Understanding the Business Environment

This document provides an in-depth understanding of the business environment, focusing on stakeholders and the impact of various factors such as political, economic, social, technological, environmental, and legal. The case study of Mitchells & Butlers (M&B) Company is used to illustrate these concepts.

UNDERSTANDING THE BUSINESS ENVIRONMENT
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Executive Summary
Some well-known brands work under Mitchells & Butlers (M&B) Company and they provide a
wide choice of eating and drinking experiences. The main objective of M&B is to conquer the
place of leading pub and restaurant business venture across UK territory. They have also aimed
to develop more sites and they can make most of their scale in marketing, purchasing and many
more. Internal, external and connected are three types of stakeholders that are present in an
organisation. Stakeholder theory was proposed by Edward Freeman and he aimed to improve the
relationship with the stakeholders through the theory. PESTEL stands for Political, Economic,
Social, Technological, Environmental and Legal factors and it is needed to identify the
macroeconomic factors of any brand. IMF is able to exchange views with the country’s leaders
and in this exchange process, performance, policies and prospects of every members are
evaluated. IMF performs all these tasks under the leadership of World Bank with the help of
economic support and technical help. Their ambitions have long term goal and they receive
funds from various countries and their employees are well trained on their desired work. In order
to improve the joint working performance of these two institutes, an external review of Bank-
Fund collaboration was conducted in the year 2007.
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Table of Contents
Introduction......................................................................................................................................3
Task One..........................................................................................................................................4
Task Two.........................................................................................................................................7
Task Three.....................................................................................................................................10
Conclusion.....................................................................................................................................12
Reference List................................................................................................................................13
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Introduction
Mitchells & Butlers (M&B) Company is considered as one of the most well-known UK based
business ventures for operating pubs, restaurants and bars in the UK territory. Some well-known
brands work under this company and they provide a wide choice of eating and drinking
experiences (mbplc.com 2019). The guests have also shown their satisfaction towards the
business venture’s service quality and value according to the quality. It is a public organisation
and successfully gained revenue of approximately $2.7 billion under the leadership of Phil Urban
as the CEO (owler.com 2019). It has been evident in the words of McFarlane et al. (2016), it is
the duty of every organisation to work for the customers and develop product and services
according to their needs. The main objective of M&B is to conquer the place of leading pub and
restaurant business venture across UK territory. They have approximately 44,000 employees and
successfully gained over 1,700 businesses (mbplc.com 2019). They have a wide number of
services at destinations, such as Toby Carvery specialised in traditional roast dinner with all the
trimmings, Browns is specialised in a stylish cocktail that is located in the hearts of London.
The organisation has successfully maintained its reputation since from 1898 and their
experienced staff members and management department have helped them become a highly
successful organisation. Their quality service provides 140 million meals per year combined with
430 million drinks annually. Their operation is surrounded by constant innovation in order to
apply new and advanced ideas in their business process. They have successfully developed
household names such as Toby Carvery, All Bar One and Vintage Inns. All of them have
maintained their service for their customer and as a result, kept their pride in the market. Every
year a major number of customers, approximately 700,000 avail their services and gave positive
feedback. These feedbacks motivate the organisation to improve its services and introduce
innovative ideas within their list of services.
Their main objective is to satisfy the customer with quality service, warm welcome, excellent
value and outstanding quality (mbplc.com 2019). Their staff members are all experienced in their
work, achieved rewards on training, high-quality supply chain management, rigorous food safety
practices, innovative menu development and being responsible enough to sell alcohol seriously.
Their strategy is to make their brand’s name the first choice for customers of the UK in terms of
relaxation, casual drink or meal and other occasions. In context to the UK and Germany, they
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have at about 1,700 pubs and restaurants that are successfully trading under a wide range of
formats and brands. Every week they gain net sale of approximately £23,000 and every year they
earn a profit of approximately £180,000. These data indicate that the organisation as the highest
levels in the desired sector.
Over the last five years, the organisation has successfully enhanced their food sale by
approximately 60% in every pub. Based on the understandings that have been evident in the
words of Yu et al. (2019), it can be opined that the organisation have gathered three-quarter of
their sale from the guests who avail restaurants and pubs services. Their quality service makes
the customers come to avail their services again and again. They have kept their brands fresh and
ensure their organisation’s choice, quality, value and service. In the near future, the brand has
aimed to increase the rate of trading with recognisable and attractive offers. On the other hand,
they have also aimed to develop more sites and they can make most of their scale in marketing,
purchasing and many more. The staff members are trained after a certain period of time in order
to increase their performance and motivate them. According to the conceptions, that have been
evident in the words of Doherty et al. (2017), it can be opined that these strategies help an
organisation to achieve a better return on investment.
Task One
Stakeholder theory involves various elements such as business ethics, values and morals while
managing stakeholders who are involved either directly or indirectly to a business venture and
their projects. This theory was proposed by Edward Freeman and he aimed to improve the
relationship with the stakeholders through the theory. It is clearly evident in the words of
Ketokivi and Mahoney (2016), implementation of this theory can improve the efficiency of the
organisation throughout the project or company. There are three types of stakeholders that are
present in an organisation, such as internal, external and connected stakeholders.
Internal Stakeholders
It involves the people who are directly involved with an organisation such as staff members, the
board of directors and managers of that organisation (professionalacademy.com 2019).
External Stakeholders
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It involves the people who do not have any direct relationship with the organisation; however,
they get affected by the organisation’s profit or loss. Government, local communities, media,
society and pressure groups are some of the common examples of external stakeholders.
Connected Stakeholders
These stakeholder groups are also known as primary stakeholders and have a contractual or
economic relationship with the brand. Shareholders, distributors, financiers, customers and
retailers are some of the commonly connected stakeholders for an organisation.
Figure 1: Type of Stakeholders
(Source: professionalacademy.com 2019)
Main four stakeholders of Mitchells & Butlers
As an organisation of the hospitality sector, the four main stakeholders of this brand are
employees, customers, government and managers. Proper management will help the staff
members with regular training in order to motive and enhance their working skills. On the other
hand, highly trained employees will more likely satisfy their customers at a higher scale.
Government is considered as one of the most important stakeholders for the chosen organisation
since they will monitor the organisation’s financial profit and the legislation that is applied to
their working process. In case the government find out that the organisation is not following the
legislation properly or not paying the revenue in time then the organisation can face major
actions such as financial penalty from the government.
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The power matrix tool is used to assess the importance of these stakeholders for the chosen
organisation. According to the conceptions that have been evident it the words of Harrison et al.
(2015), it can be deduced that in terms of stakeholders’ management, stakeholder analysis is
considered at the primary step. It has been seen that it is an important process that is used by
successful managers of an organisation in order to win support from others. Through stakeholder
management, the organisation can ensure that their project will gain success where there could
be a chance for them to get fail. Based on the understandings that have been evident in the words
of Mansell (2015), it can be opined that these are the key benefits of proper stakeholder
management:
Getting projects into shape
A proper stakeholder can provide effective ideas and opinions that will help the organisation to
define their project at an earlier stage. Stakeholders can support the organisation and their efforts
will help in improving the quality of the project.
Winning Resources
Through proper support from stakeholders, the business venture will gain more powerful and
effective resources such as money, time as well as people. It has been evident in the words of
Tantalo and Priem (2016), it is an effective step towards the organisation’s success.
Building Understanding
Through rapid and continuous communication between the organisation’s higher authority and
other stakeholders, a relationship of trust will grow between them. The stakeholders will gain
knowledge regarding the organisation’s working process and benefits that will come from their
ongoing projects.
Getting ahead of the game
Through proper communication, the organisation will also understand their stakeholder's
expectation and as a result, they will plan according to it. The organisation can also predict the
reaction of its stakeholders towards their project. Therefore, they can plan early actions that will
win their stakeholder’s support.
In the case of M&B, the potential area of conflict arises when different stakeholder groups will
have different expectations from the organisation. Therefore, a business venture such as M&B
needs to prioritize its stakeholders. For instance, if the manager needs to reduce the price of its
products then they will most likely change their suppliers. However, the management needs to
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ensure the quality of the new products. In reference to the in-depth study Theodoulidis et al.
(2017), it can be deduced that low priced products generally do not have high quality. This
approach will most likely affect the customer’s choice and it can be resolved by proper quality
check of the products.
Task Two
M&B is a British organisation and the economic condition of the country is much stable as
compared to other countries in the world. UK government follows mixed economic system
which is a mixture of capitalism and socialism. Following are some of the advantages and
disadvantages of such economic system:
Advantage
 Job Security
It is an essential role of the government to get involved in citizen’s lifestyle in order to
provide security. Government employees do not have any risk of losing their job
however, the private employees do and it depends upon the market.
 Pollution Regulation
Various private organisations misuse environment for their profit (Arvidson 2017).
Therefore, implementation of government law on those brands is necessary in order to
control air and water pollution.
Disadvantage
 Inefficiency of public sector
It has been seen that private organisation face either reduction in cost or incrementation
of their production volume. Inefficiency, corruption and waste are some the major reason
for the suffering.
 Decrease in Capitalism
Mixed economy has a negative impact on capitalist economy and in order to restore it,
investment socialisation is used.
In order to identify the macroeconomic factors of the chosen brand, PESTEL analysis is
conducted. Based on the understandings that have been evident in the words of Pan et al. (2018),
it can be stated that PESTEL stands for Political, Economic, Social, Technological,
Environmental and Legal factors as mentioned in Figure 2.
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Figure 2: Business Environment
(Source: Nurmi and Niemelä 2018)
These factors cause a huge impact on Mitchells & Butler’s macro environment. In case of any
instability on these macro-environment factors, not only Mitchells & Butlers but also other
organisations in this sector are more likely to face a direct negative impact.
Political
This factor is used to determine the long-term profitability factor that can cause a direct impact
on M&B. According to the conceptions of Muncer and Kabwe (2015), in order to achieve
success in the travel and hospitality industry across various countries, it is essential to minimise
the risks of political environment. The UK is said to be a politically stable country with low
corruption rate, therefore, the companies that run under its governance gets benefited with plenty
of opportunities. According to the conceptions that are evident in the words of Nurmi and
Niemelä (2018), it can be deduced that the UK is split into local and national administrations
which is a point of benefit for the organisations. However, with all these benefits the country can
face uncertainty due to the effect of Brexit.
Economical
As compared to other countries, UK has a strong and stable economic condition as it has a
diverse economy and higher GDP. It is clearly evident in the words of Tsangas et al. (2019) in
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terms of GDP; the UK is ranked fifth in the whole world and second in Europe. The stable
population condition allows small markets to be profitable. Enhancement in foreign direct
investment and the free market allows most of the companies to gain more profit within a short
period of time. M&B can use the country’s inflation, growth rate, consumer spending and many
more economic factors to estimate the growth rate of their sector. They should regularly conduct
checks on the county’s unemployment rate, interest rate, exchange rates and labour cost.
However, in 2009 the country faced some serious issues that lead to the closing of approximately
40 pubs per week. Eventually, this condition leads to unemployment at a higher level as 24,000
workings in this sector became jobless and among them, M&B was also present. Nevertheless,
the business venture encountered this issue with its strong management and leadership quality.
The brand’s excellent sites, strong reputation and proper operational skills kept their business
well positioned.
Social
It is a known fact that the UK has high social standards where people prefer quality over
quantity. The citizens are ready to pay a handsome amount if they receive proper services
according to their demands. According to 2019, the UK has a population of approximately
66,899,983 inhabitants (worldometers.info 2019). They receive various free public services such
as National Health Service and it results in a cheap and large workforce. However, as a part of
the travel and hospitality industry, M&B understand that excessive alcohol consumption leads to
wider anti-social behaviour. However, the brand received several recognitions for their quality,
hygienic and fresh food. On the other hand, the UK government also emphasised the brand to
promote healthy eating and minimisation of obesity level.
Technology
As an economically developed country, UK has high standards in the advancement of technology
through proper research and development. With the advancement of technology, brands such as
M&B have access to equipment that minimises energy consumption. In the words of Kara
(2018), it is a major step towards climate change and all the brands in this industry must utilize
equipment such as electric smart meter, low energy light bulbs, gas automated meters, water leak
detection and many more.
Environmental
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In order to reduce carbon emission and global warming, a lot of European companies played
their major role. Therefore, M&B needs to spend more capital on green issues and reduction of
carbon emission. In the year 2019, M&B received recognition for middle C+ carbon positive
award as they performed the highest greenest business all over UK (mbplc.com 2019).
Legal
UK has several legislations that are needed to be implemented and followed by every
organisation working on their geographical region. Equality Act 2010 has proven its advantage
for the employees in order to keep them away from discrimination and enjoy equal respect in
their working territory (Davies et al. 2018).
Task Three
International Monetary Fund (IMF) has always proven them as a stable organisation in order to
ensure financial and global economic system. According to the conceptions that are evident in
the words of Steger (2017), it can be stated that risk and promise, both are offered by
globalization. Risks such as reversing and capital flow dying up are a major part of globalisation.
Through the mechanism of surveillance, IMF is able to exchange views with the country’s
leaders. In this exchange process, performance, policies and prospects of every members are
evaluated (imf.org 2019). On the other hand, the surveillance mechanism is helpful for financial
stability and economic growth promotion. However, some of the crisis gets overlooked. IMF is
working on containing present financial crisis in context to Asia and in case of Africa, they are
trying to secure a twenty years old renaissance.
Through technical assistance, political advice and financial support, IMF is helping the country
to support finance mobilization and transition economy’s reform efforts with the help of policy
advice. Between the year 1990 to 1998, IMF has provided support with approximately $41.3
billion to these economies (imf.org 2019). On the other hand, from 1992 to 1995 there was a
growth of 40% IMF technical assistance’s transition economic share. As inspired by the words of
Kentikelenis et al. (2015), in early 1998, approximately 9,300 participants from 33 transition
countries received training from Joint Vienna Institute. However, IMF has no limits for
Globalisation improvements as they have mentioned to conduct various works in near future.
They have aimed to promote acceptance and standards observance through surveillance that are
agreed by the international community. Based on the understandings that have been evident in
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the words of Ban (2015), it can be deduced that in Special Data Dissemination Standard’s IMF,
these codes and standards are developed by economic statistics. As these initiatives are not small,
therefore, it will take a lot of time in order to implement them properly. All the standards and
codes should be regulated after a certain period of time before its implementation. It is evident in
the words of Reinhart and Trebesch (2016); IMF works are not restricted to rich countries as they
have spread their wings in the poor countries as well.
On the other hand, poverty reduction and long-term economic development are promoted by the
World Bank (imf.org 2019). IMF performs all these tasks under the leadership of World Bank
with the help of economic support and technical help. They world closely overcome the
loopholes in certain portions, such as construction of health centres and schools, supplying
electricity and water, curing vulnerable diseases and reducing carbon emission in the nature.
Their ambitions have long term goal and they receive funds from various countries and their
employees are well trained on their desired work. Some of the leaders of World Bank and IMF
together conducted a meeting named as Development Committee. Their managing directors
often meet and discuss about some major affairs and take a visit to countries where their desired
work is needed to be completed. They actively support each other on their missions and
overcome each other’s loopholes. In order to improve the joint working performance of these
two institutes, an external review of Bank-Fund collaboration was conducted in the year 2007. It
is evident in the words of Williams (2016), this collaboration was named as Joint Management
Action Plan (JMAP). Global Monitoring Report (GMR) was published annually by both IMF
and World Bank jointly between the years 2004 to 2015. The publication previously discussed
meeting the progress of Millennium Development Goals (MDGs). However, in 2015,
Sustainable Development Goals (SDGs) replaced MDGs under 2030 Global Development
Agenda. Their joint venture has taken strict action towards the issue of financial instability. With
the help of Financial Sector Assessment Program (FSAP) in 1990, they have identified the
vulnerabilities and strengths of a country's financial system. They have also actively
recommended proper policy feedback on the issues.
Their joint initiative known as HIPC was a huge successful project as they reduced the debt of
approximately $40 from 20 different countries. Eventually in these countries the social
expenditure got raised by three times as compared to the debt service and the net present value
terms got reduced by two thirds. The World Bank has approached the policy makers in order to
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take lessons of economic history as the global integration development are neither new nor can
be ignored (worldbank.org 2016). In this modern world every country wants to take advantages
of foreign services, goods, ideas, finance and labour. In order to perform these tasks,
international rules for management of interdependency and openness are needed to be followed
properly.
Conclusion
The Mitchells & Butlers (M&B) Company is effective in the provision of high quality food and
drinks that helps to attract a large number of customer groups. Based on the above study, it can
be concluded that the brand has an effective model in place that contributes to these high brand
values and sales. Based on the stakeholder theory it was found that the prime intrinsic
stakeholders of the organisation include the employees, managers, board of directors and the
shareholders. These stakeholder group works in unison in order to provide high value services to
customers. The external stakeholders of the brand include its customers and the raw material
suppliers for high quality food product provisions.
The organisation has been able to gain significantly high revenue values over the last five years.
The highly favourable conditions in UK have contributed to even higher possibilities for the
brand to ensure improved growth, development and visibility in the market. UK has a low
corruption rate which contributes to political stability whereas the high population availability
allows attracting a larger number of customers. Additionally, the provision of funds by the
International Monetary Fund (IMF) and the Worldbank has also contributed to increased
opportunities for brand profitability.
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