Donna Klein And Marriott International (A) Harvard Case Solution & Analysis

Donna Klein And Marriott International (A) Case Study Solution

Alternative-3: Developing a Child Care Service Centre within the Organization

The company could build a child care centre within the organization by assigning a building for the centre. It could also make a third party contract to provide child care services to its hourly workers at an annual fees.

Advantages:

  • Increasing the productivity of the hourly workers due to the elimination of one of the major social problems faced by these employees.
  • Increase in the productivity of managers with reducing their responsibilities to cope with the problems of hourly workers.
  • Achievement of high motivational levels of the hourly workers which have a huge impact on the overall organizational performance.

Disadvantages:

  • Increase in the operational costs faced by the company due to the payment of child care service fees to the third party.
  • A large number of child care service centres would be required due to the highly extensive business with almost 100000 hourly workers.

Recommendations

On the basis of the above analysis of the company issues and the advantages and disadvantages of each of the alternative option, Marriot is recommended to consider alternative 1 for developing various incentive plans for its employees. The incentive plans would provide a financial assistance to the low wages employees. The major cause of the high social problems faced by these employees is their low wages and a financial assistance in form of incentive plans would provide the best assistance to resolve their issues. Although, these plans would increase the operating expenses margin from 95%, as stated in Appendix 1,but, with the increased employee productivity, the company could increase it revenues. Moreover, the option would not require a substantial amount of investment as in alternative 3 and a radical change in the organizational culture as in alternative 2.

Implementation Plan

In order to pursue alternative 1, the top management must develop various alternative incentive plans. However, the incentive plans must be based upon the research on the needs of the hourly workers. A best incentive plan is that which satisfy most of the employees. After developing the plans, it could set key performance measures. These measures should be aimed at increasing the productivity of the employees. After that it should set up a method of performance evaluation on the basis of the criteria that how the performance of an employee would be evaluated. It should specify a certain amount of its annual budget to the incentive plans to avoid any cash shortages at the end of the period. It could provide annual or monthly incentives to its employees to provide frequent financial assistance. It should evaluate the performance of the option on the basis of the reduction in the employee turnover and have an increase in the overall productivity of employees. In this way, Marriot would be able to implement the incentive plan efficiently.

 

Appendices

Appendix-1: Financial Analysis

Financial analysis for Marriott International could be conducted by using the data in case Exhibit 1. Various ratios are calculated to evaluate the financial performance of the company. Table 1 provides various ratios calculated by using the given data.

Table-1

Financial Analysis
  1991 1992 1993
Sales Growth n/a 4% 7%
Operating Expenses as a Percentage of Revenues 95% 95% 95%
Operating Profit Margin 5% 5% 5%
Net Profit Margin 2% 2% 2%
EPS 1.33 1.34 1.26

From the above table, it could be seen that the sales growth of the company from 1992 to 1993 is 7% as compared a sales growth of 4% from 1991 to 1992. This implies that the either the number of customers or the spending per customer is increasing with a potential percentage. One of the major factor of increasing growth is the quality of services provided by Marriot. Moreover, all of the other ratios i.e. operating profit margin, net profit margin and the operating expenses as a percentage of Sales are constant in each of the year. This implies that the company is able to maintain its operating expenses levels at a constant level. It also implies that the company is inefficient to reduce its operating cost to increase its profit margins.

Despite of a constant net profit margin, the EPS for the company on the basis of the assumption of 100 number of shares outstanding for each year, is declining. The major reason behind it is the overall decrease in the net income despite of the high revenue growth. On the basis of above analysis, it could be said that the company must review its financial performance to gain substantial profit margins and EPS………….

 

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