Decentralization of an organization can occur for many reasons. It may be that the organization is involved in multiple activities that are not closely related to each other, such as construction and auto sales. In other cases, the decision may be due to the structure of the firm’s ownership and how it chooses to manage its image. Let’s look at a firm that falls under this category— Marriott International.

1. Go to Marriott International’s Web site at www.marriott.com. Does the home page emphasize corporate information or promotional information?

2. How has Marriott decentralized its businesses? Click on “Explore Our Brands” near the bottom of the page to find a list of Marriott’s divisions. Do you suppose the divisions are cost centers, profit centers, or investment centers?

3. Go to the most recent annual report by clicking on “About Marriott,” “Investors,” “Financial Information,” and finally click on “Financial Reports & Proxy” to find the most recent annual report. Locate the information on business segments in the Notes to Financial Statements. How many segments does Marriott identify? What are these segments? What information does the firm report with respect to each of the different segments?

4. Marriott provides both income and assets for each of the segments. Calculate the return on average total assets for the past year for each of the segments.

5. What was the return on average total assets for the corporation as a whole for the past year? Given the different kinds of business segments the company has, do you think that operating return on average total assets would be a good measure for evaluating the individual segments? What factors might influence your answer?

6. Is Marriott likely to have any transfer prices? If Marriott has transfers, how do you suppose the company determines its transfer prices?