Marriott Corporation Essay

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Marriott Corporation is an international company who's the growth over the year has been more than satisfactory. In 1987, Marriott's sales grew up by 24% and its return on equity stood at 22%. The company operates in three divisions: lodging, contract services and restaurants which represents 41%, 46% and 13% of sales in 1987 respectively. Lodging generated 41% of 1987 sales and 51% of profits. Contract services generated 46% of 1987 sales and 33% of profits. Restaurants provided 13% of 1987 sales and 16% of profits. Goals of Marriott Corporation: This main goal of the Marriot corporation are: - To become the most profitable company. - To be the preferred employer. - To be the preferred provider. Strategies to achieve the above mentioned goals: 1) Invest in projects that increase shareholders values : This object is one of the financial goals to invest properly. Marriott used discounted cash flow techniques to evaluate potential investment. It is beneficial because it is considered present time value. Projects which increase shareholder value could be formed with benchmark hurdle rates, the company can ensure a return on projects which results in profitable and competitive advantage. 2) Optimize the use of debt in the capital structure: Marriott invests a lot of money in long term assets that's why it is really necessary for the company to maximize and optimize its debt. And the company has an A rating. It means that Marriott is able to borrow an important amount of money to invest and it could be heavily indebted. Therefore, it is really important to optimize the debt level. 3) Marriott measured the opportunity cost of capital for investments of similar risk using the weighted average cost of capital (WACC). 4) A firm's WACC is the overall required return on the firm as a whole and, as such, it is often used internally by company

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