Introduction to Strategic Management
In the competitive market scenario there is continuous rise in the customer demand as well as other changes in the external environment has given rise to strategic management process (Ivan and Ivana, 2012). However, strategic management is an ongoing process that include planning, monitoring, analysis and assessment of all that is necessary changes for an organization so they can easily meet their stated objectives and goals. Therefore, Strategic management provides overall direction to the enterprise and involves specifying the organization's objectives, developing policies and plans designed to achieve these objectives, and then allocating resources to implement the plans. The present report focuses on one of renowned hotel that is Marriott International, as with the continuous change in the external environment they must focus on the strategic management technique which will help them to cope with certain change and uncertainties.
Present report mainly focuses on the strategic and non-strategic decisions that are taken by Marriott international so that, they can easily survive in the competent environment. However, the report will also measure the different type of strategy which is being formulated in the different levels of the organization. Lastly, the report also measures risks, uncertainty and trade-offs play in the strategic decision making process of the organization.
The strategic decisions are those decisions which are related with the external environment in which the service organization operates their business and manages different resources so that, they can determine the success of implementing the strategy. However, the Marriott International mainly renders luxurious and leisure services to their guests and customers in terms of providing luxurious accommodation facilities, food services etc. thus, strategic decisions would help the organization to sustain in the competitive hospitality industry (Alkhafaji, 2011). In order to expand Marriott business internationally in the different countries, organization is adopting strategic management technique which primarily impact their success. There are different types of strategic decisions that are taken by Marriott international so that, they can easily sustain in the environment. For this, business organization needs to formulate strategy that help Marriott International in accomplishing their goals and objectives and survive in the long run (Huff and et.al., 2008). Therefore, business strategies exist at different organizational levels. The different type of strategy includes:
Corporate-level strategy: Corporate level strategy mainly aims to consider overall extent of business organization and achieving aim of operations in order to meet the distinct requirement of internal and external stakeholders. According to Walters and Rainbird (2007) corporate level strategy in the Marriott International is being framed by the top level authorities with the main aim to fulfil mission statement of the organization (Walters and Rainbird, 2007). The corporate level strategy will be for the long time period that will result Marriott to attain success in the market for the long time period. However, it has been said that the mission statement of Marriott International is nearly connected with corporate strategy of the business (Salaman, Storey and Billsberry, 2005).
Business-level strategy: However, the main aim of Marriott International is to provide the quality and luxurious accommodation and logging facilities for the customers. For gaining the aim of service organization, they need to form different business level strategy which results in determining the strategies that must be adopted to deal with target audiences in the hospitality industry (Lasserre, 2012). This strategy comprehend strategic decisions regarding their services, exposure to new possibilities, meeting different expectation of guests and customers, to gain competitive advantage over their rival companies etc. For example, Marriott International is introducing new restaurant in their luxurious hotel so that, they can satisfy the demand of customers and gain advantage over their rival organization thus, for this manager need to formulate business level strategy.
Functional level strategy: Functional level strategy is in the response to business level strategy (Carton, 2006). Functional level strategy assist the business to see management decisions to be specific with the functional or departmental area of the organization, such as marketing, human resources, finance, information management and public relations. The advantages of devising functional level strategy is that, they can systematically assign human resources and other resources to the tasks. For example, an employee with expertness in HR, thus it may be logical to assign the duties and tasks of HR instead of providing them activities related with the finance (Cadez and Guilding, 2008).
For taking strategic decisions regarding the business organization, it is essential for the organization to develop a systematic plan that will ensure the Marriott International to attain their long term goals. However, strategic planning is significant for the success of organization and it also assist in determining the current state of organization through conducting SWOT analysis and PEST analysis (Beer and et.al., 2005). However, the planning process also involves devising objective for Marriott, formulating and implementing the strategy considering environmental assessment. Therefore, the view of strategic planning process include following step:
Analysing current state: The first step in the strategic planning process include measuring the internal as well as external environment of Marriott International with the help of conducting SWOT analysis (Evans, Stonehouse and Campbell, 2012). Analysing current state of Marriott International will assist the management in designing effective strategy so that, they can take strategic decision for the organization. Identified strength, weaknesses, threats or opportunities of Marriott International are:
- High brand recognition (Shook, 2005).
- Effective employee retention
- Entrance of low budget leisure hotels.
- Stagnated growth
- ontinuous innovation in the services
- well equipped interior and exterior of hotels
- Have potential to grow in the emerging markets (Poister and Streib, 2005).
- Limited market share due to high competition from the established hotel chains.
Defining mission statement: After examining the current state of Marriott International another step of strategic planning include defining the mission statement of the business organization so that they can easily grab opportunities to succeed in the hospitality industry. For example, from the above analysis Marriott International mission statement is to become the global firm in the hospitality industry (Postma and Liebl, 2005).
Strategy formulation: After defining the mission statement they should formulate corporate strategy that will assist the Marriott international to become the leading company in the industry. For example, the firm seeks to become top most company in the hospitality sector for that they must develop their market by expanding their services in the different countries (Wheelen and Hunger, 2011). Thus, they will formulate effective market development strategy by setting new hotels chain in the different countries.
Implementing strategy: After selecting the strategy, Marriott International will implement the market development strategy by setting up new premises or hotel chains in the different countries. However, implementation mainly involves managing the Marriott resources and motivating their staff to accomplish objective which is to expand their services in the other countries (Freeman, 2010).
Evaluation and control: The last step in the strategic planning includes measuring and controlling the implemented strategy so that they can not affect the external and internal environment. Marriott International should focuses on developing control system to facilitate any change in the strategy. The management must set a standard performance and compare them with the actual performance of the hotel (Mador, 2011).
Non-strategic decisions are also known as operational decisions which are taken on the daily basis that help the Marriott International in conducting their daily operations in the effective manner. The aim of the non-strategic decisions is to attain budgeted sales and to get revenue to meet targets (Janczak, 2005). Non-strategic decisions should be consistent with strategic decisions. Effective operational decisions will have measurable outcomes such as higher revenues, inflated profits, increased productivity and increase in the satisfaction level of the customers.
For example, to determine that how many staff or employees will be needed in the Marriott International to serve their customers then the decisions regarding managing the employees or staff may be termed as operational decisions. These decisions are often taken at the departmental level to ensure that day to day operation of Marriott International should be accomplished. There are several departments or functional areas operating in the hotel and they are required to take non-strategic decisions for conducting the daily work (Ivan and Ivana, 2012). The different department are:
Human resource department: The main function of the HR department in the Marriott is to manage human resource so that they can properly render services to their guests and customers. The department often take decisions regarding demand and supply of human inventory in the hotel. The HR department also recruit employees and staff within the premises so that they can render quality services to their guests (Alkhafaji, 2011). Therefore, HR department is required to take effective operational decisions so that they can successfully execute the operations.
Marketing department: Another non-strategic decision is being taken by the marketing department so that they can easily frame effective marketing or advertisement strategy for the Marriott International and can easily promote their services in the different countries (Huff and et.al., 2008). Marketing department also focuses on framing different marketing strategies for their hotel so that; they can effectively succeed in the other countries.
Finance department: Other non-strategic decisions are taken by the finance department that mainly concentrate on allocating the fund properly within the hotel so that day to day operational functions can be carried out properly and effectively. For example, it is essential to allocate proper fund to the food and beverage department as with the help of this they can easily purchase the raw material for preparing food for their guests who visits their hotel (Walters and Rainbird, 2007).
A business always assumes risk when deciding to change its methods. Strategic decisions always represent a risk because these decisions deal with the future. While a company can make strategic decisions based on relevant information, the organization can never predict the future with certainty. Because of this, a business must take precautions when implementing both strategic and non-strategic decisions (Salaman, Storey and Billsberry, 2005). Thus, managing risks management must adopt risk management techniques which will assist the Marriott International in taking strategic decision without any issue. There are certain risks existing in the hospitality industry which are increasing competition, dynamic demand of the customers and guests, pace of technology etc. need to be responsive so that they can manage change within the internal environment. Marriott International strategically programs their risks, rather than making impulsively decisions (Lasserre, 2012). The following PESTLE analysis the external factors which can influence or affect Marriott International risk management strategies.
The factors are:
Political factor: One of the major risk or uncertainty is caused due to changing political norms and regulations of the different countries (Carton, 2006). Thus, constant change in the international trade policies will result in affecting Marriott International decisions regarding expanding their business. For instance to operate their operations in the different region, they need to adopt the rules and regulations of the different countries so that they can operate in that country.
Economical factor: Thus economic factor also act as the major risk for the Marriott International as due to unsteady interest rate and rise in the economic growth of the country the demand of luxurious hotels are reducing (Cadez and Guilding, 2008). Thus, it will ultimately decline the profitability of the Marriott International.
Social factor: Another risk in the external environment include social factors as with the increasing ageing population in the different countries customers have become more careful with their spending and now they focus on luxuries rather than fulfilling necessities (Beer and et.al., 2005). However, with the change in lifestyle, people or guests are shifting their preferences to the budgeted hotel as compare to the luxurious or brand hotel chain. Thus, these factors can act as the risk for Marriott International to operate their services in the new region.
Technological factor: However, technological factor consider as a major issue for the Marriott International as competitors can take advantage by using internet technology as their strategy to capture the market.
Legal factor: The legal factor include regulation regarding international advertisement, equal pay etc. that sometime negatively affect Marriott operations. For example, legal factors mainly impact international advertisement which can obstruct the strategic decisions made by Marriott International (Evans, Stonehouse and Campbell, 2012).
Environmental factor: Another external factor that acts as the risk and impact internal environment of Marriott International is environmental factor. Now a day’s customers are aware about the environment so Marriott International needs to ensure sustainable business environment to attract customers (Shook, 2005).
Thus, for managing the risks that are associated with the external environment, company should implement certain risk management techniques which will assist the Marriott hotel in lowering risks and accomplishing their objectives to be successful in the external environment. The different risk management techniques are being used by Marriott International to manage impact of risks in the internal environment. Therefore, for starting up a new business in the international market Marriott International has to follow several risk management strategies for avoiding risks and uncertainty within the organization (Poister and Streib, 2005).
Avoidance - This is a risk management strategy which helps to avoid the actions and activity that brings failure or loss to the organization. For instance, Marriott International could proceed in purchasing the location for their hotel chain in other country if the location or site is not generating enough revenue to cover the cost of building (Postma and Liebl, 2005).
Risk control – It is another strategy which is used to minimize the risk in Marriott International by making some rule and regulation at the workplace that assist to control the risk in the organisation.
Recommendations for future strategies
By conducting the situational analysis of Marriott International with the help of determining certain strength, weaknesses, threats and opportunities it has been recommended that Marriott International should adopt different future strategies which will assist them to become the leading organization in the hospitality industry.
Merger and acquisition: Recommended future strategy for Marriott International include merger or acquiring the organization that serve in hospitality industry to increase their market share and target audiences. This is an effective future strategy which is adopted by many of the organization to be successful in the competitive environment and to reduce the extra cost of production in the different region (Klein, 2009).
Effective usage of technological factor: Another opportunity for Marriott International is that with the increasing technological era, they should create their own mobile application which offers discounts coupons or loyalty points for their regular customers to stay with Marriott. Thus, they can also expand their services on the online platform so that, customers or guests can easily reserve the rooms for their family (Wheelen and Hunger, 2011).
Expansion in the different countries: Another recommended future strategy for Marriott International would be to build or set up large number of hotels in the expanding technological countries such as China or Japan. Thus, expanding business in the other countries will result in enhancing their reach and brand image among customers (Freeman, 2010).
From the above report it has been concluded that to be successful in competitive environment business required to take strategic and non-strategic decisions. Strategy and operational decisions addresses different aspects of the organization. Strategy influences overall direction of the organization whereas operational decisions affect its day-to-day operations. However, it has also concluded from the above report that there are different types of strategy which an organization frame to be successful in the industry. Different types of strategy are corporate level strategy, business level and functional level strategy. Furthermore, the report also measures strength, weakness, threat and opportunities so that Marriott can easily take strategic decisions to be sustainable in the environment. Lastly, the report has also measured the risks which are present in the external environment and that can affect internal environment of the business and result in bringing failure.
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