Marriot International Inc. is one of the companies that have endured in the hospitality industry for the longest period. the company has managed to survive in this industry due to their various strategies including merger and acquisition. The merger between Marriot International Inc. and Starwood Hotels on September 23, 2016, was so strategic, and this is not just because of its role in strengthening the hospitality industry but also the avenue it created for the company to make a huge brand that has the ability to stronghold and influence their competitors. The two corporations have been at the first 10 largest chains of a restaurant in the world a number of times. Some of the strategies which were deployed in the merger and acquisition between Marriot International Inc. and Starwood Hotel include corporate level strategy where it was based on the quest for stability and growth (Marriot, 2016) The hospitality industry is considered one of the most competitive industries due to the establishment of new hotels in a different location every day. Therefore, Marriot International Inc. management decision to acquire Starwood Hotel was to ensure there are buoyancy and strength for the company to be able to compete and be among the best peers. If Marriot International Inc. would have picked a different company to merge with, they would have faced financial implications because the merger with Starwood offered the corporation an unprecedented level of expansion and ability to grow their international brand, a strategy that has never been witnessed before in the hospitality industry. Due to this acquisition, Marriot International Inc. has 30 hotel brands under its umbrella resulting to development of world largest hotel chain with more than 5, 700 properties in more than 110 countries, and 1.1 million rooms ( Keep, 2015 ). Therefore, looking at the merger and acquisition between Marriot International Inc. and Starwood Hotels would be viewed as being a wise choice, because the executives at Marriot International Inc. were looking for differentiation within business levels and a great opportunity for the restaurants to reach for a larger customer base. Also, the merger was a wise decision in that it enhanced Marriot International Inc. competitive advantage by offering best cost services because managing two entities individually is better than managing them as single Unit.
Marriot International Inc. is one of the businesses operating in the hospitality industry which have well-planned strategies including technology leadership, global growth, owner preference, portfolio power among others. However, just like any other business, Marriot International Inc. experience five forces of competition which have a significant impact on company’s growth and profitability. The five forces of competition affecting the Marriot International Inc. today include buyer’s power which is moderate in the hospitality industry. The company has a strong brand recognition hence it can attract expand its market share without employing major promotions and marketing efforts. Also, Marriot International Inc. offers quality services and gives the best customer experience reducing the threat of competition due to high buyer power (Salvioni, 2016). Secondly, supplier power is a moderate threat to competition in the hospitality industry, but Marriot International Inc. supplier power in the industry is fragmented. Some of the suppliers for Marriot International Inc. include architects, property owners; real estate companies law firms, developers, equipment suppliers and information technology suppliers. Their suppliers are in different sizes and shapes where other suppliers such as food and beverage suppliers, labor suppliers and utility suppliers may have more threats on company’s competitiveness as compared to the other identified suppliers. Also, a threat to new entrants is considered a major threat, and this is experienced where the growth of mobile applications and significant growth in the use of technologies including Home away, Airbnb another pose a major threat to Marriot International Inc. sustained competitive advantage. Additionally, rivalry among the competing firms is a major threat to Marriot International Inc. competition, where although the company has managed to build one of the strongest brands in the world, there are other hotel chains that customers are familiar with including Intercontinental, Hyatt among others ( Luo & Bu, 2016 ). This force act as a threat to the company’s competitiveness where all the competing firms are offering similar amenities, but Marriot International Inc. has managed to reduce the threats by merging with smaller and mid-sized companies a move that has managed to lessen the threat of rivalry. Lastly, the threat of substitution at Marriot International Inc. can be viewed as being low especially in the developed and premium markets. In the developing countries, the threat is higher because of innovative concepts in tourism and travel industry such as camping, homestay campaign among others. However, the company has managed to lessen this threat in the last few years by avoiding venturing into developing countries.
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Currently, Marriott International Inc is using cost leadership strategy as their international business level strategy. For decades, the company has managed to do a superb job in introducing brands that are targeting more price sensitive customers. Brands like Courtyard and SpringHill Suites are known for targeting the moderate upper population, while brands such as Fairfield Inn target the low-price population. The company has managed to excel in efficient cost production hence enabling them to offer their customers high-quality services at a low cost as compared to their competitors. The company uses this strategy to ensure they offer service to a broad segment of customers in the international business by providing practical, clean, and comfortable rooms, but also exceptional services. On the other hand, Marriott International Inc. international corporate level strategy is based on demand conditions, where the company tends to consider the concerns and demands of local consumers. However, the strategy has depicted various challenges where they have difficulties in choosing to operate in multiple territories instead of operating in multiple value chains (Gallagher, 2015). However, different mergers and acquisition the company as managed to undertake in the last few years has impacted their international corporate level strategy significantly where they have a broad segment of customers. From the analysis of the strategies, I would recommend Marriott International Inc to consider differentiation as their main international level strategy. This will ensure they are able to operate regardless of the changes being experienced in the hospitality industry.
For decades, Marriott International Inc has managed to maintain their long-standing commitment to integrity and transparency in their corporate governance practices. To ensure the right individuals occupy the right positions, Marriott International Inc allows their shareholders to elect most influential people in the organization including the board of directors so that they can help in enhancing the company’s long-term value and oversee the management of all the restaurants in over one hundred countries. These mechanisms ensure the corporation is a democratic zone, where leaders understand that their actions may contribute significantly to the shareholder's decision on whether they should continue leading the organization or not ( Keep, 2014 ). Also, the mechanism has ensured healthy owner-agent relationship, where shareholders have the over the management but the amount of return helps strengthen the relationship. Marriott International Inc has different techniques for controlling the managerial actions. With businesses in different demographic locations, the company ensures their management team is equipped with all the requirements and skills of an effective leader, and this is achieved through training and development. For example, the leadership style required in the united state market may be different from Middle East market; hence, the organization ensures effectiveness by offering the right skills to their managers so that they can be able to maintain the corporate standards and procedures in all their restaurants (Salvioni, 2016). Also, the managerial actions are controlled by compensation where best performing managers are offered different packages to motivate them including health coverage for their families, fully paid vacation, increased salary, promotion among others. The use of these mechanisms ensures the managerial activities are focused on increasing returns on the shareholders and future prosperity of the company.
Effectiveness in leadership is one of the elements that have contributed significantly on the current growth and stability at Marriott International Inc. the effectiveness in leadership is highly depicted in the employee relationship with the management where the concern for employee begins with assurance of fair treatment policy which has enable the Marriott International Inc management to offer employees an opportunity to express their problems and have the problems resolved in a timely manner. For businesses operating in the hospitality industry, the employee-company relationship is considered as the most appropriate metric to measure the effectiveness of leadership (Gallagher, 2015). The management at Marriott International Inc has managed to address the problem by ensuring there is effective communication with the employees, which is a major way of depicting a sincere interest among individual employees. Secondly, the effectiveness of leadership within Marriott International Inc can be described through their great morale in the organization, and this is seen through the management culture to try addressing each employee by his or her name a trend which was started by the Marriott International Inc founder J. Willard Marriott. Lastly, the effectiveness of Marriott International Inc leadership can be seen in the management ability to create a clear direction for the organization. Being in one of the most competitive industries, Marriott International Inc management has created effective standards that help the company attract and retain customers by ensuring they successful distinguish quality, efficiency, and value in the lodging products and other services. This has ensured all their partners are competing effectively in their market due to the ability to offer the customers both high-quality services and experience. Although it might be impossible for management to know employees by their names, there have been major efforts by the management to ensure employees feel like part of the organization. Although different factors have depicted the effectiveness of Marriott International Inc leadership, there are changes that the management needs to undertake to improve the relationship with the employee and increase their profitability (Marriott, 2016). Involving employees in decision making will play a significant role in boosting their morale where they feel like part of the organization because their thoughts count in making the organization greatest in the global hospitality industry.
Businesses operating in the hospitality industry operate and develop the use of a significant amount of natural resources which have a major impact on the sustainability of the environment. However, in the last few years, Marriott International Inc has managed to become one of the corporations operating in the global hospitality industry to embrace sustainability where corporations are expected to focus on ensuring there is harmony with their surrounding environment. Going Green Initiative by Marriott International Inc has placed them in top position in terms of efforts to become responsible corporate citizens where the company is supposed to make daily decisions with major consideration on the impact their decisions will have on the environment. The main agenda of the Marriott International Inc initiative is to ensure there is reduce waste and pollution by encouraging the lifestyle of recycling in all their hotels and using products that are chemical free. Also, the company uses alternative energy sources including solar, wing to reduce dependency on fossil fuels which have an adverse effect on the environment (Gallagher, 2015). Going Green Initiative ensure the company does not affect the environment they are operating in negatively through poor disposal mechanisms. For example, the company reported 2.2% reduction in waste production per room, through Reduce, Reuse, And Recycle program that has been adopted in 90% of the restaurants they operate in the entire world. These efforts have a significant impact on Marriott International Inc bottom line where the efforts to ensure their restaurants are sustainable are contributing to a reduction in operating costs thus increasing the company’s profitability and competitive advantage. For example, implementation of MRCx recommendation saw the company reduce the cost of energy by about 20% and managed to achieve payback on the investment within 1 and half years (Gallagher, 2015). Additionally, the majority of customers are currently looking for restaurants that are conscious of environment degradation factors, hence making Marriott International Inc one of the best choices for such customers.
References
Gallagher, L. (2015). Why Employees love staying at Marriott . Retrieved from http://fortune.com/author/leigh-gallagher/
Kang, K. H., Lee, S., & Huh, C. (2010). Impacts of positive and negative corporate social responsibility activities on company performance in the hospitality industry. International journal of hospitality management , 29 (1), 72-82.
Keep, E. (2014). Corporate training strategies: the vital component? New Perspectives , 109-125.
Luo, Y., & Bu, J. (2017). Contextualizing international strategy by emerging market firms: A composition-based approach. Journal of World Business .
Marriott International, Inc. (2017). Marriott International Inc. 2016 Annual Report . Retrieved from http://files.shareholder.com/downloads/MAR/0x0x936409/834E45D9-8979-4190-AE47-702FBFF54755/Marriott_2016_Annual_Report.pdf
Salvioni, Daniela. (2016). SYMPHONY Emerging Issues in Management . Retrieved from https://ssrn.com/abstract=2860562
