Harvard Case - Marriott International: The Next 90 Years
"Marriott International: The Next 90 Years" Harvard business case study is written by Chiara Farronato, Gary P. Pisano. It deals with the challenges in the field of Operations Management. The case study is 30 page(s) long and it was first published on : Sep 27, 2017
At Fern Fort University, we recommend Marriott International adopt a comprehensive strategy focused on digital transformation, sustainable operations, and global expansion to navigate the next 90 years. This strategy will leverage their existing strengths in operations strategy, supply chain management, and brand recognition to drive growth and maintain their leadership position in the hospitality industry.
2. Background
Marriott International is a global hospitality giant facing a rapidly evolving landscape. The company needs to adapt to changing consumer preferences, technological advancements, and economic uncertainties. The case study highlights the challenges of maintaining growth and profitability in a highly competitive market.
The main protagonists are Arne Sorenson, CEO of Marriott International, and the executive team tasked with developing a long-term strategy for the company. They must consider the impact of factors like:
- Digital disruption: The rise of online travel agencies, sharing economy platforms, and personalized experiences.
- Sustainability concerns: Growing consumer demand for environmentally responsible practices.
- Global expansion: Opportunities and challenges in emerging markets.
- Technological advancements: Automation, artificial intelligence, and data analytics impacting the hospitality industry.
3. Analysis of the Case Study
To analyze Marriott's situation, we can utilize the Porter's Five Forces Framework to understand the competitive landscape:
- Threat of new entrants: High due to low barriers to entry in the hospitality industry.
- Bargaining power of buyers: Moderate, as consumers have access to numerous options and can easily switch brands.
- Bargaining power of suppliers: Moderate, with some dependence on labor and materials.
- Threat of substitute products: High, with alternative accommodation options like Airbnb and vacation rentals.
- Competitive rivalry: Intense, with numerous established players and new entrants vying for market share.
Key Internal Factors:
- Strong brand recognition: Marriott enjoys a strong brand reputation and loyalty.
- Extensive global reach: A vast network of hotels across various segments.
- Operational expertise: Expertise in managing complex operations and supply chains.
- Data-driven insights: A wealth of customer data and analytics capabilities.
Key External Factors:
- Digital transformation: Rapidly changing customer expectations and technological advancements.
- Sustainability concerns: Growing consumer demand for environmentally friendly practices.
- Economic uncertainty: Global economic fluctuations and geopolitical instability.
- Emerging markets: Opportunities and challenges in developing economies.
4. Recommendations
Marriott should implement the following strategic initiatives:
1. Digital Transformation:
- Invest in technology and analytics: Implement advanced data analytics platforms to better understand customer preferences and optimize operations.
- Enhance online presence: Develop a seamless online booking experience, personalize customer interactions, and leverage social media platforms for marketing.
- Integrate mobile technology: Offer mobile check-in, contactless payment, and personalized in-room experiences.
- Embrace artificial intelligence: Utilize AI-powered chatbots for customer service, automate tasks, and optimize resource allocation.
2. Sustainable Operations:
- Adopt green building practices: Implement energy-efficient designs, reduce water consumption, and utilize renewable energy sources.
- Reduce waste and emissions: Implement waste management programs, minimize packaging, and optimize transportation routes.
- Promote sustainable practices: Encourage guests to participate in eco-friendly initiatives and educate staff on sustainability principles.
- Partner with environmental organizations: Collaborate with NGOs and industry leaders to promote sustainable tourism.
3. Global Expansion:
- Focus on emerging markets: Identify high-growth regions and tailor offerings to local preferences.
- Develop strategic partnerships: Collaborate with local businesses and governments to facilitate expansion.
- Leverage existing infrastructure: Utilize existing supply chains and operational expertise to streamline expansion.
- Invest in local talent: Recruit and develop local employees to foster cultural understanding and market knowledge.
5. Basis of Recommendations
These recommendations align with Marriott's core competencies and mission:
- Operations strategy: Leverage existing expertise in managing complex operations and supply chains.
- Supply chain management: Optimize procurement, logistics, and inventory management for efficiency and sustainability.
- Brand recognition: Capitalize on brand equity and loyalty to attract customers in new markets.
- Innovation: Embrace technological advancements to enhance customer experience and operational efficiency.
The recommendations also consider external factors:
- Customer preferences: Address changing consumer expectations for digital experiences and sustainable practices.
- Competitive landscape: Differentiate Marriott from competitors through innovation and sustainability.
- Economic uncertainty: Diversify operations and expand into emerging markets for growth opportunities.
6. Conclusion
Marriott International has a strong foundation for future success. By embracing digital transformation, sustainable operations, and global expansion, the company can navigate the challenges and capitalize on the opportunities of the next 90 years.
7. Discussion
Alternative Options:
- Focus solely on existing markets: This strategy might limit growth potential and fail to capitalize on opportunities in emerging markets.
- Acquisitions and mergers: While acquisitions can accelerate growth, they can also be risky and require careful integration.
Risks and Key Assumptions:
- Technological advancements: Rapid technological changes could create challenges in keeping up with innovation.
- Economic fluctuations: Global economic downturns could impact travel demand and profitability.
- Sustainability regulations: Increasing environmental regulations could increase operating costs.
8. Next Steps
- Develop a detailed strategic plan: Outline specific initiatives, timelines, and resource allocation.
- Implement pilot programs: Test new technologies and sustainable practices in select locations.
- Monitor performance indicators: Track key metrics to measure progress and make adjustments as needed.
- Communicate the strategy: Engage employees and stakeholders in the vision for the future.
By implementing these recommendations, Marriott International can continue to thrive in the dynamic hospitality industry and ensure its success for the next 90 years.
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Case Description
The case examines how Marriott should respond to the potential threats from new home-sharing platforms and the rise of on-line travel agencies. In 2017 Marriott was the largest hotel chain, with more than one million rooms and 7% of worldwide room supply. In the previous decade the growing ubiquity of internet-based commerce had facilitated the rise of technology platforms such as Expedia and Airbnb. The case enables students to explore the forces that might lead to industry transformation and the appropriate response strategies of a large incumbent.
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