Marriot Case Study Why Is Case Study

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For one, the hotel management business is not burdened by the real estate market directly due to this restructuring. This will allow the hotel management business to transfer its long-term obligations to that of the real estate company formed in the restructuring. By alleviating itself of long-term debt, Marriott is in better position to purchase assets at depressed prices in the open market, thus positioning itself for future profitability. By positioning itself for future profitability, management is acting consistently with its responsibilities to all stakeholder groups. Bondholders will see their principle repaid with all corresponding coupons. Stockholders will likewise see rising share prices as the companies earnings grow. Both of which are the responsibilities of management.

3. The case describes two conceptions of managers fiduciary responsibility (page 9). Which do you favor: the shareholder conception or the corporate conception? Does your stance make a difference in this case?

I overwhelmingly favor the shareholder conception in regards to fiduciary duty of managers. The company is first beholden to the owners of a company.

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The managers likewise should operate the business in the best interest of the shareholders first. To better align shareholder interests to those of management certain pay structures such as stock options and performance pay are used. These initiatives allow the managers of Marriot to behave in a manner in the best interest of the owners. My stance is geared towards the owners due in part to the overall financing of the business. Most businesses are financed through debt and equity. The equity portion usually incorporates both common stock and preferred stock. The debt portion usually encompasses debt, debentures and other convertible securities. This initial money is provided by shareholders to help run the firm more efficiently. In the case of Marriot, these funds can be used to capture customers and expand market share. As such, the shareholders, or the individuals who provided the capital should be adequately compensated for the risk of providing funding. This involves running the firm to maximize….....

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