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Transcription of this question: 5.Thorns Hill (TH)Thorns Hill (TH) is a hotel. Its mission statement is “to provide the highest standard of customerservice and to be the best employer”. TH has three profit centres, each with its own manager:• sleeping accommodationrestaurant• function room for weddings, conferences and other events.The function room offers entertainment facilities and purchases catering from the hotel restaurant.The function room employees are mostly students •working in their spare time. They have flexiblecontracts that do not guarantee hours of work nor provide benefits such as paid sick leave orholidays.The use of flexible contracts has reduced the function room’s annual wage cost by 40 % overthe last five years. The de-layering of supervisory posts (positions) has further reduced the costof wages. With these cost savings, the profits of the function room have increased significantly.Recently, issues with punctuality, absenteeism and labour tumover increased.30% of the restaurant’s sales revenue comes from catering for the function room. The restaurantrecently won an award and, in the summer season, is always full of diners. In summer therestaurant has difficulty meeting the catering demands of the function room. Meals ordered oftenarrive late from the restaurant.Competition in the market for function rooms is high. The owners are considering a proposal toimprove the reputation of the function room by outsourcing all the services of the function roomto a private contractor. The private contractor will charge TH more than the direct cost of thefunction room.(a)(b)(c)(d)Define the term de-/ayering.Explain two advantages for TH of having three separate profit centres.Explain one benefit and one negative consequence for TH of an increase inlabour turnover.Discuss the proposal to outsource all function room services to a private contractor.[2][10]

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