Marriott International: Challenges in Global Business Expansion

This report provides a comprehensive analysis of Marriott International's international business strategy, focusing on expansion into South Africa and Asia. It examines the challenges and opportunities presented by these markets, considering factors such as environmental conditions, economic integration, and cultural issues. The report utilizes various analytical tools, including PESTLE, Ansoff matrix, and SWOT analysis, to assess the internal and external environments. Key findings highlight the need for Marriott to adapt its pricing and service strategies to attract a broader customer base, particularly in the low-budget segment. The report recommends strategic alliances to mitigate operational costs and risks associated with entering new markets. It also reflects on the implications of these recommendations, emphasizing the importance of responding to market opportunities to gain a competitive advantage. The report concludes with a discussion of global economic developments and their impact on the hospitality industry, offering insights into how Marriott can navigate the complexities of international business.

International Business

TABLE OF CONTENTS
Executive Summary ........................................................................................................................3
INTRODUCTION...........................................................................................................................4
ANALYSIS AND EVALUATION.................................................................................................5
ANSOFF Matrix..........................................................................................................................6
PESTLE Analysis........................................................................................................................8
Cultural issues............................................................................................................................10
Global economic development and its impact on Marriott hotel...............................................10
National responsiveness vs. economic integration challenge....................................................11
Economic Integration Process (EU, NAFTA etc.).....................................................................11
INTERGRATED SUMMARY AND SOLUTION OPTIONS.....................................................12
RECOMMENDATION.................................................................................................................14
REFERENCES..............................................................................................................................16
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EXECUTIVE SUMMARY
Hospitality industry is considered as one of the fastest growing service industries that
focuses on rendering luxurious and leisure services to customers and different clients. In order to
survive in the competitive scenario, hospitality organization must focus on International
businesses in the emerging markets so that they may enhance their brand image as well as
portfolio so that large customers get attracted towards it. Marriott International of UK is a largest
and well known hotel of UK and to maintain standards, hotel has focused on pricing factor which
is also regarded as promotional element of business.
(a) Option selected
The selected option for the international business assignment is to focus on the current
business problem and opportunities existing in the countries where Marriott International plans
to expand their business activities. Furthermore, researcher has also analysed the scenario with
the help of different tools and models.
(b) Core international business challenges and justification
The core international business challenges that Marriott International faces while
expanding their activities in the South Africa and Asia region is related with environment. As,
both the environmental condition within both the region change continuously as South Africa
covers 3000km coastal area that impact the environmental condition. While, Nepal is consider as
major hub for earthquake that affect the operation of hospitality organization in the region.
However, it also focuses on current international opportunities that are available for hotel
Marriott International that support them in growing their market area by targeting low segment
customers. The Marriott International is best known for their premium class luxurious & leisure
services thus, to grab the overall marketplace and to become the leading organization in the
hospitality industry, they must focus on entering in low budget segment to satisfy different needs
of customers.
(c) Approaches taken in analysis
Furthermore PESTLE, Ansoff matrix and SWOT analysis model have been used to
analyze the current scenario by determining different internal and external factors that affect the
international businesses of organization. However, these factor have also provided strategic
insight of the organization that supports management in taking effective decisions.
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(d) Key findings and recommendation
In addition to this, it is also recommend certain strategies and options that support
organization in creating successful international business. Recommended strategies will
effectively support the Marriott International to response with the opportunities present in the
market that support them in gaining competitive advantage.
(e) Critical reflection on the implication of the recommended option
Implication of strategic alliance to Marriott results in reducing the extra cost of
operations as with whom they are formulating the strategic alliances are already existing within
the Nepal. Furthermore, another implication of the recommended option that is strategic alliance
involves that it results in sharing the expenses as well as risk associated while entering into the
new market that is South Africa and Asia.
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INTRODUCTION
Hospitality industry is considered as one of the major service industries that renders
different services to the traveller and visitors so that they may enjoy their pleasant stay.
However, in the contemporary scenario, the ratio of travel and tourism has been increasing since
it also contributes in the development of economy (Dunning, 2012). Moreover, hospitality
industry possess broad range of services that are provided to customers and visitors such as
lodging, accommodation, food and beverages. Hospitality sector mainly depends upon the
accessibility of leisure time and customers disposable income. With the increasing hospitality
sector, it increases the number of visitors and travellers and simultaneously it also outcomes in
developing and growing of economy. The main objective for conducting the study is to focus on
assessing the international challenges and opportunities that are faced by the organization while
expanding their services and business activities into the new region and countries. For
accomplishing this objective the selected countries in which hospitality organization would
expand their businesses is South Africa and Asia as both the countries are highly potential for the
international business.
Overview of the organization
Present report focuses on one of the renowned hospitality organizations that is Marriott
International that organizes and manages wide range of portfolio of hotel that are engaged in
rendering services related with lodging, accommodation etc. However, organization has more
than 4087 properties in different countries and territories that support it to render services in the
broad marketplace. Marriott international is considered as a premium organization that renders
premium quality services to high income customers (Demirkan and Demirkan, 2014). Whereas,
in the contemporary scenario, organizations are engaging in international business as it provides
ample of opportunities so that they can easily serve the needs and requirement of large market,
adopt new advanced technology and support in overall development to sustain in the new
marketplace (Wild, Wild and Han, 2014). Main motive of hospitality industry is to expand
business activities, acquire resources and reduce the level of risk that is being faced by the
organization in the current scenario. With the help of economic integration process, firm can
easily save its future as different opportunities are being present with the help of which company
can become famous in worldwide.
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Relationship to the organization/ Challenge to be discussed
With the increasing pace of globalization author has assessed different challenges that
will be faced by the Marriott International while expanding their business activities in the
international market that is South Africa and Asia region. The author relationship with the
organization is that it support in examining the challenges that exist in the external market and
countries while expanding the activities. The different challenges that Marriott attain while
expanding business in South Africa is that the region possess high taxation level thus, it act as
the major challenge for Marriott international to expand their hotel within the South Africa.
However, Marriott will also counter with different challenges while expanding or entering into
the Nepal, Asia region that is the place is the hub of natural calamities that is earthquake. Thus, it
may act as major challenge for the Marriott International to operate in the Nepal region.
Identification of critical problem or opportunities relating to international business and their
impact on organization
With the increase in globalization, it also outcomes in increasing the level of competition
in the hospitality industry as many firms and organizations existing in this industry deliver
homogeneous services to the customers (Cantwell, Dunning and Lundan, 2010). There are
certain key challenges which support hospitality organization to focus in the international
business so that they may increase their market coverage as well as it also support them to
sustain in the competitive global marketplace. However, there are certain opportunities and
trends that support hospitality organization to focus on international business that are economic
integration processes, global economic developments, international dimensions of R&D and
innovation etc. All these factor effectively contribute in successful resolution of the international
business (Folsom and et. al., 2012). However, the impact of these challenges and opportunities
will benefit the Marriott International in expanding their activities in the new region by
increasing the overall market share.
Overview of the relevant context contributing to the problem and opportunities
Therefore, in the competitive environment, Marriott has potential opportunities to target
all income customers by modifying their services and pricing strategies. It has been stated that
Marriott International is highly dependent upon their luxury brands in US market. Thus, it lacks
low cost life style brands which is now popular in developing nations. Therefore, there are
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several opportunities for Marriott International to expand their services and hotels in the markets
like South Africa and Asia. Both the countries are consider as best option for the Marriott
International as there is no presence of premium and luxurious hotel. However, expanding hotels
in South Africa is beneficial as the country have around 3000 km coastal line and the major cities
like Johannesburg, Cape Town, Durban are situated at the coastal area that attracts many visitors
and business travellers to visits such places (South Africa, 2016). Therefore, it will positively
impact the brand image of Marriott and result in successfully expansion of their international
business (Beaverstock and et. al., 2010). Despite of this there are certain problems and issues
associated with the Marriott International while expanding activities in Nepal within Asia region
that is Nepal one have one international airport that will affect the demand of visitors and
travellers as mode of transport is limited within the country.
By adopting technique that is entering in the new markets like South Africa and Asia
region will affect the business of Marriott in a positive manner as with this, company gets
opportunities to tap or expand business into the new market around the world. However,
globalization has a positive impact on the international business that results in raising the level of
competition. The competition may be related with the services as well as cost and price of the
services (Hovhannisyan and Keller, 2010). With the help of entering in the Asian market that is
in the Nepal region Marriott International will target all segment customers so that they should
satisfy the requirement of all the customers and contribute in rising economy of emerging
markets. Although, international business will also impact on the organization through enhancing
the level of innovation as well dimensions of R&D so that they must have opportunity to
innovate their customer service so that they might target all segment customers who are related
to lower, middle and upper class.
Approaches to assessing the issues and opportunities
Furthermore, this report will also assess different conceptual frameworks as well as
models that would assist Marriott international in identifying and assessing the internal and
external factors that act as the major challenges for them in order to engage in the international
business (Hynes, 2010). Different models and frameworks are SWOT analysis, Ansoff matrix,
PESTLE analysis etc. These frameworks and models support the senior management of Marriott
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International in providing strategic insight that helps them in taking effective decision making so
that they may successfully engage in the international business.
ANALYSIS AND EVALUATION
The analysis and evaluation for Marriott hotel can be done by applying several kind of
tools and techniques. It facilitates corporation to expand business in the marketplace and deliver
good quality of services among customers. It consists of several tools like SWOT, PESTEL and
Ansoff matrix (Aggarwal, Berrill and Kearney, 2011). All these framework and models are
proved to be effective in determining long run success of company with the increased rate of
return. These are explained as follows-
Models and frameworks for identification of internal and external environment
SWOT analysis of Marriott hotel
It is an internal analysis which provides detail information related to internal as well as
external environment of corporation. By using this information, company can easily operate at
global marketplace with the increased rate of return. It has been applied as follows-
Strengths
 Good brand reputation
 Range of brands across 70 countries
 Technical innovations
 Pool of highly competent workforce
Weaknesses
 Limited market share
 Dependency on luxury brands in US
market
 Lack of low cost life style brands
Opportunity
 Low cost market segment
 Eco tourism
 Growth in Asian Travel and tourism
market
 Global hospitality sectors are at boom
that act as opportunity for Marriott
International (Hotel Industry
Analysis, 2012).
Threats
 Political instability
 Terrorism
 Economic recession
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PESTLE Analysis
It is the most important external analysis which provides detail information with regards
to uncontrollable factors of environment in the respect of Marriott hotel. It enables management
of corporation to bring modification in the current work environment and accordingly assists to
gain competitive advantage in the marketplace (Hamilton and Webster, 2015). It has been done
as follows- Political factors-It is the most important factor which affects the business of Marriott
hotel to a great extent. This is because of danger of terrorism, international relations and
political climate at the tourist destinations. For example, military conflict is the main
issue through which international air travel cannot work effectively. In June 2015, 39
people were killed at hotel beach in Tunisia. Such kind of incident frightens people who
access services of Marriott (Stephan and Roin, 2010). Marriott operates in 70 countries
like Nepal, Malaysia, Germany and UK as well as US. Also, Marriott has its existence in
Syria as well and in turn this affect operation of company to a great extent (PESTLE
Analysis of Marriott International, 2015). Furthermore, in 2014 downing of Malaysian
Airlines Flight which was fired from the Ukraine. Owing to this, scope of tourism has
decreased to great extent. Furthermore, political instability in Nepal can create issues
while expanding business of Marriott hotel. However, government of Nepal facilitates to
support travel and tourism business to a great extent. On the other hand, South Africa has
stable political situation which explore possibilities of effective progress of Marriott
hotel. Furthermore, it would be effective for corporation to expand business in South
Africa because of high demand of luxury hotel services. In addition to this, being member
of World Trade Organization South Africa proves to be effective location for growth and
development of Marriott hotel. Economic factors-Economic factor affects the business of organization very badly due to
economic crisis and adverse condition for the overall country. Here, slow growth of
South Africa and Nepal affects the operation of Marriott because of low spending limit of
buyers. Owing to this, organization cannot pay attention on its growth and expansion
because of low profitability and high cost of production (Hussain Rizwan and Latif,
2013). Furthermore, high exchange rate for US dollar is other factor which serves as a
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barrier in the growth and expansion of Marriott hotel. Apart from this, because of slow
economic growth, stock market in South Africa is collapsed and this is the reason that
organization cannot cope up with the changing scenario. It is the fact which needs to be
kept into mind by management of Marriott hotel. In addition to this, income inequality
and constant growth of middle class people do not allow them to visit across other
countries and access good quality of services that are rendered by hotels (Taylor, 2012).
The economic condition of Nepal is not stable due to political uncertainty. Further,
diverse exotic culture of country tend to ensure growth of Marriott hotel (PEST Analysis
of Nepal, 2016). However, lack of skilled workforce can be have negative impact on
corporation at the initial stage. The country has main sources of growth from
construction, financial and agriculture services as well as other services. Owing to this,
growth of rate of nation varies rapidly. At the same time issue of inflation may also be
issues in Nepal. Apart from this, economic condition of South Africa is quite better where
government is trying to remove unemployment with the help of industrialization.
Similarly, in 2014 hospitality industry of nation got benefit due to increased customer
base and high room rates (Growth spurt predicted for South Africa's hospitality sector,
2016). Social factors-Social factors are the other factors which affect the performance of
company through changing the preferences and taste of buyers. For example, willingness
of people to visit other countries and pay more for the products and services aid to
enhance sales turnover. Furthermore, cultural changes and effect of population bring
positive changes on the performance of hotel (Cadle, Paul and Turner, 2010). This is
because of increasing number of Asian travelers. Not only this, but now days people
demand for certain kinds of travel experiences like luxury resorts and packages tours.
This in turn increases the demand of hotel services in the marketplace by which Marriott
hotel can create its competitive edge in the marketplace. In Nepal people tend to have
local life style where different kind of culture and beliefs are followed. Similarly, people
of nation speak different languages like Indo-Aryan, Tibeto-Burman and Mongolian.
Some of these attractive aspects tend to increase demand of tourism in Nepal. Owing to
this, Marriott hotel can provides its luxurious services in Nepal. In current era preferences
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of buyers are changing at rapid speed but due to less available of luxurious hotel in South
Africa demand of Marriott hotel can be increased. However, being hot spots country it
may attract less visitors in a particular season whereas immense support from the side of
government can prove to be effective in successful expansion of corporation. Technological factors- This is one of the most imperative aspects which reduces barriers
related to distance and helps company to attract more buyers. Here, upgraded
technologies like social media, internet and several other factors have made it easy to
promote services across the globe (Guay, 2014). It is the only fact that hotels work with
integrity and approach buyers effectively. For example, Marriott hotel ties up with the
travel agencies so that promotion plan can be made effectively through understanding
current market trends. At this juncture, customers or visitors find effective holiday
packages in affordable prices. A counter argument might be that Marriott operates only in
premium segment by which low and middle class do not feel comfortable to access its
services (Bartle, 2002). Technological environment is considered by each organization
while expanding at international level. Here, the well known fact about Nepal is scarcity
of resources like gas, oil and coal which in turn upgraded technologies are used to import
the same. However, Marriott hotel has strong goodwill at global level so that it can easily
import required material. In addition to this, technologies such as Software as a service
(SaaS), mobility and social media. It aids to give rich experience to customers which in
turn increases scope of Marriott hotel. All these tools make it possible for coproration to
expand itself at international level. This is because hotel must be able to communicate its
existence via internet across different countries. It aids to promote travel and tourism
services of country. It can be critically evaluated that there is poor infrastructure facilities
in rural areas of South Africa. Legal factors-All organizations which are operating in different country need to follow
the rules and regulations that are imposed by government. For example, Marriott needs to
consider status of service like Airbnb. Furthermore, organization needs to follow the
country specific rules with regards to employment, health and safety as well as other
related regulations. On the other hand, different rate of taxes reduces the level of
profitability. Similarly, high cost of labor is also a barrier in front of hotel management.
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For example: regulations related to minimum wage in different countries are different.
This increases financial burden of Marriott hotel (Mason, 2007). Legal framework of
Nepal tend to support business of hotel Marriott. It is because Nepal entered into the
Double Taxation Avoidance Agreement. However, UK is not included in that agreement.
Thus, it is important for Marriott hotel to pay off taxation in right manner. Furthermore,
government of South Africa approached Europeans Union for development of tourism
white paper. It shows that favourable legislations are also there along with some of the
structure policies such as Visa regulations
 Environmental factors- This is another potential factor which could affect organization
by increasing electricity cost and conducting sudden changes in the environmental
conditions. Furthermore, global warming and high temperature influence Marriott to
close some of its beach resorts because of too hot environment. Furthermore,
environment issues is serious in country as it serves as hub of earthquake. At this
juncture, customers or visitors tend to avoid such kind of tourist locations. It shows that
management of Marriott hotel need to adopt effective strategies so as to increase
customer in the same location. The conservation practices of South Africa are effective.
However, there are critical issues with regard to soil erosion, air pollution and
deforestations. These issues must be taken into account by Marriott hotel so to face
challenges in an effective manner (Development and Promotion of Tourism in South
Africa White Paper, 2015).
Model for strategic insight
ANSOFF Matrix
ANSOFF matrix mainly focuses on the organization's present situation as well as their
services and markets to whom they mainly target. However, with this framework, researcher has
easily determine the current market position as well as their existing services of Marriott
International that they provide to their existing customers (Condry, 2013). The matrix also
supports senior manager in determining four combination that may be used by Marriott
International so that they may grow their business activities within the South Africa and Asia
region through inventing new services for their customers. The matrix mainly suggests four
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