Managing Innovation in Business

 

Managing Innovation in Business

 

Table of contents:

Executive summary ………………………………………………………….…p.3

Introduction …………………………………………………………………p.4

The Organisation and Industry Overview …………………………………

The Organisation and its Innovation History……………………………..

The organisations existing Innovation Performance and Capabilities……..

The Industry in 2017   …………………………………………………………

Conclusion …………………………………………………………………………………

Reference list …………………………………………………………………………..

Executive Summary

The report covers a background information of Marriot Hotel by identifying the level of performance, the company overview and the industry there are in. In the recent years as tourism increasing more people like to travel it has become a huge demand for the hotel industries where offers and packages are supplied within different tour operators and agencies. This has led organisations increasing level of competition by creativity and innovation. Innovation is an important tool in organisation especially if they would still survive in markets for a long term. Therefore, areas of innovations in Marriot Hotel will be discussed.

 

Introduction

The report is an overview of the chosen organisation in analysing the innovation and level of performance. Marriott Hotel is in the hospitality industry run by America and manages a broad area of hotel and franchises across different continents. It is a multinational firm as well as related to lodging facilities.  The purpose of the business is to thrive through markets, keep using strategic approaches in different market and to expand. As Marriott is the largest hotel chain in the world, it makes the brand very successful. However, their innovation would also be an aim to sustain in the markets they are in.

 

The Organisation and Industry Overview

The Organisation and its Innovation History

The hotel industry has become very competitive which has led different hotels to merges, create joint ventures, franchising, etc.  The hospitality industry is a large industry that supplies services from accommodation to leisure and tourism depending on disposable income. The hospitality industry involves services as a restaurant, hotel, events, etc. that include, housekeepers, management, marketing, and human resources etc.) Carlborg, P., Kindström, D. and Kowalkowski, C. (2014).

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Marriot Corporation was one of the largest hotel industries in the market. When the Marriott Corporation split into two companies, Marriott International was formed in 1993 and Host Marriott Corporation. In 1995, Marriott was the first hotel company worldwide to offer guests the option to book reservations online. In 1995, Marriott international therefore had 49% interest in Ritz-Carlton Hotel Company that increased sales and profits and following year they spent £330 million to take over Ritz-Carlton Marriot international (2018). This was their first strategy in developing their business and merging and taking over, later on Marriot International grew more and expanded fast Jana, R. (2007).

The four dimensions of innovation space are:

Product innovation –Marriot offers a variety of services, from luxury, to resorts to suites and rooms worldwide with facilities as is a large hotel chain. Services are been developing in the last few years as their include all inclusive deals, conferences, events etc Nejad, M.G., Sherrell, D.L. and Babakus, E. (2014).

Process innovation – this is how these services are been processed, Marriott using their expansion in merging with other companies they offering a wide variety of services.

Position innovation – Marriot hotel has more than 6,500 properties in 127 countries and over 1.2 million rooms (as of September 2017). This shows their position of these services in many markets have given the company to grow.

Paradigm innovation – this includes the social aspect, behaviour and ethical morals of businesses which yet Marriott has involved in many of this occasions Barcet, A. (2010).

In terms of the PESTLE analysis the firms has gone through aspects of impacts such as political impacts in the market they are running such as tax, policies etc., economic impacts in terms of GDP of the countries they are running in, economic recessions, unemployment level etc., social impact in terms of size of populations, demographics, culture etc., technology becoming more advanced in having better operation systems, legal impacts in policies and legislations to the countries operating in and environmental impacts such as level of pollution, recycling etc. the PESTLE analysis is important to identify the impacts of Marriot.

The organisations existing Innovation Performance and Capabilities

Innovation is the successful exploration of new ideas, Innovation unit, (2004). As Marriott International  is a brand of premium hotels and hospitality chain based currently has around 1.2 million rooms and plans to expand it by another 1,95,000 Spohrer, J. and Maglio, P.P. (2008). This has made the company to grow and apply innovation of ideas in all aspects.

A SWOT analysis is carried out for Marriot hotel innovation performance

Strengths of Marriott:

One of their strengths is their strict adherence to operational norms. Their code of conduct has been custom designed by the top management and every employee is expected to follow it to the final detail. It is said that many of these policies revolve around resourcefulness.

Market position worldwide as Marriott are 122 countries with 600 properties under its umbrella with 1.2 million rooms.

Focus on Innovation: Marriott’s is centred on innovation and try to integrate commitment and innovation Marriot hotel, (2018).

Drive for competitive advantage: Marriott is a competitive brand and always seek to sustain competition.

Opportunities of Marriott:

Focusing on customer behaviour as people  are more open to staying in luxury hotels when they travel becoming a trend which is an opportunity to hotels.

Increase in global travel: people are travelling more now than before which gives the opportunity to hotels to grow which Marriott can exploit this opportunity to their advantage.

Focus on customised:  customer wants personalized attention and most of the times are also willing to pay for it. Increasing the level of services

Weaknesses of Marriott:

Excessive focus on expansion: Marriott has expanded so fast that they lack focus in maintain its services in all markets Marriot hotel, (2018).

Demotivating staff – as Marriott is a system driven business and has brought down the morale of the employees.

Media – the blockage of personal wi-fi of customers stating privacy risks. Such negative marketing puts the brand in a poor reputation.

Threats of Marriott:

Competition: Marriot has to compete with a lot of brands such as Hilton, Novotel etc.

Economic recession: in case getting another global recession can be a major threat to businesses as they are unable to generate revenues.

Political influence – as Marriott is operating in many countries this can also be impacted by the level of political influence, legislation and policies in those markets.

Marriot Resources:

Physical resources – these are machines, equipment’s, buildings etc. that are required to operate the business. Marriot has a wide range of physical resources in their every branch because as a hospitality industry they require to use these resources frequently and appropriately.

Financial resources- these come across to capital, borrowings, investments profits etc. Marriott been 2nd in hospitality industry in 122 countries their financial resources such as borrowings from banks in opening new business have applied. Also they have a lot of profits, shareholders and investments that are still taking over and merging with other companies Marriot international (2018).

Human resources – based on employees, current workers in training and development, creating a professional environment has been a key to Marriot. Their staff are main tool in making the company to happen although Marriott is quite strict with their staff. In terms of human resources they have over 100,000 employees worldwide. However, when online booking was launched there were a few cuts of staff in reducing costs.

Intellectual Capital resources- as intangible resources including brand, patents etc. Marriott using mostly of their strategic appliances in acquisitions and merging with other brands in order to sustain competition and expand their market share. This has also led customers to use better services in booking holidays and accommodation mostly through online service.

Strategic capabilities

Innovation matters to organisations because it a source of competitive advantage, increases market share, growth and profitability. It is one of the most characteristics associate with success and it has a positive impact in the economy. Marriot has value of strategic capabilities as up to this date. Based on their value to its customers they have formed their company to be a strong brand, offering services to customers that are loyal and to the other types of customers. When Marriott was first launch by the owners it came as an idea at first and then slowly growing their business in 1953 where their son J, Marriott expanded the company worldwide Gremyr, I., Witell, L., Löfberg, N., Edvardsson, B. and Fundin, A. (2014). This began to be an innovation in creating further businesses in many markets and increasing level of competition as well as market share.

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As according to the coupling model of innovation (see appendices 1), the three stages of marketing, design and R&D plays a major part of the history of innovation based upon Marriot Hotel. As a great idea degeneration to concept development, prototypes and providing services in market place was the first stages of Marriot. In R&D having new technology and applying to their services they expanded very fast.  This is part of their other strategy to maintain in the market place through innovation and creativity of new ideas. Therefore, the stages of innovation from findings to launching, to operating, widespread and expanding worldwide having social and economic impact is reflecting to the history of innovation in Marriot hotel Song, L.Z., Song, M. and Di Benedetto, C.A. (2009).

Value chain network or value chain analysis

Based from Porter 5 forces of competitive advantage including, competitive rivals, power of buyer, power of supplier, substitutes products and threat of new entry model was created for organisations to analyse the market of entry when they are expanding.  The idea of porters was applied by the value of chain Ovidijus Jurevicius (2013). The value of chain is activities where companies operate in order to deliver a valuable products or services (see appendix 2 & 3). The networking of supplier value chain, channel value chain and customer value chain is the network of transporting the services or product through from one stage to the other where the organisational value chain is shown in the middle. However, some innovations such as customer relationship management (CRM) and customer intelligence tools are also important scale. This is a system made of subsystems of each inputs and output and involve consumption of resources. Service innovation “introduces something new into the way of life, organization, timing and placement of what can generally be described as the individual and collective processes that relate to consumers” (Barcet, 2010, p. 51). Marriott had formed acquisitions of Starwood Hotels and Resorts Worldwide for £12.5 billion in 2015 and merged in 2016 creating the world’s largest hotel company with over 5700 properties, 1.1 million rooms, and a new portfolio of 30 brands Huang, Z. and Benyoucef, M. (2013). This was part of their value of chain in entering new markets in terms of expansion. Another example of using the value chain is when they partnered with IKEA to create Moxy brand three star hotels offering stylish rooms to target the millennial travellers who do not want to spend as much for a five-star hotel.

The Industry in 2017 

According to R. Garrido (2016) and Marriott Annual report 2017, shows that Marriott are focusing mostly on creativity and innovation for the current and future aspect by increasing their level of innovation in meeting the needs of customers, travellers, changing markets and competitors. They are still forecasting to continue to merger with other hotel industries by using horizontal integration but also are seeking to change their aspect into a vertical integration where other types of companies in the hospitality industry as well as in tourism industry would be preferable to Marriott to continue to grow and create acquisitions in with the similar example of Starwood merge back in 2015 (see appendix 4 & 5) . Last year, they joined with Chana Ali baba brand to provide a problem free travel experience which is an example of the vertical integration.

Marriott is also focused on building partnerships and developing the technology to deliver immersive, personalized experiences on a mass scale. Therefore, some examples of Marriott innovations technology services used for its customers such as phone-as-key-cards, mobile self-check-in, mobile booking, self-service check-in kiosks, electronic luggage tags, hotel service optimization systems, guest device connectivity tools, voice over internet protocol phones that are interconnected with the hotel’s ecosystem etc Wang, Q., Voss, C., Zhao, X. and Wang, Z. (2015). They are also wanting to continue to innovate by building a personalised guest experience such as internet of things, guestroom lab etc. in another category the Travel Experience Incubator is designed to discover and foster start-ups working on innovative technologies and solutions to improve travel. This is where innovation is getting more connective with different fields in the market brining hospitality with tourism together and combined with loyalty programs.

Marriot is conducting more challenges for their business and working on different projects from 2017 towards 2030. One of these projects involves the Known Traveller Digital Identity, will use biometrics and other data to create a verifiable, unique, secure digital identity for “known” travellers. Based on this the future of Marriot seems to be an innovative one and strategically well planned.

Looking at the red and blue ocean innovation strategies, Marriott current position, in the red ocean shows that they have a high market share, always increasing the level of competition in different markets within price wars and adding value to their services based on the their performance identified earlier. As discussed some of the projects of Marriot initiating into different areas of tourism, technology and innovation through creating opportunities, they are at a stage where in the blue ocean strategy, they continue to offer something new or different in creating demand and entering new markets.

Moreover, the future of Marriott is to lead in innovation, in order to do this they have to analyse their PESTLE analysis in every market they are in in order to track the impacts of their external environment as well as their internal environment should be analysed thoroughly. Also to search for innovation ideas by scanning their environment for future predictions.

Conclusion

Overall summary, investigating Marriott hotel in analysing their innovation, creativity, position of market and their expansions has been a great understating and knowledge of business operations in approaching innovation. Applying examples of the hospitality industry has become a great knowledge and also Marriott hotel performance and its capabilities is an influence of a great understanding of innovation.

 

Reference list

Barcet, A. (2010), “Innovation in services: a new paradigm and innovation model”, in Gallouj, F. and Djellal, F. (Eds), The Handbook of Innovation and Services: A Multidisciplinary Perspective, Edward Elgar, Cheltenham, pp. 49-67.

Carlborg, P., Kindström, D. and Kowalkowski, C. (2014), “The evolution of service innovation research: a critical review and synthesis”, The Service Industries Journal, Vol. 34 No. 5, pp. 373-398.

Claudia De Souza Libanio (2012), ‘Coupling Model of Innovation’,   https://www.researchgate.net/figure/Coupling-model-of-innovation-Source-Adapted-from-Rothwell-1994_fig2_305552182 date accessed: 24/10/2018

Gremyr, I., Witell, L., Löfberg, N., Edvardsson, B. and Fundin, A. (2014), “Understanding new service development and service innovation through innovation modes”, Journal of Business & Industrial Marketing, Vol. 29 No. 2, pp. 123-131.

Huang, Z. and Benyoucef, M. (2013), “From e-commerce to social commerce: a close look at design features”, Electronic Commerce Research and Applications, Vol. 12 No. 4, pp. 246-259.

Jana, R. (2007), “Service innovation: the next big thing”, Business Week, 29 March.

Marriot hotel, (2018) ‘Marriot history’ https://www.marriott.co.uk/default.mi date accessed: 22/10/2018

Marriott International, Inc. (2017) ‘Annual Report’ https://marriott.gcs-web.com/static-files/b82978a6-9d28-4e38-9855-fc4ae2cebe11 date accessed: 26/10/ 2018

Marriot international (2018), ‘Marriott rewards, brands and benefits’, https://www.marriott.co.uk/loyalty/member-benefits.mi date accessed: 22/10/2018

Nejad, M.G., Sherrell, D.L. and Babakus, E. (2014), “Influentials and influence mechanisms in new product diffusion: an integrative review”, Journal of Marketing Theory & Practice, Vol. 22 No. 2, pp. 185-208.

Ostrom, A.L., Parasuraman, A., Bowen, D.E., Patrício, L., Voss, C.A. and Lemon, K. (2015), “Service research priorities in a rapidly changing context”, Journal of Service Research, Vol. 18 No. 2, pp. 127-159.

Ovidijus Jurevicius (2013) ‘Value Chain Analysis’ https://www.strategicmanagementinsight.com/tools/value-chain-analysis.html date accessed: 25/10/2018

Song, L.Z., Song, M. and Di Benedetto, C.A. (2009), “A staged service innovation model”, Decision Sciences, Vol. 40 No. 3, pp. 571-599.

Sorescu, A., Frambach, R.T., Singh, J., Rangaswamy, A. and Bridges, C. (2011), “Innovations in retail business models”, Journal of Retailing, Vol. 87, pp. S3-S16.

Spohrer, J. and Maglio, P.P. (2008), “The emergence of service science: toward systematic service innovations to accelerate co-creation of value”, Production and Operations Management, Vol. 17 No. 3, pp. 238-246.

R. Garrido (2016), ‘Marriott and Starwood 2016 Room Rates and Hotel Brand Size https://loyaltytraveler.boardingarea.com/2016/10/11/marriott-and-starwood-2016-room-rates-brand-size/ date accessed 26th October 2018

Winkler, R. and Macmillan, D. (2015), “The secret math of airbnb’s $24 billion valuation”, Wall Street Journal, 17 June.

Wang, Q., Voss, C., Zhao, X. and Wang, Z. (2015), “Modes of service innovation: a typology”, Industrial Management & Data Systems, Vol. 115 No. 7, pp. 1358-1382.

Appendixes:

 

Figure 1 Claudia De Souza Libanio (2012),

Figure 2 Ovidijus Jurevicius (2013)

Figure 3 Ovidijus Jurevicius (2013)

Figure 4 R. Garrido (2016),

 

Figure 5 R. Garrido (2016),