Describe the competitive advantage that Marriott envisioned they would receive from the Starwood acquisition.

Bailey et al.: Strategic Human Resource Management, 2nd edition

Chapter 3 mini case study 1: Marriott’s acquisition of Starwood

The hotel chain Marriott, in 2016, completed the largest and most expensive acquisition in the hotel industry’s history, with a $13 billion-dollar acquisition of Starwood. Almost instantly overnight, Marriott increased its hotel portfolio by 50% and therefore increased their employees by roughly the same margin. One of the great challenges in the acquisition was the cultural challenges brought about by the different organizational rationale and mind-set of each business. There was a clear business rationale for the merger. In 2015 Starwood, which was one Marriott’s primary competitors, put itself up for sale. Marriott looked at it and decided initially they were not interested. It looked like a really difficult job and Marriott was doing very well.

The CEO explained, in a candid sit-down interview with Fortune, that the economics didn’t feel right but this began to change over the summer of 2015, when they engaged with a number of technology partners that act as middle men for their services, such as Facebook and Google. It was in these meetings that an emergent strategy became apparent.

Marriott decided that if they had an even bigger loyalty program then the relationships they could develop with their customers would be even stronger, due to the fact they could offer way more choice. The strategic importance of the deal became stronger across the environmental analysis stage. The CEO explained that companies like Starwood only come along for sale every ten years or longer, so they decided to go ahead with the deal.

Activity

Using Whittington’s (2001) model, what strategic perspective(s) appear to have been utilized by the firm?

Describe the competitive advantage that Marriott envisioned they would receive from the Starwood acquisition.

Sources:

Prune the Brand Portfolio, Harvard Business Review (2018) https://hbr.org/2018/03/case-study-should-a-hotel-giant-eliminate-some-brands-and-refocus

Fortune (2017) http://fortune.com/2017/05/26/marriott-starwood-sorenson/