Strategy Communication Marriott International free essay sample

The above mentioned learning objectives have been applied to the real-life case company Marriott International. Marriott International is a worldwide operating lodging company which opened its first hotel in 1957. It currently employees around 300. 000 people over 3. 500 properties and is focusing on continuous growth worldwide with their 18 brands. The Chinese market is at the moment one of the biggest expanding markets, they are focusing on growth outside the US in general. The major conclusion after analyzing all the facts which are relevant for this report is that the Marriott is a wonderful company whereby the employees are the basis of their success. The current differentiation strategy of Marriott fits with their mission and vision and is implemented successfully throughout the organization. After conducting research via various models it can be concluded that there is no need to develop a new strategy, since they do reach all their goals with the current strategy. Table of content SubjectPage Introduction4 Introduction to strategy5 Conducting a situation analysis7 Developing the strategic direction10 Formulating the strategy12 Implementing the strategy14 Monitoring and evaluating the strategic performance16 Conclusion19 Sources21 Introduction In this report the strategy of Marriott International will be elaborated via various analysis. We will write a custom essay sample on Strategy Communication Marriott International or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The outcome of several analysis such as SWOT, Porter’s 5 forces model and Mc Kinsey’s 7s model will analyze the current situation, determine if there is a need for a new strategy and how to measure and evaluate the current or new strategy. Introduction to Strategy Marriott International One of world’s biggest hotel chains in the world with more than 80 years experience in the hospitality industry wherefrom 50 years in the hotel industry. Marriott international is active in 70 countries and operates more than 3. 500 managed and franchised hotels. This 3. 500 hotels are spread over 18 different brands and operated with approximately 300. 000 associates. It is Marriott’s mission to stay ahead so its guests can, too * New innovations and signature experiences. * New ways to personalize each stay. * New hotels from the Caribbean to China. Marriott expects to add at least 80,000 to 90,000 hotel rooms to its portfolio from 2011 through 2013 with additional opportunities for 22,000 rooms to open in Europe and Asia during that same period. Marriott has plans to adapt and expand current brands, to meet the growing needs of customers in markets worldwide. The company will also be expanding its new brands outside of the United States. We are on the threshold of extraordinary growth for our company, ( J. W. Marriott, Jr. ) Marriott’s fundamental beliefs are enduring and the keys to its continued success. There is a â€Å"Marriott Way† they call it. It is about serving the associates, the customer and the community. These ideals serve as the cornerstone for all Marriott associates fulfilling the â€Å"Spirit to Serve†. The associates: The unshakeable conviction that our people are our most important asset * An environment that supports associate growth and personal development * A reputation for employing caring, dependable associates who are ethical and trustworthy * A home-like atmosphere and friendly workplace relationships * A performance-reward system that recognizes the important contributions of both hourly and management associates * Pride in the Marriott name, accomplishments, and record of success * A focus on growth managed and franchised properties, owners, and investors The guests: * A hands-on management style, i. . , management by walking around * Attention to detail * Openness to innovation and creativity in serving guests * Pride in the knowledge that our  guests can count on Marriotts unique blend of quality, consistency, personalized service, and recognition almost anywhere they travel in the world or whichever Marriott brand they choose The communities: * Demonstrated every day by associate and corporate support of local, national and global initiatives and programs * An important part of doing business the Marriott Way Marriott is a publicly held company listed on the New York Stock Exchange Organizational structure of the company Marriott-Branded Hotels are franchised and operated pursuant to three basic structures:   * A franchise agreement with the owner and operator of the hotel * A franchise agreement with the owner of the hotel who contracts with an independent management company to operate the hotel on its behalf * A franchise agreement with an independent management company that manages the hotel on behalf of the owner pursuant to a management agreement and a three party-owner agreement among the owner of the hotel, Marriott and the franchisee According to Porter’s Generic Strategies Marriott follows the Differentiation Strategy. This strategy will be elaborated in the chapter â€Å"Formulating the Strategy†. Marriott’s strategy is to expand their hotel portfolio by serving to excellence, contributing to the community and distribute their company in order to expand their market share. In the next chapter I will elaborate on their current internal and external situation. Conducting a situation analysis Strategy: Concentrate on growth optimization and drive profit by solidify product and service leadership. Structure: Marriott International covers a total of 18 hotel brands. To make sure each of these brands are able to present themselves in the same market, Marriott has chosen for a divisionalized form according to the organizational structures by Mintzberg. System: Different systems are used for internal and external communication; Fidelio Opera, GSI. Style: The style of the company is written in the â€Å"Code of Business Ethics†: â€Å"Commitment to human rights†, â€Å"Ethical and legal standards†, â€Å"Working with suppliers† and â€Å"Helping our workforce grow†. Staff: The most important as a Marriott employee is to have a Passion for people and live up the Spirit To Serve (Spirit To Serve can be found in the chapter â€Å"introduction to strategy†). Marriott has a global workforce compromised of associates from dozens of nations, speaking more than 50 languages, in 70 countries around the world. Skills: To be the world’s leading provider of hospitality services they take well care of our guest by offering them the best brand portfolio. To pursue this they develop a highly skilled workforce with extensive operational knowledge. In order to address a complex strategic situation, a SWOT analysis is very useful to support the 7S model (McKinsey). The SWOT analysis divides the internal aspects of the company as strengths and weaknesses. STRENGHTS| WEAKNESSES| * Technical innovations to ease the business process and increase hassle-free experience for the customers; * Higher brand recognition and recall makes the company priority choice for clients; * Global presence and strong brand portfolio diversifies the revenue sources. * Business model which has the potential to dilute the brand perception and limit the revenue growth; * High debt burden will affect the future capital generation and expansion projects. | To analyze the external environment of Marriott International the opportunities and threats will be explicated. OPPORTUNITIES| THREATS| * Strong growth in the hotel and motelindustry in emerging markets; * Improving hospitality market in the US; * Brand innovations and expansion. | * Vulnerability to terr orist attacks raises security and safety concerns; * Fragmented and intensely competitive lodging industry. Opportunities Emerging markets Remarkable growth from emerging markets like China and India over the past few years, because of more business travelers. China now is the largest market outside North America. Because of strong brand recognition it gives them the unique position to compete effectively with local and international players in the emerging markets. Improving hospitality Fast recovery from the global crisis with rising occupancy, upward average daily rate and revenue per available room. Brand innovations and expansion Marriott launches new brands and is expanding existing brands. Besides addition of the new brands, the company has invested in expanding its presence worldwide. Through brand introduction and expansion the company is changing itself to suit the needs and interests of the present business and leisure travelers. Threats Terrorist attacks Marriott has been a prime target of terrorist attacks. The company has suffered many bomb blasts in the past. These terrorist attacks have weakened the consumer confidence, which will probably affect the company’s business and reputation on the long term. Competitive lodging industry The company faces a strong competition. No player in the hotel business commands more than 20% of the market share. The intense competition results in a price war which makes Marriott’s luxurious brands uncompetitive, resulting in low market opportunities for the company. In the next chapter there will be created a new strategic direction with the mission and vision as guidelines. The conclusions of the SWOT have been taken in to account by creating these. Developing the strategic direction The mission and vision are the guide lines for an organization to use in everyday decisions to achieve the company’s goals. (Shoemaker, S. ) Marriott has provided specific core values which reaffirm and reinforce the culture of the company, but has not provided a mission statement in the traditional sense, or a vision statement. Mission Marriott is committed to being the best lodging and food service company in the world. About 50% of all Marriott brands around the globe are linked to the name Marriott, to stimulate the brand recognition. For example: Fairfield Inn by Marriott. Besides being the best lodging and food company in the world their goal is to create extraordinary customer service and shareholder value. They accomplish this by the way they treat their employees. Key elements for the Marriott’s culture are â€Å"Do Whatever it Takes to Take Care of the Customer, â€Å"Pay extraordinary attention to detail† and â€Å"Use their creativity to find new ways to meet the needs of customers†. The above mentioned points will definitely be part of the mission statement if provided in the traditional sense. New mission statement Marriott is committed to be the best lodging and food service company in the world, by treating employees and communities in ways that create extraordinary customer service. Innovations will ensure to stay ahead and personalize each stay, which results in extending the brand recognition and shareholder value. Vision According to Bill Marriott Jr. , Chief Executive Officer of Marriott International: I think the future and the vision for this company is to continue to foster, maintain and improve our company culture. The culture of Marriott is very strong and quite unique in the hospitality industry. Because of this strong culture they know that they will have stronger guest satisfaction and guests will return. New vision statement Marriott wants to become the leading provider and  facilitator of value-based luxury, leisure and  Ã‚  business experiences across the globe. We will embed global diversity and inclusion into our organization so that it is integral to how we do business. To achieve our growth goals outside of the U. S. , it is essential that our leaders truly embrace and understand different cultures. Reduce our environmental footprint and combat climate change. It might be a strategic decision of Marriott not providing a stated mission and vision statement since this may have the unintended effect that the company is less open to change initiated from the customers (Shoemaker, 2005). In the core values we see that â€Å"people† are a very important asset for Marriott, but what does that really mean? â€Å"Well, our company culture has been stated many ways. Basically, we believe in taking good care of our people and believe that if we do, theyll take good care of the guests and the customers and theyll return. This has been embedded in the philosophy of our company for over 81 years. (Bill Marriott) Because they take such good care of their people they know that their people will stay with them. Turnover will be low, and the turnover of employees is very expensive. Since the turnover will be low they know that their people will get better at their jobs and stay in longer. They keep on providing them with opportunities to keep the sp irit up and keep them motivated. The main focus for Marriott should be creating a clear mission and vision for each brand category as they are the guidelines for the company’s strategy. In the next chapter we will discuss if Marriott’s strategy fits with the ompany according to the mission, vision and SWOT analysis. Formulating the strategy For Marriott International to  be  a  successful company,  they should align external components   with  the  internal components. This alignment is called strategic planning. The strategy of the company is based on the mission, vision and SWOT analysis. Adjusts the  current strategy  of  the Marriott  well with  the company? Or are there changes required  to  ensure  success in the  future? To establish the current strategic profile, the theory of Porter’s Generic Strategies (Figure 1) is of great importance. As one of the best lodging and food companies in the world, Marriott is always on the move: launching innovative new brands, expanding in emerging markets and solidifying their position as a unique hospitality company. Referring to Porter’s Generic Strategies, this shows that they use the ‘Differentiation Strategy’. This strategy is reflected in the way they represent themselves by offering a wide brand portfolio. Some well known brands are: Marriott Hotels amp; Resorts, Renaissance Hotels and The Ritz-Carlton. Their brand  portfolio offers any and every type of stay experience guests are looking for and the uniqueness of the Marriott concept is that each of the brands is individually distinctive, but collectively powerful. As already mentioned, the company is always looking for innovation to serve their guests in the best way. Together with their focus and attention for personal and professional development of their employees. This are the  most  important  parts of the strategy,  if  you look at  the ever  changing market and  changing demands of  guests. It can be concluded that Marriott follows the correct strategy. It cannot be denied that Marriot has several major competitors within the hospitality market. Therefore it is important to get insight in the current and future market developments. The 5 forces model of Porter offers a solution here. How does the 5 forces model look like for Marriott? Threat of new entrants There is not much of a threat of potential entrants, which have the same size and are globally active, because of the existing hotel chains and the loyalty their customers have. This can discourage potential entrants. Threat of substitute products or service There is a small threat of substitutes since Marriott offers short and long term stay brands in various price classes. They are able to reach all target groups who would like to stay in a hotel or residence. Bargaining power of buyers The bargaining power of buyers is very great within the lodging industry since the buyers have a very wide range of providers which offer almost similar products. Customers will go where they have the best value for their money. As we have seen in de recent credit crunch the bargaining power of buyers increased, because they knew that companies were afraid of losing customers. Bargaining power of suppliers The bargaining power of suppliers and Marriott is a kind of equal since the suppliers need the business from the hotel and will try to offer good quality for good prices. Since Marriott needs reliable suppliers and it is a very intensive process to find a new supplier which is able live up to the standards from the hotel it will trade the suppliers well. The current strategy should not be changed. It is important for them to keep focused on their core values and corporate culture which leads to customer loyalty and innovation within Marriott International. By doing this they will be able to distinguish themselves from their competitors. Implementing the strategy As discussed in the chapter ‘Formulating a Strategy’ Marriott International follows the correct strategy. This strategy has been used and proved successful. Therefore there is not formulated a new strategy which has to be implemented. But it may be important for the Marriott to better deepen their current â€Å"Differentiation Strategy†. This is especially important to continue differentiating themselves from competitors. Treacy and Wiersema ‘The value disciplines’ By means of the ‘Value disciplines’ model from Treacy and Wiersema can be determined in which of the three strategies the organization excels. Fact is that the organization has to be on a sufficient level with the other two values as well. Marriott International follows the strategy of ‘Customer Intimacy’. What does this exactly mean for the organization? They focus on continuously adaption of the supply to the needs and wishes of the customers. Besides that they invest continuously in customer loyalty, customer retention, reliability and exceeding expectations. It thus means that the organization is focused to develop a long and close relationship with the customers. Hereby they are in an optimal position to provide the customers in their needs. The organization makes sure that the customer get exactly what they wish for. Customized Products, services and service are important measurement points for this strategy. Treacy and Wiersema’s ‘Customer Intimacy’ strategy is accordingly to Porter’s ‘Differentiation Strategy’ in relation to Marriott International as mentioned in the chapter ‘Formulating a Strategy’. To execute this strategy very much knowledge about the customer is necessary, which Marriott built up step by step over the years. This customer knowledge is the most important possession and the most important competitive weapon for the organization. Brand Portfolio As mentioned earlier, Marriott International has a very broad brand portfolio. They are able to serve different target groups, because of this wide range of brands. This also means that ‘Customer Intimacy cannot always be the leading strategy. ‘Product Leadership’ and ‘Operational Excellence’ are sometimes the leading strategies, depending on which segment the organization tries to reach. To strengthen the ‘Differentiation Strategy’ and ‘Customer Intimacy’ strategy, it is important that the core values of the company for everyone in the organization are clear. Therefore Marriott International developed the ‘Code of Business Ethics’ for managers and employees. ‘The core values established by the Marriott family over 80 years ago have served our company well and will continue to guide our growth into the future. Foremost of these core values is the enduring belief that our associates are our greatest assets. ’ When you look at the overall picture of the Marriott International as an organization, there is no doubt that they follow and carry out the ‘Customer Intimacy’ strategy. Since Marriott has such a great brand portfolio and operates in different (price)segments the two other value disciplines are very important in addition to the ‘Customer Intimacy’. Concluded can be that Marriott International does very well, because they have a good balance between the applied strategies within the organization and the way they apply them for the different brands. But above all, that the core values from the organization make sure that not only the top of the organization is informed about the current strategy, but that all employees show and carry out wherein the organization excels. When Marriott comes at a point wherein they need to implement a new strategy they can use the EFQM excellence model. It can be used to implement a strategy, and redesign and develop organizational structures and processes. Monitoring amp; Evaluating the Strategic Performance After discussing the subjects ‘Introduction to strategy’, ‘Conducting a situation analysis’, ‘Developing a strategic direction’, ‘Formulating a strategy’ and ‘Implementing a strategy’, we arrived at the last but most important part of this academic report: ‘Monitoring and Evaluating Strategic Performance’ of Marriott International. Organizations can  develop  a strategy,  but if  they do not  monitor and measure  whether the  goals  of this  strategy  are reached, formulating a strategy makes no sense. It is certain that evaluating and monitoring are the most important parts of the whole ‘strategy process’. It is shown that the current strategy of Marriott International is adequate and there is no reason to switch to a new strategy. However, it is important  to consider if the current strategy aligns the business goals  which have emerged  in the mission and  vision. A model that offers a solution to do this is the ‘Business Balanced Scorecard’, by Robert Kaplan en David Norton. What is the balanced scorecard model exactly? ‘The balanced scorecard is a strategic planning and management system  used to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance via multiple measures against strategic goals’, according to Norton and Kaplan (1992). How can the balanced scorecard be valuable for Marriott International? The balanced scorecard measures a company’s performance across four perspectives: * Financial perspective: ‘What is important for our shareholders? ; The financial objectives focus on the terms of revenue growth and mix, cost reduction and profitability, and asset utilization and investment strategy. * Customers: ‘How do customers perceive us? ’. Customer service and satisfaction are viewed as important issues for the organization. As poor customer performance ultimately leads to a company’s decline â⠂¬â€œ dissatisfied customers will find other suppliers to fulfill their needs. Measuring satisfaction, retention, market and account share provides an insight into how customers perceive the company. Possible indicators nclude customer profitability, return policy, handling service calls, market share in target segments, and claims and complaints handling. * Internal business processes: ‘Which internal processes can add value? ’; Indicators for this perspective give management an insight into the effectiveness of their operations. Quality, response and cycle time, costs, new product development, time to market, but also break even time realized and new sales as a percentage of total sales are indicators for measuring the performance of the company’s operations. * Learning and growth: ‘Are we innovative and ready for the future? ; Indicators for the learning and growth perspective provide an insight into how successful human recourses management and knowledg e and innovation management are. Possible indicators are employee satisfaction and retention, revenue/value added per employee, strategic redundancy in job skills, new ideas per employee and information availability relative to need. The balanced scorecard forces a company to focus on a balanced set of key performance indicators which are recognizable throughout the organization, and which will lead ultimately to substantial and lasting performance improvement. Marriott has set the following KPI’s. By applying the Balanced score card and set their KPI’s they are able to measure and evaluate their performance. And eventually adjust and redirect their strategy in the right way. Conclusion The Marriott’s way is build on their core values, in which employees, local communities and their guests are the most important. The organizations follows the differentiation strategy which fits best because of their wide brand portfolio. An internal analysis has been conducted with McKinsey’s 7S model I have concluded that they concentrate on growth, optimization of profit and roduct and service leadership. To pursue this they develop a highly skilled workforce with extensive operational knowledge following the divisionalized form according to the organizational structures by Mintzberg. A weakness is the business model which has the potential to dilute the brand perception and limit the revenue growth by analyzing the external si tuation I concluded that there is a strong growth in the hotel and motel industry in emerging markets a threat at the same time is a fragmented and intensely competitive lodging industry. Remarkable is that Marriott not provided a mission or vision statement in the traditional sense. It might be a strategic decision but I would recommend them to focus on creating these, as they are the guidelines for the company’s strategy. According to Porter’s Generic Strategies Marriott follows the ‘Differentiation Strategy’. The company is always looking for innovation to serve their guests in the best way; they offer every type of stay experience. Together with their focus and attention for development of their employees. For Marriott to be able to distinguish themselves from their competitors, according to Porter’s 5 forces model, is that they need to keep focused on their core values and corporate culture which leads to customer loyalty and innovation. Marriott International follows the correct strategy. This strategy has been used and proved successful. Therefore there is not formulated a new strategy which has to be implemented. But it may be important for the Marriott to better deepen their current â€Å"Differentiation Strategy†. This is especially important to continue differentiating themselves from competitors. They could do this by the strategy of ‘Customer Intimacy’ from Treacy and Wiersma. It is shown that the current strategy of Marriott International is adequate and there is no reason to switch to a new strategy. However, it is important  to consider if the current strategy aligns the business goals  which have emerged  in the mission and  vision. A model that offers a solution to do this is the ‘Business Balanced Scorecard’, by Robert Kaplan en David Norton This model measures a company’s performance. By applying the Balanced score card and their set KPI’s they are able to measure and evaluate their performance. And eventually adjust and redirect their strategy in the right way. We can conclude that Marriott is doing very well within the lodging industry. If they keep on focusing on their growth, special attention for their employees and guests and willingness to change when necessary they will maintain their position as one of the biggest players within the hospitality market. Sources Books: Marriott, J. W. , Brown Kathi Ann (1997), The Spirit To Serve Marriott’s Way, Harper Collins Publishers. Henry Mintzberg (1979), The structuring of organizations, Prentice Hall. Pascale, R. T. (1990), Managing on the Edge, Simon amp; Schuster, New York, NY. Shoemaker, S. (2005). â€Å"Customer service. Hospitality Design†. 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