1. Businesses operating in the primary sector are involved with the extraction, harvesting and conversion of natural resources, e.g. agriculture, fishing, mining and oil extraction. Roger Williams made a large fortune in this sector before establishing The Imperial.
  1. The chance for a business of expanding into a new product and/or market. Roger Williams perceived the hotel business as under provided and hence saw a market opportunity in founding a new hotel, The Imperial.
  1. A growth strategy where a business spreads its risks by expanding into new products and markets, away from its traditional business. Roger Williams' founding of The Imperial represented diversification away from his existing investments in the primary sector. Implementing Option 3 would also allow The Imperial to diversify by having a direct stake in the safaris industry.
  1. Shares held in other businesses are called investments on the balance sheet. Investments could also be medium to long-term financial assets that a business might hold which generate a short-term income for the business such as dividend or interest. Roger Williams' large fortune from being in the primary sector of British East Africa would have been be tied up in investments mostly in the primary sector itself. Global Properties invested in The Imperial by purchasing the hotel in 1989.
  1. The movement of cash into (mostly from income and capital injections) and out of (mostly purchases and expenses) a business. The Imperial was facing cash flow problems in its initial years due to the cash outflows being greater than the cash flowing into the business.
  1. The monitoring of the liquid assets of a business to ensure that it can always pay its bills and other current liabilities. Part of the financial problems faced by The Imperial in its initial years related to liquidity management. Seasonality in the hotel industry also causes liquidity problems for The Imperial.
  1. An individual owning and operating a business on his or her own although s/he may or may not employ other people for help in running the business. Roger Williams initially operated The Imperial as a sole trader.
  1. The view of a company held by its customers, employees and other major stakeholders. The Imperial enjoyed a very positive corporate image initially.
  1. Individuals or firms who have put money in the business expecting it to generate a return in the future. The five different owners that The Imperial had from 1959 to 1989 were investors in the business. Global Properties is the investment group that bought The Imperial in 1989.
  1. An incorporated business that is owned by shareholders with limited liability but whose shares cannot be offered for sale to the public. The subsidiary set up by GP was incorporated as a private limited company.
  1. The trend towards free international trade and free movement of capital between countries resulting in the integration of economic, social, technical and cultural issues of the world's economies. It is largely a consequence of expansion of multinational corporations around the world. GP, an international investment group, with investors from Japan, South Korea and the USA, symbolises globalisation.
  1. Shareholders, also known as stockholders, are people who own shares in a private or a public limited company. GP's shareholders were from the United States, Japan and South Korea.
  1. People responsible for the day-to-day running of the business or a department within the business. Managers are generally accountable to Directors and responsible for the staff teams they supervise. Martin Kimathi was appointed the Hotel Manager at The Imperial. Susan Chapman is the Head of Housekeeping at the hotel.
  1. The surplus left after all costs are deducted from sales revenue. GP expected the Hotel Manager at The Imperial to generate profits for the investment group.
  1. The share of the net profits that a company distributes to shareholders. Preference shares usually carry a fixed dividend while ordinary shares a variable dividend depending on the profitability of the company. Most of the profits generated at The Imperial were usually paid back as dividend to GP.
  1. The level of output that generates neither any profit nor loss, shown on the x-axis corresponding to the break-even point, where total revenue = total costs. An annual meeting between the Hotel Manager of The Imperial and a representative from GP would calculate the break-even quantity for the following year.
  1. The guaranteed minimum level of profit the company must earn to satisfy the shareholders. The Hotel Manager and the representative from GP would meet annually to set target profits for the year ahead.
  1. Also referred to as the safety margin, this refers to the difference between a business' current level of production and its break-even level of output (in terms of units of production). A positive safety margin means that The Imperial can face lower sales but still be making a profit. A negative safety margin would indicate The Imperial is making a loss. The Hotel Manager and the representative from Global Properties would meet annually to determine the margin of safety for the year ahead (lines 24-25).
  1. The process of hiring a suitable worker which would involve a thorough job analysis involving identifying the need for a new employee, defining the job (Job Specification) and the most appropriate person for it (Person Specification), attracting a number of suitable candidates and then selecting the one most suited to the job. In 2000 when Martin returned to Kenya, The Imperial was recruiting receptionists.
  1. Refers to the advancement of an employee in the company hierarchy leading to improved status, more responsibilities and, possibly, increased salary. Martin Kimathi joined The Imperial as a receptionist and was promoted to Head of Reception five years later.
  1. A type of internal stakeholder, namely the people who work for a business. They are workers who are employed by The Imperial to carry out specific tasks within the organisation. Most Kenyan employees at The Imperial spoke Kikuyu.
  1. Physiological needs are essential things that all human beings must have in order to survive e.g. food, clothing and shelter. Needs appear at the bottom of Maslow's hierarchy of needs. Martin's appointment as Hotel Manager at The Imperial seemed to satisfy most of his needs.
  1. Fixed amount of remuneration paid to senior staff usually at the end of the month. They generally represent a fixed cost. Martin was paid a salary based on his position and performance.
  1. A bonus or an increase in salary awarded to an employee for his or her achievements over a range of pre-agreed targets or criteria. These targets can relate to sales targets, competence in a job, successful completion of a contract or any another pre-agreed criteria. Martin Kimathi's salary was based on performance-related pay.
  1. Business activities which are intangible but which people are ready to pay for e.g. airlines, tour agents, hotels. The new hotels opening in The Imperial's vicinity were offering better facilities and services than The Imperial.
  1. Percentage of all sales in a market that is held by one brand or a business. It can be measured in volume (units sold) or value (revenue generated). The Imperial was facing shrinking market share on account of the opening of new luxurious hotels in Mombasa.
  1. A detailed financial plan for the future usually involving a cash flow forecast. Each cost and profit centre may be allocated a budget. Martin was given a limited budget for renovation and improvements every year.
  1. Information collected from second hand sources such as government statistics or market research reports, all of which are relatively easy to access. Martin's use of secondary market data from Kenya National Bureau of Statistics and other tools helped him to realize that The Imperial could attract a new type of traveller interested in safaris or in cultural tourism.
  1. A systematic examination and review of the current position of a firm's marketing in terms of its strengths and weaknesses as well as where a firm stands in its relationship with customers and competitors. It was used by Martin Kimathi, along with secondary market data, to identify a new market segment of tourists to cater to - the ones interested in safaris or in cultural tourism.
  1. Also referred to as perception maps, this is a visual aid used to show customers' perceptions about the product or brand in relation to others in the market, against variables such as price and quality. A position map was used by Martin Kimathi to help him realize the new types of travelers that The Imperial could tap into.
  1. Concerns to a business arising from changes in the target market or from the emergence of new competitors leading to issues of market share or product perceptions. The Imperial was facing long term challenges on both the fronts.
  1. Also referred to as net current assets, this represents the amount of finance available to a business for its day to day operations.

It is calculated using the formula: current assets - current liabilities = working capital

Too little working capital would indicate strained liquidity while too much would indicate business conservatism and wasted investment opportunities which could have led to improved efficiency. The seasonal nature of the business had created working capital worries for Martin Kimathi.

  1. A period of time in business, generally less than a year. Working capital issues had been a worry for Martin Kimathi in the short term.
  1. The effect of seasonal variations on a business. The Imperial was prone to working capital problems on account of the seasonality of its hotel operations.
  1. Medium to long-term plans on ways of achieving achieve specific objectives. Martin Kimathi had to design strategies to deal with liquidity problems that The Imperial was facing.
  1. Problems arising from an inability of a business to meet its short-term debts, as seen from its liquidity ratio or acid test ratio. Problems in working capital management were creating liquidity problems at The Imperial.
  1. A department or a unit of a business that incurs both costs and revenues and hence maintains its own profit and loss account. It allows a business to identify the areas that generate the most and those that generate the least revenue. The accountant recommended to Martin to use profit centres for the hotel itself, the restaurant and the special events services as one way of addressing liquidity problems.
  1. A cost centre is a department or a unit of a business which does not generate any revenue yet to which specific costs can be clearly attributed and allocated. It is used as a control tool to make different departments conscious of their costs and to encourage them to operate within their budgets. Martin Kimathi was being encouraged to establish some departments, such as housekeeping, as cost centres.
  1. Also called the published accounts, these are the annual financial statements that all limited liability companies are obliged by law to produce and report, namely the Balance Sheet and the Profit and Loss Account.
  1. The P&L account is part of the final accounts of a business, which is a financial statement of a business' trading activity over a period of time. It is usually split into three parts: the Trading Account, the Profit and Loss Account and the Appropriation Account. Martin Kimathi was expected by GP to organize the preparation of the Profit and Loss Account for The Imperial.
  2. Also part of the final accounts of a business, the balance sheet is a financial statement showing the assets and liabilities of a business at a point in time, usually, the last day of the financial year. In a balance sheet, the sources of funds must be balanced with the uses of funds. Martin Kimathi was expected by GP to organize the preparation of the Balance Sheet for The Imperial.
  1. Also called inventories, stocks are physical materials and goods that a business holds for further production or sale. They appear on the Current Assets of the Balance Sheet of a business. At The Imperial, the Head of Catering was unable to manage the actual stocks.
  1. Also called Stock Valuation, this refers to the methods used by a business to place a value on stocks. Stock valuation can be influenced by the purchase date and costs of purchase. LIFO and FIFO are the two main methods for stock valuation. At The Imperial, the Head of Catering struggled to make appropriate calculations of closing stock values.
  2. Human Resources (74)
  3. Human resources are the personnel or the employees of a business, often regarded as an asset for their skills and abilities. Martin had a human resources problem in terms of his strained working relationship with Susan Chapman, the Head of Housekeeping.
  1. Motivation (78)
  2. Motivation is the desire, effort and passion to achieve something. Craig Chapman, Susan's grandfather was driven by humanitarian motivation when he decided to stay back in Kenya after its independence and work for a non-profit organisation. By contrast, Martin Kimathi seems to be motivated by the salary, linked to performance, to meet his own needs.
  3. Non-profit organisations (79)
  4. Non-profit organisations are private sector organisations that do not primarily aim to make a profit and usually operate for the benefit of others in society. Craig Chapman had humanitarian motivations at heart when he decided to stay in Kenya and work for other non-profit organisations.
  5. Discrimination (84)
  6. The unjust or prejudiced and biased treatment of different categories of people especially on grounds of age, gender, religion, race or any other reasons. In countries allowing equality and freedom from discrimination as a fundamental right, any acts which seem to imply discrimination are against the law and can be challenged in a court of law. Even three years after Martin's appointment as Hotel Manager of The Imperial, Susan still felt she had been discriminated against.
  7. Leadership style (87)
  8. Leadership style refers to the way in which managers and leaders choose to behave in relation to how they organize and control their employees. Martin has a laissez-faire style of leadership and preferred to allow his employees to fix minor problems and believed in delegating responsibility and empowering employees to make decisions. Susan has an autocratic style of leadership and likes systems, accountability and a clear chain of command. She focuses on the task rather than the team involved in getting the job done.
  9. Task-oriented (87)
  10. If people are task-oriented they focus on the task and getting the job done without considering the needs of the team completing the task. They tend to put systems and procedures in place for achieving the goal and these must be strictly adhered to. They do not allow their employees to be creative and make their own decisions and as a result employees can become demotivated. Susan was task-oriented and adopted a very formal approach to management and was intolerant of even minor mistakes.
  11. Bureaucracy (88) HL
  12. Bureaucracy means that there are many administrative procedures and rules that have to be followed to complete a task. Susan enjoyed bureaucracy (formal policies and procedures) and had created a system of rules, a clear chain of command and system of accountability within the Housekeeping Department to ensure that tasks were completed without mistakes and that all employees were held accountable for their jobs.
  13. Chain of command (88)
  14. The chain of command refers to the formal line of authority through which orders are passed in an organisation. The structure of the hierarchy is usually presented in an organisation chart. Susan "liked a clear chain of command" (line 88) which means that each employee in the organisation knows to whom they are responsible. The line of authority in the Housekeeping Department ends with Susan.
  1. Scientific approach to decision-making (88)
  2. A scientific approach to decision-making means that facts are collected and a logical approach is applied to decision-making in contrast to using intuition and experience. Susan had a scientific-approach (line 88) to decision-making and relied on facts and figures as a basis for her decisions.
  3. Laissez-faire (90)
  4. A laissez-faire leadership style is one in which the leader makes the major decisions and sets the overall objectives for the organisation and subsequently assigns tasks for employees and lets them make decisions and complete tasks as they see fit. Martin had a laissez-faire leadership style (line 90) and he believed in passing on the responsibility for solving minor problems to his employees as he felt it led to empowerment and motivation.
  5. Empowerment (90)
  6. Empowerment is when authority to carry out a task is passed to an employee and the person feels they are in control of the task and can take decisions.