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Strategic Management, Marriott
Transcript of Strategic Management, Marriott
“Over 80 years after that first business venture, we’re still going strong with continued plans to grow and innovate worldwide.”
Founded in 1927 by J. Willard Marriott
Originally named “Hot Shoppes”
Founded in the US, Marriott have grown into a lodging service which main purpose is to provide luxury hotels worldwide.
In order to expand internationally, Marriott had to consider using Strategic Management to continuously influence their success.
A recent Marriott strategic decision was to grow the company by 4%, by lowering the taxes on corporations and the general public as well as reducing government spending. The economic policy uncertainty will be decreased; meaning large investments may be avoided dependent on whether future policies can be predicted.
Another example of a strategic decision is
By 2014 there will be a hotel constructed in Haiti, inspired by the devastation caused by the 2010 earthquake. Marriott are helping Haiti grow and regain success; by creating jobs and much need hotel space.
Improving their long term CSR and public image.
Reflection and evaluation
Another strategic decision is to "green the future" and make all sustainability actions available to the general public.
Non Strategic Decisions
Short term and day to day decisions
An example for Marriott being; seasonally discounting hotel room prices.
Analysis of attitude towards risk
There are two risks to consider:
Speculative risk: The possibility of loss and the possibility of gain.
Absolute risk: The possibility of loss and no possibility of gain.
Marriott strategically plans their risks, rather than impulsively making decisions; the risks made are calculated and not emotionally dependant.
The following PESTLE method demonstrates what external factors can influence Marriott's risk managment strategies;
Stability of the government
Government type e.g. democratic USA culture and monarchical UK society could derive conflict from Marriott’s international decisions.
Economic strategy of the government
International trade policies constant change
Diplomatic events in countries Marriott have invested in or have hotels in.
Demographics; with the general aging population, people are becoming more careful with their money, spending it on necessities rather than luxuries.
Lifestyle; the fashion is to keep up to date and aware of current trends, which can change overnight.
Local, national and international pressure groups could generate bad publicity for Marriott if social requirements are not met.
Communication is faster; meaning business meetings can be organised more efficiently.
Technology allows communication instantaneously and worldwide.
Technology becoming distracting can be an issue. There is also a danger that competitors can be much more of a threat by using the internet as a strategy.
Different legislations e.g. Health and Safety (1974), Equal pay act (1970), Race relations act (1976) etc.
Contracts of employment
Increase of taxes
Legal factors affecting international advertisement, which could hinder Marriott’s strategic decisions.
Customers are more aware of the environment and are against exploitation. Marriott will need to ensure their green policy is publicly voiced and available.
Shipping legislation and fuel emissions are increasing; trade demands are decreasing due to people conserving energy.
Recent risks Marriott have taken
To continue growing and developing hotels in other countries; despite the lodging industry being highly competitive, and the decreasing demand for luxury expenditure.
Continuing to trade and invest in current hotels internationally and in the USA despite the fluctuating exchange rates and euro-crisis in some countries.
Marriotts growth strategy depends upon third-party owners/operators, and future arrangements with these third parties may be less favorable due to decrease profits and dividends.
Development plans that involve Marriotts co-investment with third parties may result in disputes that could increase project costs, impair project operations, or increase project completion risks; due to the current difficult business environment.
Their time share business continues to be expanded, however there is a huge risk that the development and sale of residential properties that are associated with our lodging properties or brands may reduce our profits; because of non controlling interest and licensing fees.
In order to generate useful recommendations, a critical success factor table has been created, this table offers the benefit of comparing two similar hotel chains alongside Marriott, then evaluating the results to reveal any opportunities or threats that could be discovered from competitors.
What Marriott is good at
How their main competitors fair to Marriotts advantages
The scoring demonstrates that Intercontinental Hotel Group is potentially a large threat to Marriott; they have gone one step better than Marriott by creating a reward scheme application.
An opportunity for Marriott to rival this could be to create their own mobile application offering discounts and loyalty points for each time they stay with Marriott; putting them ahead of their main competition.
There is also an opportunity for Marriott to start ‘trending’ on twitter by using ‘hashtags’ Offering discounts and being more accessible to diverse demographics makes Marriott a lot more relatable to a wider audience.
Another suggestion for Marriott is to take advice from its competitors; Intercontinental Hotel Group’s sustainability records and actions are much more accessible than Marriotts. Intercontinental Hotel Group have already ‘green trained’ 1250 members of staff; something that Marriott could take into consideration as to not decrease their public image and CSR.
To perform a strategic plan created by Thompson and Martin (2005) where the whole strategic planning process focuses on four main elements;
• Situation analysis
• Strategy design
• Tactic implementation
• Reflection and control
By using the following holistic model provided by Nutt and Wilson, Marriott could create a typology of decisions. They are broken down into four quadrants; Easy/Hard: Non-strategic/Strategic.
Easy decisions about strategic issues are usually concerned with extents of impending development in service or geographical coverage.
These kinds of decisions are usually influenced by current consumer markets; Marriott could make choices by following their significant patrons as they shift or expand into different markets. For example; a suggestion for Marriott would be to build more hotels in expanding technological countries such as China or Japan.
Marriott’s success is due to their clever, complex strategic decisions
Prioritising calculated risk taking above impulse has been one of main reason for the consistant expansion of Marriott's hotels.
The changes in regulation could influence how well Marriott could take advantage of the economic opportunities and how they adapt to the constant changes
Due to the fluctuating interest rates and the economy being increasingly more expensive, the demand for luxury hotels may decrease. Meaning Marriott’s profitability may decline.
Technology is the topic of this generation and can quickly improve customer service and demand.