External Environmental Analysis: Marriott's Expansion in Australia

This report provides an external environmental analysis of Marriott International's potential expansion into Australia. It begins with a background of Marriott, highlighting its history, core values, mission, vision, and financial performance. The analysis uses the PESTEL framework to assess political, economic, social, technological, environmental, and legal factors impacting Marriott's expansion, identifying both opportunities and threats. Key opportunities include Australia's stable political environment, growing economy, multicultural background, technological advancement, and high standard of living. Threats include increasing competition, the rising popularity of Airbnb, vulnerability to terror attacks, and the need for sustainable practices. The report also employs Porter's Five Forces to analyze the competitive intensity within the Australian hospitality industry. The conclusion assesses the feasibility of Marriott's expansion based on the identified factors, suggesting that with careful consideration of the threats and leveraging the opportunities, Marriott can successfully expand its presence in Australia. Desklib provides access to this and other solved assignments for students.

Running head: EXPANSION OF MARRIOTT IN AUSTRALIA
EXPANSION OF MARRIOTT IN AUSTRALIA
Name of the Student
Name of the University
Author Note

1EXPANSION OF MARRIOTT IN AUSTRALIA
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Background of the Organization- Marriott:...........................................................................2
PESTEL Analysis:.................................................................................................................7
Opportunities and Threats for Marriott:...............................................................................12
Industry Analysis- Porter’s Five Forces:..............................................................................13
Conclusion:..............................................................................................................................15

2EXPANSION OF MARRIOTT IN AUSTRALIA
Introduction
The strategic tool, which is used for the identification of internal as well as the
external factors that can influence performance of organizations, is known as Environmental
analysis (Moutinho and Phillips 2018). The factors reflects the assessment of the threats as
well as the opportunity of the organizations (Ansoff et al. 2019). The procedure of
environmental analysis consists of Environmental Scanning, which identifies the elements or
factors that affects the business operations of organizations (Grant 2016). The objective is to
find early warning signal and/or emerging trends (Keith 2017). The external environmental
analysis studies the analysis of the industry, competitor analysis and macro-environmental
forces. Macro environment forces concentrates on the future possibility of events (Glowik
2017). The purpose of the paper is to discuss the expansion possibility of Marriott in
Australia by conducting external environmental analysis. Marriott is planning to expand its
business to Australia, which will require the analysis of opportunities and threats in
Australian hospitality industry. The paper will also present the background information of
Marriott. For the identification of threats and opportunity of the organizations, external
analysis will be conducted by using the framework of PESTEL as well as the Porter’s
Industry Analysis. The paper will be concluded by stating the expansion possibility of
Marriott in Australia.
Discussion
Background of the Organization- Marriott:
The American multinational company Marriott, specializing in hospitality services
manages as well as it involves in franchising a wide range of hotels, lodge facilities and other
hospitality businesses. J. Willard Marriott founded the company in the year 1927. The

3EXPANSION OF MARRIOTT IN AUSTRALIA
headquarter of Marriott is situated in the metropolitan area of Washington, D.C. Marriott
offers includes around 6,900 properties in 130 countries (marriott.com 2019).
Marriott International was started in the year 1993 after the split of two different
companies, Host Marriott Corporation and Marriott International. The first ever hotel
organization, which offered the online service of booking hotel reservation is Marriott. The
organization incorporated the online infrastructure of Marriott's Automatic Reservation
System for Hotel Accommodations (MARSHA) (marriott.com 2019). The organization
acquired the hotel chain of Canada, Delta Hotels in the year 2015. Marriott also acquired
Starwood Hotels and Resorts Worldwide in the year 2015. The acquisition of Starwood
presented a wide presence in non-US regions (marriott.com 2019).
The core values of Marriott consists of various elements such as taking care of
employees/staff before taking care of consumers. The hotel brand focuses on improving the
service offerings for reaching as well as in maintaining the level of excellence. The brand
believes in incorporating innovation by accepting changes from external environment
(marriott.com 2019). The brand concentrates on challenging status quo of the operational
functions and identifies the changing needs for consumers in regards with new locations,
different guest experiences as well as new brands (Tso and Wood 2018). Integrity is one of
the main values of Marriott as well as the organization involves itself in legal and ethical
practices for day-to-day business activities, policies of supply chain, employee policies and
regulations, commitment towards social responsibilities as well as human rights as well as
setting standards for environmental practices. The organization also involves activities for
contributing towards sustainability (marriott.com 2019).
The mission of the organization is to improve lives of the customers by the creation of
supreme quality of vacation and leisure experience. The vision of Marriott is to become the

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leader of providing and facilitating leisure as well as for vacation experiences (marriott.com
2019).
Brand portfolio:
Services offered by the brand includes events like social events, meetings as well as
various booking packages like senior travelling packages. The stakeholders of Marriott
includes vendors, communities as well as customers, franchises, the organization manages a
wide range of hotels but owns very few of them as well as independent owners (marriott.com
2019).

5EXPANSION OF MARRIOTT IN AUSTRALIA
Organizational structure of Marriott
(Source: Wang 2018)
Financial structure of Marriott for the third quarter of the year 2018:
The organization reported a net income of 483 million dollars as compared to 485
million dollars in 2017. The Earnings per Share of the company was reported to be 1.38
dollars. The adjusted net income of third quarter of 2018 was around 598 million dollars,
which was a 51 percent increase from 2017 (Tso and Wood 2018). The franchise fees as well
as base management income summed up to 781 million dollars, which was a 14 percent
increase from the previous year. The incentive management fees increased up to 9 percent,
from 138 million dollars to 151 million dollars (Robinson et al. 2016).
Financial Performance charts:

6EXPANSION OF MARRIOTT IN AUSTRALIA
Graph representing the net income of Marriott International from the year 2007-2018
(Source: marriott.com 2019)
Graph representing the revenue and net income in each segment
(Source: marriott.com 2019)

7EXPANSION OF MARRIOTT IN AUSTRALIA
Graph representing Earnings per share from September 2017 to June 2019
(Source: marriott.com 2019)
The company involves the approach of sustainability in its levels of value chain. They
contributes towards reducing the impacts of operational activities on the environmental
aspects. The environmental footprint of the company is mitigated by managing the water as
well as energy use, enhancing the utilization of recyclable resources as well as the renewable
energy as well as by reducing the carbon and waste extraction (Wang 2018). The
organization adopts innovative ways and technological implementation for facilitating their
sustainable strategic implications. They have incorporated the approach of sustainability from
designing hotels to improving guest experience. They also attempts at synchronising the core
values of the company with the supplier as well as the business partners for reducing the risk
as well as impact of business operation on the environment (Mendieta-Peñalver et al. 2017).

8EXPANSION OF MARRIOTT IN AUSTRALIA
PESTEL Analysis:
The tool or framework, which is used by businesses or marketers in order to assess as
well as it monitor macro-environmental factors for understanding the impact of external
environment on the organization (Moutinho and Phillips 2018). The findings of PESTEL
analysis are used for identifying the opportunities and threats of an organization.
PESTEL Positive or Negative for Marriott
Political Factors:
One of the important markets for the
operation of Multinational companies in
Asia Pacific is Australia. It reflects the state
of growing economy. It has a stable
business as well as stable political
environment. It also have a population of
skilled workforce with a diverse cultural
background. The country Australia reflects a
competitive cost base structure. The
economic resilience of Australia is the
impact of its stability in political structure as
well as the transparency in regulatory
systems. Australia has a sound framework
of governance. It is ranked among the top
five regarding Index of Economic Freedom
(Moutinho and Phillips 2018). The country
Australia offers the business environment,
which holds the 15th rank in regards with the
Positive for the expansion opportunity of
Marriott.

9EXPANSION OF MARRIOTT IN AUSTRALIA
ease of doing business (Wheelen et al.
2017). The regulatory system of Australia is
considered to be robust for the stable
institutional framework as well as strong
banking as well as the financial regulations.
The quality of life is rated as seventh
highest in world.
Economic Factors:
Australia has the 13th largest economy in the
world. The economy grew up to two percent
in the year 2017 as well as around three
percent in 2018. The opportunity of buying
off-land properties in an optimal rate arose
from the increasing number of people
opting for the option of ‘pure investment’
(Moutinho and Phillips 2018). The currency
exchange rates favours companies from
America as well as the foreign countries to
invest in business opportunities with ease
and convenience. The tax rate in Australia
currently thirty percent.
Positive for the expansion strategy of
Marriott.
Social Factors:
The population of Australia is smaller as
compared to other countries. It is around 23
million as recorder in the year 2018. The
Positive for the expansion plan as the
acceptability factor will be more with the
presence of diverse culture.

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average life expectancy of men is
approximately 80 years as well as women is
84 years. The country have a multicultural
background which increase the acceptability
of new products and services. The social
class of Australia is divided in three classes,
upper, middle and lower class (Moutinho
and Phillips 2018). Australia directs its
focus on the importance of higher
education. The standard of living in
Australia is ranked as the seventh highest in
the world. It is considered to be one of the
best counties in terms of education, quality
of life and education. Australians are
considered for investing time for
entertainment as well as leisure activities
which can be great opportunity for Marriott
by entering in the hospitality industry
(Grünig and Kühn 2015).
Technological Factors:
Australia is considered to be technologically
advanced in the world. It is known for
investing in technological implications.
Technology purchase of Australia have
grown at a rate of 4 percent in the year of
It will be beneficial for the organization for
the process of innovation.

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2018 amounting up to 65 million Australian
dollars (Molina-Azorín et al. 2015).
Companies like Marriott will acquire a great
advantage from the technological scenario
of the country (Gupta 2013). The
government is known to fund around 50
percent of the research & development of
the country (Moutinho and Phillips 2018).
The government has introduced a law,
which allows the security agencies to have
access of encrypted messages, which
contributes towards the overall security of
the country (Moutinho and Phillips 2018).
Environmental Factors:
The country face environmental issues like
it is considered to be the driest inhabited
continent on earth. Another challenge is the
increasing rate of climate change, which
causes infectious diseases, water insecurity
as well as the conflicts over water, food and
land (Moutinho and Phillips 2018).
This can be an opportunity for Marriott to
attract partners and customer by reflecting
the sustainable practices.
Legal Factors:
Australia has competition laws, consumer
laws as well as fair trade practices laws. The
Fair Work Act 2009 governs the
Positive for Marriott