MIHM202

Strategic Management

Assessment 3
Strategic Report

Contents
Executive Summary.....................................................................................................................................1
INTRODUCTION...........................................................................................................................................1
COMPANY OVERVIEW.................................................................................................................................1
INTERNAL STRATEGIC ANALYSIS TOOLS.......................................................................................................2
MARRIOTT INTERNATIONAL INC: MCKINSEY 7S ANALYSIS......................................................................2
EXTERNAL STRATEGIC ANALYSIS TOOLS......................................................................................................3
PORTERS FIVE FORCES.............................................................................................................................3
PESTEL.................................................................................................................................................4
ORGANISATION CORE COMPETENCIES........................................................................................................8
DYNAMIC CAPABILITIES...............................................................................................................................8
ORGANISATION SUSTAINABLE COMPETITIVE ADVANTAGE.........................................................................9
THE RIGHTNESS OF THE STRATEGY..........................................................................................................9
CURRENT STRATEGY FOR CREATION OF COMPETITIVE ADVANTAGE..................................................9
STRATEGIC CAPABILITY..............................................................................................................................10
ANALYSIS OF BEST APPROACH FOR STRATEGY EXECUTION..................................................................10
CONCLUSION.............................................................................................................................................10
RECOMMENDATION..................................................................................................................................11
References.................................................................................................................................................11
 Executive Summary
The report aims to identify the strategic factors that are affecting the hospitality industry. For an
analysis of business strategy, Marriott hotel is selected. Different types of theories and the
academic article has been used to provide an analysis of the environmental aspect of the
business. From the strategic analysis, it is seen that Marriott hotel has stood out as a market
leader. Marriott has implemented different types of strategy over the year and has maintained a
competitive advantage over the competitor. In particular, Marriott Hotel lacks expertise in social
media marketing and digitization. The report finds that Marriott must improvise its digitization to
increase customer and strengthen brand value in the market. The recommendation includes
improvisation of digital skill, digital training to employee and recruitment of professional

INTRODUCTION
Organization are formulating various types of strategy to stay competitive in the
market. Business The business strategy outlines actions and decisions organization
undertakes to achieve business goals. This report provides an analysis of the
business strategy of the Marriott Hotel. Critical analysis of reports covers an
analysis of core competencies, dynamic capabilities and sustainable competitive
advantage. It discusses how well the strategy has been implemented by use of
relevant theoretical tools and frameworks. Lastly, the report provides a
recommendation on an improvement of existing business strategy to enhance
competitive positioning and competitive advantage.

COMPANY OVERVIEW
Marriott International Inc. is a multinational hospitality company managing
various hotels. It was founded by Willard Marriott and Alice Marriott in
1927[ CITATION Mar19 \l 1033 ]. It is spread over 131 countries with 30 brands and
7,484 properties. It is the largest hotel chain across the world by somenumber of
rooms. It is focused on providing innovate service to the customers and has always
stood as a key player in the global hospitality industry.

Table 1: Sales revenue of international hotel in

2019[ CITATION Sta19 \l 1033 ]

Hotel companies Revenue in $billion

Marriott International 21
Hilton Worldwide 9.5
Host Hotels & Resorts 5.5
Oriental Land 4.3
Hyatt Hotels 5
Accor 4.5
INTERNAL STRATEGIC ANALYSIS TOOLS
MARRIOTT INTERNATIONAL INC: MCKINSEY 7S ANALYSIS
Mckinsey 7s model is the framework that analyzes the internal aspect of an
organization by looking at seven critical internal elements of an organization.
These elements includes skills, structure, shared value, system, staffs, style and
system[ CITATION Bat19 \l 1033 ]. These elements are assessed whether the aspects
are aligned with the growth and expansion strategy.

Structrure

Skills Systems

Shared
values

Staff Style

Staratgey

Figure 1: McKinsey 7S framework of internal

factors

This framework is used to analyze Marriott International Inc. business design. It

facilitates in an implementation of a new strategy, identifying the challenges and bringing
change in organization design. Seven factors of McKinsey for Marriott is presented below:
 Strategy: Marriott’s business strategy focuses on differentiation of entire service.
Service is differentiated is based on the use of advanced information technology and
quality of service. Hotel service is classified based on status, achievement and client
recognition[ CITATION Kel121 \l 1033 ].
 Shared Value: Marriott places shared value as a core agenda of operation. It values
employee and guide employee behaviour on the performance. The prime spot of
Marriott is to serve customers by focusing on employee attitude and behaviour.
  Skills: It identifies key business skills and fosters those attitude with an employee for
creating a better image of the brand.
 Systems: The hotel is excellent at providing facility to customers. It offers facilities
such as consumer reservation system, quality control and worker retention system.
 Staff: The staffs are highly trained and skilled. Monitoring of staff is conducted by
the HR manager as well as special manager recruited by the hotel.
 Structure: It is one of the largest hotel chains in the world and follows a hierarchal
organization structure for effective functioning.
 Style: It is concerned with an approach of managing employee and providing
customer service. It conducts various types of a workshop to develop employee and
communicate important skills.

EXTERNAL STRATEGIC ANALYSIS TOOLS

PORTERS FIVE FORCES
It is a framework that evaluates the competitiveness of business within the same
industry. It analyzes various forces that influence the financial and non-financial
performance of the organization[ CITATION Ger18 \l 1033 ].

Threat of
new
entrants

Bargainning
Threat of
power of
substitue
suppliers
Porter
Five
Forces

Rivalry
Barainning
among
power of
existing
buyers
competitors

Figure 2: Porter Five Forces Model

 Bargaining power of buyers: Marriott faces huge pressure from

customers to negotiate on price for different services. The customer has a
large range of hotels to choose from. Thus, leading to high bargaining
power to customers.
  Bargaining power of suppliers: Marriott holds cost leadership in a range
of dealing with suppliers leading to lower bargaining power to a supplier.
Suppliers competes within themselves to serve the hotel.
 The threat of substitute: Marriott faces negligible threats from a
substitute. The hotel mainly targets business people and tourist. There is
are less fewer options of for substitute rather than a relative place.
 The threat of new entrants: Hospitality sector has a limited barrier to
entry, posing a new threat of new entrants for Marriott. Numerous hotels
are established to target local & international tourist.
 Rivalry among existing competitors: Marriott faces huge competition
from Hilton, Intercontinental Hotel, Hyatt Regency, Shangri-La and
other hotels. The diversification of the hotel to various areas has
leveraged the business.

PESTEL
PESTEL analysis is a tool that monitors the macro-environment of business that
holds an impact on the organization performance[ CITATION Sal18 \l 1033 ] . It
allows an organization to develop a strategy for a new market and take action to
exploit new opportunities.

The analysis of macro-environment of Marriott by PESTEL are discussed below:

 Political: Political environment plays a significant role in the operation of the
business. The support of government for foreign investment, new industry
and other government legislation plays a major factor. Beside, political
stability, tax policies, labor law, terrorism and health regulation are key matter
for Marriott. Relatively stable political condition and sound economy offers
safe place for Marriott for operation of business.

 Economic: Economic status in national & international level affects growth

of Marriott. The degree of disposable income and standard of living plays a
key role too. Higher the disposable income and standard of living, more
profitable the Marriott becomes. Decline in real estate business and corona
pandemic has impacted the spending habit of people in Australia.

 Social: Marriott business operation is affected by various types of social

norms. Although Marriott is known as renowned brand in the hospitality
sector, various social factors such as local norms, consumer lifestyle and
demographic affects the operation of Marriott.
  Technological: Australia is highly advanced nation in terms of use of
technology and promotes use of technology across the business organization.
Marriott Hotel operates advanced technology such as online booking system,
facility management, CRM software and feedback mechanism.

Environmental: Australian economy is among few economy that implements &

monitors preservation of ecology.
 Legal:

Political

Economic Environmental

PESTEL
ANALYSIS

Legal Technological

Social

Figure 3: PESTEL analysis

The analysis of macro-environment of Marriott by PESTEL are discussed below:
 Political: Political environment plays a significant role in the operation of the
business. The support of government for foreign investment, new industry
and other government legislation play a major factor. Besides, political
stability, tax policies, labour law, terrorism and health regulation are a key
matter for Marriott. Relatively stable political condition and sound economy
offer a safe place for Marriott for the operation of the business.

 Economic: Economic status in the national & international level affects the
growth of Marriott. The degree of disposable income and standard of living
plays a key role too. Higher the disposable income and standard of living,
more profitable the Marriott becomes. A decline in real estate business and
corona pandemic has impacted the spending habit of people in Australia.
  Social: Marriott business operation is affected by various types of social
norms. Although Marriott is known as a renowned brand in the hospitality
sector, various social factors such as local norms, consumer lifestyle and
demographic affect the operation of Marriott.

 Technological: Australia is a highly advanced nation in terms of the use of

technology and promotes the use of technology across the business
organization. Marriott Hotel operates advanced technology such as online
booking system, facility management, CRM software and feedback
mechanism.

 Environmental: Australian economy is among the few economies that

implement & monitor the preservation of ecology. An environmental act is
implemented in State, federal and local level. Marriott Hotel has to comply
with environmental norms for effective functioning.

 Legal: Different types of legal restriction are imposed by the Australian

government for business. Restriction implemented by Australian government
includes Goods and service tax(GST), Australian Business Number(ABN) and
Tax File Number. It has severely affected the operation of Marriott as a tourist
from across the world visits Australia.

SWOT ANALYSIS
SWOT analysis refers to an evaluation of the core elements of an organization[ CITATION
Eme171 \l 1033 ]. It highlights the core competency and helps improve them. SWOT
analysis of Marriott is based on various types of facts and evidence.
 Strengths Weakness
SWOT
Opportunities Threats

Figure 4: SWOT analysis

Strength:
 Focus on innovation: Operational philosophy of Marriott Hotel is centred on
innovation. Innovation is seen in customer service and operational system.
Innovation has led to better customer service and better brand value.

 Drive for competitive advantage: Marriott is one of the highly competitive brands
in the world. Over the year, it has continuously reinvented to overcome
competition.

 Code of conduct: Marriott strictly adheres operational norms. Code of conduct

designed by top management is followed by all the employee. The policies are
centred on the effective use of resource and customer service.

 Strong presence in the market: Marriott International has 7,484 properties across
131 countries. It has over 1.4 million rooms around the world[ CITATION mar20 \l
1033 ].

 Skilled & trained employee: At Marriott, employees are highly skilled and
trained. Various types of training are provided to an employee to provide better
customer service.
 Weakness
 Cultural integration: Marriott Hotel major problem is the inability to interact with
other work culture across different nations. It is an American company, it faces
complexity in adapting to the working culture of Asia.
 Huge attrition rate: At the Marriott Hotel, the attrition rate is very high compared
to other hotel chains. Employees are leaving the jobs due to lower level of job
satisfaction.

 Excessive focus on innovation: Over the year, Marriott has expanded rapidly and
has created itself as the largest hotel chain. But, it is difficult to maintain a
standard of service over and over.

Opportunity
 A shift in consumer behaviour: Customer across the world is more inclined to a
luxury hotel. Especially, a rapid rise in seen in developing economies. It provides
an opportunity for the Marriott Hotel.

 Online market: Most of the organization has moved to the online market. An
investment in the online market provides a platform for attracting new customers
and increasing sales.

 Personalized customer service: Most of the customer are more attracted to

personalized service and are willing to pay higher prices. It allows an opportunity
to charge a premium price.

Threat
 Competition: Marriott faces stiff competition from large hotel chains and small
hotels. Major competitors of Marriott Hotel are Hilton, Hyatt and Accor[ CITATION
Mar20 \l 1033 ].

 The increasing cost of raw-materials: An increase in the price of raw materials has
affected the operation of Marriott. It has led to a decline in profitability for the
company.

ORGANISATION CORE COMPETENCIES

Core competency refers to the niche company has created in the market by offering
unique product & valuable service. In the hospitality sector, Marriott has created a niche
 in customer mind by providing outstanding customer service and focus on business
improvement. At Marriott, customer service is core to the company strategy. The
backbone of Marriott success can be interlinked with excellent service quality. Various
activities are streamlined to increase customer loyalty and achieve organizational goals.
It focuses on the development of leadership within all the employee and all employees
are motivated to serve the customers better and enhance an organizational
image[ CITATION htt17 \l 1033 ]. The employee has contributed to the creation of reputation
among customers across the globe.

DYNAMIC CAPABILITIES
It Marriott Hotel is always dedicated to identifying, building and assimilating its external
& internal competencies to stay competitive in a dynamic business environment. It is
open for an expansion in international level and involves in partnership with various
organizations. It invests in new technology to improve the business and offer better
service to the customers. Over the past 95 years, Marriott has continuously provided
better service to customers despite many turmoils. Marriott places an important focus on
building intangible assets and has employed non-imitable capabilities[ CITATION Ral13 \l
1033 ]. Marriott performance is monitored and compared with past performance to
improve the state of performance.

ORGANISATION SUSTAINABLE COMPETITIVE

ADVANTAGE
THE RIGHTNESS OF THE STRATEGY
From the success of Marriott, it can be observed that service differentiation,
integration and digitization are appreciable approach. Digitization has brought rapid
changes in the operation of Marriott. Digitalized reservation system, customer
feedback and Customer Relation Management (CRM) are the approaches of
digitalization applied by the hotel. A consumer can make a reservation for the hotel
easily and can verify various about the types of product & price prior booking
through customer feedback. Consumer feedback on an online platform has helped in
increasing brand awareness about the hotel. Clarity with customers has increased with
an opportunity for the customer to compare cost structure and facilities with other
hotels in the industry.

CURRENT STRATEGY FOR CREATION OF COMPETITIVE ADVANTAGE

 Marriott Hotel has held strong domination in the market through service
differentiation strategy. The use of service differentiation as a core strategy has
provided a competitive advantage to Marriott over other rival hotels. Its service is
classified based on quality and standard. Integration of service differentiation
strategy with information technology has added more leverage to the hotel.
Moreover, digitization in service options has helped to stand out from the
competition.
Marriott digitization includes data-driven personalization, mobile service, loyalty
programs, reservation channel and feedback of the customers. The functioning of the
hotel has improved with a synergy between the digital aspect and traditional form of
service. The hotel follows an aggressive business expansion strategy based on its
service differentiation.

STRATEGY ALTERATION FOR MAXIMIZATION OF COMPETITIVE ADVANTAGE

There is a high likeliness of imitation of Marriott service differentiation strategy by
other competitors. It needs to frequently alter their strategies for maintaining
exclusive customer service and brand loyalty. Change in the strategy along with the
change in demand helps to bring customer more closely with the organization.

The attractive and appropriate content for websites is pre-requisite for branding.
Although, the hotel has adopted digitalization, it has failed in social media marketing
leading to poor content. It has not been able to use social media sites to its full
potential. Despite digitization, it does not give much attention to interaction with the
customer in social media. It has led to failure on the use of social media strategy.
Marriott has not given much importance to social media marketing in its strategy.

SUCCESS OF THE STARTEGY STRATEGY & FUTURE ASPECTS

Currently, Marriott has 16 hotels with 4700 rooms in Australia. It has 15 to 17 hotel
in the pipeline and expects to double the hotel portfolio by 2023 - 2024. It has a
pipeline to open 150-room courtyard in Melbourne by 2021 [ CITATION Mar19 \l 1033 ] .
With immense success, it has planned to establish new hotels in New Zealand as well.
The growth of Marriott is associated with a service differentiation strategy.

STRATEGIC CAPABILITY
ANALYSIS OF BEST APPROACH FOR STRATEGY EXECUTION

Strategic capabilities of Marriott Hotel has helped in the optimum utilization of

resources and skills to maintain a competitive advantage in the market against key
competitors in a highly competitive market. The strategic move of Marriott is
directly inclined with the competitive advantage. In an expansion of the international
market, it focused on the cultural aspect. It is difficult to appeal to a customer of new
 markets without understanding their culture and building a cultural bond with them.
The strategic move was centred on matching skills and resources along with the
culture. Marriott Hotel focuses on an expansion into emerging markets. It conducted
various types of research on emerging markets to identify business opportunities. It
holds experience in dealing with new markets and is well aware of technological
changes & demand fluctuation in the market. Marriott has positioned as a luxury hotel
and has become a market leader through innovative service. The success of Marriott
is inclined with effective execution of service differentiation strategy, use of
advanced technology and HR policies.

CONCLUSION
Strategic analysis of Marriott Hotel shows that it has thrived in a cut-throat competition
by an implementation of a strategy which is focused on customer service and use of
advanced technology. McKinsey framework has highlighted that customer care is the
most important aspect for the hotel. PESTLE analysis highlights, Marriott Hotel must
focus on the political and economic condition of the Australian market for an expansion.
But, huge challenge underlies in complying with a legal obligation and environmental
norms. Bargaining power of buyers, rivalry among existing customer and threat from
new entrants are high. On the other hand, bargaining power of suppliers and threat from
substitute is relatively low. Strong presence in the market, trained employee, code of
conduct and innovation are the key strength. It needs to focus on improving weakness
and identifying new opportunities. Digitization strategy and service differentiation
strategy have made Marriott Hotel as a key leader in the market. Nevertheless, Marriott
hotel is growing in the international market with the help of core capabilities. It must
apply various types of approach to stay afloat in the market.

RECOMMENDATION
From a strategic analysis, it can be seen that Marriott hotel has adopted a service
differentiation strategy and digitization strategy as a core strategy. Despite the adoption
of the strategy, it has failed at the use of digital media as a strategy. Implementation of
the following recommendation helps to improve current digitization strategy of the firm:
 Effective use of social media marketing: Social media marketing is the most
widely used digital marketing tools[ CITATION Wan17 \l 1033 ]. Focus on social
media marketing helps improve the brand value of the hotel.
  Recruitment of professional: Professional social media expert helps to adopt
various types of approaches to implement digital social media strategy and
increase the visibility in the social media platform.
 Digital training of employee: Providing training to an employee on the use of
digital tool helps improve employees provide better service through a digital
platform. Effective use of digital tool helps to increase sales.

Effective implementation of the above mentioned recommendation helps improve

competitiveness of Marriott Hotel and increase profitability in the long run.

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