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CHAPTER 12 READING
CHAPTER 13 READING
Global Thinkers Consulting Group:
Analysis of Marriott Hotel in Panama
Week 10 Group Assignment
Running Head: ANALYSIS OF MARRIOTT HOTEL IN
PANAMA1
ANALYSIS OF MARRIOTT HOTEL IN PANAMA 2
09/0209/2014
Team Members:
Jenn O’Neal
Lisa Ross
Theodore Newton
Tommy Choi
Dominic Eze
Table of Contents
Executive Summary 3
Introduction 4
Nature of the MNC’s International Operations 4
Implementation Problems 5
Management Issues 6
Strategy 6
Finance & Accounting 8
Marketing8
Human Capital 10
Marriott’s Ethics Code 10
Social Responsibility 12
Conclusion 12
References 13
Executive Summary 2
Introduction 3
Nature of the MNC’s International Operations 3
Implementation Problems 5
Strategy 6
Finance & Accounting 7
Marketing8
Human Capital 10
Marriott’s Ethics Code 11
Social Responsibility 12
Conclusion 13
References 14
Introduction
Global Thinkers Consulting Ggroup recommends that Marriott
Hotel expand their hotel chain into Panama. Panama is a strong
option since Marriott is known as a hospitality and tourism
industry around the world, providing a variety of services and
activities that appeal to guests in Panama. Marriott’s strategy to
gain the largest market will be to offer a diverse array of
services and luxury hotel features, high quality customer
service, and their already prominent name as a foothold.
Marriott financing will be guided by a combination of global
and US accounting practices so they are compliant in their home
country and new sites. Marriott will be able to market to their
audience by push-pull promotional practices, attractive pricing,
using the Marriott’s current JW brand. Marriott will be
successful in Panama because of their strong human capital
structure, code of ethics, and social responsibility.Nature of the
MNC’s International Operations
Marriott International is a hospitality and tourism industry
involved in providing world class lodging, foodservice,
recreational, gaming, and travel services across different
operational bases globally. The company is a US based
hospitality industry with its corporate headquarters in Bethesda,
Maryland; the company has expanded its operations into over 80
countries with 4000 brands established to provide services for
different consumer segments. In realisingrealizing its corporate
mission, the company engages in “operations and franchising of
hotel services, the development and operation of holiday
ownership resorts, the operation of Marriott Executive
Apartments, the provision of furnished corporate housing
through its Marriott Executive Stay division, and the operation
of conference centrescenters” (Euromonitor International, 2009,
p. 5). The provision of these different operational categories
help Marriott intensify its effort in ensuring wide coverage in
hospitality and tourism in order to maintain competitive
advantage, customer satisfaction, and loyalty.
In keeping with innovations in the hospitality and travel
industry, Marriott recently announced plans to significantly
grow its global coverage portfolio of in luxury and lifestyle
brands. The company intends to actualize this plan of by
building 200 luxury and lifestyle hotel projects over the next
several years. This $15 billion investment would be financed by
the company’s owners and franchisees (Euromonitor
International, 2009). The company continues to generate
revenue through its direct operations at various hotel locations
and franchise with investors in the hospitality industry. The
company operates different brands of hotels ranging from high
class to low class categories aimed at providing services for all
consumer segments.
The company presently operates 449 hotels in its luxury and
lifestyle portfolio across eight brands of Ritz-Carlton, JW
Marriott Hotels & Resort, Edition, Autograph Collection, AC
Hotels by Marriott, Renaissance Hotel, Bvlgari Hotel & Resort,
and Moxy Hotel. These This luxury and lifestyle initiative
provides a unique personality and a distinctive guest experience
which creates a wide range of services for different customers
aimed at ensuring loyalty within its brand network.
The company has maintained aggressive development of its
international pipeline as a strategy to combat the falling
patronage in the US hospitality and travel industry due basically
to the declining economy. This approach is geared towards
cultivating traveler’s loyalty across the globe.
Panama ias an investment destination with great potentials in
tourism and economic growth propelled the return of Marriott
International after several years of terminating operations in
that area. The company operates 296 rooms at the Panama City
Marriott Hotel, which is strategically located in Panama
CityCity; . And the hotel represents the first Marriott directly
operated hospitality project in Panama (International News,
1999).
Marriott interest in Panama has continued to grow with the
latest plan to develop 180-room Casamar Marriott Panama
Resort within the Casamar master-planned resort community on
Panama’s Pacific Coast. The company would base its operation
on franchise agreement with Casamar Development, S.A. and
Corporación Turística del Pacífico, S.A., which will enhance
significantly the value of the country’s Pacific Coast (Pike,
2011). Marriott International has strategically through franchise
agreement launched its presence in the fast growing Pacific
Coast of Panama where wealthy Panamanians and tourists
retreat during weekends and holidays. The number of tourists
doubled to 1.7 million from 2002 to 2010, and the region has
become a destination for the high-profile hospitality industry
(Pike, 2011). Implementation Problems
Marriott as a global hospitality and tourism industry has
encountered various implementation problems in expanding in
Panama and other parts of the world. The company’s aggressive
expansion drive into Panama and other North American region
was not devoid of cultural and language barriers. Panama
predominantly speaks Spanish language, and Marriott realized
the need to train its associates in different languages which
made business transactions easy. The company designed
“Valuing Our World of Differences, a new mandatory training
course for all associates, to help our workforce develop or
further enhance cross-cultural competence” (Marriott CSR,
2014, p.21).
The company adopts franchising and partnerships in its
expansion drive, so as to reduce business risks and maintain
competitive advantage. Implementing the company’s expansion
plan requires huge resources for property acquisition and
development, this makes collaboration and partnership
necessary in actualizing the company’s mission of rendering
valuable services to ensure customer satisfaction and loyalty.
Daniels, Radebaugh, and SullivanSR, (2013) explains the
importance of collaboration in a culturally differentiated
environment which helps partners deal with challenges and
learn from each other’s differences. Marriott International uses
franchise in realizing its expansion plan in order to maintain
customer loyalty across different regions and countries. every
business region.
The economic downturn in recent time reduced the hospitality
and tourism activities in Panama and other business regions.
The global expansion drive by Marriott International is a
strategy in checkmating the impact of the downturn in the
hospitality and travel industry due to the declining economic
situation here in the US. This approach helps cultivate loyalty
among different travelers, and Marriott has continued to reward
its customers through the company’s customer loyalty reward
programs worldwide. Management Issues
Another issue to consider is the management of overseas
operations. Overseas operations should be the run by the
principles the organization was founded upon. When issues
arise communication is key. Any special issues should be
handled initially at the level of the franchise owner. The
franchise owner should act promptly to resolve the issue for the
customer. In some cases the situation may be escalated. In this
case the issue should be communicated directly to the corporate
headquarters (Marriott International Inc, 2014).
Headquarters will work diligently to resolve the issue for
the customer providing complementary visits and other rewards.
If there is an internal issue it can be handled by the corporation.
Every fFranchise owner has an account manager from Marriott
that can help resolve issues as well. There is also an advisory
council that can be also be of assistance,assistance; franchise
owners can reach out for assistance this way as well. Lastly,
suppliers are carefully evaluated to reduce issues. However,
when issues with suppliers occur they are coordinated through a
contractor Avendra. When issues arise through suppliers it is
handled through the contractor (Avendra, 2014). Strategy
The lodging and hospitality industry is one of the most
competitive and challenging industries in the world. It focuses
on making consumers and customers happy and comfortable.
The lodging industry allows customers to experience everything
from high-end luxury hotels to extended stay hotels. As one of
the prominent leaders in the industry the Marriott offers lodging
accommodations in all capacities. Strategically, the Marriott
has been very successful. The Marriott offers a wide variety of
brands and products to provide pleasurable experiences to each
and every customer. The customer that enjoys the most
luxurious experiences may find comfort in the JW Marriot
Hotels or the popular Ritz Carlton. Customers who require
longer arrangements may prefer the Residence Inn Marriott or
the Towne Place Suites Marriott. This diversity has allowed
Marriott Hotels to be prosperous throughout the world (Marriott
International, 2014).
Marriott hotelsInternational has even branched into
different markets in order to add enjoyment and excitement to
the customer experience. The Marriott hotel offers high end
entertainment to customers. At many Marriott hotels customers
are able to experience quality nightlife. Customers have the
opportunity to attend concerts and live performances sponsored
through Marriott for its guest.
Some customers utilize the Marriott hotel for its
spectacular wedding services. In order to be the world’s
premier lodging and hospitality hotel industry, the Marriott
offers remarkable wedding services for those who wish to
utilize the service. The excellent scenery, and comfort make
the Marriott one of the best places to get married.
The customers stands at the Marriott’s core. The
Marriott’s attention to customers sets it apart from other
competitorsthe competition. The Marriott strives to offer an
exceptional customer experience. The Marriott stands by the
principles of putting consumers first, adapting to change,
pursing excellence, and honestly serving patrons. Also, the
Marriott believes in creating a better community. Standing true
to these principles is the key to the Marriott’s success and
growth (Marriott International Inc., 2014).
The Marriott expanded through franchising, as may other
organizations have done to expand internationally. The
Marriott licenses it brands and products to those that meet
specific qualifications. They Marriott requires that customers
identify the exact location of land. Potential owners are
required to put together a proposal that identifies how large
each guest room will be, and a total project budget. The
potential owner is required to provide a detailed proposal
explaining exactly which brand and products they are interested
in. Through franchising, the Marriott is able to expand its
brand and reach out to a wide variety of communities. The
Marriott expanded in to Panama through franchising and has
been very successful. This strategy fits in perfectly with the
goals and objectives of the Marriott. Through this strategy the
organization has been able to reach out to a diverse community
and adapt to the needs of consumers within the Panama
environment. Marriott’s main goals and objective is to provide
an exceptional atmosphere for customers.
Competition is very intense around the world. The
Marriott competitors include: Starwood hotels popular hotels
include the Westin, and Sheraton hotels; Choice Hotels
International whose popular brands include Comfort Suites and
Quality Inn; The Hilton who is one of the leading lodging
companies in the world, and many others. In Panama the
Marriott endures heavy competition from almost every
organization in the industry. Panama hosts locations for the
Westin, the Hyatt, the Trump and even the Sheraton. Despite
the intense competition the Marriott is one of the most
successful in the industry. The Marriott provides customers
with a great experience, making the Marriott ideal for expansion
(NASDAQ, 2014).Finance & Accounting
More than a few features separate internationally based reports
from domestically oriented financial statements. Amongst these
are the issues of consolidation, translation of individual
accounts, and overall reporting of international profits.
Currently, the U.S. tax regulations involve the consolidation of
the financial statements of subdivisions or branches in
congruence to the proportion of ownership of the parent
organization. The regulations range can include a variety of
rules from a pro-rata incorporation of profits and losses to a full
disclosure in the balance sheet and income statement. The
excessive international profits because of the favorable
exchange variations were transferred into this particular
account. Withdrawals were completed through the period of
high losses branching from unfavorable exchange movements.
The results of these actions shows a smooth pattern in a MNCs
international profits in MNCs international profits.
In FASB No. 8, later mandated that both transaction gains and
losses and translation amendments be incorporated in net
income, with a different disclosure of only the cumulative
foreign exchange gain or loss (FASB, 2014). This obligation
caused highly discernible swings in the details of net earnings
of U.S. multinationals. Since the issuance of FASB No. 52, only
certain transactional gains or losses are replicated in the income
statement (FASB, 2014). Panama has adopted International
Financial Reporting Standards (IFRS) and which is required for
all domestic and foreign companies listed on the Stock
Exchange in Panama starting 2000 (IFRS, 2014). All domestic
companies listed on the stock exchange are required to use
either IRFS or U.S. General Acceptable Accounting Practices
(U.S. GAAP).
There are several issues when dealing with financial, currency
and accounting practices when doing business internationally.
Overall, the various mandated accounting practices allowed for
smooth accounting patterns for MNCs iInternational profits.
Financial reporting is more transparent now that all domestic
companies listed on the stock exchange are required to use IFRS
or US accounting practices.Marketing
Marriott Hotel has decided to expand operations in Panama per
Global Thinkers Consulting recommendation. Panama has a
unique marketing mix and marketing practices that differ from
the United States’ practices. Panama’s promotional practices,
pricing, branding strategies, and customer characteristics will
be considered as Marriott expands their hotels in this country.
The target customers for this hotel will be travelers across the
world that are looking for a variety of activities including
luxury accommodations, history, beaches, and golf (Marriott
International, Inc., 2012). There are also cultural and economic
considerations that can impact the standardization of products
(Daniels, Radebaugh, & Sullivan, 2013, p. 607).
Marriott should consider a combination of a push-pull
promotional mix, which relies on both “direct selling
techniques… [and] mass media” with a slightly larger emphasis
on the pull strategy (Daniels, Radebaugh, & Sullivan, 2013, p.
613). Since customers may not directly seek Marriott as an
option, since there are many other hotels in the area, Marriott
should advertise to entice customers. The advertising can focus
on areas that attract customers in Panama.
The pricing should be set that it is “low enough to gain
sales but high enough to guarantee the flow of funds required to
cover such expenses as R&D, production, and distribution”
(Daniels, Radebaugh, & Sullivan, 2013, p. 609). Pricing
obstacles include government intervention, market diversity,
and currency fluctuations. As a guide, Global Thinkers
Consulting recommends setting the price the same as pricing in
the JW Marriott hotel chain in Central America between $150
and $250 per night.
Marriott hotels are widely known throughout the world, and
would not need to advertise what they are, but rather how they
are a better hotel in Panama compared to others. Marriott should
maintain their worldwide brand, but should consider a slight
alteration for the hotels in Panama. Marriott currently has 18
different brands under their name, and can use one of these that
appeal to the target audience. The JW Marriott brand is already
located in other counties in Central America, and would also
suit Panama; this brand advertises that “Less says much more.
No loud pretense. No excess formalities. Your surroundings are
defined by authentic beauty. And your desire to own a truly
memorable experience is magnificently met” (Marriott
International, Inc., 2012, p. 2). Marriott will also have an
advantage in Panama since they have an established
transportation foothold servicing flights and boating docks for
travelers around the world.
Marriott should use a combination of a standardized and
differentiated marketing program. The hotel chain in Panama
should be standardized according to other JW Marriott
properties, but the JW chain is slightly differentiated from other
Marriott properties since it targets the culture in this area. By
standardizing this property similar to other hotels, Marriott can
benefit with a cost savings, higher quality since some
characteristics are similar to other properties, and gain faster
entry into the market since it is already an established chain
(Daniels, Radebaugh, & Sullivan, 2013, p. 614).
This is a similar strategy to other hospitality and travel
industries since this fragmented industry can be profitable with
“efficient operations since many costs are fixed, effective
marketing increasing additional convenience offerings, and
establishing strong brand recognition” (Michigan State
University, 2014, para. 2).Human Capital
Marriott International, Inc is one of the leading organizations in
the hospitality industry that comprises of more than 3,900
property sites and 18 types of brands. Marriott was instituted by
J. Willard and Alice Marriott and directed by the Marriott
family management for over 80 years, and the organization’s
headquarter is located in Bethesda, Maryland (Marriott, 2014).
Today, the organization is operated by J.W. Marriott Jr., the
chairman of the board and chief executive officer and William
J. Shaw as the president and chief operating officer. J. Willard
Marriott’s simple goal is to provide, “Good Food and Good
Service at a Fair Price.” Marriott’s culture has four key points:
Do whatever it takes to take care of the customer; Pay
extraordinary attention to detail; Take pride in their physical
surroundings; and use their creativity to find new ways to meet
the needs of customers (Marriott, 2014).
Marriott believes in a hands-on leadership style that shows the
importancet of employees (associates) (Marriott, 2014), Spirit
to serve culture, individual hotel appearances such as the front
desk work, and is well respected by employees. Marriott uses
the geocentric approach in which the best people are wanted for
key jobs throughout the organization, despite of their ethnic
group. This builds a strong combining culture and casual
management group. This approach does limit the capability of
the organization to pursue this policy due to immigration
policies of national governments. Marriott’s structural
dimensions include five types: Formalization; Specialization;
Centralization; Personal Ration; and Hierarchy of Authority.
Each of these structural dimensions plays a critical part in
Marriott’s organizational culture.
Marriott is innovative and is changing the results of the
innovative practices into functional products, services, and
work system. The 3 three variables to generate the “precise”
atmosphere for advancement are structural, cultural, human
resource. Overall, Marriott’s design is a mechanistic design and
each subdivision can be unrefined. Marriott’s Ethics Code
Marriott provides an abundance of information and
guidance to assure compliance of its ethical standards. The
Marriott Business Conduct Guide provides comprehensive
information on competition law and antitrust, bribery and
corruption, political giving, and where to go for help if
confronted with these issues. The Business Conduct Guide
(2011) states all Marriott associates and those acting on
Marriott’s behalf are to be familiar with and uphold the
standards outlined within the guide and it applies on or off duty.
The first ethical rule addressed is competition and antitrust
law. Marriott’s policy is to follow any and all applicable laws
and regulations in the countries it does business. According to
the Business Conduct Guide (2011), no Marriott associate is to
enter into conversation with competitors where the discussions
may limit competition (p. 11). Along these lines, Marriott also
encourages fair practices where competitors are concerned.
They encourage associates to refrain from making inaccurate
claims about competitors and they are told to avoid the use of
private information from the competition (Marriott Business
Conduct Guide, 2011, p.13).
Bribery and corruption are addressed within the Business
Conduct Guide. According to Daniels, Radebaugh, and Sullivan
(2013) bribery is at the center of corrupt behaviors when
dealing with multinational corporations (p. 191). “Marriott
strictly forbids giving or promising anything of value…to
influence that person in his or her official duties or to
encourage unlawful conduct” (Marriott Business Conduct
Guide, 2011, p. 18). The company also looks at third party
corruption in the same regard. Associates are to perform their
due diligence to assure contractors, vendors and suppliers that
are selected to do business with Marriott follow the company’s
guidelines against bribery and other corrupt practices. Daniels
et al. (2013) states “disclosures of corruption not only damage
the reputations of companies and whole countries, they also
compromise the legitimacy of MNEs in the eyes of local and
global communities” (p.192). Marriott is a United States based
corporation that follows the United States Foreign Corrupt
Practices Act and abides by United States economic sanctions
and anitanti-boycott laws, regardless of the country they are
doing business in at the time.
One final ethical concern addressed in the Business Conduct
Guide for Marriott is their view on political giving and
activities. Corporate guidelines state that it is infrequently
suitable to give anything of value to any government official.
While you are encouraged to do your civic duty and participate
in political elections, you are to do such activities on your own
time and with your own resources. All associates are to avoid
even the smallest appearance of inappropriate behavior in
regards to political support for the purpose of gaining an
advantage (Marriott Business Conduct Guide, 2011, p. 22).
Whether an associate is in doubt regarding discussions with the
competition or has concerns over attempted bribery, Marriott
has avenues to help report potential issues. The company has a
no retaliation policy so associates can feel free to come forward
to report such illegal and unethical business acts. According to
the Business Conduct Guide (2011), associates can use the
“open door” policy with managers, call an integrity line,
contract internal audit or contact the Marriott law department to
report suspected inappropriate practices (p. 5).Social
Responsibility
The company’s Corporate Sustainability Report (CSR) for 2014
addresses areas where Marriott has responsibility to serve the
community. Marriott has commitments for all its facilities to
“reduce, reuse, and recycle”, which helps each environment
where properties are located. The CSR describes the company’s
core value which is “to Serve our World” through the “Spirit to
Serve Our Communities” strategy (p. 22). Marriott has many
programs throughout the world where they make cash
contributions, in-kind contributions and employees volunteer
and make impacts on local communities.
Stakeholders are engaged in advocating for the industry.
According to the CSR, stakeholders take on topics such as
reforms for improved travel, immigration reform, and illegal
trafficking of people and products (p. 8). These areas all have
significant impact on the travel industry as a whole and
stakeholders (including associates, customers, communities, and
shareholders) push for positive change on topics that will
improve the overall health of the industry, which will ultimately
improve Marriott’s corporate position.
Suppliers associated with Marriott not only have to uphold the
company’s ethical standards, but also must adhere to their
corporate philosophy on responsible sourcing. Suppliers must
help Marriott conserve energy, water use, and include more
sustainable materials (CSR, 2014, p. 32). The CSR does make
note that while Marriott attempts to be transparent and know
where its products have been, working across borders makes it
difficult sometimes to know the complete travels a product
takes prior to its final destination (p. 32). Conclusion
In conclusion, the Marriott is one of the most premier
hospitality organizations in the world. The organization has
established a strong presence through franchising its large
portfolio to a very diverse pool of owners. This has allowed the
Marriott to continue to expand. The Marriott offers a wide
assortment of high-end accommodations and upscale
entertainment in an effort to meet the needs of every customer.
Moreover, the Marriott thrives on the experience of the
everyday consumer. Each customer is treated with the utmost
care and attention. Guided by these principles the organization
has become a household name that has been able to grow
through savvy marketing techniques and strategies. These
principles will allow the Marriott to be very prosperous in
Panama and other future endeavors.
References
Ann, B. (1997). The Spirit to Serve: Marriott's Way. New York:
Harper Business.
Daniels, J. D., Radebaugh, L. H., & Sullivan, D. P. (2013).
International business: Environments and operations. (14th ed.).
Upper Saddle River, NJ: Prentice Hall.
Euromonitor International (2009). Marriott International Inc -
Travel and Tourism – World. Retrieved from
http://www.siimt.com/work/models/siimt/Resource/1098/Marrio
t_World.pdf
Financial Accounting Standards Board (FASB). (2014).
Retrieved on 8/14/14 from
http://www.fasb.org/jsp/FASB/Page/LandingPage&cid=1175805
317350
Financial Reporting Standards (IFRS). (2014). IFRS
Applications Around the World: Jurisdiction Profile: Panama.
Retrieved on 8/14/14 from http://www.ifrs.org/Use-around-the-
world/Documents/Jurisdiction-profiles/Panama%20-IFRS-
Profile.pdf
Henry, B. (2003). An Atlas of The Multinational Corporation.
NY: The New Press.
International News (1999). Hotel and Motel Management.
Retrieved from
http://web.b.ebscohost.com.ezproxy.umuc.edu/ehost/pdfviewer/
pdfviewer?sid=21b03e2a-2149-4789-a614-
1e0a93557578%40sessionmgr114&vid=118&hid=127
Marriott International. (2014). About Marriott International-
Find Your World. Retrieved on 8/14/14 from
http://www.marriott.com/marriott/aboutmarriott.mi
Marriott International. (2014). Brands. Retrieved from
Marriott.com: http://www.marriott.com/hotel-
development/marriott-brands.mi
Marriott International. (2011). Marriott Business Conduct
Guide. Retrieved from
http://www.marriott.com/Multimedia/PDF/CorporateResponsibil
ity/2014SustainRpt_FNL_lr.pdf
Marriott International Inc. (2014). Core Values & Heritage.
Retrieved from Marriott.com: http://www.marriott.com/culture-
and-values/core-values.mi
Marriot Sustainability Report (2014). Retrieve from
http://www.marriott.com/Multimedia/PDF/CorporateResponsibil
ity/2014SustainRpt_FNL_lr.pdf
Marriott International, Inc. (2012). 2012 Travel Directory. JW
Marriott. Retrieved from
http://www.marriott.com/Multimedia/PDF/Brand_Directories/J
W_Downloadable_Directory.pdf
Michigan State University. (2014). Hospitality and Travel:
Introduction. GlobalEdge. Retrieved from
http://globaledge.msu.edu/industries/hospitality-and-travel
NASDAQ. (2014). Marriott International Competitors.
Retrieved from NASDAQcom:
http://www.nasdaq.com/symbol/mar/competitors
Pike, J., (2011). Central and South America Marriott Expands.
Retrieved from
http://web.b.ebscohost.com.ezproxy.umuc.edu/ehost/pdfviewer/
pdfviewer?sid=21b03e2a-2149-4789-a614-
1e0a93557578%40sessionmgr114&vid=40&hid=127
Schermerhorn, J. (2009). Exploring Management. Boston:
Kensington Publishing .

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(Read the green parts)CHAPTER 12 READINGCHAPTER 13 REA.docx

  • 1. (Read the green parts) CHAPTER 12 READING CHAPTER 13 READING Global Thinkers Consulting Group: Analysis of Marriott Hotel in Panama Week 10 Group Assignment Running Head: ANALYSIS OF MARRIOTT HOTEL IN PANAMA1 ANALYSIS OF MARRIOTT HOTEL IN PANAMA 2 09/0209/2014
  • 2. Team Members: Jenn O’Neal Lisa Ross Theodore Newton Tommy Choi Dominic Eze Table of Contents Executive Summary 3 Introduction 4 Nature of the MNC’s International Operations 4 Implementation Problems 5 Management Issues 6 Strategy 6 Finance & Accounting 8 Marketing8 Human Capital 10 Marriott’s Ethics Code 10 Social Responsibility 12 Conclusion 12 References 13 Executive Summary 2 Introduction 3 Nature of the MNC’s International Operations 3 Implementation Problems 5 Strategy 6 Finance & Accounting 7
  • 3. Marketing8 Human Capital 10 Marriott’s Ethics Code 11 Social Responsibility 12 Conclusion 13 References 14 Introduction Global Thinkers Consulting Ggroup recommends that Marriott Hotel expand their hotel chain into Panama. Panama is a strong option since Marriott is known as a hospitality and tourism industry around the world, providing a variety of services and activities that appeal to guests in Panama. Marriott’s strategy to gain the largest market will be to offer a diverse array of services and luxury hotel features, high quality customer service, and their already prominent name as a foothold. Marriott financing will be guided by a combination of global and US accounting practices so they are compliant in their home country and new sites. Marriott will be able to market to their audience by push-pull promotional practices, attractive pricing, using the Marriott’s current JW brand. Marriott will be successful in Panama because of their strong human capital structure, code of ethics, and social responsibility.Nature of the
  • 4. MNC’s International Operations Marriott International is a hospitality and tourism industry involved in providing world class lodging, foodservice, recreational, gaming, and travel services across different operational bases globally. The company is a US based hospitality industry with its corporate headquarters in Bethesda, Maryland; the company has expanded its operations into over 80 countries with 4000 brands established to provide services for different consumer segments. In realisingrealizing its corporate mission, the company engages in “operations and franchising of hotel services, the development and operation of holiday ownership resorts, the operation of Marriott Executive Apartments, the provision of furnished corporate housing through its Marriott Executive Stay division, and the operation of conference centrescenters” (Euromonitor International, 2009, p. 5). The provision of these different operational categories help Marriott intensify its effort in ensuring wide coverage in hospitality and tourism in order to maintain competitive advantage, customer satisfaction, and loyalty. In keeping with innovations in the hospitality and travel industry, Marriott recently announced plans to significantly grow its global coverage portfolio of in luxury and lifestyle brands. The company intends to actualize this plan of by building 200 luxury and lifestyle hotel projects over the next several years. This $15 billion investment would be financed by the company’s owners and franchisees (Euromonitor International, 2009). The company continues to generate revenue through its direct operations at various hotel locations and franchise with investors in the hospitality industry. The company operates different brands of hotels ranging from high class to low class categories aimed at providing services for all consumer segments. The company presently operates 449 hotels in its luxury and lifestyle portfolio across eight brands of Ritz-Carlton, JW Marriott Hotels & Resort, Edition, Autograph Collection, AC Hotels by Marriott, Renaissance Hotel, Bvlgari Hotel & Resort,
  • 5. and Moxy Hotel. These This luxury and lifestyle initiative provides a unique personality and a distinctive guest experience which creates a wide range of services for different customers aimed at ensuring loyalty within its brand network. The company has maintained aggressive development of its international pipeline as a strategy to combat the falling patronage in the US hospitality and travel industry due basically to the declining economy. This approach is geared towards cultivating traveler’s loyalty across the globe. Panama ias an investment destination with great potentials in tourism and economic growth propelled the return of Marriott International after several years of terminating operations in that area. The company operates 296 rooms at the Panama City Marriott Hotel, which is strategically located in Panama CityCity; . And the hotel represents the first Marriott directly operated hospitality project in Panama (International News, 1999). Marriott interest in Panama has continued to grow with the latest plan to develop 180-room Casamar Marriott Panama Resort within the Casamar master-planned resort community on Panama’s Pacific Coast. The company would base its operation on franchise agreement with Casamar Development, S.A. and Corporación Turística del Pacífico, S.A., which will enhance significantly the value of the country’s Pacific Coast (Pike, 2011). Marriott International has strategically through franchise agreement launched its presence in the fast growing Pacific Coast of Panama where wealthy Panamanians and tourists retreat during weekends and holidays. The number of tourists doubled to 1.7 million from 2002 to 2010, and the region has become a destination for the high-profile hospitality industry (Pike, 2011). Implementation Problems Marriott as a global hospitality and tourism industry has encountered various implementation problems in expanding in Panama and other parts of the world. The company’s aggressive expansion drive into Panama and other North American region was not devoid of cultural and language barriers. Panama
  • 6. predominantly speaks Spanish language, and Marriott realized the need to train its associates in different languages which made business transactions easy. The company designed “Valuing Our World of Differences, a new mandatory training course for all associates, to help our workforce develop or further enhance cross-cultural competence” (Marriott CSR, 2014, p.21). The company adopts franchising and partnerships in its expansion drive, so as to reduce business risks and maintain competitive advantage. Implementing the company’s expansion plan requires huge resources for property acquisition and development, this makes collaboration and partnership necessary in actualizing the company’s mission of rendering valuable services to ensure customer satisfaction and loyalty. Daniels, Radebaugh, and SullivanSR, (2013) explains the importance of collaboration in a culturally differentiated environment which helps partners deal with challenges and learn from each other’s differences. Marriott International uses franchise in realizing its expansion plan in order to maintain customer loyalty across different regions and countries. every business region. The economic downturn in recent time reduced the hospitality and tourism activities in Panama and other business regions. The global expansion drive by Marriott International is a strategy in checkmating the impact of the downturn in the hospitality and travel industry due to the declining economic situation here in the US. This approach helps cultivate loyalty among different travelers, and Marriott has continued to reward its customers through the company’s customer loyalty reward programs worldwide. Management Issues Another issue to consider is the management of overseas operations. Overseas operations should be the run by the principles the organization was founded upon. When issues arise communication is key. Any special issues should be handled initially at the level of the franchise owner. The franchise owner should act promptly to resolve the issue for the
  • 7. customer. In some cases the situation may be escalated. In this case the issue should be communicated directly to the corporate headquarters (Marriott International Inc, 2014). Headquarters will work diligently to resolve the issue for the customer providing complementary visits and other rewards. If there is an internal issue it can be handled by the corporation. Every fFranchise owner has an account manager from Marriott that can help resolve issues as well. There is also an advisory council that can be also be of assistance,assistance; franchise owners can reach out for assistance this way as well. Lastly, suppliers are carefully evaluated to reduce issues. However, when issues with suppliers occur they are coordinated through a contractor Avendra. When issues arise through suppliers it is handled through the contractor (Avendra, 2014). Strategy The lodging and hospitality industry is one of the most competitive and challenging industries in the world. It focuses on making consumers and customers happy and comfortable. The lodging industry allows customers to experience everything from high-end luxury hotels to extended stay hotels. As one of the prominent leaders in the industry the Marriott offers lodging accommodations in all capacities. Strategically, the Marriott has been very successful. The Marriott offers a wide variety of brands and products to provide pleasurable experiences to each and every customer. The customer that enjoys the most luxurious experiences may find comfort in the JW Marriot Hotels or the popular Ritz Carlton. Customers who require longer arrangements may prefer the Residence Inn Marriott or the Towne Place Suites Marriott. This diversity has allowed Marriott Hotels to be prosperous throughout the world (Marriott International, 2014). Marriott hotelsInternational has even branched into different markets in order to add enjoyment and excitement to the customer experience. The Marriott hotel offers high end entertainment to customers. At many Marriott hotels customers are able to experience quality nightlife. Customers have the opportunity to attend concerts and live performances sponsored
  • 8. through Marriott for its guest. Some customers utilize the Marriott hotel for its spectacular wedding services. In order to be the world’s premier lodging and hospitality hotel industry, the Marriott offers remarkable wedding services for those who wish to utilize the service. The excellent scenery, and comfort make the Marriott one of the best places to get married. The customers stands at the Marriott’s core. The Marriott’s attention to customers sets it apart from other competitorsthe competition. The Marriott strives to offer an exceptional customer experience. The Marriott stands by the principles of putting consumers first, adapting to change, pursing excellence, and honestly serving patrons. Also, the Marriott believes in creating a better community. Standing true to these principles is the key to the Marriott’s success and growth (Marriott International Inc., 2014). The Marriott expanded through franchising, as may other organizations have done to expand internationally. The Marriott licenses it brands and products to those that meet specific qualifications. They Marriott requires that customers identify the exact location of land. Potential owners are required to put together a proposal that identifies how large each guest room will be, and a total project budget. The potential owner is required to provide a detailed proposal explaining exactly which brand and products they are interested in. Through franchising, the Marriott is able to expand its brand and reach out to a wide variety of communities. The Marriott expanded in to Panama through franchising and has been very successful. This strategy fits in perfectly with the goals and objectives of the Marriott. Through this strategy the organization has been able to reach out to a diverse community and adapt to the needs of consumers within the Panama environment. Marriott’s main goals and objective is to provide an exceptional atmosphere for customers. Competition is very intense around the world. The Marriott competitors include: Starwood hotels popular hotels
  • 9. include the Westin, and Sheraton hotels; Choice Hotels International whose popular brands include Comfort Suites and Quality Inn; The Hilton who is one of the leading lodging companies in the world, and many others. In Panama the Marriott endures heavy competition from almost every organization in the industry. Panama hosts locations for the Westin, the Hyatt, the Trump and even the Sheraton. Despite the intense competition the Marriott is one of the most successful in the industry. The Marriott provides customers with a great experience, making the Marriott ideal for expansion (NASDAQ, 2014).Finance & Accounting More than a few features separate internationally based reports from domestically oriented financial statements. Amongst these are the issues of consolidation, translation of individual accounts, and overall reporting of international profits. Currently, the U.S. tax regulations involve the consolidation of the financial statements of subdivisions or branches in congruence to the proportion of ownership of the parent organization. The regulations range can include a variety of rules from a pro-rata incorporation of profits and losses to a full disclosure in the balance sheet and income statement. The excessive international profits because of the favorable exchange variations were transferred into this particular account. Withdrawals were completed through the period of high losses branching from unfavorable exchange movements. The results of these actions shows a smooth pattern in a MNCs international profits in MNCs international profits. In FASB No. 8, later mandated that both transaction gains and losses and translation amendments be incorporated in net income, with a different disclosure of only the cumulative foreign exchange gain or loss (FASB, 2014). This obligation caused highly discernible swings in the details of net earnings of U.S. multinationals. Since the issuance of FASB No. 52, only certain transactional gains or losses are replicated in the income statement (FASB, 2014). Panama has adopted International Financial Reporting Standards (IFRS) and which is required for
  • 10. all domestic and foreign companies listed on the Stock Exchange in Panama starting 2000 (IFRS, 2014). All domestic companies listed on the stock exchange are required to use either IRFS or U.S. General Acceptable Accounting Practices (U.S. GAAP). There are several issues when dealing with financial, currency and accounting practices when doing business internationally. Overall, the various mandated accounting practices allowed for smooth accounting patterns for MNCs iInternational profits. Financial reporting is more transparent now that all domestic companies listed on the stock exchange are required to use IFRS or US accounting practices.Marketing Marriott Hotel has decided to expand operations in Panama per Global Thinkers Consulting recommendation. Panama has a unique marketing mix and marketing practices that differ from the United States’ practices. Panama’s promotional practices, pricing, branding strategies, and customer characteristics will be considered as Marriott expands their hotels in this country. The target customers for this hotel will be travelers across the world that are looking for a variety of activities including luxury accommodations, history, beaches, and golf (Marriott International, Inc., 2012). There are also cultural and economic considerations that can impact the standardization of products (Daniels, Radebaugh, & Sullivan, 2013, p. 607). Marriott should consider a combination of a push-pull promotional mix, which relies on both “direct selling techniques… [and] mass media” with a slightly larger emphasis on the pull strategy (Daniels, Radebaugh, & Sullivan, 2013, p. 613). Since customers may not directly seek Marriott as an option, since there are many other hotels in the area, Marriott should advertise to entice customers. The advertising can focus on areas that attract customers in Panama. The pricing should be set that it is “low enough to gain sales but high enough to guarantee the flow of funds required to cover such expenses as R&D, production, and distribution” (Daniels, Radebaugh, & Sullivan, 2013, p. 609). Pricing
  • 11. obstacles include government intervention, market diversity, and currency fluctuations. As a guide, Global Thinkers Consulting recommends setting the price the same as pricing in the JW Marriott hotel chain in Central America between $150 and $250 per night. Marriott hotels are widely known throughout the world, and would not need to advertise what they are, but rather how they are a better hotel in Panama compared to others. Marriott should maintain their worldwide brand, but should consider a slight alteration for the hotels in Panama. Marriott currently has 18 different brands under their name, and can use one of these that appeal to the target audience. The JW Marriott brand is already located in other counties in Central America, and would also suit Panama; this brand advertises that “Less says much more. No loud pretense. No excess formalities. Your surroundings are defined by authentic beauty. And your desire to own a truly memorable experience is magnificently met” (Marriott International, Inc., 2012, p. 2). Marriott will also have an advantage in Panama since they have an established transportation foothold servicing flights and boating docks for travelers around the world. Marriott should use a combination of a standardized and differentiated marketing program. The hotel chain in Panama should be standardized according to other JW Marriott properties, but the JW chain is slightly differentiated from other Marriott properties since it targets the culture in this area. By standardizing this property similar to other hotels, Marriott can benefit with a cost savings, higher quality since some characteristics are similar to other properties, and gain faster entry into the market since it is already an established chain (Daniels, Radebaugh, & Sullivan, 2013, p. 614). This is a similar strategy to other hospitality and travel industries since this fragmented industry can be profitable with “efficient operations since many costs are fixed, effective marketing increasing additional convenience offerings, and establishing strong brand recognition” (Michigan State
  • 12. University, 2014, para. 2).Human Capital Marriott International, Inc is one of the leading organizations in the hospitality industry that comprises of more than 3,900 property sites and 18 types of brands. Marriott was instituted by J. Willard and Alice Marriott and directed by the Marriott family management for over 80 years, and the organization’s headquarter is located in Bethesda, Maryland (Marriott, 2014). Today, the organization is operated by J.W. Marriott Jr., the chairman of the board and chief executive officer and William J. Shaw as the president and chief operating officer. J. Willard Marriott’s simple goal is to provide, “Good Food and Good Service at a Fair Price.” Marriott’s culture has four key points: Do whatever it takes to take care of the customer; Pay extraordinary attention to detail; Take pride in their physical surroundings; and use their creativity to find new ways to meet the needs of customers (Marriott, 2014). Marriott believes in a hands-on leadership style that shows the importancet of employees (associates) (Marriott, 2014), Spirit to serve culture, individual hotel appearances such as the front desk work, and is well respected by employees. Marriott uses the geocentric approach in which the best people are wanted for key jobs throughout the organization, despite of their ethnic group. This builds a strong combining culture and casual management group. This approach does limit the capability of the organization to pursue this policy due to immigration policies of national governments. Marriott’s structural dimensions include five types: Formalization; Specialization; Centralization; Personal Ration; and Hierarchy of Authority. Each of these structural dimensions plays a critical part in Marriott’s organizational culture. Marriott is innovative and is changing the results of the innovative practices into functional products, services, and work system. The 3 three variables to generate the “precise” atmosphere for advancement are structural, cultural, human resource. Overall, Marriott’s design is a mechanistic design and each subdivision can be unrefined. Marriott’s Ethics Code
  • 13. Marriott provides an abundance of information and guidance to assure compliance of its ethical standards. The Marriott Business Conduct Guide provides comprehensive information on competition law and antitrust, bribery and corruption, political giving, and where to go for help if confronted with these issues. The Business Conduct Guide (2011) states all Marriott associates and those acting on Marriott’s behalf are to be familiar with and uphold the standards outlined within the guide and it applies on or off duty. The first ethical rule addressed is competition and antitrust law. Marriott’s policy is to follow any and all applicable laws and regulations in the countries it does business. According to the Business Conduct Guide (2011), no Marriott associate is to enter into conversation with competitors where the discussions may limit competition (p. 11). Along these lines, Marriott also encourages fair practices where competitors are concerned. They encourage associates to refrain from making inaccurate claims about competitors and they are told to avoid the use of private information from the competition (Marriott Business Conduct Guide, 2011, p.13). Bribery and corruption are addressed within the Business Conduct Guide. According to Daniels, Radebaugh, and Sullivan (2013) bribery is at the center of corrupt behaviors when dealing with multinational corporations (p. 191). “Marriott strictly forbids giving or promising anything of value…to influence that person in his or her official duties or to encourage unlawful conduct” (Marriott Business Conduct Guide, 2011, p. 18). The company also looks at third party corruption in the same regard. Associates are to perform their due diligence to assure contractors, vendors and suppliers that are selected to do business with Marriott follow the company’s guidelines against bribery and other corrupt practices. Daniels et al. (2013) states “disclosures of corruption not only damage the reputations of companies and whole countries, they also compromise the legitimacy of MNEs in the eyes of local and global communities” (p.192). Marriott is a United States based
  • 14. corporation that follows the United States Foreign Corrupt Practices Act and abides by United States economic sanctions and anitanti-boycott laws, regardless of the country they are doing business in at the time. One final ethical concern addressed in the Business Conduct Guide for Marriott is their view on political giving and activities. Corporate guidelines state that it is infrequently suitable to give anything of value to any government official. While you are encouraged to do your civic duty and participate in political elections, you are to do such activities on your own time and with your own resources. All associates are to avoid even the smallest appearance of inappropriate behavior in regards to political support for the purpose of gaining an advantage (Marriott Business Conduct Guide, 2011, p. 22). Whether an associate is in doubt regarding discussions with the competition or has concerns over attempted bribery, Marriott has avenues to help report potential issues. The company has a no retaliation policy so associates can feel free to come forward to report such illegal and unethical business acts. According to the Business Conduct Guide (2011), associates can use the “open door” policy with managers, call an integrity line, contract internal audit or contact the Marriott law department to report suspected inappropriate practices (p. 5).Social Responsibility The company’s Corporate Sustainability Report (CSR) for 2014 addresses areas where Marriott has responsibility to serve the community. Marriott has commitments for all its facilities to “reduce, reuse, and recycle”, which helps each environment where properties are located. The CSR describes the company’s core value which is “to Serve our World” through the “Spirit to Serve Our Communities” strategy (p. 22). Marriott has many programs throughout the world where they make cash contributions, in-kind contributions and employees volunteer and make impacts on local communities. Stakeholders are engaged in advocating for the industry. According to the CSR, stakeholders take on topics such as
  • 15. reforms for improved travel, immigration reform, and illegal trafficking of people and products (p. 8). These areas all have significant impact on the travel industry as a whole and stakeholders (including associates, customers, communities, and shareholders) push for positive change on topics that will improve the overall health of the industry, which will ultimately improve Marriott’s corporate position. Suppliers associated with Marriott not only have to uphold the company’s ethical standards, but also must adhere to their corporate philosophy on responsible sourcing. Suppliers must help Marriott conserve energy, water use, and include more sustainable materials (CSR, 2014, p. 32). The CSR does make note that while Marriott attempts to be transparent and know where its products have been, working across borders makes it difficult sometimes to know the complete travels a product takes prior to its final destination (p. 32). Conclusion In conclusion, the Marriott is one of the most premier hospitality organizations in the world. The organization has established a strong presence through franchising its large portfolio to a very diverse pool of owners. This has allowed the Marriott to continue to expand. The Marriott offers a wide assortment of high-end accommodations and upscale entertainment in an effort to meet the needs of every customer. Moreover, the Marriott thrives on the experience of the everyday consumer. Each customer is treated with the utmost care and attention. Guided by these principles the organization has become a household name that has been able to grow through savvy marketing techniques and strategies. These principles will allow the Marriott to be very prosperous in Panama and other future endeavors. References Ann, B. (1997). The Spirit to Serve: Marriott's Way. New York: Harper Business. Daniels, J. D., Radebaugh, L. H., & Sullivan, D. P. (2013). International business: Environments and operations. (14th ed.). Upper Saddle River, NJ: Prentice Hall.
  • 16. Euromonitor International (2009). Marriott International Inc - Travel and Tourism – World. Retrieved from http://www.siimt.com/work/models/siimt/Resource/1098/Marrio t_World.pdf Financial Accounting Standards Board (FASB). (2014). Retrieved on 8/14/14 from http://www.fasb.org/jsp/FASB/Page/LandingPage&cid=1175805 317350 Financial Reporting Standards (IFRS). (2014). IFRS Applications Around the World: Jurisdiction Profile: Panama. Retrieved on 8/14/14 from http://www.ifrs.org/Use-around-the- world/Documents/Jurisdiction-profiles/Panama%20-IFRS- Profile.pdf Henry, B. (2003). An Atlas of The Multinational Corporation. NY: The New Press. International News (1999). Hotel and Motel Management. Retrieved from http://web.b.ebscohost.com.ezproxy.umuc.edu/ehost/pdfviewer/ pdfviewer?sid=21b03e2a-2149-4789-a614- 1e0a93557578%40sessionmgr114&vid=118&hid=127 Marriott International. (2014). About Marriott International- Find Your World. Retrieved on 8/14/14 from http://www.marriott.com/marriott/aboutmarriott.mi Marriott International. (2014). Brands. Retrieved from Marriott.com: http://www.marriott.com/hotel- development/marriott-brands.mi Marriott International. (2011). Marriott Business Conduct Guide. Retrieved from http://www.marriott.com/Multimedia/PDF/CorporateResponsibil ity/2014SustainRpt_FNL_lr.pdf Marriott International Inc. (2014). Core Values & Heritage. Retrieved from Marriott.com: http://www.marriott.com/culture- and-values/core-values.mi Marriot Sustainability Report (2014). Retrieve from http://www.marriott.com/Multimedia/PDF/CorporateResponsibil ity/2014SustainRpt_FNL_lr.pdf
  • 17. Marriott International, Inc. (2012). 2012 Travel Directory. JW Marriott. Retrieved from http://www.marriott.com/Multimedia/PDF/Brand_Directories/J W_Downloadable_Directory.pdf Michigan State University. (2014). Hospitality and Travel: Introduction. GlobalEdge. Retrieved from http://globaledge.msu.edu/industries/hospitality-and-travel NASDAQ. (2014). Marriott International Competitors. Retrieved from NASDAQcom: http://www.nasdaq.com/symbol/mar/competitors Pike, J., (2011). Central and South America Marriott Expands. Retrieved from http://web.b.ebscohost.com.ezproxy.umuc.edu/ehost/pdfviewer/ pdfviewer?sid=21b03e2a-2149-4789-a614- 1e0a93557578%40sessionmgr114&vid=40&hid=127 Schermerhorn, J. (2009). Exploring Management. Boston: Kensington Publishing .