Analysis of Marriott International Inc.
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Analysis of Marriott International, Inc.
Marriott International, Inc is the top most global hotel that offers hotel and lodging services. The company owns 6700 properties in more than 130 countries either as lease, franchise or company owned. The company operates in highly competitive industry that is characterized by availability of substitutes and threat of new entrants (Barchiesi & La Bella, 2014). However, the company’s internal environment protects the company from getting kicked out market due to its well thought core values. As a franchisor, the company operates under different brand names that have made it to remain competitive presently and in the past decades. Its differentiation strategy allows it to offer products depending on the client’s background. The company is also committed to environmental protection through waste reduction and recycling (Vecchiato & Roveda, 2010). The internal environment for Marriott International, Inc. is analyzed by looking into core competencies and conducting a SWOT analysis. On the other hand, PESTLE analysis and Porter’s Five forces offer an insight to macro-environment in which the company. Lastly, recommendations are offered on how the company should conduct business to maintain its market competitiveness.
Introduction
In 1927, John Willard Marriott founded Marriott hotel in collaboration with Alice Sheets Marriott his wife. The hotel began in Washington, DC as a root beer stand after the founders realized that the city residents were in dire need of a place where they could enjoy a cool drink. The hotel was later expanded into a chain of enterprises known as Hot Shoppes restaurant (Katsioloudes & Abouhanian, 2016). In 1953, the company went public as Hot, Shoppes, Inc. the first hotel owned by Marriott was opened in Arlington, Virginia known as Twin Bridges Marriott Motor Hotel in 1957 (Marriott & Brown, 2012; O’Neill & Mattila, 2010). Key Bridge Marriott was the second hotel and is the company’s longest serving branch. In 2009, Key bridge Marriott celebrated its 50th anniversary. Bill Marriott served the hotel for more than 50 years and during this time; he led the corporation into going international. The company changed its name from Hot Shoppes, Inc to Marriot Corporation in 1967 (David, 2011).
In 1993, Marriott international, Inc. (NASDAQ: MAR) was formed after split of Host Marriot Corporation and Marriott international. The company boasts of its position as the first hotel I the globe to offer online reservation booking to its client. Currently, Marriott international, Inc. is the largest and most prominent hotel globally offering lodging facilities with over 6700 properties that are located in 130 countries. As of 2017 fiscal year financial report, the company had accumulate a total of $22 billion revenue (Hormby et al., 2010). For more than 90 years, the company was family led but after the CEO Marriott Jnr retired in 2012, Arne Sorenson a non-family member the Executive chairman title. A study of Marriot Inc internal and external environment is one characteristic of a long and versatile journey through the organization’s culture, market dominance, and the development of a brand name that is widely associated with integrity, loyalty, and longevity.
Assessment of the Internal Environment
Every business strategy’s success is largely dependent on the sound evaluation of an organization’s in-house capabilities and resources, which generates sufficient means to determine and capitalize on the strengths while overcoming any identified weaknesses during the strategy formulation phase. Typically, this assessment deals with a company’s business, resources, policies, objectives, and plans, as well as the effectiveness with which they are realized. Vecchiato and Roveda (2010) note that all business entities, regardless of their nature, size, or scope of operations, perform certain key functions, including production, finance, human resource, research and development, and marketing, which should be cautiously planned, coordinated, and executed to achieve effective strategic management. Internal analysis facilitates the identification of the strengths and weaknesses inherent in each of these functions (Morais et al., 2014). Moreover, it allows for the evaluation of the management and the board of directors in terms of their organizational profiles. It seeks to determine the compatibility between a company’s shared values or culture with its strategy, structure, style of management, systems, skills, and staff as illustrated by the McKinsey 7-S model (Crook, Ketchen, & Snow, 2008). Various tools will be used to analyze Marriot corporation internal environment.
This approach investigates a firm’s internal resources to determine the distinctive features by assessing a company’s competencies, skills, and expertise with regard to the individual members as well as the entire team. When considering the distinctive competencies, product and market for Marriott Inc. it clear that the organization is operating under a number of business level generic strategies. The company is an international operator and franchisor of lodging and hotel facilities under a number of different brand names (Kraiprnsak, 2014; David, 2011). The company is likely to remain as a top layer in the industry in the coming years. This is based on a number of competitive advantages that include cost, uniqueness and their large competitive scope. The company has adopted various business level strategies. The corporation’s competency is based on differentiation strategy, cost leadership and unique products. Marriott’s continues to deliver products that suit different customer segments and are highly valued compared to those of their competitors (Bharwani & Mathews, 2012). The value added by Marriot’s uniqueness allows it to offer low and high priced products depending on the customer financial background. This serves as core competency since it enables the company to offer prices in such a way that they cannot substitute the corporation’s products with those offered by competitors.
The cost leadership strategy aims at offering products to clients that are cost sensitive. Marriott works hard to offer clean and comfortable rooms at a lower cost with exceptional customer service. The company also strives to reduce costs by waste reduction, green supply chain and green buildings. These efforts are in response to the company’s promise for protecting the environment and reducing costs (Hess, Rogovsky, & Dunfee, 2002). Marriott is also committed to upholding its core values that include pursing excellence, putting people first, acting with integrity, embracing change and serving world resonates with its associates. Company also adopts a multigenerational work force in order to engage brightest and best talent and encourage innovation and collaboration. Marriot aims at maintain a happy workforce as a cost saving strategy since it reduces employee turnover. Lastly, Marriott values diversity and inclusion since it believes that embracing differences is crucial for success (Yong & Oh, 2004).
Marriot international adheres to its operational norms that are set by the top management and employees are required to follow. The policies made by the company’s management are centered on resourcefulness. The company’s operates in 130 countries where it has acquired 600 properties with 1.2 million rooms. In order to ensure value for money, Marriot Inc. is committed to innovation in most of its systems and procedures. Lastly, the corporation offers competitive brands reinvents it to beat competition (Bellin & Pham, 2007).
Marriot inc. is aggressive on expanding to different countries making its business empire huge in such a way that it is difficult to maintain similar standards in all the branches. Employees are required to strictly adhere to the set procedure consequently reducing their morale. The hotel chain has faced controversies for instance it blocked customers personal wi-fi due to privacy risks. According to Marriott’s founder, the company remains a family business adhering to family values that management is not willing to change (de Boer, 2018).
Globalization has encouraged people to travel around the world for pleasure or work. Partnership with airlines is an opportunity that the hotel needs to tap. Since people demand for personalized attention, Marriott could introduce premiums for clients who ask for it. The management should develop strategies for acquiring more assets for revenue generation (Magretta, 2011; O’Neil & Mattila, 2010).
Government involvement and political issues are making it difficult for companies to operate in foreign countries. Other companies, such as Novotel and Hilton, are striving to become market leaders, thereby posing high competition to Marriott International. Moreover, the global economic recession has adverse effects on hospitality industry making it difficult for Marriott to earn high revenues. High star hotels are the main target for terror attack therefore deterring tourists from staying in such premises (Bharwani & Mathews, 2012).
Analysis of External Environment
Political factor play a role in determination of the factors that have an impact on Marriott international and its profitability in a certain market. To success in the tourism industry, Marriott international needs to analyze several political factors before entering a new market, such as political stability, corruption levels, intellectual property protection, taxation, employee benefits, trade regulations, anti-trust laws on lodging facilities, threat of terrorist attacks, bureaucracy and government interference (Schilke, Reimann, & Tyhomas, 2009).
Economic factors such as interest rates, saving rate, rate of foreign exchange, economic cycle, unemployment rate, and cost of labor, infrastructure, and inflation determine investment and demand in a given economy. Marriott Inc. should consider a country’s economic factors since they determine consumer spending on lodging and hotel facilities (Ford, Sturman, & Heaton, 2012).
An organization is likely to get affected by the culture and way people do things in a certain country. Consumer attitudes and shared beliefs play a role in understanding customer in a market and how marketers should design promotional messages (Ford, Sturman, & Heaton, 2012). Marriott’s leadership should consider factors such as population demographics, education level, culture, leisure interests and entrepreneurial spirit within the population.
Technology has an impact on tourism and leisure industry across the world. Marriott Inc. should not only analyze the technology within the industry but also the speed of innovative disruptions. Technology affects costs, products and the value chain.
In some economics, the legal framework does not provide intellectual property rights protection. Before entering a new market, Marriott international should conduct an evaluation of legal factors such as employment laws, e-commerce and consumer protection, discrimination laws, patents, copyrights an intellectual property laws, health and safety, and data protection (Hitt, Ireland, & Hoskisson, 2017).
Environmental requirements differ depending on the market and have an effect on a firm’s profitability. Marriott should be careful of the environmental laws in existing or new markets and careful analysis of such factors is required. Environmental factors threatening Marriott include climate change, weather, waste management and recycling, water and air pollution, environmental pollution laws, endangered species and attitudes on renewable energy (Grant, 2016).
New entrants offering hotel and lodging facilities bring in innovations that have negatively affect Marriott Inc. through reduced costs, new value for customers and lower prices. Consequently, Marriott international requires addressing these challenges in order to remain on the competitive edge.
Companies in the hotel industry buy products from a number of suppliers. Price increment by a major supplier may decrease Marriott international Inc profitability. Powerful suppliers negotiate for higher prices to exploit lodging facilities (Gillespie, 2016).
In most cases, buyers can be demanding. Especially in cases where they want to get the available products at the lowest prices possible. When caught up in such a situation, the profitability of Marriott International, Inc. would be decreased in the long run (Vance & Paik, 2015). Customers with high bargaining power are always looking for offers and discounts.
Profitability of an industry reduces when a new product that meets the customer needs in similar way like the existing is introduced. The threat is substitute is high when a new product is unique in value proposition from what the industry is offering.
When there is intense rivalry among existing competitors, firms are forced to drop down prices. Marriott International, Inc operates in a highly competitive industry and when competition is high, the profits go down (Enz, Kosova, & Lomanno, 2011).
Conclusion and Recommendations
Founded in 1927 by J.W Marriott, Marriott International is operates in 130 countries and territories where it owns over 6700 properties and reports $22billion total revenues. For over 90 years, the hotel has been operating under family leadership and its headquarters are in Washington, D.C, Bethesda, Maryland (Hinkin & Tracey, 2010). The company operates in a highly competitive industry especially after the recent economic down turn. While it is important for the corporation to focus on sustainability, expansion and cutting its costs in order to keep with competitors, it is also important to capitalize on its strengths in order to capture available opportunities. There is untapped potential in the hotel industry and the company should grow these markets to win more customers. The company can also transfer its core competencies country by country to enhance its organic expansion (Aaker & McLoughlin, 2015). It is also important for Marriot to respond to changing needs and preferences of customers. Notably, the company can benefit from advertising and marketing campaigns in the face of increased competition. The company also needs to address threats to its profitability as presented in the PESTLE analysis and Porter’s Five Forces. While the company may not do much to change the laws of different countries, it should be committed towards ensuring that it does not violate them.
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