1. Are the four components of Marriott’s Financial Strategy consistent with its growth objective? Marriott’s sales grew up by 24% and its return on equity stood at 22% in the year 1987‚ the sales and earnings per share has doubled over the previous year as stated in the case study. The company operates in three divisions: lodging‚ contract services and restaurants which represents 41%‚ 46% and 13% of sales in 1987 respectively. Marriott is determined to develop and to enhance its position in each
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experiences in the business which would be complementary (Schmitz‚ 2012; Jurevicius‚ 2013); therefore‚ assessing the strengths and weaknesses of a potential partner is vital. Strengths. Strengths of Frasers are analyzed to determine how they align with Marriott’s search for joint partnership (Fraser Centrepoint Limited‚ 2017; Fraser Centrepoint Limited Trust‚ 2017; Frasers Hospitality Trust‚ 2017; Frasers Hospitality‚ 2017): Competent Leadership – the corporate governance is led by a general manager‚
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travelers’ value by segmenting the market and then targeting selected segments‚ each with a different brand. Then as now‚ Marriott was the flagship brand. Each new brand would support Marriott’s overall brand identity — a commitment to superior customer service — and train employees to have a passion for service. Marriott’s flagship brand continues to target customers needing fine restaurants‚ meeting rooms‚ athletic facilities‚ and other upscale amenities. But Marriott added seven additional brands
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Marriott Corporation: The Cost of Capital 1. Are the four components of Marriott’s financial strategy consistent with its growth objective? 2. How does Marriott use its estimate of its cost of capital? Does this make sense? 3. What is the weighted average cost of capital for Marriott Corporation? a. What risk free rate and risk premium did you use to calculate the cost of equity? b. How did you measure Marriott’s cost of debt? 4. If Marriott used a single corporate hurdle rate for evaluating
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WACC: (1-T) rD (D/V) + rE (E/V) (1-.44) .1002(.60/1) + .1697(.40/1) = .033667 + .067880 = .101547 or 10.15% 3. In using Marriott’s WACC to value an investment you must use an investment that has the same level of risk and/or be in the same risk class as Marriott. The proposed investments must be comparable to the risk taken in Marriott’s present operations. 4. It is not feasible for Marriott to use a single hurdle rate for evaluating investment opportunities in each of their
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What is the overall weighted average cost of capital for Marriott Corporation? (Use a corporate tax rate of 34%). What type of investments would you value using Marriott’s WACC? Cost of debt：8.95%+1.3%=10.25% Cost of equity：8.95%+1.64*7.43%=21.14% 實際beta=1.11，根據exhibit 1，長期債務為24.99億美元，權益價值為35.64億美元(30元*118.8百萬股)，可以得出D/V=24.99/35.64=41%標的資本結構D/V=60%，所以必需做出調整。 V=D+E，D/V=41%，E/V=59% Beta of asset=(E/V)*beta of equity=0.59*1.11=0.655 Beta of equity=(V/E)*beta of asset=(1/0.4)*0.655=1.64 Risk free
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Preparation Brainstorming Funding Re-do Legal Responsibility • • • • • Honesty and Integrity Record Keeping- Financial Dealing fairly with customers Compliance with laws Commercial Bribery Ethical Responsibility Marriott’s purpose is to open doors for an opportunity. Marriott’s values is to provide the foundation Social Responsibility • • • • Serve our communities Shelter and Food Ready for jobs Vitality of Children Planning Function of Management Situational Analysis Conclusion
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According to V and Mahapatra‚ “the information system department has served an increasingly important role in many organizations proactively to shape new competitive strategies that improve operational and managerial work processes”. Mission of Marriott’s ISM: Marriott uses its Information System to support the guests and employees. Guests support is divided into the five different major parts: • Reservation System – customer-relationship management package from Siebel Systems Inc used by
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in for the primary purpose of making a profit. Business activities can include things like operations‚ marketing‚ production and organization. Also known as business operations marrriotts mission STATEMENT: and aims and objectives S.M.A.R.T Marriott’s vision is to be the world’s leader in hospitality services and it achieves that through its spirit to serve culture. The Marriot has a corporate mission which entails being the world leader in hospitality services. This is translated into all departments
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Stock Repurchase Repurchase of stock can be viewed in each of the following way: investment‚ financing‚ shareholder distribution and control issue. Repurchase of stock can be a way to use firm’s excess debt capacity. By doing so‚ firm can lower the cost of equity financing. If debt financing is more flexible and cheap‚ replace equity financing with debt financing is a good way to lower the weighted cost of capital. In this sense‚ such action is a financing issue because it controls the cost of
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