Econ-My case study piece - When comparing both firms the...

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When comparing both firms, the first thing do is explain what factors of production are for each firm from 2010-2014 and compare these the findings to explain which had a greater impact on change in efficiency and profitability. To compare the two firms to see which had the greater impact the formula for operating income which is the following: Gross income – operating expenses- depreciation and amortization= operating income, was used. Operating income is a good way to compare the two firm’s efficiency and profitability with their factors of procution because it is the amount of profit realized from a business’s operations after taking out operating expenses (factors of production included). Operating expenses include costs that are incurred from operating activities such as office supplies, heat, power, etc. To go more into depth, a look at land, labor, capital and entrepreneurship as factors of production in which a firm’s success depends on all of these influences by using the operating income/profit in which will show a company’s operating efficiency. 1.To begin the comparison, one must first take a look at the factors of production of both firms in the beginning year. In 2010, Hilton opened a new brand, Hilton Short Hills, and a eforea spa that operates in China, Thailand and the United States. Marriott invests into their Autograph Collection hotels including iconic and independent properties. When they invested into this new brand, they gained 95 hotels in 4 continents. Hilton had operating income of 4.42 billion after taking out 3.64 billion in operating expenses and 5.74 million in depreciation and amortization from their gross income ( Hilton WorldWide 2015 Annual Reports 2015) . Marriott, even with a gross income of 11.69 billion, only had an operating income of 1.47 billion due to their high spending in operating costs ( Marriott International income-statement 2015). This difference shows that Marriott put a lot more money into opening more hotels/resorts, hiring, developing than Hilton in this year.
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  • Fall '15
  • Hilton Worldwide, Hilton Hotels, Hotel chains

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