Strategic Analysis of Marriot's Merger with Starwood

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ANALYSIS OF THE STAKEHOLDERS

There are a lot of stakeholders involved in the hospitality industry. These stakeholders can be grouped into internal and external. Internal stakeholders represent parties that belong to industry such as the shareholders and employees. The primary interests of shareholders are profit maximization, whereas employee interests include gaining a wide range of tangible and intangible compensation from their employment. External stakeholders, on the other hand, are parties that do not belong to the industry; nevertheless they have interest in the business from various perspectives. Dudovskiy (2012). These external stakeholders include the Government, the customers, the suppliers, the communities and the media.

In this particular case study, the stakeholders listed above contributed with varying interest and influence. A broader grouping of the stakeholders is as follows;

The owners - this involves both shareholders of both hotel groups who coalesce into one after the merger. This also involves agents employed in order to advocate on behalf of the shareholders. The initial and final decision on the progress of an industry is the prerogative of the owners. In the particular case study of this merger, the corporate level of strategy originated as a collaboration of the owners and probably the top management staff among the employees. The shareholders are primarily interested in profit making alongside sustainability in the industry. Therefore they have great interest and also wield great power.

The employees - this include a wide range of those who are on the payroll of the hotels; those currently employed (staff )and those formerly employed who are on pension (retirees). The staff can be subdivided into top management, middle level staff and rank and file; the influences impacted and power exercised by these three levels and very distinct and therefore needed to be considered differently. However, all employees have Marriot’s interest at heart – for job security but do not wield much power

Government – through various policies formation, the governments and the agencies of the government of various countries play a lot of role in influencing the hotels. It is interesting how the differences in policies between the Chinese government and the US government tilted the success of the merger/acquisition in the favour of Marriot over the equally strongly competing Anbang Insurance Group. The governments wield a lot of power but do not necessarily have much in terms of interest.

Competitors – this is a strong stakeholder and it includes all other hotel and hotel groups. Competitors have strong power and wield strong influence directly and indirectly on the activities, decisions and strategies employed by others in the hospitality industry. The interest however is low. Hilton and Intercontinental hotels would have preferred that Anbang Insurance Group purchases Starwood rather than it falling to Marriot. This is understandable because the difference in size, capacity and revenues between these hotels and Marriot is greater than between them and Anbang.

Customers – this includes a wide range of hotel users (clients). Moreover, large hotel chains like Marriot and Starwood often sub-contract many of their services; the restaurant, laundry, security services, house cleaning etc. The suppliers of these services can be also be grouped as customers, though another grouping system might have suppliers as a separate group. The clients have little interest about the hotels but wield considerable power.

Communities/Environment – the communities where the different hotels are located and impact of the hotel on such environment as perceived by such communities. These groups have little interest and little power over the activities of the hotel.

Non-Governmental Organization – NGOs are involved in a lot of oversights on establishments; they do this through advocacy to relevant stakeholders, mounting pressures through campaigns or even seeking legal option. it could be to make the hotel industry undertake some kind of community service, process hotel waste in a different way or issues like that. They however have little interest in the operations of the hotel and have limited power to influence it.

The media – the influence of the media cannot be overemphasized. The media kept the general public abreast of the various developments from the onset of the merger to the final conclusion of it. However the media exhibited relatively low power and interest in the eventual outcome of the merger.

MAPPING OF THE STAKEHOLDERS USING THE POWER-INTEREST GRID

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Subjects – (To be Kept Informed)

Suppliers

Staff

Competitors

Players – (To be Managed Closely)

Shareholders

Agents

Crowd – (To be monitored – Minimum effort)

Communities

Environment

NGO

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Context Setters – (To be Kept Satisfied)

Clients

Government

Low High

THE MAIN EXTERNAL FACTORS DRIVING THE INDUSTRY

There are many factors that drive or push the activities, program and decision of the hotel industry. The external factors are the factors outside the direct control of the industry like Government policy, environmental issues, religious activities, natural occurrences and technological advances. In the case study, many external factors were in play in the merger.

In recent decades, the rapid increase in international tourist flow has generated a highly competitive global market, stressing the need to formulate strategies to increase destination success and market share. Bernini (2010). With increase in tourism comes proportional increase in hospitality and hotel demand. The associated increase in revenues generated or that can be generated from this line of business has caught the interest of many government. The policies of the government and the governmental regulatory