The Competitive Position of Marriott International Inc. and Starwood Worldwide

An Assessment using Porter's Five Forces and PESTLE-Analysis


Essay, 2020

15 Pages, Grade: 800


Excerpt

Table of content

1.0 Introduction

2.0 Related Strategic Evaluation
2.1 Corporate level strategy
2.2 Business level strategy
2.3 Functional level

3.0 Critical Evaluation of Key Stakeholders
3.1 Marriot’s Stakeholders and Their Contributions towards Merger
3.2 The stakeholder theory
3.3 Application of stakeholder theory

4.0 External analysis uses PEST to identify and explore key trends

5.0 Industry analysis using Porter's five forces
5.1 Analysis by Marriott International, Inc. The service uses five (5) Porter Force models Barriers to entry
5.2 Implications of Porter Five Forces at Marriott International, Inc

6.0 Conclusion

References

1.0 Introduction

Marriot International Inc. and Starwood Worldwide, been the leading franchisor, operator and licensor located in over 100 countries worldwide (Marriot International Inc, 2015). In September 2016, the company announces the acquisition of Starwood Hotel and resorts to merge the world largest hotel company and carrying the name Marriot International Inc.

As the case may be, Marriot International has series of well-planned strategies such as advance new generation Travelers, portfolio strength, brand differentiation and technology leadership. This strategy is designed to compete with rival chains. In addition to this strategy, Marriott International has a strategy known as the "spirit of service to our community," which is a social approach to staying ahead of the competition.

The merger between Starwood and Marriot is a strategic move that not only builds more meaningful brands but also provides the most competitive advantage that helps them reach their brand and make them competitive with the industry. It is well known that the implementation of effective strategies leads to better outcomes, through a coordinated approach, responding to local needs and problems, based on best practices and existing strengths (Weiss, Berger & Hatcher, 2008).

Marriott has made a strategically series of decision and actions to meet the objective of becoming the only best hotel company in the world. It is basis of establishing commercial enterprise, and it is essential for a company to survive and to sustain itself in today's changing environment, providing insights and encouraging its mission. Marriott International's business environment includes both internal and external (PESTEL analysis) that influences its performance and decision.

The PESTEL framework provides an analysis concerning the external environment of the company, highlighting the economic, technological political and social influences that affect the environment (Gupta, 2013). Meanwhile, Michael Porter's five forces are the frameworks that shape competitive position of a firm (Bardis, 2012). The assessment of the role of the prior framework revealed competitive position of Marriott and Starwood and how it could compete with competitors through strategic group control, which would provide a solid understanding of the firm’s strategy.

2.0 Related Strategic Evaluation

Strategic management is a procedure of strategic thinking, setting goals for an organization, making plans and enforcing the essential adjustments and measuring effects (Butler, Hong and Or, 2011). Although strategic management methods are officially typical in five consecutive steps, they're analyzed at three specific stages: corporate, enterprise and functional level degree. These levels strategy are of undisputed importance and therefore requires a great deal of approach (Knights & Morgan, 1991; Cummings, 2003, cited in Clegg et al., 2004).

Marriot International Inc. has a well-planned strategy as the New Generation Traveler, portfolio Power, Brand Excellence, Global Growth, Owner Preference and Technology Leadership ( Report Serve 360, 2018). These strategies have been formulated and evaluated, as they include an initial plan to acquire Starwood for $ 12.2 billion to compete with rivals’ chains. “In aggregate, 30 hotel brands are now under the umbrella of Marriott to create the largest hotel chain in the world, with more than 5,800 properties and 1.1 million rooms in more than 110 countries. That's more than 1 in 15 hotel rooms worldwide” (CNBC, 2016). In addition to this strategy, Marriott International has already strategic management program to maintain up with the present day trends and developments in the marketplace. (Reuters.Com, 2012). The corporation plans to make bigger more than 80% of Marriott properties globally within 2018.

2.1 Corporate level strategy

Corporate-level strategy can be seen as the selection of businesses in which companies must compete and the development and coordination of selected businesses (Butler, 2011). "Corporate strategy consists of the types of initiatives used by companies to set up business in different industries; the approach was taken by corporate executives to enhance the performance of the business combination, and how to capture synergies between businesses and turn them into profit”(Thompson, Strickland & Gamble, 2008).

The corporate strategy of Marriot and Starwood focuses on aligning the strengths of both firms to enhance their market competitiveness (Jessica, 2016). This will allow added value to the shareholders' investment and provide valuable resources to the two parties, so Marriott's managers will want to create not only great competitors in the marketplace But also to be the first-rate among their peers with many advantages. More profit and competitive variables to guarantee profit. Therefore, Starwood's withdrawal from the timeshare market enables both combinations to focus solely on the hotel (hotel and resort) industry by consolidating the combined company direction. This can be seen at the corporate strategy level and determines the course and focus of the new market.

2.2 Business level strategy

Business-level strategy is defined in terms of the variation of a firm's characteristics concerning its success or competitive failure in a particular industry. The main business- level of strategies are Focus strategy, Cost Leadership Strategy and Diversity Strategy (Beard & Dess, 1981). Firms can pursue and beef up aggressive competitive position in either of the stated business level strategies as the case may be, but they as well find themselves amid three strategic choices depending on their core values ​​(Thompson, Strickland & Gamble, 2008).

Marriott expects global net room increases from 5.0 to 5.25 per cent for the whole of 2019. The company expects gross revenue for the entire 2019 year to increase $ 3.809 million to $ 3.819 million, a 5 percent increase over 2018's total income of $ 3,638 million, including $ 20 million of unprofitable currencies. The company expects public, administrative and other expenditures for the entire year 2019 to increase up to $ 921 million to $ 926 million, 1 per cent less than the total yearly expense of $ 927 million (Marriott International, Inc., 2019). At business level; low cost, best cost and differentiation focused. Companies that merged through differentiation will have the advantage of getting the best service and low cost, as they will bring both companies into a single entity, which will enable them to challenge their competitors in a stronger differentiating and negotiating pattern; this will result in lower operating costs and higher profitability.

2.3 Functional level

The functional level is where organisational value creation activities take place, consistent with all agreed strategies and targets at the company and business levels. Functional strategy is about the actions, approaches, and practices used to manage specific business functions or processes or critical activities in the business (Thompson, 2008). According to Grant et al. (2011), feature functional strategy level strategy focus on developing and coordinating resources where business strategies can be implemented correctly and efficiently

In order to protect the Company's operational level strategy of the company, Marriott has focused on detailed and effective coordination on its salaries and businesses; A basic piece of a strong competitive position. Furthermore, by focusing on the use of innovative technologies and technical programs to improve customer experience, Marriott is able to differentiate itself from competitors and has a huge competitive advantage. It has good human resources, reliable IT solutions, and good relationships with suppliers and a strong commitment to serving the community. This has made it difficult to replicate the operating modes that competitors are trying. Marriott and Starwood can be considered complementary.

Generally, there is an immediate strategic relationship among the corporate stage, the business stage and the functional stage strategy, but their implementation in many businesses may be less steady and consistent.

3.0 Critical Evaluation of Key Stakeholders

Stakeholders are people and organizations interested in ensuring that critical issues are adequately addressed and that short and long-term goals and objectives are met. Stakeholders may include city governments and policymakers, funding agencies, community members, constituents and workers. This nomination should consist of both those who are expected to benefit from the program and those who participate in the program's implementation.

3.1 Marriot’s Stakeholders and Their Contributions towards Merger

Internal Stakeholders

- Shareholders: they are essential players who determine the process of merger with high enthusiasm and interest. They provide the necessary financial support, not decision-makers who vote for the merger process.
- Owner: The Marriott Hotel, managed by an autonomous owner because of the franchise expansion strategy adopted, makes the merger process very interested in any changes that enhance the company's business and growth.
- Employees: when they can be employees or retirees, changes in enterprise structure can affect all employees. They have lots of energy and interest because the industry is understood for human interaction, and this enables preserve customers organized.

External Stakeholders

- Banks / financial houses: they have excessive strength and low interest inside the merger. Determining financing and lending affects the outcome of the merger, despite the fact that financial institutions have little importance so long as payments are made on time.
- Government: The government has excessive power and low interest in the merger via various training policies. It is exciting how the policies variations among the Chinese authorities and the US government have encouraged the success of the Merriot merger/merger in favor of the same Insurance Group.
- Travel Agents: They may have a greater interest in the corporations maintaining their relationship with the merged company to facilitate their work. They are low on price but have a high interest in meeting customer budgets and attention.
- Competitors: they are valuable players and include all hotels and other hotel groups. Competitors have a high power that indirectly affects the merger of directors but has a low interest because they do not benefit in any way from the merger procedure.
- Customers: they are hotel customers. Nevertheless, as it is well known, Marriot and Starwood often use third parties to operate; restaurant, security service, home cleaning, washing machine, etc.
- Community/environment: these groups have little interest and little influence on the hotel activities.
- Media: This is how the merger process represents the world to its conclusion. It cannot be underestimated or underestimated, but the price must be included in the image used for the community.

3.2 The stakeholder theory

Stakeholder theory has its roots in the management literature and was developed as a response to the need to meet the objectives of stakeholders with decisions that have a rational basis for successfully carrying out strategic processes in the context. of for-profit organisations (Flak & Dertz, 2006). Freeman (1984) “proposed a management perspective that identifies the company's critical stakeholders as owners, customers, employees and suppliers”. Later he added other groups to include the competitor, government, consumer advocate, environmentalists, special interest and the media (Bailur, 2006). Freeman (1984) argued that this was a better way to explain the complex interaction between different interest groups and companies.

3.3 Application of stakeholder theory

This theory namely stakeholder can be used to analyse the management strategies involved in a project, such as those taken for the merger of Marriott and Starwood. Marriott International has a CSR strategy known as "Spirit to serve our communities," which is a social approach to stay ahead of the competition and ensure the required compliance of stakeholders. Marriott International is dedicated to helping addresses some of the biggest social, environmental and economic problems in the world in the world. With its size and global scale, it is well positioned to be part of the solution, whether that means reducing the environmental footprint; addresses unemployment by investing in job training; construction and operation of sustainable hotels; supporting communities in times of natural disasters; or advocate for human rights throughout the company and beyond it (Report Serve 360, 2019).

4.0 External analysis uses PEST to identify and explore key trends

The macro-environmental analysis using the PEST tool provides clear guidance on how different strategic business units (SBUs) from companies in each industry can compete. PESTLE is an important planning tool used to examine the impact that project, economical, political, economic, social, technology, environmental and legal can have. This indicates that an organization considers the external environment before commencing the project. It's the right way to make sure that someone has captured all the potential risks and problems.

Marriott operates in more than 100 countries on five continents, so it is influenced by many political, economic, social and technological factors. Therefore, senior managers need to analyze and understand the different environments in which the business exists to succeed. The PEST analysis is important for the hotel industry to identify, analyze and explain the key factors that can affect the hotel industry, especially after the Starwood-Marriott merger.

Political factors

- Major political issues that may affect Marriott are the dangers of violence, international relations and political climate in popular tourist destinations. The biggest threat here is terrorist attacks or military battles that can disrupt international air travel or make people afraid to travel.
- Political stability: Regional or national political stability enhances trust and confidence. Investors plan their investments without hesitation.

Economical factor

- Inflation: this occurs when prices of goods and services increase, which decreases the value of money (Economic Times, 2016). This happened in Venezuela, where the government, where it failed to curb inflation, flipped the national currency, so Marriott limited investment in Venezuela and eliminated three of its profits.
- Exchange Rates: In Nigeria, the lack of foreign exchange is due to low oil prices. Because Nigeria derives about 90% of its revenue from crude oil exports with falling oil prices, foreigners like Marriott cannot return their income to their home countries and cannot import essential items, such as furniture, seafood, etc. . Lack of exchange rates.
- Growth Economic growth: Latin America and Africa remain the most promising Marriott areas, regardless of political risk. This is an area with rapid economic growth. Although Marriot is the largest hotel in Africa after buying Protea hotels, it plans to add 40 properties in 13 African countries by 2020, while it has implemented 35 projects in Latin America.

[...]

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Details

Title
The Competitive Position of Marriott International Inc. and Starwood Worldwide
Subtitle
An Assessment using Porter's Five Forces and PESTLE-Analysis
College
Ahmadu Bello University
Course
Management
Grade
800
Author
Year
2020
Pages
15
Catalog Number
V932142
ISBN (eBook)
9783346301611
Language
English
Notes
The author of this text is not a native English speaker. Please excuse any grammatical errors and other inconsistencies.
Tags
competitive, position, marriott, international, starwood, worldwide, assessment, porter, five, forces, pestle-analysis
Quote paper
Sanni Olawale (Author), 2020, The Competitive Position of Marriott International Inc. and Starwood Worldwide, Munich, GRIN Verlag, https://www.grin.com/document/932142

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