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Case study of Penang mutiara

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Question 1. Describe how you think Wernie Will

a)make sure that the way he manages the hotel is appropriate to the way it competes for business

For get a biggest development, and get more success, Penang Mutiara has to:

– Expand its business in other areas to acquire more market shares against other high-class and strong competitors in the whole Asia region, or even in the world;

– Offer the differentiation, high standard quality and characteristic hotel services, and comfortable environment for customers.

– Pitch itself as an “up-market” end hotel business that targets customers are those who are high income and high consuming individuals, and the high class business and political unions or organizations.

b) implement any change in strategy

– Through concession and alliance with other business such as tour companies, ocean & safari theme park, movie companies, golf or car club, complete set of hotel industry which is gathering tour, amusement, business exploiture, relaxation together.

– Complete foundational services, such as transporting line services; wireless internet;

– Diversifying its services to satisfy different demands of customers, such as offering difference holiday traveling packages; seasoning conference market different packages; diversified types of foods.

– Develop automatic system to offer, services and payment

– Form registering membership with loyal consumers who can be offered more free services or good price and receiving the latest promotion information.

– Expand existing business to developing e-business; alliance other hotels in other areas;

c) develop his operation so that it drives the long-term strategy of the hotel

– Building and developing hotel website, including introduction of hotel services, traffic map, resource and promotion information, booking on line, requirement and feedback of customer, online payment.

– Continues improvement for whole operation developing to match the market requirements in operations decisions and long time strategy, such as implementing ISO 9001/2000 standard, TQM and cost control system.

– Develop Statistical Process control (SPC) for measuring the service quality, rates of customers’ satisfaction and complaint, cost controlling, deciding for new services which match with customers changing demands.

– Develop a top-down strategy to reflect what the hotel’s vision and mission, changing strategies, requirement.

– Building an automatic system to improve reliable and speed that ensuring JIT for collecting correct information of customer requirement, conveniently e-pay, delivering and exchanging information for corresponding with each departments, ensuring security.

– Offer continual training for staff to improve the standard quality of services, English and foreign languages speaking, handling these new automatic system and internet using.

Adding the advertisement through TV, internet, high-income reader journal or fashion magazines and newspaper.

Keeping and developing a high standard quality and low cost supply chain which including ensuring purchasing at the right quality, fast delivery, retaining flexibility, right prices; collecting and utilizing resources form internet or global; building physical distribution management and internet; keeping a high quality materials; building a good relation ship with suppliers

Question 2. What questions might Wernie ask to judge whether his operation is a Stage 1, Stage 2, Stage 3, or Stage 4 operations on Hayes and Wheelwright’ s scale of excellence ?

four-stage model analysis:

The four-stage model of operations contribution developed by Hayes and Wheelwright’s scale uses to assess the role of competition and the operation function contributing for a company. The model draws four progressions for operation function. each stages can be described difference representations in the four aspects: Relationship with internal and external customers, Understanding of operations practiceLinks with competitive strategy, Innovation within the operation.

Stage 1: External neutrality

It is a stage the operation compares itself with its competitors’ performance and adopting the ‘best practice’ that taking the best idea and norms of performance from them, tries to be tries to be ‘appropriate’ or ‘ external neutrality’. Thus, in this stage, Wernie might look for what is best expected from the best hotel and try to imitate form it to increase his hotel’s standard of service. And in this stage, the operation may have:

Try to place appropriate operations practice: operations within the organization regular exchange of ideas and performance with other; Other organizational similar operations are considered the benchmarks of performance and practice;

Beginning to focus on key objectives: awake that appropriate different
operations performance are used to different operations, but are yet no clear idea of how to change operations practice to reflect different objectives;

Performance the monitoring relationship with its customers that seldom disappoints customers; increase the positive value meeting the standards expected by customers;

Operations management has full responsibility for executing new ideas and is flexible and creative in getting things ‘up and running’ with ‘tinkering’ methods, but don’t develop completely new approaches yet.

Stage 2: Internal neutrality

It is a stage of an operation function that playing a largely negative role and the very poorest level of contribution. Such, if Penang Muriare’s operation was in this stage, Wernie might believed that Mutiar standard of performance is not holding the operation back from competing effectively and it would has these characteristics

(Nigel Slack, Stuart Chambers and Robert Johnston 2001):

competitive strategy’s objectives are simplistically understood that the role of the operation is misunderstood; and difficulty in identifying the trade-offs

Has crisis relationship with customers including either internal customers or external customer. It would often frustrating their expectation;

The responsibility of Operations for innovations just as being outside the operation that ‘Band Aid’ for Innovation

Can’t satisfy in operations practice that poor exchange of ideas with other internal operations; Wernie can’t choose a appropriate way for designing and running the operation and to find out ‘what makes the operation tick’.

Stage 3: Externally supportive

A stage 3 operation is seen as providing one of bases for its competitive success. It tries to innovate and adapt the markets changing for creating ways to product and service, and organizes the operation to be the ‘one step ahead’ of competitors. Thus, Wernie should ask whether the Mutiara is driving it competitive strategy and customers expectations, the operations whether are:

Learning to network capabilities; Operations at the forefront of ‘changing the rules of the game’. Its Innovations timed to give organization maximum competitive advantage.

Creative relationship with customers that understanding the needs and expectations of customers and be able to exceeds them. Continual looking for new operation practice linked to customers’ future needs.

Unique operations capabilities drive strategy that operation takes a leading role in shaping competitive strategy, seen as the prime source of the capabilities which competitors find difficult to imitate. ‘trading-off’ as a performance objectives are at a significantly higher level than competitors.

Looking for long time, operations process knowledge provides ability to take responsibility for reform competencies and forecast possible changes in market, supply, labor and technology requirements.

Stage 4 Internally Supportive

Stage 4 operations have nearly reached the ‘first division’ in their industry. They may not be the best on every aspect of operations performance but they try to be, by creating competition strategies and developing ‘appropriate’ resources to excel. Thus, from Wernie point of view, he might ask ‘is the hotel up to the standard of the best hotel’. The operations in this stage are:

Continuous improvement of operations practice. It plays a role that facilitating other internal operations; consider the external ideas to improve internal performance more appropriate; Process knowledge are able to control performance.

Own ‘strategy to operations’ capabilities that develop new approaches to operations practice based on understanding of the needed skill and own resource constraints to meet market needs.

Improvement of relationship with customers that: it starts to exceed customers’ expectations; According to internal and external customers’ demands places appropriateness of performance standards and plan continuous improvement of performance.

Clear link strategy and operations practice. All operations staffs very clear the importance operations objectives and their implications. Identify the Key performance trade-offs and improving strategies to overcome them.

Question 3. The case describes how quality, speed, dependability, flexibility and cost impact on the hotel’s external customers. Explain how each of these performance objectives might have internal benefits.


Speed means do things fast. For Mutiare, speed means fast response to requirements of external customers or new conditions, speedy decision making and speedy movement of materials and information inside the operation. It’s benefit for internal customers are:

Speed reduces inventories

For Mutiare, reducing inventories mean increasing the utilization of rooms and restaurants that fast cleaning and preparing the available rooms and dinner tables for external customers adds revenue for organization, and improving the efficient of working.

Speed adds flexibility

Fast response adds the capability for operations to the flexibility dealing with urgent things.

Speed adds dependability

Fast delivering for the latest information among other department of operations, such as the newest customer entrance information, available room information adds the dependability for each internal operation’s coordination and communication.


Dependability means do things on time. For Mutiara’s internal customers, dependability means well management and coordination with each operation ensuring other process are reliable, such as delivering right material or information on time, correct foreseeing and planning the facilities, reorder and workforce. It leads to more effective operation for internal customers.

Dependability gives stability

Dependability fixes the time and costs overcoming the disruption, enhancing the trust for planning works and collaborating with each operation.

Dependability saves time

It effectively arranging the facilities, information, material, workforce, money and time to ensure all of them can be available at any time, saves the time to wait or to look for other substitutes.

Dependability saves money

Ineffectively arrangement will translate extra cost. Dependability arrangement reduces the chance of repeating input resources or some resources leaving unused increasing the cost of maintain or store fee, or labor cost.


Quality means ‘doing things right’. For Mutiara, quality means consistently producing impeccable services, using top-class and durable materials to create the right impression and environment, and anticipating and preventing all potential problems in advance. It is benefit to make life easier inside the operation.

Quality increases dependability

Good quality leads to stable and efficient processes that less mistake, easy for coordination for matching the standard of processes, dependable and advanced equipments and tools to use adds dependability for internal customers,.

Quality reduces cost

It reduces cost for Mutiara due to it is fewer the chance to make mistakes. First it saves the time to sort out the problem, redoing or correcting mistakes, or to reducing confusion or irritation for each people; second, it also reduces the labor cost. Dispelling some serious troubles or problem always needs more staffs or more time to do it, thus, it results in the labor cost added, such as part-time salary, overtime compensation. The more minimizing mistake, the more minimize the excess labor costs to pay for doing excess works; third, less mistake and using top-class and durable materials also result in saving expenditures such as maintaining fee, cost of materials resulted by mistakes , transporting fees, and other excess expenditures.


Cost means ‘do things cheaply’. To Mutiara hotel, it means keeping an appropriate cost for keeping the operations’ effective running. All of other objectives affect cost.

Flexible operations leads to quickly make changes or decisions for changing conditions and overcomes disrupting the other operation. Flexible operation inside can also change tasks timely without wasting time and capacity.

Speedy operations cuts down the in-process inventory level and also saving the cost of administrative overheads.

High-quality operations prevents wasting time, re-do things, or flowed service which would be inconvenient for internal customers.

Dependable operation protects the normal orders don’t be confusion by any unwelcome surprises on internal customers. It ensures delivery exact and reliable. This limits uneconomical disruption and improves the efficiency of micro operations.


Flexibility means change what you do. For the internal customer of Mutiara, It means according different requirements or things to fast handle with, making change or decisions with them; flexibility arranging and coordinating operations’ work. It has these benefits:

Flexibility maintains dependability

For some complex things, if following the primary plans may resulted in extra the time and expenses that reduces the dependability. Thus flexibility making change or timely looking for new plans would maintains dependability for internal customer.

Flexibility saves resources

According to particular things or conditions to rearrange operations and resources sometimes can prevent unnecessarily repeating planning, spending, and using resources such as time, money, workforce, to follow the traditional ways to do things done.

Flexibility increase speed of response

Being able to give fast service for customers depends on the operation being flexible. Flexible operations speedily transfer extra skilled staff and equipment to the urgent conditions and emergencies will provide the fast service with other operations’ needs.





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