IB Business Management HL 1.4 Stakeholders Question Bank

Himalayan Trekking


Himalayan Trekking (HT) is a trekking (mountain walking) agency based in Nepal. It has been operating guided treks for tourists in Nepal, Tibet and Bhutan for over 20 years. With a duration of between one and three weeks, HT offerings include treks to the Everest Base Camp, tours to Buddhist sites in Tibet, and treks even to the inaccessible Kingdom of Bhutan. Brand loyalty is very strong, with repeat bookings from many clients (trekkers).
The market for trekking has been growing very rapidly with many new businesses setting up to meet the increased demand for "adventure" holidays. In this competitive market, HT's unique selling proposition (USP) is to provide an unforgettable wilderness experience in a socially and ethically responsible manner. It only uses locally produced food and local guides and trekkers camp without wasting too many resources. All clients have to sign a contract to agree that they will act in a socially responsible manner throughout the trek. Though it always had a strong sense of social responsibility, HT had not promoted this aspect of the business until the management realized that changes in attitudes towards social responsibility could be used to gain competitive advantage.
HT's brochure states that:
- It is a market leader in adventure tourism for Nepal, Tibet and Bhutan. It caters to a wide range of clients from experienced to inexperienced trekkers.
- In recognition of protecting the fragile environment, economic systems and cultures it treks in, HT has been awarded a global quality standard.
- By employing local guides and using locally produced food, HT adds much value to the local region.
- It only employs staff that have previous social and environmental experience.
- It financially supports a non-governmental organization (NGO) for Nepali orphans by giving 5 % of its turnover to Child Environment Nepal (CEN).
Selected financial information for HT for 2013:

Identify two external stakeholders of HT.

The UWP Mission to Loyka was based in Beral, the capital of the country. The autocratic General Ron Meiri was appointed by the UWP as Commander. The organizational structure of the UWP Mission was tall and centralized, with several levels of hierarchy and a narrow span of control (Appendix 1). This structure fitted well with the organizational culture of the military. This organization was not flexible, but it ensured that orders were clearly understood and always followed. As a consequence the security of the UWP troops was maintained. In the first years, the $U W P$ Mission to Loyka experienced some successes but also some failures. The presence of "the Olive Hats" gave a sense of stability and international support. It also benefited the local business community: the provisions for the troops were purchased locally, the soldiers spent a significant proportion of their pay in the local economy and also helped repair roads and bridges that had been damaged during the civil war. As a result of these improvements in infrastructure, local businesses in Beral were able to resume their trade activities to the same levels as before the civil war. However, the UWP presence also caused some problems. There was some resentment at the presence of "the Olive Hats" - some Loykese just did not want these foreign soldiers in their country. Local community leaders had also accused the troops of inappropriate behaviour and the local governor often had disagreements with General Meiri about the frequency of UWP patrols in the Beral area. The reputation of the UWP troops gradually deteriorated and General Meiri did not seem able to control the situation. Originally, when the troops first arrived, the local population was largely supportive. However, opposition to the $U W P$ presence grew as did violence against the troops. Moreover, "the Olive Hats" in Loyka started to resent being there and motivation was beginning to deteriorate. They felt unappreciated by the local population, whom they believed they were assisting by maintaining order, peace and security. Due to these changes in the external and internal environment, the $U W P$ headquarters in Geneva prepared a force field analysis to evaluate whether the $U W P$ Mission to Loyka should change its strategy in 2011 (Appendix 2).

In late 2011 the UWP replaced General Meiri with General Diane Pierce as Commander, in the hope that her situational leadership style and experience of social marketing in previous UWP missions would help reduce the problems. She was given two specific objectives: - Firstly, she had the strategic objective to improve the image of "the Olive Hats" in Loyka in order to improve public relations. This would reduce the number of conflicts with the Loykese, thereby improving the safety of the UWP troops. - Secondly, she had the operational objective to remotivate her troops. As salaries were set by the UWP, she could not use financial rewards so she would have to use non-financial motivational methods. General Pierce decided to undertake a major improvement of social infrastructure in Loyka by using the resources of the UWP to build either a new hospital or a new university campus. She received permission from the UWP headquarters, provided that the new hospital or university be operated as a non-profit organization. The UWP believed that this would allow the Loykese to see an important benefit of the presence of "the Olive Hats". It would also reinforce the UWP Mission's corporate social responsibility. This humanitarian project would remotivate the troops by providing a change of routine, by giving them a sense of achievement, and by building positive relationships with the local population. The construction of a new hospital or university would allow General Pierce to fulfill the two objectives given to her.

A non-profit hospital would increase access to medical care, especially for poorer people.

When the civil war broke out, most of the Loykese doctors who could speak English left for countries such as Canada, the United Kingdom, and the United States, where foreign doctors could easily obtain work visas and employment opportunities. As a result, there was a significant decrease in the number of doctors in Loyka. Secondly, complications from the lack of prenatal care had increased significantly. Many young children had a variety of health issues. However, Kos was very concerned about who the staff at the hospital would be. Given the shortage of doctors in the country, would doctors from abroad be employed? Also would those providing obstetrics and gynecology be female doctors? Conservatives in the country, Kos warned, would be strongly opposed to Loykese women receiving care from foreign male doctors. The construction of a university campus presented its own set of issues. On the one hand, a new university campus would be welcomed, as the existing one was small, old and in need of extensive repair. Moreover, because of the civil war, the country desperately needed engineers, school teachers, nurses and many other highly skilled professionals to help rebuild the social infrastructure. However, although instruction would be in the local language, Kos feared that a university built by the UWP would become a symbol of foreign intervention in Loyka and would make it a target for critics of the government and of the UWP presence in the country. Although a hospital might offend some conservatives, it is unlikely that it would be the target of physical attack. A university, on the other hand, with more open access, would be less secure than a hospital. In addition, as a place where free speech is exercised, a university could potentially cause unrest in a country recently torn by civil war. In further discussions with local officials, Colonel Donovan found that Kos' concerns were shared by others. After completing a critical path analysis, he reported to General Pierce that constructing either a university campus or a hospital was feasible within 25 to 30 weeks. He added that the officers in the Civil Engineering Group were excited by the opportunity to lead the project.

The project also had the support of the troops, who would feel empowered and would welcome working in new flexible matrix structures. It would, however, require careful workforce planning and training: some peacekeeping troops would need extra training in construction skills and safety procedures. Colonel Donovan concluded that both types of facilities were greatly needed in Loyka and would offer important benefits. The issue was which one to choose. Given her experience of previous UWP Missions, General Pierce ordered Colonel Donovan to conduct a formal social and environmental audit of the construction of both facilities and to carry out additional primary research. She asked him to prepare and distribute a survey to 2000 local residents for a more valid and reliable indication of the local community's opinion of which was needed more, a university or a hospital. She also wanted focus groups to discuss the two options. Some of the focus groups were to consist of men only, some of women only, and some of both men and women. Unfortunately, the results of the survey did not give General Pierce the clear indication that she had hoped for (Appendix 4). A slight majority preferred the hospital to the university, but it was by such a small margin that she could not be confident of which direction to take. In addition, a far larger percentage of those surveyed were strongly opposed to the hospital than to the university.

After spending weeks gathering data, Colonel Donovan had few doubts. He recommended that the hospital should be built as soon as possible. He still needed to decide what method of production to use. He was considering cell production, where each cell would be responsible for the construction of a separate section of the hospital. On completion, the hospital would provide immediate important benefits to the local population. If the main objection of the local population was the concern that most of the doctors would be male, the U W P, he argued, should do everything it could to recruit female doctors, even if only for the short term. However, the local governor who agreed to contribute the piece of land for the construction site preferred the new university campus rather than a hospital. A new university would be prestigious and contribute to the long-term development of Loyka by training future professionals. It could also attract private capital for future public-private partnerships in research and development (R\&D).

Appendix 3: Comparison of the two construction projects

Appendix 4: Results from the survey

Evaluate the possible ways to overcome conflict between external stakeholders and the UWP Mission in Loyka.