Reference no: EM133500555

Goaway Hotels is a chain of hotels based in one country. 90% of its shares are held by members of the family of the founder of the Goaway group. None of the family members is a director of the company. Over the last few years, the family has been quite happy with the steady level of dividends that their investment has generated. Directors are encouraged to achieve high profits by means of a remuneration package with potentially very large profit-related bonuses. The directors of Goaway Hotels currently wish to take significant steps to increase profits. The area they are focusing on at present is labor costs. Over the last couple of years, many of the workers they have recruited have been economic migrants from another country, the East Asian People's Republic (EAPR). The EAPR workers are paid around 30% of the salary of indigenous workers, and receive fewer benefits.

However these employment terms are considerably better than the workers would receive in the EAPR. Goaway Hotels has been able to fill its vacancies easily from this source, and the workers from the EAPR that Goaway has recruited have mostly stayed with the company. The board has been considering imposing tougher employment contracts on home country workers, perhaps letting the number of dismissals and staff turnover of home country workers increase significantly.

In Goaway Hotels' home country, there has been a long period of rule by a government that wished to boost business and thus relaxed labour laws to encourage more flexible working. However a year ago the opposition party finally won power, having pledged in their manifesto to tighten labour laws to give more rights to home country employees. Since their election the new government has brought in the promised labour legislation, and there have already been successful injunctions obtained, preventing companies from imposing less favourable employment terms on their employees.

An international chain of hotels has recently approached various members of the founding family with an offer for their shares. The international chain is well known for its aggressive approach to employee relations and the high demands it makes on its managers. Local employment laws allow some renegotiation of employment terms if companies are taken over.

STAGE 1 - TOPIC 2a: Stakeholders and Social Responsibility

You are a research assistant working for a major financial newspaper, The Dollars and Sense. A senior investigative journalist has asked you to help her compose a feature article on the impacts of the bid by the international chain of hotels to buy (acquire) all the shares in Goaway Hotels from the family of owners, then implement its strategic plan for an aggressive labour costs-cutting program.

TASKS

You are instructed by the senior investigative journalist to prepare summaries (2 paragraphs) of the potential impacts on the following stakeholder groups, if the owning family agrees to sell all their shares and enable the acquisition or takeover of Goaway Hotels by the international company:

What will be the potential impacts on the wages and conditions of the local employees at Goaway Hotels?

Actions that the United Workers Union, representing the local workers who are members of this Union, may take to protect their legal rights, pay and other benefits?

Actions that the new 'worker friendly' government may take to put conditions or restrictions on approving the sale of this local business to the foreign company - under pressure from the United Workers Union, local media organisations including The Dollars and Sense, families of the local workers, and other community members?

New job opportunities for other family member and relatives of the economic migrant workers recruited from East Asian Peoples Republic, if the sale to the foreign company goes ahead?

Another 2 marks are available for demonstrating your evaluation skills in assessing the importance of the different stakeholder groups in this scenario.