External Business Environment and Its Impact on Company Operations

According to Bridges and Thomas (2012), the structure of a private company involves various levels of management, including shareholders, board of directors, middle-level managers, and lower-level employees. Each level has different roles and responsibilities that need to be fulfilled effectively. Effective communication is necessary for this, which can be achieved through processes such as annual shareholder meetings, official mail systems, and regular meetings between middle-level managers and the board of directors.

External business
environment

CONTENTS
Introduction.....................................................................................................................................................................4
Task 1..............................................................................................................................................................................4
1.1 Discussion on the structure and operation of UK economy.................................................................................4
Task 2..............................................................................................................................................................................4
1.2 Government economic policies and its impacts on the business and service industries......................................4
Task 3..............................................................................................................................................................................5
1.3 Discussion on income, employment, wealth and occupational distribution in the context of business and
service operations.......................................................................................................................................................5
Task 4..............................................................................................................................................................................5
1.4 Assessing of demographic trends that affect the employment patterns in the hospitality industry.....................5
Task 5..............................................................................................................................................................................6
1.5 Analyzing the social structure of people employed in business and service industries.......................................6
Task 6..............................................................................................................................................................................6
2.1 Discussion on the structure, operations and influence of local government of UK on Hilton Hotel...................6
Task 7..............................................................................................................................................................................7
2.2 Evaluating the role and influence of EU as well as its impact on business and service industries......................7
Task 8..............................................................................................................................................................................7
2.3 Role of pressure groups and their political influences in relation to national and local issues in the respect of
hospitality industry.....................................................................................................................................................7
Task 9..............................................................................................................................................................................8
2.4 Analyzing of legal framework within the UK as well as differences between the English and Scottish systems
....................................................................................................................................................................................8
Task 10............................................................................................................................................................................8
2.5 Impact of UK and EU legislative process in the working of Hilton at local and national level..........................8
Task 11............................................................................................................................................................................9
3.1 Various types and characteristics of business that operate in hospitality sector..................................................9
Task 12............................................................................................................................................................................9
3.2 Discussion on the legal processes that are necessary for the formation and dissolution of any company...........9
Task 13..........................................................................................................................................................................10
3.3 structures and processes that determine responsibilities and control within a registered company...................10
Conclusion....................................................................................................................................................................10
References.....................................................................................................................................................................11

INTRODUCTION
External business environment includes a range of factors such as social, political,
economic, technological, legal and environment which put its huge impact on the development
of various industries operating in the market (Mugurel-Alin, 2014). Service industry is one of the
leading and growing sectors in UK which is focused on rendering better quality of services to its
customers related to accommodation, food and beverage as well as transportation. This includes
various sub industries such as hospitality, travel and tourism, airline as well as agriculture. In the
present report, external business environment of the service industry has been discussed. For
better understanding of this report, Hilton hotel is selected.
TASK 1
1.1 Discussion on the structure and operation of UK economy
UK economy mainly includes two types of sectors including private and public sector.
Private sector organizations are established by entrepreneurs or individuals whose main purpose
is to generate profits behind conducting its business activities. However, many private firms are
organized by individuals who may be controlled by different organizations or people. For
instance, these types of businesses are organized by shareholders who can be institutional or
private investors (Useem, 2014). On the other hand, public sector organizations are financed and
controlled by the local and central government of UK. In this sector, products and goods are
delivered to the community through local government, public corporations as well as statutory
agencies. Main aim of public sector is to ensure the welfare of community’s thorough rendering
better quality of products and services instead of generating profit.
While considering the GDP rate, UK economy is considered as the sixth largest economy
in the world and it is the tenth largest economy according to the measurement of purchasing
power parity (PPP) (Structure of UK economy, 2013). In case of UK economy, service industry
mostly contributes in analyzing the national income and enhancing its growth rate in the world.
Service sector contributes in GDP by covering 78% share. This industry includes various
businesses such as hotels, restaurants, bars, pubs, travel agents, lodging, conference centers,
airline companies and banqueting organization. This industry contributes in enhancing the
revenue of UK by rendering various taxes such as income tax, value added tax, council tax, fuel
duty and many more.
TASK 2
1.2 Government economic policies and its impacts on the business and service industries
In order to conduct its business practices in a legal manner, service industry which
includes businesses such hotels, travel agents and airlines needs to be followed the economic
policies of UK government (Carroll and Buchholtz, 2014). In service industry, Hilton hotel is
one of the leading and growing hotels in the UK which is focused on providing better quality of
services to its customers that are related to accommodation, food and transportation. Along with
this, it follows all the economic policies of government for conducting its business in a legal
way. Major economic policies made by UK government are as follows:

Fiscal policy: This policy is maintained by the central government and tax authority of UK. This
policy is used to adjust the level of tax rate as well as spending for the purpose of controlling and
regulating the economy (Gitman and McDaniel, 2008). It is essential for the organizations
working in business and service industries to pay tax properly according to their revenue and
profitability as well as the tax rate set by the UK government. This tax revenue is spent by the
government for the development and growth of country.
Monitory policy: Monitory policy is control by the Central Bank of UK for the purpose of
supplying money by setting interest rate according to the condition of market. With the help of
monitory policy, various activities related to banking operations, credit system and proper
utilization of money supply are managed by the UK government (Meade, 2012). Fluctuation in
interest rate puts its impact on the wages of individuals that leads them to invest less money on
entertainment and leisure. Thus, it also affects the revenue and profitability of service industry.
TASK 3
1.3 Discussion on income, employment, wealth and occupational distribution in the context of
business and service operations
Income: Income of individuals can be termed as an amount in terms of monitory fund or
payment which has been given to the employees by employer for working in his or her
organization. Income of individuals puts its huge impact on the budget of customers (Hult,
Hurley and Knight, 2004). So, service industry needs to consider this factor at the time of setting
the prices of its services as well as goods.
Employment: Employment includes the procedure of selecting and recruiting candidates for
fulfilling the goals and objectives of organization. For rendering better services to customers, it is
required for the hospitality, travel and tourism industries to recruit qualified and talented
employees.
Wealth: Wealth includes the number of valuable resources in terms of money, property,
businesses or other resources which are possessed by an individual, region, community or
country. Availability of wealth is the term which is used to classify individuals into class
including high level, middle level and lower level (Batini, Jackson and Nickell, 2005). By
considering this factor, businesses should focus on rendering different variety of products and
services according to the class of customers.
Occupational distribution: It is the term in which population living in a society is classified on
the basis of economic function, skill level and social class. This classification should be
identified by the business operating in service industry for understanding the needs of customers
along with providing services according to those needs.
TASK 4
1.4 Assessing of demographic trends that affect the employment patterns in the hospitality
industry
Demographic trends include the following changes that come into the human population
over a duration of time. These changes are related to age, geographical location, education,

gender, marital status, race, income, health and religion. These factors are necessary to be
considered by the management of Hilton Hotel at the time of performing its employment
functions. One of the major factor that influences the employment patterns of hotel is income
(Bridges and Thomas, 2012). This factor influences Hilton to provide better salary to its
employees as per their expectations otherwise, it can lead to enhance the level of employee
turnover which will be not good for the development of company. Another factor is religion
which generates problems for hotel management in maintaining proper communication due to
availability of language differentiation. Age is also a major factor that influence the employment
patterns because hospitality industry needs young and smart people to deal with customers
effectively and it also needs employees which can work in the both shifts as it provides 24*7
services.
TASK 5
1.5 Analyzing the social structure of people employed in business and service industries
Social structure of people includes various levels of social classes that can be
distinguished on the basis of income, wealth, position and status. Social structure involves
different kinds of factors such as lifestyle, attitude, income, educational status, religion and
family which needs to be considered by the service industry at the time of dealing with people
employed in it. In social structure, income is one of the major criteria which puts its huge impact
on the needs and requirements of employees (Walker, 2009). Along with this, education level is
required to be analyzed while taking decision about the job analysis, job description and person
specification. By using educational level, business entity can recruit separate candidates for the
separate position. For instance, manager must have qualification of M.B.A in HR and chef must
have at least 5 year experience in cooking with the qualification of diploma in this field. Further,
religion factor is also required to be focused by airline companies and travel agents at the time of
selecting new employees.
TASK 6
2.1 Discussion on the structure, operations and influence of local government of UK on Hilton
Hotel
UK local government is mostly focused on the welfare of society through ensuring the
level of products and services provided to them by the hospitality and service industry. Due to
this aspect, government is mostly focused on influencing businesses to follow the rules,
regulations and policies made by them in order to maintain the safety standards in its practices.
Along with this, they also develop different legislation related to environment safety,
employment policy, minimum wage rate, labor policy as well as other legal issues. Following all
the legislation and policies leads to enhance the cost of the management of Hilton (Altonji and
Doraszelski, 2005). In UK, various types of authorities are working for the welfare of
communities including country council, district council, metropolitan district, unitary district and
London boroughs. These all authorities are responsible for giving permission for the
establishment of new project in the country. So, approval from theses authorities is necessary to
be taken by Hilton before opening its new hotel or any project. Further, UK local government

always tries to take some major decisions for promoting tourism activities in that particular city
and also focuses on enhancing the development of hotels such as Hilton.
TASK 7
2.2 Evaluating the role and influence of EU as well as its impact on business and service
industries
European Union (EU) is a professional and political body in UK which has 28 member
states. Main aim of this union is to provide proper guidance to its member companies for
performing its practices in a legal manner (Rennie and Leigh, 2008). Along with this, it renders
financial support to all of its member states for the development of its business. In case of service
industry, airline companies, hotels, restaurants and travel agents are needs to follow all the
policies made by EU in order to operate its businesses in an effective manner. Policies made by
EU for the better development of service industry are as follows:
Inflation policy: This policy is focused on controlling the level of inflation rate which is
developed by the committee of monitory policy and Central bank of England.
International policy: Main aim of this policy is to promoting international trade and encouraging
the level of imports for enhancing the revenue and profitability of service industry.
Regional policy: This policy was developed by EU for increasing the growth rate of undeveloped
regions by providing finance support (Offe and Preuss, 2006).
Competition policy: This policy ensures the business practices performed by the organization
that must be fair, legal and respectful.
Labor policy: According to this policy, businesses working in service industry need to provide
better working conditions, salary and wages to its employees.
TASK 8
2.3 Role of pressure groups and their political influences in relation to national and local issues
in the respect of hospitality industry
Pressure groups can be defined as those groups which can influence public policy for the
purpose of their own interest. Along with this, pressure groups consist the power to affect the
rules and policies that are made by regulatory bodies. In case of Hilton, this type of group
influences management to perform their business practices in an ethical and legal manner in
order to ensure the safety of environment as well as society. Main aim of this group is to protect
the local environment of city by taking legal decisions. This group can also be influenced to
political actors to perform their duties in a proper way (Richardson and Mazey, 2015). Pressure
groups are mostly focused on reducing the impact of hospitality industry on environment related
to CO2 emissions, climate change and damages of natural resources as well as wastage of water,
food and beverages. Food commission is one of the main examples of pressure group which is
working in the UK for minimizing the level of food wastage in the respect of hospitality
industry. In accordance to this, it is required for the management of Hilton to coordinate properly
with the pressure groups.

TASK 9
2.4 Analyzing of legal framework within the UK as well as differences between the English and
Scottish systems
There are different types of legal systems that are followed in UK and maintained by the
UK government. These systems are English, Scotland, Wales and Northern Ireland (Legal
framework in UK, 2015). In UK, there are various types of courts such as county court, crown
court, youth court, royal courts of justice and magistrate’s court that deals with both types of
cases including criminal and civil. Further, difference between English and Scottish Systems are
as follows:
Basis English system Scottish system
Nature of laws This system includes
common laws only.
It includes both civil and
common laws.
Responsibilities In this system, regulator is
responsible for performing
regulatory responsibilities
In this system, regular has
authority to breach issues but
doesn’t have right to
prosecute (Rennie and Leigh,
2008).
Witness statements It plays an important role in
the criminal cases as an
evidence (Mazey and
Richardson, 2006).
In this system, written
statements are not considered
as evidence.
Formal cautions In this system, regulators play
the duty of publishing formal
cautions at the time of
prosecuting.
In this system, formal
cautions are not considered.
TASK 10
2.5 Impact of UK and EU legislative process in the working of Hilton at local and national level
Legislative process of EU and UK is very complex as it is very tough for Hilton to deal
and follow the rules and regulations of government. Legislative process of EU and UK directly
influence the business operation of Hilton to a higher extent. Legislative process of UK includes
several policies such as Health and Safety act, Anti-discrimination Act, Human Right Act,
Equality Act as well as employment and labor policies (Bridges and Thomas, 2012). In
accordance to the Health and safety Act, it is essential for the management of Hilton to ensure
the safety of customers and its employees at workplace. Further, labor policy influences hotel
management to provide proper wages to its employees as per the industry standards. In case of
equality act, it is needed for organization to provide equal opportunity to its all employees
without any discrimination at workplace. It is also requited for business entity to render healthy
and friendly environment to its workforce. Thus, legislative policies influence Hilton to perform
its practices in a fair manner at both local and national level.

TASK 11
3.1 Various types and characteristics of business that operate in hospitality sector
Main businesses that are operate in the hospitality sector including hotels, resorts,
restaurants, pubs etc. Main aim of these all businesses is to provide better quality of
accommodation to its customers or to render high quality of food items and beverages or both.
Description of these two services and its characteristics are as follows:
Accommodation: This service is provided by the management of hotels, resorts and motels
including Hilton hotel. Businesses in this category include the objectives of rendering better
lodging facilities to its customers as per their needs and requirements (Useem, 2014). Further,
these businesses have objective of rendering memorable experience to its clients by giving them
outstanding accommodation. Some of the characteristics included in this category are as follows:
 Information related to clients is kept with security.
 Proper leisure and comfort are given to the clients.
 Services are provided in an effective manner.
Food and beverage: It is one of the important services included in the hospitality sector. This
service is provided by the businesses such as restaurants, fast food restaurants, pubs, bars as well
as some high level hotels which include restaurants. Some of the characteristics included in this
category are as follows:
 Businesses in this category mostly focused on understanding the needs of customers
before setting its food menu (Mugurel-Alin, 2014).
 It covers one of the highest market share in increasing the revenue of country.
TASK 12
3.2 Discussion on the legal processes that are necessary for the formation and dissolution of any
company
Formation of company
The process of formation includes the following documents which should be processed in
step by step. These are mentioned below as:
 Article of association: It consists a set of rules and regulations which are necessary to be
followed for conducting business effectively and fulfilling the duties and responsibility of
directors towards its business as well as country. This document is necessary to be signed
by one of the directors in front of witness (Carroll and Buchholtz, 2014).
 Paper process: In accordance to the section 9 of Companies act 2006, it is necessary for
business entity to submit the required documents with the fees decided by the
government.
 IN01 form: This form includes various sections which are filled for getting detailed
information about all the directors of company. For verifying all the information, original
personal documents are needed to be submitted.

 Memorandum of association: It involves the consent as well as all the detail information
about the stakeholders.
DISSOLUTION OF THE COMPANY-
There are two ways to dissolve a firm which are as follows:
 Creditor’s voluntary liquidation- In this way, decision of dissolution has been taken
by the consent of both stakeholders and directors because they are not more able to
pay the loan as well as depts (Bridges and Thomas, 2012).
 Member’s voluntary liquidation- This type of dissolution takes place due to some
person reason instead of any financial reason.
TASK 13
3.3 structures and processes that determine responsibilities and control within a registered
company
Structure of a private company involves board of directors, shareholders, middle level
managers and lower level employees. Every person in company has different roles and
responsibilities which are necessary to be fulfilled by all of them in an effective manner. In order
communicate about their responsibilities, various processes can be adopted by the management
of company. In case of shareholders, annual meeting is the best sources for the communication
and interaction. It is necessary for organization to involve shareholders in decision making
process by conducting meeting in order to get better solution for the further improvement
(Altonji and Doraszelsk, 2005). Further, to communicate employees about their responsibilities,
official mail system can be considered by the middle level managers. Further, middle level
manager and board of directors can communicate with each other in order to delegate duties and
responsibilities through conducting meeting on weekly and daily basis.
CONCLUSION
From the above study, it has been concluded that external business environment may
have huge impact on the business practices of service industry including hospitality, airline,
travel and tourism etc. External business environment includes several legislative policies, social
structure of people working in industry, economic policies, structure of local and national
government etc. which put its both positive and negative impact on the business operation of the
organization as well as its revenue and profitability.

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