9-1 Final Project Submission: Business Development PlanAssignmentUpdatedIn this submission, you will finalize the process of creating a business development plan for your selected organization or comp

Business Developments Plan for Marriott International Inc

Darlene Ames

QSO 690

January 10th, 2018

Business Developments Plan for Marriott International Inc

Introduction:

Marriott International Inc for 50 years, it has developed a culture which is centered on the spirit to serve. The company focuses on satisfying needs of its associates, customers and the community. These values shape every aspect of the company ambition. The company manages and operates a franchise or license 6080 properties worldwide. The business segments are divided into three segments which include North American full services, North American Limited Services and international. By the end of 2016, the company managed a total of 1,990,604 rooms in over 122 countries and boundaries under 30 brand images. The purpose of this business development plan is to evaluate the current operation of the company business segments and recommend adoption of technology for competitive differentiation.

Current Business Operations:

Marriott International Inc sources of revenue include base management and incentive fees, franchise fees, revenue from lodging and cost reimbursements. The management's fees include a base fee which is a percentage of revenue generated by the hotels and incentives fees which include fees earned on the hotel profitability. The franchises fees are composed of initial application fees and continue royalties generated from the franchises program. The company operation is characterized by direct and indirect cost incurred in the process of managing the company activities. For example, in the North American full services segment the company incurs various cost associated with the operation.

Northern American full services segments are composed of a total of 1042 properties with around 367,977 rooms. Out of those properties, the company manages 424 properties with around 66,646 rooms, franchised/license contracts include a total of 2966 properties with a total of 339,330 rooms and owned or leased hotels around 20 with a total of 3008 rooms. As a result of managing fully owned or leased properties, the company incurs cost relating to productions, services, leasing, legal, accounting cost and others cost. The hotel offers a variety of foods and beverage options including restaurants, lounges, room services, catering and banquet services.

Marriott International Inc culture is centered in the spirit to serves and therefore in order to offer that value, the company has to incur direct cost such as direct labor and directs material. Direct labor involves the labor incurred in the catering process for example individual involved in the kitchen. The cost associated with direct labor also include payroll cost, cost of company paid medical insurance, life insurance, workers compensation insurance. Other cost relating to labor includes indirect cost relating to administration, cashers, waitress and janitors, supervisors and other costs. This cost is a challenge to the northern American full services segments because some of the employees are employed in full-time contracts.

During the season of high demand like Christmas holiday, the company has to increase numbers of shifts hence increasing the cost of labor. The direct material includes all cost incurred in sourcing and in the food production. For example, Marriott hotel in the North American full-time segments incurs the cost of sourcing material for food and beverages. The material used for foods depends on the market prices of those raw materials. The company produces some goods according to a number of orders in order to avoid wastes but in scenarios whereby the products raw materials are not available then the company has to buy the products in small scale in order to satisfy the needs of the customers.

The cost of purchasing raw material in bulky is lower than purchasing in small quantities. Other indirect cost includes the cost of electricity, depreciation, amortization, marketing, and renovation of the hotels. In order to attract customers, the company has to renovate and upgrades the hotel to reach the company status. Besides, the company still incurs cost relating to accounting and legal cost. During the process of leasing a land or purchasing products, the company has to incur a legal cost and those costs shrink the company profit margin. Lawsuits relating to land leasing and property acquisition which is a common thing and therefore the company has to incur those costs.

Business strategies Applied to reduce cost relating to business operations.

In order to reduce cost relating to the North American Full-Service segments operation, The Company has to utilize project management, technology, and project management tool among other tools in order to reduce cost increase production, incorporate sustainability principles and to deliver consistently superior products and services using quantitative tools and techniques.

Project management

The project cost involves cost like acquisition, legal cost, financial cost and other cost relating to real estates. Marriott International Inc needs to estimates the project cost inclusive of legal and accounting cost in case of a merger. The individual chosen to undertake the process should be evaluated well before the process starts in order to avoid the incidence of searching another individual in the process of negotiation which shows a high level of unpreparedness and it may lead to high cost. The project management requires project managers to have a plan on when the project will be completed and proper resources allocation including financial and human capital resources. The task should be allocated effectively according to experiences and skill of project teams.

This process helps in reducing unplanned cost which may be incurred in case the leasing and franchising contracts fails to reach an agreement. Similarly, Project managers should first evaluate the area where the company plans to develop a hotel and residential properties in order to avoid incurring losses due to loss of demand in long term. Besides, in the process of developing a hotel or residential property, project managers should be able to remove features that may increase budgets and instead find options for reducing budget cost. For example, instead of purchasing raw material in small quantities the project managers can source the project in bulky to avoid purchasing the products when they are more costly. Similarly, the project managers can hire cheaper project coordinator instead of hiring an expensive coordinator.

Application of Technology

Marriott International Inc measures the company operating performance using three key performance indicators such as return on investments, product quality and customers satisfaction. The performance gaps available in the company operation are as a result of value chains activities. The value chains consist of work activities required to produce goods and services required by customers. The cost relating to value chains include labor cost, electricity cost, production cost and communication cost (Araujo, J & Costa, 2005). Rising labor cost, utilities, and maintenance expenses are some of the operating cost in Marriott International Inc and this cost usually impact the company bottom line.

Labor cost accounts for approximately half of the company operating cost and therefore the company can have fixed schedule according to day to day activities in order to reduce overstaffing and wastage of company profits. The company can use technology to updates employees on their duties in order to reduce time wastes and additional cost relating to employing additional laborers. The company can as well cross-train employees in order to have flexibility in the company operation. The training does not need to be conducted as seminars but can be conducted through web conferencing in order to reduce cost relating to allowances cost. Similarly, the company can save on marketing budget using customer base to their advantage.

Marriott hotels and other properties are connected to speed WIFI which can be used for marketing purposes. For example, the company can encourage customers to update their fellow friends on their experience through their social media. This can be done using user-generated content which may help to replace cost incurred in advertisements through radios and television. As well the company can encourage customers to offer their reviews on the company websites about the company services (Friedrich, 2016). Reviews will help to boost brand images and reduce cost relating to marketing hence improving customers retention level. Utilities such as the internet, water, energy and telephone use can be reduced by using technology and finding alternative methods of conserving those costs.

The Internet can be used to measure and adjust energy and water usage by monitoring everything from unoccupied room temperature to the amount of water used cleaning linens. In-room management sensors can be used to reduce cost relating to electricity. Besides, the company cans switch to LED lighting in order to reduce electricity cost. Thermostats, advanced technology, and remote energy management's capabilities can be used to control room temperature. Thermostats outfitted with real-time occupancy detection can help to conserve energy relating to unnecessary air conditioning and heating when the hotel's room is not occupied. Night features can be installed for the continuous comfort of heating and conditioning while the guests are asleep.

In addition, the company can use wireless networking which can be monitored and configured by managers over the web, view room status for occupancy. Through wireless networking the managers can easily apply a different setting to different rooms, explore room temperature hence boosting efficiency operation and lowering down operation cost (Friedrich, 2016). Smart energy management in the hotel help in improving customer's comfort hence impacting customer satisfaction level. Besides, the energy management methods can help also to boost labor and operating efficiency, reduces consumption and saves on utility cost.

Project management tools

In order to improve customer satisfaction, service delivery and reduce cost, Marriott international Inc can use decision trees to analyze hiring, marketing, investments and equipment's purchases. This method is used to evaluate risk condition associated with the future decision. According to the company annual filling, 2016, the company faces various risk result to unpredictable market profitability because hotels and residential properties loss demand before the project are completed hence impacting huge cost to the company. Therefore, the company can reduce the effects of those risks by using a decision tree to analyze investments, stakeholder matrix, risk map and SWOT analysis tool.

References

Friedrich,(2016). “The power of the Thermostat- Re-imaging in-room energy management”[HM Hotel Management Articles, August 31st, 2016]: Retrieved from https://www.hotelmanagement.net/sponsored/power-thermostat-re-imagining-room-energy-management

Xerox,(2017). “Common causes of high hotel operating cost”.[ Xero Cleaning Technologies, August 17th, 2017]: Retrieved from http://www.xeroscleaning.com/blog/3-ways-to-control-hotel-operating-costs

Yandrasevich, S.(2011). “Controlling Labor Costs in Restaurant Management: A Review of the Internal-Marketing Concept as a Method for Enhancing Operating Efficiency

Marriott International Inc, (2016). “SEC filing Form 10- K": Retrieved from http://files.shareholder.com/downloads/MAR/5754068693x0xS1628280-17-1506/1048286/filing.pdf

Maserang, S. (2002). Project Management: Tools & Techniques. Retrieved November 15, 2013.

Araujo, J. A. D. R. D., & Costa, R. P. D. (2005). Operations strategy and cost management. JISTEM-Journal of Information Systems and Technology Management, 2(3), 291-303.