Current Service Strategies at Marriott International Limited - Case Study Example

Marriott International Limited Introduction Service strategies define how such company deals with external and internal factors when attempting to have a competitive advantage in the market. This is the same case with Marriott International Limited. The Company cannot influence these forces and can only adapt to them to account for the opportunities and risks which arise. Theoretically, analysis of the service strategies can be accompanied by the industrial organisation approach to determine competitive advantage, a method which dictates that external factors are more important than internal ones. Marriott International Limited is framed across the economic, socio-cultural, political, technological and natural environment conditions in America in the recent decade, and the future forecast for the company is determined by critical understanding of current trends in the hospitality industry. Based on the information, this study critically assesses the service strategies Marriott International Limited is currently using. Based on different theoretical models, the research further proposes strategies to be used in improving the operations of its services. Background Information Marriott International, Inc. is located in America where it acts as a diversified hospitality company that franchises and manages a broad portfolio of hotels and related lodging facilities. Based on financial positions and annual reports, Marriott International Limited is a robust and leading hospitality Company. Its main areas of operations include tourism, hospitality, and accommodation. With its headquarters in Bethesda, Maryland the Company has its operation penetrating other markets outside America. The Company provides hospitality access services to business, local, homes and long-distance travellers. It has also been rivaling its competitor when it comes to online booking services and such has included about 5,000 online subscribers as well as over 7,000 online visits on a monthly basis (Yong & Oh 2014). In addition to this, the Company uses theoretical models and modern management structures to achieve its mission. Due to competition from companies such as Ritz-Carlton Hotel Company, Marriott International Limited have adopted contingency theory where they have tried to identify the situational variables which can predict the most effective and appropriate outcome for a given hospitality circumstance. Current Service Strategies at Marriott International Limited With increase in revenue growth in hospitality and services deliveries, Marriott International Limited has seen its total revenue improve by at least 4% annually (Thomas 2015). It is worth noting that the Company is in healthy external environment. Based on this position, the first strategy the Company uses is a two-tiered management and governance structure, where the Board of Directors comprises of executive and non-executive directors as is traditional for the American setting. The management structure of the organization functions through seven major departments, managed by respective chief officers (Chong & Ricaurte 2015). Given the size and scope of the organizational activities, this functional management structure provides an effective and valuable solution for the company’s governance. Chong & Ricaurte (2015) note that most hotels where Marriott International limited operates lack flexibility and responsiveness in decision-making processes. However, a two-tiered management and governance structure allows it to alignment between the departments thus resulting in a bureaucratic response to the market change. Given the growing ambitions and market penetration strategy the Hotel has been undertaking, it should consider moving from its functional model to a product design model, which enables better cross-departmental communication and alignment. The objective of the company in terms of strategic development is to reach even further improvement in service standards and network quality (Gatt & Schranz 2015). The product design model allows focusing efforts and consolidating specific expertise around the product and not the function, which brings in a more focused set of skills and experiences. Applying different management and situational theories such as contingency theory by Fiedler a number of strategies are employed order to maintain their competitive nature in the global market. These strategies explain the theories associated with them. For instance, the Company recently introduced Corporate Strategic Planning (CSP) which entailed the mission of the company and resource allocation (Gatt & Schranz, 2015). CSP further deals with the implementation, control and planning of the company’s affairs. The companies therefore, take the advantage of these strategies to update their activities more frequently in order to remain strong in the competitive market. The global economic downturn and the internal environment in America outline the general trend in the increase of raw material and service delivery costs for Marriott International. This process is further triggered by increased competition due to reduction of entry barriers, driven by the industry deregulation. Marriott International however, uses economies of scales and the strong relationships with suppliers as a strategy. This strategy has placed it in a strong bargaining position with its upstream partners and allows leveraging the costs. Brand reputation (Marriott International as a brand), at the same time, has continued serving as a competitive edge in an increasingly competitive market. Relating this strategy with situational model/theory by Hersey-Blanchard, for organization to develop an effective leadership culture, task behavior requires that leaders spell out responsibilities of every one in a firm so that specialization and effectiveness is promoted (Hamlin 2002). This is exactly what Marriott International did when they introduced Arme Sorenson in their management team. Arme Sorenson did not only provide specialization in the mix but refreshed collection of the Company’s brand into one-of-a-kind modern luxury hotels, creating brands that are evolutionary to the daily needs and desires for a sophisticated experience from their tourists and guests with a contemporary lifestyle. For instance, the Istanbul edition is the brand’s debut property, which was followed by the recent premiere of the London (Han et al. 2015). Analysis of Current Service Strategies Based on the strategies that have been enumerated above, the company can now leverage the risks of economic downturns by diversifying its income channels. Giving an example, the planned openings in gateway cities such as Miami Beach, New York, Abu Dhabi explain the extent to which the strategies have been beneficial to the company. The growing domestic market, economies of scales and the strong relationships with supplier strength enable further market penetration and help to reduce the pressure of external factors. Additional, the strategy of a two-tiered management and governance structure has enabled the Hotel to pursue an investment heavy strategy to grow its existing brands. Financial indicators, however, outline a challenging internal environment in terms of liquidity and internal funding options (Kumar & Raju 2016).). This means that the application of a two-tiered management and governance structure should be done to an extent that it maintains its leadership position and satisfy the interests of its customers. It will be economically efficient if the strategy (a two-tiered management and governance structure) could help in providing for alternative ways to fund its expansion and potentially move from a market penetration strategy to a product differentiation strategy, which can offer less capital-intensive strategic options. A two-tiered management and governance structure helps the company reduce the pressure of service delivery by offering alternative high-value solutions. The above analysis shows that the current strategic position of the company demonstrates a strong focus on sustainability and growth. In relationship, economies of scales and the strong relationships with suppliers has further ensured that there is strategic options to grow through market penetration and market growth can now be valuable to the organization. However, Kumar and Raju (2016) warns that market penetration should be dealt with cautiously because it may place further pressure on company’s already asset-heavy operations. In an increasingly complex and competitive market environment, economies of scales and the strong relationships with suppliers leverages different types of capital intensive solutions with more flexible and faster strategic options, such as product diversification. Recommendations to Improve the Service The first recommendation to the company is to consider ethical decision making. According to Bilgihan et al. (2016) ethical decision making is the process where an organization makes management related decision that conforms to its objectives and goals. Thus, in view of the critical analysis of the vertical and horizontal integration of CSR and ethical principles within the hotel, special attention should be given to the community relationships and hotels’ codes of conduct. The internal relationships of Marriott International Limited with its employees demonstrates a high level of involvement and feedback culture, where the hotel seeks participation of its personnel in CSR programs and looks at opportunities to encourage independent sustainable behaviour. However, some researchers have been concerned with the application of ethical decision making. For instance, Bilgihan et al. (2016) notes that the logical inconsistency of ethical decision making is that it may cause conditions of anxiety and stress in other workers since the manager’s perspective assumes, from the theory, that the right of individual based on terms of fairness and privacy which may be contrary to the benefits of the Hotel. Furthermore, an analysis of the sustainability report shows that the company demonstrates strategic focus on responsible business activities and CSR policies, which target both internal stakeholders – employees — and external parties – government and customers (Rogerson 2011). Based on this understanding, Marriott International Limited should give a leading stewardship of environment by first and importantly, conservation, efficiency in the usage of resources, reducing and maintaining environmental footprint and reduction of operation costs. Marriott International Limited is an organization with a transformational leadership approach, where employee development and personal empowerment are in the centre of its Human Resource Management (HRM) and general strategic approach. As such, this research recommends that the hotel’s planning is based on a long-term strategy, which includes general growth and development objectives, specific marketing strategies and human resource management elements such as medium and long-term staffing plans and employee-retention planning. From the leading perspective, current functional structure should outline the core mechanisms, which will in turn be used by the hotel to organize its hierarchical structure. Furthermore, functional structure will allow Marriott International Limited to focus on its core business competence and bring in specific leadership expertise to each of the product lines. Conclusion This study has evaluated service strategies at Marriott International Limited. From the evaluation, the report finds that brand reputation and the variety of services offered help the hotel to develop customer loyalty, as customers value the quality and one-stop-shopping solution provided by Marriott International Limited. At the same time, the scale of operations and demand for growth has placed the organization in a vulnerable financial position noting that internal funding options are limited. This position may jeopardize the growth plans for the hotelier infrastructure. Secondly, the organization pursues a very asset-heavy strategy, which can also place it in a disadvantage at times of economic downturn, as well as slow down its responsiveness to market trends. These recommendations, once implemented, will help the company address its weaknesses and build on strategic goals with less risk and with a more diversified approach. The company will benefit from reducing its asset structure and becoming more flexible in its response to the market trends and will remove financial pressure by allowing a higher debt-equity ratio. References Yong Kim, B., & Oh, H. (2014). How do hotel firms obtain a competitive advantage?. International journal of contemporary hospitality management, 16(1), 65-71. Chong, H., & Ricaurte, E. E. (2015). Hotel Sustainability Benchmarking Tool 2015: Energy, Water, and Carbon. Hamlin. R. (2002) Towards a Universalistic Model of Leadership: a comparative study of Britishand American empirically derived criteria of managerial and leadership effectiveness. Working paper WP005/02, University of Wolverhampton. Gatt, K., & Schranz, C. (2015). Retrofitting a 3 star hotel as a basis for piloting water minimisation interventions in the hospitality sector. International Journal of Hospitality Management, 50, 115-121. Han, H. J., Mankad, S., Gavirneni, N., & Verma, R. (2016). What Guests Really Think of Your Hotel: Text Analytics of Online Customer Reviews. Kumar, D. P., & Raju, K. V. (2016). A Study on Customer Perception about Service Quality at Marriott Hyderabad. Adhyayan: A Journal of Management Sciences, 5(2). Bilgihan, A., Kandampully, J. A., & Zhang, T. (2016). Towards a unified customer experience in online shopping environments: antecedents and outcomes. International Journal of Quality and Service Sciences, 8(1). Rogerson, J. M. (2011, December). The limited service hotel in South Africa: the growth of City Lodge. In Urban Forum (Vol. 22, No. 4, pp. 343-361). Springer Netherlands. Thomas, L. Y. (2015, January). The International Council of Hotel, Restaurant, and Institutional Education (ICHRIE), San Diego, California, July 30–August 1, 2014. In Journal of Convention & Event Tourism (Vol. 16, No. 1, pp. 11-15). Routledge. Read More