Marriot Corporation: the Cost of Capital

The company likewise has already employed various strategies in order to maintain the high growth rate of the company. However these strategies is soon to reach its capacity to ensure growth. Based on the case as well, what seems to be lacking in the strategies that the company employed before is marketing, control of costs, and

First, we need to find the required rate of return (WACC) to calculate the discounted cash inflow so that we can evaluate the longwood woodyard project more accurately.

The four key elements of Marriott 's financial strategy were the following: • • • •

1. Please conduct a financial ratio analysis using the data in Exhibit 2. How do the results reflect different strategies pursued by the 4 firms?

5. If Marriott used a signle corporate hurdle rate for evaluating investment opportunities in each of its lines of business, what would happen to the company over time?

The following case analysis portraits the use of capital asset pricing model to compute the weighted average cost of capital for Marriott and each of its divisions. The flow of events below is following a string of different evaluations, each of which is assessed separately.

a) Value of the company: With profitable growth, the value of the company increases and attracts more investors for investing and thus development of company.

With this information a key question to ask when conducting a strategic analysis of Maverick Lodging can be formulated. Does the current balanced scorecard completely parallel the overall objectives and strategic goals of the organization? The answer is no. Maximum differentiation will not be produced. As a result, growth will not be maximized. This represents the main issue with the case discovered by this strategic analysis. The following issues are all responsible for the failure of the balanced scorecard to reach the company’s strategic targets.

All of these calculated figures can then be used to calculate the WACC which is (17% x 3.47%) + (83% x 11.2%) = 9.87% WACC. This WACC percentage can then be used to value the investment and as a comparative in valuation methods. The full calculation and numerical values are shown in Appendix 1.

They also have shown strong financial growth through their existence. Since 1996, the company has seen major financial growth throughout the years. The companies compound annual growth rate has increase and so has the company’s revenue. With the increase of customer awareness, the company will continue to see growth.

c) There is not a lot of incentive in areas where minimal business takes place. Marriott chooses to keep businesses where it is less likely to have repeat visitors because it keeps them marketable and maintenance is minimal. However, where there is a lot of repeat business, such as downtown in cities, there is a lot of incentives for

Two major ways in which a company can grow are increasing competitive advantage or joining a business conglomerate. In the first way, the company wants to gain the market share by competing with business rivals in order to gain more customers or market-share. From that, the company can increase revenues and return on investment. The company can increase the number of units sold when it increases the number of clients and frequency of purchase. From that way, it increases how to add value. It provides a value-add benefit to improve customer relationship. Hence, it fully understands how to interpret, define, quantify the value it receives from products and services.

The above matrix shows the four strategies one can use to grow and analyze the risks related to it.

“Marriott to Buy Starwood Hotels, Creating World’s Largest Hotel Company” is an article I retrieved from The New York Times, which deliberates, how Marriott International acquired Starwood Hotels and Resorts Worldwide for $12.2 billion. The announcement was a surprise to the industry, because Hyatt Hotel Corporation, InterContinental Hotels Group and some other Chinese companies were in the blend to pursue the transaction, Additionally, Marriott is more considered as a dominant entity in the hotel industry, especially in the upscale sector where Starwood also has a dominant name.

But from 1965 to 2004, Barclaycard passed through a few of phases, it’s important to analyse the strategic position with a thorough analysis of the company, doing first of all an external analysis, so we can see which one is the situation of every moment outside the company, using the Pestle factors as an macro analysis, we are going to analyse the Life Cycle and use the Porter Five Forces analysis as an microanalysis.