Internal Environment Analysis

This report is Marriott International’s internal environment analysis for Marriott
International. It includes an analysis of corporate-level strategies, a portion SWOT table that lists
and analyzes strengths and weaknesses, and an internal factors evaluation (IFE). The report also
includes a grand strategy matrix, business and functional level strategies, and financial analysis
for the last reported year.
Corporate level strategies
Corporate-level strategies are the strategies that an organization makes to be more competitive.
Global Operations Strategy
Marriott International is committed to increasing operations on a global scale according
to its 2019 strategic plan (Marriott, 2019). The organization has made investments in this course
through partnerships and acquisitions. Marriott International has been able to increase its asset
base. In the hotel industry, assets determine the level of success that organizations can have. One
of Marriott’s biggest competitors, Disney, has more assets under its management (Mergent
Online, 2022). Disney can post significantly better results and has an even larger worth and
market capitalization through this. Marriott needs to increase its asset acquisition over the globe
to become better suited to compete with Marriott.
Brand Diversification
To serve customers better, Marriott is looking to diversify its operations (Marriot, 2019).
Currently, Marriott international offers unique experiences with its products and services.
Diversification reduces the risks and ensures that some business units generate revenues even in

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low performance. Marriott’s investment in the diversification strategy is evident in its product
offerings, including theme parks, family residences, corporate living, meetings and events,
holidays, and vacations (Marriott, n.d).
Profit maximization
Marriott International’s strategic plan focuses on increasing profitability to provide value
for its shareholders (Marriott, 2019). All organizations operate intending to make profits.
Profitability determines many aspects of Marriott’s growth prospects. For example, Marriott can
make more investments to increase revenue streams, offer attractive employee packages, acquire
strategic assets and generate wealth for its owners. Profitability also increases the ability of an
organization to invest in brand marketing which is essential for attracting and maintaining a large
market share. Marriott International has grown from strength to strength through being
profitable, as is evident from its financial performance and the performance of its shares in the
capital markets.
SWOT Partial Analysis
The SW analysis is an analysis of strengths and weaknesses.
Strengths Weaknesses
Global presence Data protection
Financial reserves Business structure
Service variety Brand dilution
Large customer base Employee dissatisfaction
Brand equity & reputation Legal woes

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Strengths

Global presence
Marriott International operates a global chain of hotels. Through strategic partnerships
and investments through acquisitions, Marriott has ensured that it operates in 131 countries and
offers over 7000 properties (Marriott, 2019b). This way, Marriott can offer customers quality and
variety.
Financial reserves
Marriott International has been a consistent performer over the years. Besides the reduced
revenues in 2020, the organization has posted revenues of 13.8 billion (Mergent, 2022). Marriott
international shares trade on the major stock exchanges. This is essential because it helps
Marriott International raise funds from the capital market to stimulate its performance. In
addition, its financial capabilities have helped Marriott actualize investments in acquisitions, to
become more competitive in the hotels and motels industry.
Service Variety
Marriott International has provided its customer with a variety of products and services.
Marriott has unique offerings such as beach houses, mountain cabins, and vintage and modern
ultra-classic hotels (Marriott, n.d). Marriott has met customer needs through such variety by
providing unique and customer-centric travel solutions. Marriott has also increased variety
through strategic partnerships and the brands under its name. Such brands include notable names
such as Sheraton, Four Points, and Ritz Carlton.
Large customer base

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Marriott International has the largest customer loyalty program in the hotels and motels
industry. The Marriott International customer loyalty program has over 110 million members,
making it the largest in the world (Marriott, 2018). The size of its loyalty program is evidence of
its large customer base. Additionally, Marriott’s large customer base has been a product of its
increased global presence.
Brand equity and reputation
Marriott International has created a name for itself in the hotels and motels industry.
Through consistency, quality, customer service, and brand investment, Marriott International has
been able to increase the value of its brand (Marriott, 2019). Marriott International has also
received accolades for being among the best workplaces.
Weaknesses

Data protection
The size of Marriott’s customer base has left it prone to challenges with data protection.
As a result, Marriott international has found itself in the middle of several suits regarding data
protection that have threatened to damage its reputation and brand name.
Business Structure
Marriott International is structured as a family business. Since its inception, Marriott
International has always had the Marriott Family members in key positions in the organization.
Currently, the family owns an 18% stake in the organization, whose CEO, John Willard Marriott
Jnr, owns an 11% stake.
Brand Dilution

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Marriott International has partnered and continues partnering with many other brands.
However, most of these brands continue operating under their name. While this makes business
sense for Marriott, it also dilutes its brand name. Marriott is poised to continue global operations
and expansion but may need a different structure to fulfill such operations since the current ones
may lead to brand dilution.
Employee dissatisfaction
Marriott International’s employees must observe strict adherence to employment
conditions and professional requirements. The organization has a strict policy for enforcing such
requirements, and as such, employees are afraid to innovate or be creative in their work. This
leads to employee dissatisfaction and may put the organization at the risk of employee attrition,
which may affect its ability to fulfill its requirements to customers.
Legal woes
Marriott has been at the center of several legal challenges. Some of the sources for those
suits include weak data protection measures, deceptive resort fees, unlawful termination of
employee employment, discriminative customer service, and racial discrimination. These suits
reflect poorly on the organization’s reputation.

Internal Factor Evaluation (IFE) Matrix

An IFE matrix analyzes the organization’s strengths and weaknesses in an organization’s internal
environment (Ketchen & Short, 2012)
The IFE matrix for Marriott International has been computed as shown below.
Strengths Weight Rating Weighted Score 1.82

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Global presence 0.12 4 0.48
Financial reserves 0.14 4 0.56
Service variety 0.10 3 0.3
Large customer base 0.09 3 0.27
Brand equity & reputation 0.12 2 0.24
Weaknesses

Data protection 0.1 3 0.3 1.11
Business structure 0.07 1 0.07
Brand dilution 0.06 2 0.12
Employee dissatisfaction 0.09 2 0.18
Legal woes 0.11 4 0.44
Total 1.0 2.93

The IFE matrix analyses an organization’s strengths and weaknesses in the internal
environment (Ketchen & Short, 2012). The strengths and weaknesses are assigned weights that
add up to 1 (100%). The factors closer to zero indicate that the factor is unimportant, while those
close to one are considered most important. Ratings have been structured as follows: 1 represents
the poor response rate, 2 represents a below-average response rate, 3 represents an average
response rate, and 4 represents an above-average response rate.
The above internal factor matrix is indicative that the companies’ strategies are fairly
responsive. This means that the organization can use its strengths to overcome its weaknesses.
Grand Strategy Matrix

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Quadrant 2

1. Cost reduction
2. Market penetration
3. Divestiture
4. Market development

Quadrant 1

1. Service development
2. Market penetration
3. Related divserfifcation
4. Forward integration

Quadrant 3

1. Retrenchment
2. Liquidation
3. Diversification
4. Diverstiture

Quadrant 4

1. Strategic partnerships
2. Acquisitions
3. Partnerships and joint
   venture
   4.Diversification

A grand strategy matrix shows organizations’ strategies in different circumstances. The
grand strategy matrix is presented diagrammatically, with the Y-axis showing the rapid market
growth and the X-axis showing the competitive position.

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Quadrant 1. Marriott International operates in quadrant 1 since it has a strong competitive
position and has rapid market growth. The strategies available to Marriott include service
development, market penetration, related diversification, and forward integration. The strategies
available in this quadrant are designed to make the organization more competitive and put them
in control of the market by leveraging on their strengths.
Quadrant 2
Marriott International can use the strategies in this quadrant in a weak competitive
position with rapid market growth. The strategies available in Marriott International’s industry
are cost reduction, market penetration, divestiture, and market development. Firms that operate
in this quadrant are in a rapidly developing market but have a weak competitive position.
Quadrant 3
Firms that operate in quadrant 3 have a weak competitive position and slow market
growth. This means that they operate at a huge disadvantage and therefore need to evaluate their
business and take critical measures to prevent winding up the business. The strategies available
to such firms are retrenchment of staff, liquidation of assets, divestiture, and investment in
alternative business areas.
Quadrant 4
The firms that operate in the quadrant have a strong competitive position and slow market
growth. Therefore, the firms have to be cautious of their investing activities considering the pace
of the market growth. The firms operating here might consider investing in markets with higher
market growth, acquiring firms that operate in high-growth markets, or partnering or entering
into joint venture arrangements with such firms.

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Business Level strategies

Marriott’s product line
Marriott International offers travel, vacation, holiday, business, and events solutions for
its customers (Marriott, 2022). Marriott’s activities are categorized in the hotel and motel
industry. Marriott International offers travel solutions that are themed and designed according to
customer needs. The offerings are also suited to meet family needs. Marriott International’s
services are categorized under four categories for all the themes. These categories are luxury,
premium, select, longer stays, and collections. Marriott prides itself in providing innovative
designs and vibrant food, beverage, and entertainment. This means that customers can make a
choice depending on their needs. For example, when traveling for business, one can choose
business premium or business luxury depending on their preferences and budget. Marriott
International offers meetings and conferences that are also differentiated and packaged
differently. There are services for meetings, conferences, group, and team travel.
Target market
The above description shows that Marriott International targets both individual and group
customers for their events offerings. The hotel and vacation stay target over-the-road travelers,
travelers looking for extended stays, and luxury travelers (Marriott, 2022). The target market
determines the structuring of marketing activities.

Business level strategies

Cost leadership

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Marriott International is looking at cost leadership as one of the avenues for increasing
profitability in the organization. Cost leadership means reducing overheads and wastage and
eliminating inefficiencies that reduce the organization’s net income (Gorondutse & Hillman,
2019). Cost leadership can be achieved by leveraging technology to increase operational
efficiency, monitor costs, predict changes in demand and visualize processes to identify where
wastage occurs. Marriott can also increase efficiency by increasing employee training on the
efficient use of materials and resources. Other investments include human resource control
policies that ensure that the organization gets value for the investment it makes in employees
through salaries and training fees.
Focused differentiation
Focused differentiation is evident in Marriott International’s product offerings. Marriott
International has diversified its service offerings to include corporates, individuals, families, and
groups (Marriott, 2022c). Marriott International has luxury, premium, and select classifications
for all the above categories. Marriott does not structure its prices as low rather, Marriott
advertises its products as representative of the quality offered. Marriott International services
cannot be viewed as cheap but are certainly differentiated.
Functional level strategies

Finance and accounting
Marriott International uses an accrual basis of accounting. Like other listed companies,
Marriott International must post its financial information with the Securities and Exchange
Commission (SEC). Marriott International’s financials are audited by Ernest & Young (SEC,
2022). The organization is considered one of the big 4 accounting firms globally. Many global

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firms understand the need for having a reputable external auditor due to the sensitivity of
financial information. Marriott has a legal and ethical duty and responsibility to ensure that its
financial statements are produced with accuracy and integrity and that disclosures are done
subject to globally accepted financial standards. Marriott International owes that responsibility to
investors, customers, the Government, and its employees.

Research and Development
Marriott International has invested in a new research and development center in the
United States. The new center will be tasked with developing new technologies and products.
Marriott International’s commitment to research and development is evident following the
creation of a department and assigning duties and responsibilities, and resources. The R&D
department will focus on operational issues such as cleanliness, housekeeping, reducing costs,
and providing efficiency in hotel construction.
Organization culture
Marriott International’s culture supports its business strategy by focusing on customers.
Marriott International leadership believes that the best way to drive an organization forward is to
care for the employees (Marriott, 2020). Marriott International gives employees opportunities to
grow in the organization by providing a conducive work environment and motivating them to
become better organization ambassadors. Marriott International pursues excellence in its product
and service offerings (Marriott, 2020). Marriott International’s mantra of excellence is good food
and service at a fair price. Marriott International embraces innovation to drive brand
development (Marriott, 2020). The organization believes that being the best requires

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organizations that embrace organizational change with new brands, locations, and experiences.
Marriott international’s activities are additionally guided by integrity. Marriott reports its
interactions with stakeholders such as suppliers and customers and commits itself to
environmental programs and human rights.

Organizational structure
Marriott International follows a hierarchical organizational structure. It is headed by a
group CEO. Below the group, the CEO, presidents, and vice presidents have been assigned
functional and geographical responsibilities. This shows that Marriott International adopts a
blended structure of corporate leadership. Besides the corporate leadership, there is a board of
governors headed by J. W. Marriot Jr (Marriott, 2022c). The Group CEO also sits on the board to
link the corporate leadership and the board. Marriott International’s operations are divided across
geographical lines. Each geographical region then has a functional unit to fulfill its customers’
needs.
Operations
Marriott International has a wide array of activities. Marriott’s core business is hotel
management operations (Marriott, 2022d). Marriott International provides a unique and luxury
hotel experience to its customers in its wide service offerings. Marriott International operates
franchises under its name that it uses to fulfill its service offerings. The franchise team is
adequately trained to ensure cutting-edge solutions. Marriott International provides hotel

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building, renovations, and conversion services with the development team. Marriott
International’s development team also indulges in residential development.

Financial Analysis

This section is an analysis of Marriott International’s financial performance. Selected
financial ratios have been considered in this evaluation. Financial ratios can help analyze an
organization’s performance in relation to the industry. The financial information has been
sourced from Mergent Online and the industry information from IBIS world.

Financial Ratios

Leverage ratios
Leverage ratios evaluate the organization’s ability to meet its financial obligations
(Belyakov, 2017). They particularly evaluate how an organization utilizes debt to finance its
activities and maintain a proper balance in its capital structure. This analysis section compares
Marriott’s debt to equity ratio for the 2021 financial year. A debt-to-equity ratio measures the
organization’s proportion of total debt in relation to the total shareholder’s equity. This ratio has
been considered applicable for this report
Marriott’s ratio Industry ratio Favorable/ unfavorable
7.17 9.7 Unfavorable
Liquidity Ratio
Liquidity ratios measure the ability of a company to meet short-term debt obligations. This
section measures the current ratio.
Marriott’s ratio Industry ratio Favorable/ unfavorable

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0.57 1.0 Unfavorable

Marriott International has a liquidity ratio of 0.57 compared with an industry average of 1.0. A
liquidity ratio of less than 1 means that the organization has more liabilities than assets. In many
cases, it signifies that an organization may be unable to meet its liquidity obligation in the future.
Efficiency Ratio
Efficiency ratios analyze an organization’s ability to utilize assets to generate revenues. It
also measures the organization’s efficiency in managing those assets. The asset turnover ratio is
most appropriate since Marriott International operates in an asset-intensive industry.
Marriott’s ratio Industry average ratio Favorable/ unfavorable
0.55 1.0 unfavorable
The asset turnover ratio means that Marriott International does not effectively utilize its
available assets to generate revenues.
Profitability Ratio
Profitability ratios evaluate the ability of an organization to generate profits from its
revenues. They also evaluate the efficiency with which the organization generates revenues for
shareholders. Marriott International operates in an asset-intensive industry. As such, the ratio
considered is the return on assets.
Marriott’s ratio Industry average ratio Favorable/ unfavorable
4.37% 9.3% Unfavorable

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Marriott International has a return on assets of 4.37% compared to an industry average of
9.3%. This signifies that while Marriott may be making profits, it is not generating enough
revenues from assets.
The above ratio analysis shows that Marriott International has been outperformed by
most of the organizations in the industry. This is despite posting an improvement in sales
between 2019 and 2020. Marriott needs to perform better to outperform industry averages.

Conclusion

The internal factor analysis report has demonstrated Marriott International’s strengths and
weaknesses. The Internal Factor Evaluation (IFE) matrix has shown that the organization has
responded well to the internal factors. Marriott international, therefore, can adequately utilize its
strengths to overcome weaknesses. The grand strategy matrix is indicative that Marriott
International operates in an industry with rapid growth and a strong competitive position;
therefore, the strategies available to Marriott international are service development, market
penetration, related diversification, and forward integration. The business-level strategies for
Marriott International are centered on cost leadership and focused differentiation. Marriott
International has functional activities are carefully structured to ensure that it meets its vision and
mission goals. The organizational structure is hierarchical and is divided into functional and
geographical lines. Marriott International’s culture is people-centered and incorporates integrity,
sustainability, and excellence. The financial analysis shows that the organization underperformed
in the selected ratios. Particularly, the organization seems to have a challenge with asset
management and utilization. This and external environment analysis shows that the organization
has strong internal structures and is well primed to perform well in the external environment.

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