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SW Analysis, IFE Matrix, and Grand Matrix Analysis for Corporate Level Strategy

The report is prepared to depict a detailed examination of the internal environment of the chosen company Marriott International with the objective of assessing the internal resources and capabilities of the firm. Marriott International is a multinational company of United States that operates under different brand and offers the hotel industry with the most powerful portfolio. It represents the largest travel company of the world and has a clear competitive advantage over others. The three level of strategies of the organization is evaluated such as corporate level strategy, business level strategy and functional level strategy. Corporate level strategy is examined by the application of the theoretical tool such as SW analysis, IFE matrix and grand matrix analysis. Business level strategy of the company is examined by performing a detailed analysis of the target market and service and product lines. The alignment of vision and mission statement of the company with the strategies set at the functional level is evaluated by referring to operations, marketing production, research and development, finance and accounting and organizational structure. Financial analysis of Marriott International is evaluated by computing relevant ratios and comparing with the industry average to identify the financial performance trend of the company.

Corporate level strategies of Marriott international is assessed by performing SW analysis that helps in identifying the major strengths and weaknesses along with their strategic implications.

Strengths

Weaknesses

Largest travel company of the world.

Poor market positioning

Driving unrivaled value and unmatched voice for guests.

Negative publicity

Dynamic marketing and sales platform

Ineffective data protection

Expansive brand of portfolio

Aggressive expansion

Differentiated factor includes signature programming and services and visionary designs

Majorly replying on the market of North America

In the leisure area, the company has been capitalizing by leveraging the proven brand that helps in driving the additional growth and extending the stay portfolio and expanding exclusive platform. The brand portfolio of the largest travel company is poised to capitalize on the major trend impacting the hospitality development at the global level such as leisure, luxury, international growth and conversions. Dynamic marketing platform intends to focus on engagement level with guests using different channels. In addition to this, global revenue and sales management organization of Marriott provides them with key competitive advantage. Further, sales program helps in increasing the speed of marketing of the products and services (Marriott.gcs-web.com, 2022). All such strengths can be capitalized to improve the positioning of the company in the market and emerging as innovative and sophisticated business serving customers with commendable experience. 

Although the company has expanded aggressively, it had not been able to adequately capture the market in the hospitality industry. Moreover, the company is particularly reliant on the market of North America which limits the growth aspect. Hence, such weakness can be addressed by adopting diversification in expansion.

Internal factor evaluation matrix is a strategical tool to assess the internal environment of the organization by identifying the areas of core weaknesses and strengths. Creation of matrix requires listing of the strength and weakness by assigning factor strength with rating 3 and 4 and weaknesses with rating 1 and 2 and weight is assigned to each of the identified factor. Score is obtained by multiplying weight with the ratings.

Key factors

Weight

Ratings

Total score

Strengths

Largest travel company of the world.

0.09

4

0.36

Driving unrivaled value and unmatched voice for guests.

0.06

3

0.18

Dynamic marketing and sales platform

0.07

3

0.21

Expansive brand of portfolio

0.09

3

0.27

Differentiated factor includes signature programming and services and visionary designs

0.9

3

2.7

3.72

Weaknesses

Poor market positioning

0.06

2

0.12

Negative publicity

0.06

1

0.06

Ineffective data protection

0.09

2

0.18

Aggressive expansion

0.9

1

0.9

Majorly replying on the market of North America

0.07

2

0.14

1.4

Average score

2.56

It is indicated by above matrix that average score of Marriott International is 2.56 and is indicative of the fact that the weakness level of company against its competitor is medium.

Assessment of Business Level Strategy

Grand strategy matrix of Marriott International is depicted below:

Internal (resources redirected within the company)

Optimizing property level revenue

Chain affiliation

Overcoming weaknesses

Improving management of cost structure

Strengthening the functional performance

Strength’s maximization

Enhance recruitment and retention efforts

Incorporating competitive positioning elements   

External (strategizing resource capability)

Concentric product diversification

Hiring consultants with necessary expertise

Business level strategies can be defined as the set of strategies used by the company to improve their competitive advantage position. Differentiation and cost leadership are the two types of business level strategies that provides scope to the organization to place themselves competitively in the market. Marriott International is a world-wide operator, licensor and franchisor of residential, hotel and time share properties under various brand name at different service and price points. By looking at the various aspects of doing business and strategies which the Marriott has adopted, it can be understood that the company adopts differentiation strategy to gain competitive advantage and place themselves competition in the market against its competitors. The company offers to millions of guests with unmatched voice with their dynamic marketing and sales platform and their expanding brand portfolio (Salih et al. 2020). Each of the home rental offering and hotel brands compete with major regional hotel chains and the company’s ability to successful compete with its competitor is dependent upon on successfully distinguishing the value and quality of service and driving preference for the lodging services and products. The target market of Marriott International can be identified from its areas of operations which includes counties such as Caribbean and Latin America, Canada and US, Asia pacific, middle east and Africa and Europe (Marriott.gcs-web.com, 2022).

The functional level strategies of Marriott International is assessed by identifying the organizational structure, research and development, finance and accounting, operations and organizational culture.

In terms of functions, the organizational structure of Marriott depicts departmentalization where the organization is composed of various departments and managerial positions with relationship with each other. The company has adopted “people-first culture” with the effort to foster and associate inclusion and wellbeing. The stakeholders are made felt valued, welcomed and important by the company wide equity, diversity and inclusion efforts. With the intent to focus on inclusion, diversity and equity, Marriott has measures of accountability and oversight in place. In addition to this, the objective of Marriott to diversify leadership is advanced by accelerating the efforts that helps in the achievement of gender parity and increasing the people representation in the executive position of the company. Organization is also committed to build transparency and communication that helps in mutually building the long-term relationship (Marriott.gcs-web.com, 2022).

Further, the international branded hotel of Marriott is supported by innovative marketing and sales network and robust platform of global distribution delivering higher value to guests through global negotiating power, state of art technology and extensive shared services. Operations of the largest travel company is powered by innovation that helps in driving the bottom-line cost savings and top line revenue. The operating segments of the company can be divided into franchised and licensed properties and company owned properties (Marriott.gcs-web.com, 2022).

Finance and accounting functions of organization is regulated by the applicable laws, legislation and standards. The accounting policy considered by the management in making estimates and accounts is done according to the GAAP requirements. Selection and development of critical accounting policies is discussed by the management with the audit committee of the BOD (board of directors) (Bogers et al. 2019). Moreover, the results of operations and financial position of the company is materially impacted due to change in the estimates and assumptions resulting from unforeseen events or circumstances.

Figures in $ million

2021

2020

Current assets

3626

2825

Current liabilities

6407

5752

Net profit

1099

-267

Sales revenue

13857

10571

Total debt

17732

18519

Total shareholder's equity

1414

430

Total assets

25553

24701

Evaluation of Functional Level Strategy

Leverage ratio

2021

2020

Debt to equity ratio

12.54

43.07

Industry average

7.12

8.14

Liquidity ratio

2021

2020

Current ratio

0.57

0.49

Industry average

1.5

1.49

Profitability ratio

2021

2020

Net profit margin

8%

-3%

Industry average

8.19%

7.13%

Efficiency ratio

2021

2020

Asset turnover ratio

0.54

0.43

Industry average

0.55

0.59

The above table depicts the key ratios from different criteria of ratios such as leverage, liquidity, profitability and efficiency. Financial leverage or solvency position of Marriott International is evaluated using debt to equity ratio which shows the proportion of borrowings held by company in relation to investors contribution (Sunardi et al. 2020). It is suggested by computed figure that debt to equity ratio of Marriott in 2021 is 12.54 indicating that ratio has declined compared to previous year. However, industry average is much lower at 7.12 and 8.14 in 2021 and 2020 respectively (Investing.com, 2022). It shows that Marriott is highly financially leveraged compared to its competitors and other players in the industry.

Liquidity position of Marriott is assessed by computing current ratio which identifies the company’ current assets ability to meet the near-term dues. The computed values of current ratio at 0.57 in 2021 and 0.49 in 2020 shows that current ratio has increased in the current year. Looking at the value of industry average, it is observed that current ratio of Marriott is lower and this can be interpreted as the fact that industry’s liquidity position is better than the company (Investing.com, 2022). It can be attributable to the fact that the company has higher amount of current liabilities held compared to their competitors.

Further, profitability position of Marriott International is examined by computing net profit margin which has improved in 2021 at 8% compared to net loss margin at -3% in 2020. In the current year, the net profit margin of the company aligns with the industry performance of 8.19%, which shows that the profitability of the company has improved (Investing.com, 2022).

Efficiency position of the company is examined by computing key ratio such as asset turnover ratio which shows how efficient the company is managing its assets to generate income. Asset turnover ratio of Marriott has improved in 2021 at 0.54 compared to 0.43 in 2020. Looking at industry average of 0.55 in 2021 and 0.59 in 2020, it can be said that in the current year, Marriott has been equally efficient as industry in managing its assets to produce income.

Conclusion:

From the detailed evaluation of the overall aspects of performance of Marriott International, it is inferred that although the company represents the largest trave group, the competitive positioning is not so strong compared to its competitors. The competitive advantage can be improved if the company strategize in the right direction. When assessing the financial position, the overall performance of the company with respect to the industry is not so attractive. The company is highly leveraged compared to others and liquidity position is not so prosperous. However, it has been efficient in utilizing its assets to produce income in the current year. 

References list:

 (MAR) M. Marriott (MAR) Financial Ratios [Internet]. Investing.com. 2022 [cited 26 April 2022]. Available from: https://www.investing.com/equities/marriott-intl-ratios

Bogers M, Chesbrough H, Heaton S, Teece DJ. Strategic management of open innovation: A dynamic capabilities perspective. California Management Review. 2019 Nov;62(1):77-94.

Cao H, Chen Z. The driving effect of internal and external environment on green innovation strategy-The moderating role of top management’s environmental awareness. Nankai Business Review International. 2018 Dec 14;10(3):342-61.

Easton PD, McAnally ML, Sommers GA, Zhang XJ. Financial statement analysis & valuation. Boston, MA: Cambridge Business Publishers; 2018.

Fridson MS, Alvarez F. Financial statement analysis: a practitioner's guide. John Wiley & Sons; 2022 Apr 12.

Fuertes G, Alfaro M, Vargas M, Gutierrez S, Ternero R, Sabattin J. Conceptual framework for the strategic management: a literature review—descriptive. Journal of Engineering. 2020 Jan 30;2020.

Makadok R, Burton R, Barney J. A practical guide for making theory contributions in strategic management. Strategic Management Journal. 2018 Jun;39(6):1530-45.

Marriott.gcs-web.com. 2022 [cited 26 April 2022]. Available from: https://marriott.gcs-web.com/static-files/b82978a6-9d28-4e38-9855-fc4ae2cebe11

Nowak R. Strategic flexibility and performance: Effects of potential and realised absorptive capacity. International Journal of Innovation Management. 2021 Sep 30;25(07):2150077.

Papadas KK, Avlonitis GJ, Carrigan M, Piha L. The interplay of strategic and internal green marketing orientation on competitive advantage. Journal of Business Research. 2019 Nov 1;104:632-43.

Salih MR, Obaid MH, Oudah aa. Accounting measurement impact of changes in price levels on financial statements and financial supply chain elements. PalArch's Journal of Archaeology of Egypt/Egyptology. 2020;17(10):2014-21.

Sunardi N, Husain T, Kadim A. Determinants of Debt Policy and Company’s Performance. International Journal of Economics and Business Administration. 2020;8(4):204-13.

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