Marriott Corporation, an American firm, has 3 major lines of business: lodging, contract service and restaurants. Its growth objective is to remain a premier growth company. The four components of its financial strategy are consistent with this growth objective for the reasons:
Manage rather than own hotel assets: Marriott sold its hotel assets to limited partners to reduce assets and thus, it can increase ROA and thereby increase potential profitability.
Invest in projects that increase shareholdersâ€™ value: the discounted cash flow techniques to evaluate potential investments allow the company to invest only in profitable projects. Therefore, it can maximize the use of its cash flow to gain profits.
Optimize the use of debt in the capital structure: because firms with lower percentage of debt have higher value, Marriott uses this strategy to increase its value and thereby increase it profitability.
Repurchase undervalued shares: By buying back its undervalued shares, Marriott can increase PE ration when needed and can make its investorsâ€™ holdings more valuable because share prices will increase (increase in ROE). It also can appease investors and avoid pressure to increase dividend, thereby it can use its retained earnings to invest more in profitable projects. This strategy means that Marriott are confident in its future performance.
Marriott use the Weighted-Average-Cost-of Capital (WACC) method to measure the opportunity cost for investments.
WACC = (1-t)rD(D/V) + rE(E/V)
where D and E are the market values of the debt and equity respectively; rD is the pre-tax cost of debt; rE is the after-tax cost of equity; V is the firm value (V=E+D); and t is the corporate tax. This method is applied for Marriott as ...
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China Sport Product Market Analysis
Since in China the economy expanded immensely and the urban people start to accept Western world dress style. The Chinese young people’s fashion styles are most trends to North American. Accordingly, the volume of trade between foreign countries and China is increasing rapidly. In order to enter China market, the Marketing strategy should be considered, and some adaptations and developments are necessary.
Join a partnership with local company is the optimal method for Roots to operating business in Chinese market. Especially, the Chinese business has very strong relationship between retailers and wholesalers, this factor has the highest flight for a new firm successful in China. The local partners could manage lots of marketing functions such as supervise inventory and transported distribution. The product development and promotional management could manage by Roots and local partners coordinated. Furthermore, the price policy management will be a coordination of both two parties to ensure that the price is affordable and rivalrous.
Same to Canada, Chinese youngling prefer sportswear much better, the leather bag and wallet also very popular in China.
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