Financial Management: Marriott

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Financial Management: Marriott

Marriot Company is currently a multinational company that promotes tourism and travel for many. The company owns many properties across the world in different areas. However, the company faces different problems and endures certain risks from time to time. For this reason, the company has a number of ways of determining the risk factors for its business prospects, working for a better global strategy, managing finances and effectively assessing the ways that the company is currently operating. In this paper, a number of these factors will be closely examined. From these, possible new strategies and solutions based on the performance will be developed. 

Risk management

Currently, Marriott recognizes that the risks that they face could affect their performance businesswise in a negative way. The risks may affect the future projections that Marriott makes in terms of business, making them differ vastly from what they propose. The company is highly competitive and for this reason, it tries to give equal weight to any of the potential risk factors while maintaining the confidence of the stakeholders. One of the risk factors for Marriott is the competitive field. Currently, each of Marriott’s hotels in the various destinations competes with many other internationally renowned hotels in the region and in neighboring regions.

Another risk factor is the economic uncertainties in different parts of the world. In Europe for example, there are some weak economic conditions for the company. This makes it impossible to accurately predict the future prospects for Marriott in the area. Since the region is large, it also makes it possible to plot future financial plans accurately.

The company also has some operational risks including premature termination of the managements or franchise agreements. This means that often, if the property owners or other stakeholders terminate their contracts with Marriott. When this happens, it makes it difficult for Marriott to follow through with the plans that they had set apart for themselves earlier. It also makes it hard for the company to make sure that they can come up with feasible plans for the future. Sometimes, property managers and owners may terminate contracts prematurely even when written agreements say that they should not do that. This is often a result of the financial conditions that the companies face at the various levels.

Another risk factor is that the areas in which Marriott operates often have national conditions. In addition to these conditions, there are also regional and global conditions that affect the operation of Marriott. Most of these laws and conditions may be aimed for good, for example, terrorism prevention. However, the effects on Marriott could be either positive or negative, or overall making it impossible for Marriott to operate in such a region. 

Over the years, Marriott is increasing insignificance in areas outside the United States of America. This may be a good thing on a general level. However, it could also mean that there is increased susceptibility from terrorists and other dangers that or of a security nature. Other challenges include an increased cost of doing business in terms of the taxes that may be imposed for a foreign company, subjection to foreign laws that may be difficult to adhere to in general, and compliance to the laws in the United States that dictate the operation of US based companies abroad. These laws may include anticorruption laws both from the United States and from other countries. 

Another economic risk factor that faces the company specifically when operating abroad is the rate at which exchange rates fluctuate. These fluctuations may lead to gains and losses that are often unpredictable hence unsustainable for the company in general. However, the company should come up with ways to make sure that the net loss during these fluctuations is sustainable, and that they spend their money when it is most profitable to do so. 

Another category of risk factors is the development risk factors. Technology is constantly changing in the modern world. This means that technology that may be in use today may become obsolete tomorrow. This change in general, is supposed to be a good and positive change for the companies and for people in general. However, it often means s-pending more on the gadgets, software and training for the company. Sometimes, it also takes time for the company’s stuff to learn to adjust to the new changes that come with changes in technology.  

What the company is doing now in terms of global strategy and risk management

Currently, the company is doing some things to make sure that the above mentioned risks to not have great negative consequences on its operations in the various areas, both in the United States and in areas outside the United States. One of the strategies is grouping the management of services that the company offers into three main parts, North American full service, North American limited service and International. The main reason for the grouping is that often, the needs for the various people who use these group are different. It is important for the company to develop them differently hence make it easier for them. 

In terms of global strategy, the company is currently examining the market potential of the various areas that it seeks to operate in. This includes learning of the security risks, the taxation plans and the average rate of success for other similar multinational companies in these areas. 

Another global strategy is making sure that the company only used the latest technology for the operations. Technology can be a tool for communication in areas across the globe. It can help the company manage its transaction without necessarily having to visit the outlier companies. This is one of the ways of making sure to maximize on profits without necessarily spending a lot on transport.

Financial condition and results of operation

  The current financial conditions for this brand show something about the modes of operation that it is currently implementing. For example, in most of the areas, there is a low supply growth especially in North America. Most of the people that are clients for Marriott generally use the property both for leisure and for business purposes. The financial status of the company especially oversees is usually affected by the political climate. Often, Marriott is unable to predict the politics of foreign nations and how they would affect the financial prospects. Political tension in some of these regions often seems to make it such that the financial conditions of Marriott at the international level are not the same as those within North America.

Derivatives and Hedging

These are some of the tools that are generally used by the company for financial analysis. They include cash flows among other things. It is from these that accurate financial conditions can be predicted for the company.

Prescribe new strategies

Based on the above conditions, some new strategies for risk management and globalization would be required. One of the best strategies based on this analysis is to make sure that the company is always up to date technologically. This includes developing communication tools that are based on technology, having fast and reliable internet connections in all of the centers of operation for Marriott. To make this effective, the company would have to employ people who already specialize in the various technological fields. These people include engineers and Information Technology personnel. Additionally, the company should make sure that there is a public relations department to raise the possibility of increased financial returns.

Another strategy worth trying is to make sure that a majority of the staff in the areas other than North America is from those areas. These people are more likely to understand the culture in these areas. As a result, they may find it easier to deal with the other people from these areas. Other than that, they often have the right skills and knowledge on the best ways to persuade the people in that area to invest in a seemingly looking foreign company. They can also help ease the political environment that may come when a company is trying out a new location. Often, these countries have laws that indicate that the companies should not be in operation there, unless they specifically help and not exploit the locals. 

Conclusion

From the above, the financial position of Marriott has been discussed and determined well. It is from these that new strategies to make it better in general from the company. Technology and the use of technology in general for the company forms a top priority. Training and working with people who are native to the area of operation may also be an effective strategy for the company. 

References

Marriot Company Annual Report 2016. Marriot Company