1 CHAPTER ONE: INTRODUCTION..............................................................

1 1
.1
Introduction......................................................................................................
1
1.2 Research
Problem............................................................................................ 5
1.3 Research
questions........................................................................................... 5
1.4 Significance of the
study.................................................................................. 6
1.5 Conceptual
framework..................................................................................... 7
1.6 Definitions of
terms ......................................................................................... 8
1.7
Hypotheses.......................................................................................................
9
1.8
Conclusion .....................................................................................................

1.1 Introduction
In the world of global economy an organization is required to
strengthen itself through prudent designing of business policies to achieve
success and sustainability in the industry. Human resource is a vital resource
of any organization and proper management of human resource can only
lead to achievement of goals and objectives of the organization.
The world is experiencing massive changes with respect to technology,
development, organizational practices, structure of market and government
policies. There is intense competition in every field of production and a firm
operating in the industry faces huge competition in the market with their
rival firms. Today, a firm cannot be successful and retain its position in the
market if it does not plan strategically and use its resources optimally.

The hotel industry is the growing industry in todays world due to the
growing tourism all over the globe. Like other industries, this industry also
encounters huge competition among the firms and each firm need to
optimize its competitive advantage to survive successfully in the market. The
competitive advantages refer to the firms advantages over its rival firm that
helps it to increase its sales in the market. In this respect, the firm need to
find the right strategy that can confront the challenges faced in the market
and industry. It need to identify its strength, weakness, opportunity and
threats and design its strategies accordingly to achieve its organizational
mission and vision.
As human resource is the vital part of any organization, the human
resource practices has been showing increasing concern of the organization.
They desire to strategically plan their human resource management so that
they can use it optimally for the fulfillment of their goals. The paper
discusses the impact of the human resource management practices on the
competitive advantages of the firm with respect to the five star hotels in the
North Cyprus. The choice of the discussion area is instigated by the present
behavior of the organization in trying to achieve competitive advantage in
every stage of planning and as hotel industry is the growing industry that
faces huge competition, it becomes inevitable for the organization to have
competitive advantage. Furthermore, management of human resource does
plays an important part due the key role of human resource in any
organization. Hence, the paper tries to establish the link between HRM

practices and competitive advantages by understanding the impact of the

former on the latter.

1.2 Research problem

Hotel Industry is one of the major industries in every country in terms
of travel and tourism growth and development. In the world of globalization,
hotel industry encounters huge competition among its players due to its
basic nature of interaction with cross-country travel and tourism industry. It
has put more pressure on the hotel management system to continuously
innovate new techniques to survive in the highly competitive industry.
Hotel industry faces several barriers to survive in the market due to
continuous changes in various internal and external business environments.
In order to compete well, the hotel industry needs to develop new strategies
and should identify the its strength, weakness, opportunities and threats. The
SWOT analysis will assist the company to design their future planning and to
enhance their capabilities to satisfy the customers and to achieve the
needed goals. To meet the competition successfully, the firms in the hotel
industry need to make a strong planning that could solve the problems and
gives the firm an edge in competitive advantage over other competitors.
Strategic human resource management may help the firm to develop a
strong competitive advantage in the market, strengthens its position among
the competitors, and become a key area of planning. Hence, it creates the
necessity to look into the matter of strategic human resource management

of the hotel industry. Strategic planning cannot be dealt separately and has
to be embedded in the overall planning of the organization. Moreover,
human resource is the strength of any organization so managing them
strategically becomes a vital part of their planning which demands some
innovative methods by the organization that would increase the capabilities
of individuals and help the company to achieve their goals.
By studying the literature review, it has been noted that there has
been an increasing interest to investigate the effect of strategic human
resource management practices on the competitive advantage position of
the hotel. Several studies have recognized th e importance of strategic
human resource management to enhance organizational competitive
advantage but still a loophole has been identified in terms of its detail study
for hotel industry. Few studies are found which has done a study to
understand how the hotels implement their practices to attain strong
competitive advantages among their competitors.
North Cyprus is situated at the bank of Mediterranean sea and is
known for its beaches. It is an ideal place for hotel industry business as
tourism industry has a major contribution to its Gross Domestic Product.
There are several Five-Star hotels in North Cyprus, which are competitive in
nature, due to which they are compelled to practice strong policies to survive
in the market. The result of it is reflected in the human resource
management practices of the Five-Star hotels, which have obtained

benchmark and have successfully implemented it. The organization applies

HR practices to identify and customize the services to bring efficiency in the
operation. In the paper, hotel sector of north Cyprus is studied and its human
resource practices are studied in details as it is an important sector in Cyprus
and has major contribution to the GDP. Further, it has been examined in the
paper whether human resource management practices helps to achieve
competitive advantage in the hotel industry. Hence the idea of the study can
be summarized in the question below:
Does HRM practices has an impact on competitive advantage of Five-Star hotels in North
Cyprus

1.3 Research Question

With the intention to achieve the objectives of the research project, several research
questions are designed that will help to understand the subject matter of the project and will pave
the way to the attainment of the objective.
The research questions are stated below:
1. What is the impact of SHRM practices on the hotels competitive advantage?
2. Is there any mediating role of employees satisfaction on the relationship between hotels
competitive advantage and SHRM practices?
3. Do variables of demographic mediate the relationship between hotels competitive
advantage and SHRM practices?
4. Which one of SHRM practices is used more than other practices?
5. What are the present levels of employees satisfaction in the hotels of north Cyprus?

1.4 Significance of the study

There is massive flow of tourist, travelers, guest and visitors to the island every year due
to its scenic beauty so the hotel industry has been regarded as one of the major sector in north of
Cyprus. It has made the hotels to compete with each other under the given dynamic and rapid
changing environment of customer service. The hotels mainly compete on two grounds. Firstly
to retain their existing customers by providing satisfactory after sale service and secondly to
capture the market of new customers.
From the study of literature review, it is seen that Strategic Human Resource
Management practices is very important for attaining competitive advantage for any type of
firms. However, the literature review has very little study to understand what is the best way to
handle SHRM management so that best practices of competitive advantage is attained against
other competitors. In this regard, the paper will focus on understanding the gap between what is
practiced by the firm and what should be practiced by the firm as best practices and then find a
solution to this problem. The study opts to make a valuable contribution in the field SHRM for
hotels sector in Cyprus.

1.5 Conceptual Framework

The study relies on the review of literature in constructing the model to study the impact
of the HRM practices on competitive advantage in Five-Star hotels in North Cyprus. The
model tries to analyze the relation between dependent and independent variable. Competitive
advantage is the dependent variable which comprises of concepts like, Service Quality
Advantage, Service Variety Advantage and Cost Advantage. HRM practices are the
independent variables which comprises of Job Analysis & design, Human Resource Planning,
Training & Development, and Employees Performance Appraisal, Recruitment, Selection &
Placement, Compensation,
Furthermore, the study will observe the mediating role of employee satisfaction and other
demographic variables such as income rate, age, marital status, and experience to understand
and examine whether the relationship between the independent and dependent variables could
be stronger by any other mediating variable.

1.6 Definition of terms

Human Resource Management
Human Resource Management is an organizational process used to
manage people to meet the objective of the firm. It ensures the retention
and selection of required people needed to attain the companys goals. It is
an essential part of all types of private and public organization which deals
with hiring and developing employees to make them important to the
company. It includes recruitment of the right person, job analysis,
management of wages and salaries, dealing with incentives and benefits,
solving of disputes, evaluation of employee performance and interacting with
employees at al levels
Human Resource Planning
Human resource planning is an asset of an organization and an
ongoing practice of efficient planning to attain optimality in the use of human
resources of the organization. It further ensures the best fit between jobs and
employees and work for minimizing surpluses and shortages. The main part
of human resource planning is to forecast the labor demand of the
organization, to understand and analyze the current labor supply and to
balance the anticipated labor supply and demand. It need to be flexible in
adopting changes and to meet the short run requirements of employees to
meet the daily challenges and also to plan for a healthy long term business
environment.

Strategic Human Resource Management

Strategic Human Resource Management (SHRM) concentrates on
different features of Human Resource Management (HRM), such as hiring,
recruiting, training and others but with the main focus on aligning its
objectives with the organizations goals. It further ensures that the HRM
objectives support the firms vision, mission goals and values. Through the
practice of SHRM, the organization ensures larger chances of its success by
strategically implementing the firms strategies through human resource
activities. It basically gives priority to broader organizational issues like the
firms performance, knowledge management, understanding the need of
resources in future, developing the capabilities of resource and make the
work done effectively.

Competitive advantage
Competitive advantage is the gain the organization has over its rival
firm that permits it to achieve larger sales and retain more customers
compared to its competitors. The different types of competitive advantages
includes low cost structure, the differentiated products that it chooses to
offer , the effective distribution channel that it maintains and the building of
string customer support through prompt and effective services. It gives an
extra edge to the company over its competitors and helps it to sustain longer
in the market. The two main types of competitive advantage are comparative

and differential advantage. The former refers to the cost advantage and the
latter refers to the differentiated product advantage.

Cost advantage
Cost advantage refers to the firms ability to produce the commodity at
a lower cost compared to its rival firm. It enables the firm to sell the product
at a lower cost in the market and thus helps it to capture higher market
share and more margins of sales. It helps the firm to generate more profit as
it is able to sell lager volume of goods due to lower price.

1.7 Hypotheses:
Hypothesis number one:

H1. There is a statistical significant impact for HRM practices (Human Resource
Planning, Recruitment, Selection & Placement, Job Analysis & design, Employees
Performance Appraisal and Compensation and rewards, Training & Development) on
competitive advantage (Service Differentiation, Customer Acquisition and Customer
Satisfaction) in Five-Star hotels in North Cyprus.

In regard to the first hypothesis, there are six sub-hypotheses linked to the different
SHRM practices, these sub-hypotheses are:
Sub-hypotheses for hypothesis number one:

H1.1 There is a statistical significant impact of Human Resource Planning, on

competitive advantage in Five-Star hotels in North Cyprus.

H1.2 There is a statistical significant impact of Job Analysis & design on competitive
advantage in Five-Star hotels in North Cyprus.

H1.3 There is a statistical significant impact of Recruitment, Selection & Placement

on competitive advantage in Five-Star hotels in North Cyprus.

H1.4 There is a statistical significant impact of Compensation and rewards on

competitive advantage in Five-Star hotels in North Cyprus.

H1.5 There is a statistical significant impact of Training & Development on

competitive advantage in Five-Star hotels in North Cyprus.

H1.6 There is a statistical significant impact of and Employees Performance

Appraisal on competitive advantage in Five-Star hotels in North Cyprus.

Hypothesis number two:

H2. Employee satisfaction mediate the relationship between SHRM practices and the
competitive advantage in Five-Star hotels in North Cyprus.

Hypothesis number three:

H3. Customers demographic variables mediate the relationship between SHRM practices
and the competitive advantage in Five-Star hotels in North Cyprus.

Hypothesis number four:

H.4 There is a statistical significant impact for HRM practices on Cost Advantage in
Five-Star hotels in North Cyprus.

Hypothesis number five:

H.5 There is a statistical significant impact for HRM practices on Service Variety
Advantage in Five-Star hotels in North Cyprus

Hypothesis number six:

H.6 There is a statistical significant impact for HRM practices on Service Quality
Advantage in Five-Star hotels in North Cyprus.

1.8 Conclusion
The paper tries to develop a relation between the Human Resource
Management Practices of the five star hotels in the North Cyprus and the
competitive advantage of the organizations. In this regard, a model has been
proposed to be frame that consists of dependent and independent variables.
The independent variable are those which are related to HRM practices and
dependent variables are those that are related to competitive advantage The
paper construct the hypothesis to analysis the relation between HRM
practices and competitive advantages of the hotel in North Cyprus. Each
hypothesis Further, the paper also tries to understand whether satisfaction of
employees in an organization influences the relation between SHRM and the
competitive advantage in Cyprus, Five-Star hotels. The customers
demographic variables are also used in constructing the hypothesis to see its
influence on SHRM and competitive advantages.
The research paper is divided in five chapters including the
introductory chapter. Chapter 2 explains the review of literature in different
areas of human resource management and tris to give a detail literature
available related to HRM, SHRM and competitive advantages. The third
chapter gives the details of the research methodology used for the research.
In this regard, the details of the collection of data, methods of sampling,
hypothesis setting and development of models are given. The next chapter
describes the analysis of Data by using statistical tools and the concluding
chapter states the findings and recommendation of the research study.

References