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Marriott Study Case Nº15

Direct export modes are suitable for Marriott because they allow greater control over sales and interacting directly with customers, which is key for Marriott. It also cuts costs by eliminating intermediaries. Contract manufacturing could work for Marriott by outsourcing production locally while maintaining control over other functions. However, quality control would need to be maintained. Licensing is not suitable as it transfers too much control to local firms, which is not what Marriott wants. Franchising is a good low-cost, low-risk option for Marriott by leveraging franchisee investments while generating marketing economies of scale. A joint venture could also work by reducing risks and costs through a local partner.

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Miguel Cervantes
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61 views2 pages

Marriott Study Case Nº15

Direct export modes are suitable for Marriott because they allow greater control over sales and interacting directly with customers, which is key for Marriott. It also cuts costs by eliminating intermediaries. Contract manufacturing could work for Marriott by outsourcing production locally while maintaining control over other functions. However, quality control would need to be maintained. Licensing is not suitable as it transfers too much control to local firms, which is not what Marriott wants. Franchising is a good low-cost, low-risk option for Marriott by leveraging franchisee investments while generating marketing economies of scale. A joint venture could also work by reducing risks and costs through a local partner.

Uploaded by

Miguel Cervantes
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Anna Magnusdottir Amorós

NIUB: 20319143
Proffessor: Xavier Canadell, International Marketing
Universitat de Barcelona.

MARRIOTT STUDY CASE Nº15

- Are direct export modes suitable for Marriott? Why?

I believe direct export modes are a good option for Marriott company because they allow
to have greater control over sales and to interact directly with your clients, which we
know is one of the key strategies of Marriott (feedback from the customers and providing
a good service to them). Also, Marriott is a big enterprise that would benefit from
eliminating intermediaries by cutting costs. They’d benefit as well from Global marketing
know-how and will involve in building up overseas contacts, undertaking marketing
research, handling documentation and transportation, and designing marketing mix
strategies. Direct export modes include export through foreign-based agents and
distributors.

- Are contract manufacturing and licensing suitable for Marriott? Why?

Contract Manufacturing may work out for Marriott since manufacture is outsourced to an
external partner, specialized in production and production technology. The Desirability of
being close to foreign customers is met on this export mode and local production allows
better interaction with local customer needs concerning product design, delivery, and
service. Contract manufacturing enables the firm to have foreign production without
making a final commitment; If management decides to exit the market it does not have to
sustain possible losses. Contract manufacturing enables the firm to develop and control
R&D, marketing, distribution, sales and servicing of its products in international markets,
while handing the responsibility for production to a local firm. However, Since the firm
loses direct control over the manufacturing function, mechanisms need to be developed
to ensure that the contract manufacturer meets the firm’s quality and delivery standards.
It is necessary to control product quality to meet Marriott’s standards.
On the other hand, I don’t believe licensing to be a good export mode for Marriott.
Although It’s another way in which the firm can establish local production in foreign
markets without capital investment, it differs from contract manufacturing in that it is
usually for a longer term and involves much greater responsibilities for the national firm
because more value chain functions have been transferred to the licensee by the licensor.
This is not what Marriott is looking for, to delegate its control entirely or almost entirely to
the local firm, so for that reason I would rule it out.
Anna Magnusdottir Amorós
NIUB: 20319143
Proffessor: Xavier Canadell, International Marketing
Universitat de Barcelona.
- Is there any other entry mode rather than franchising suitable for
Marriott?

Franchising is a low-risk, low-cost entry mode. The franchisees (the hotel operators) are
the ones investing in the necessary building (hotels), equipment and know-how. Marriott
is in contact with highly motivated business partners with money, local market knowledge
and hotel operation experience (service/hospitality). With franchising, Marriott is
generating economies of scale in marketing to international customers.
Other possible entry mode could be a joint-venture or strategic alliance with one of the
biggest local competitors to entry a new international market. Why?
Because the risk would be reduced by half when sharing responsibility and also operative/
administrative costs would lower and be divided between the two companies. Moreover,
it is known that by having a partner in the host country your business can increase the
speed of international market entry.

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