Analysis of External Business Environment: UK Hospitality Report

This comprehensive report delves into the UK hospitality industry, examining its structure, market dynamics, and the influence of external factors. It analyzes the impact of the UK economy, government policies, and various market structures on the sector's operations. The report explores income, wealth, employment, and occupational distribution within the industry, as well as demographic trends and social structures affecting employment patterns. It also assesses the roles of local government, the European Union, and pressure groups, while covering the legal framework, legislative processes, and company formation aspects. The report uses the Hilton Hotel as a case study to illustrate these concepts, providing a detailed overview of the industry's challenges and opportunities. The report concludes with insights into the industry's future and the impact of various external elements on its success.

External business
environment
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TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
Task 1: The structure and operation of UK economy..................................................................3
Task 2: Current government economic policy and its effect on business and service industries 4
Task 3: Discuss income, wealth, employment and occupational distribution in relation to the
provision of business and service operations...............................................................................5
Task 4 Demographic trends that influence employment patterns in hospitality industry............5
Task 5: The social structures of people employed in business and services industries...............6
Task 6: The structure, operations and influence of local government on a major part UK hotel
group............................................................................................................................................7
Task 7: Role and influence of European union and its impact on businesses.............................7
Task 8: Role of pressure groups...................................................................................................8
Task 9: legal framework within UK and difference between English and Scottish system........8
Task 10: UK and EU legislative process and its effects .............................................................9
Task 11: Types and characteristic of business that operates within hospitality industry ...........9
Task 12 Legal process necessary for the formation and dissolution of company ....................10
Task 13 structure and process which determines the responsibilities and control within a
registered company....................................................................................................................11
Conclusion ....................................................................................................................................12
References......................................................................................................................................14
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INTRODUCTION
Business environment is combined with two factors that are internal and external factors,
both the factors influence the decisions of businesses (Kew and Stredwick, 2005). Internal
environment includes the factors that exist within the company and put its impact on the
processes as well as the success of organization. Another component of business environment
include external environment of an organization are those components those exists outside the
company an impact the establishment ability to function. Managers generally have no control
over the external environment factors which are uncertain and indirectly affect the operations of
business. However, external environment directly affects the processes of planning, organizing,
directing and controlling of business. Present report mainly focuses on the whole UK hospitality
industry as it is consider as the fastest growing sector. The study also analyse and measure the
meaning of external business environment as it mainly affect the operations of the organization.
Along with this company also measures the modern economic policy and their impact on the
services and operations of the hospitality organization (2014 Index of Economic Freedom, 2014).
Therefore, present study also measures the impact and affect of change in the socio-
economic aspect on the performance of organization within the hospitality industry. Study also
focuses on measuring the role and influence of EU on the operations of Hilton while operating
the activities across the border. Report will also measure the different impact of external factors
that is political, social and legal environment on the activities and operations of Hilton
International.
Task 1: The structure and operation of UK economy
Hospitality industry is considered as the major employer that provides job opportunities
within the service sector. This industry encompasses an extensive variety of services that
commonly include food service, tourism and hotels services. Therefore, the key strength of
hospitality industry is that it mainly focuses on creating wealth and job opportunities throughout
the countries and get benefits from the different activities of restaurant and hotels or other
catering businesses (Economic System, 2013). In the contemporary scenario, it has been stated
that UK economy is consider as fastest growing and largest economy that features increasing
GDP rate (United Kingdom GDP Annual Growth Rate, 2016). Therefore, for operating the
services there are various form of market structure under which organization perform their
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activities (Harrison, 2013). From the different form of market structures selecting the suitable
structure directly affect and influence the behaviour and culture of organization. The different
variety of market structures available in the UK economy are imperfect competition structure,
perfect competition, oligopoly etc. Market structure of UK hospitality industry mainly focuses on
the perfect competition market as there are too many buyers and sellers present within the
marketplace and has control on the activities (David, 2000). Under UK economy, there is no
barrier for entering or existing in the market as they are free to enter in the market and exist from
the market. It has also stated that UK economy directly employs over 2.4m people in 17000
commercial establishments. Moreover, range of hospitality industry is vast as it features various
sections that mainly include hotels, restaurants, pubs, motels, clubs etc. Therefore, UK
hospitality industry mainly contributes their market share in the up-liftment of UK economy and
thus, outcome in creating various job opportunities. However, it has been stated that 32£
travellers across the globe often visit the tourist destinations in the UK. Therefore, it has been
stated that UK hospitality business mainly impart £4.25bn within economy that support the
economy in developing their destinations and places that are often visited by travellers (Britton,
2009). however, there are different sectors and industries that mainly contribute in growing the
UK economy that is agriculture sector it mainly contribute the UK economy by producing the
food needs around 60% within the economy. The agriculture industry in the UK also contribute
around £9,438 million within the economy that increases the GDP rate. Furthermore,
construction industry also primarily contribute and impart their gross value to the UK economy
that is approximately £86 billion. The construction industry progressively result in contributing
to the development or processing of infrastructure in the UK (United Kingdom National
Accounts, The Blue Book, 2013). Another industry that contribute in the GDP of UK economy
focus on production industries that generate electricity, gas and water supply that boost or add
the gross value around £33,289 million in economy.
Task 2: Current government economic policy and its effect on business and service industries
Authorities mainly frame legislations and rules that need to be enforced by the businesses
that are operating in the service industry. However, UK government from time to time modify
these policies and rules that directly forces to change their processes and procedure. The aim of
current government policy is to raise the sustainable growth and achieve rising economic
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condition by creating opportunities (Grier, 2006). In the present scenario, UK economy mainly
have higher unemployment rate. Thus, UK government enforced the different employment
policies for lowering or reducing the rate of unemployment and creating the job opportunities
within the environment. The UK government economic policy will positively outcome in
developing the hospitality industry with creating vast job opportunities. For instance, if the new
economic policies results in changing the interest rates, thus it will results in modifying the
policies and strategies (Buthe and Milner, 2008). Therefore, in the situation if hospitality
organization increases the rate of interest visitors will relatively spend low income on consuming
the luxurious and leisure services that are provided by the hospitality organization. On the
contrary, if they reduces the interest rate it will outcome in attracting more travellers and visitors
towards the hospitality organization that directly result in attracting more customers that outcome
on generating high net income. Hence due modification in existing economic policy, hotels has
been focusing on the adequate pricing strategies where in the hotel mainly regard the purchasing
power of their guest and customers. Therefore from the entire discussion, it is has been cleared
that government policies often impact the economic position of business organization (Matthews,
2005).
The affect of UK economic policy is adversely on the business and activities of Hilton
hotel. For instance; with the increase in rate of interest hotel management would modify their
rates that outcome in affecting rate of visitors and customers towards their hotel. However, with
the gain in interest rate management would also not able to take loan from the banks or other
financial institutions as due to high rate of interest. On the other hand, if government lowers or
reduces the interest rate of the banks it will positively impact the hotel organization in taking
loan from the commercial banks and financial institutions at relatively low interest rate that is
beneficial for the organization.
UK government economic policy generally focuses on fiscal and monetary policy. Fiscal
policy is defined as policies that are mainly enforced by the government on the spending of
individual and taxes. Taxes are consider as the key source that generates revenue for the UK
government. Therefore, government has focused on the fiscal policy so that it can positively
impact the overall economy. However, the economic policy generally effect the decisions of an
individual regarding spending in the businesses. There are three main stances of the fiscal policy
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that neutral, expansionary and contradictory fiscal policy. The current economic policy of UK
government that is fiscal policy generally affect the services and hospitality organization that is it
directly affect the labour productivity within the Hilton hotel. For instance; the increase in the tax
rate will directly affect the overall efficiency of individual as taxes are often deducted from their
overall compensation packages that cut down their productivity. Furthermore, fiscal policy of
UK government also benefit the Hilton hotel in taking effective decisions regarding their
business investment. For example, in the case of lower tax rates and other business taxes Hilton
hotel can investment their capital spending in the business that positively result in expanding
their services. On the other hand another current governmental economic policy is monetary
policy that is being defined as technique that is commonly used by central bank of UK to control
the inflow and outflow of money within the UK. Monetary policy of UK government will
directly effect the internal and external operations of Hilton Hotel in UK as it brings changes in
the interest rates that are set by the government.
Task 3: Discuss income, wealth, employment and occupational distribution in relation to the
provision of business and service operations
In the contemporary marketplace hospitality industry is considered as the emerging
industry as it mainly contribute in increasing the economic GDP (Fernando, 2011). Hospitality
sector mainly focuses on employing large number of employees so that they can satisfy the needs
of their customers. Income refers to amount that an employees receive in consideration with their
services those they renders within the organization. For instance, manager provide sum of money
to their staff that is waiter in order to compensate their services. However, wealth refers to an
abundance or plentiful of valuable and priceless resources that have been occupied with the
organization. Moreover, the wealth may consider as the total market value of their tangible and
intangible resources The income in relation to the provision of business and service operations is
quite high with the increasing competition in the hospitality sector. With the higher income level
in the hospitality industry employees prefer to stay committed with the organization and render
quality service to attain success in the competitive market. It has also stated that with the change
in the economic condition of UK wealth of people also keeps on changing (Carter, 2007).
therefore, it will ultimately results in changing the requirement of different hospitality
organization. It has been also stated that growth of hospitality industry is primarily depends upon
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the purchasing power of their guests and customers. Thus, there must be proper employment
distribution under the industry to keep satisfied their guests and customers by providing quality
services. Organization's in hospitality industry is mainly comprises of different services that
commonly include accommodation, food and services, housekeeping, front office, marketing etc.
that make hospitality enterprise. Therefore, all the above services need to be organized in the
proper manner so that they can contribute in occupation development (Zahra, 2003).
Great Britain
(level)
Great Britain (%) UK (level) UK (%)
Total 32825000 - 33693000 -
A: agriculture, forestry and
fishing
380000 1.2 411000 1.2
B: mining and quarrying 70000 0.2 72000 0.2
C: manufacturing 255000 7.8 2634000 7.8
D: electricity, gas, steam and air
conditioning
120000 0.4 122000 0.4
E: water supply, sewerage, waste
management
202000 0.6 206000 0.6
F: construction 2047000 6.2 2106000 6.3
G: wholesale and retail trade;
repair of vehicles
4778000 14.6 4925000 14.6
H: transportation and storage 1596000 4.9 1628000 4.8
I: accommodation and food
services activities
2218000 6.8 2269000 6.7
J: information and
communication
1328000 4 1347000 4
K: financial and insurance
activities
121000 3.4 1141000 3.4
L: real estate activities 538000 1.6 547000 1.6
The above table depicts different sector services that mainly generate the income of UK
economy. It has been measured through the table that the level of UK is higher than the total
income of Great Britain For instance, the total of Britain is around 32825000 while the total
income or gross income of UK is around 33693000. from the above table it can be measured that
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services of wholesale and retail trade as well as repair of vehicle contribute around 4778000 in
the Great Britain. On the contrary, within the UK region wholesale and retail trade as well as
repair of vehicle contribute around 4925000 that is higher than the Great Britain.
Illustration 1: The UK income distribution, 2012-13
The above table depicts that UK income distribution level that shows that income of
individual ranges from £10 to £1000 per week. The graphs generally classifies income status of
the individual from poorest to richest. Furthermore, it has also identified that there are large
number of individual within the UK that have income level between £0 to £10 per week. In
addition to this, the mean of the household income is £535 per week and the calculated median is
£440 per week.
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Illustration 2: Share of workforce
(Source: statista, 2015)
The above chart depicts different professional occupation that are ranked by measuring
the share of total workforce within the UK travel and tourism as well as hospitality sector in the
year 2011. the chart shows that large number of share are occupied by the elementary occupation
that covers 49% of the workforce. While, 16% share of workforce are of the senior and manager
officials that takes business decisions so that they can sustain in tourism sectors.
Task 4 Demographic trends that influence employment patterns in hospitality industry
Demographic factors are the one which are associated with age, sex, nationality,
background, colour etc. It can be stated that such factors have great influence on the pattern of
employment in hospitality industry (Miller and Friesen, 2003). The young individuals provide
businesses with unique and creative ideas whereas experienced employees assist in
understanding and delivering services as per the market trends (Johnson and Lenartowicz, 2009).
On the basis of gender it can be stated that most of the businesses hire males employees. The
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reason behind this is that male workers are more hard working and lot of efforts are required to
work in this industry. Sometimes people also work for 16 to 18 hours a day and such working
hours are very difficult for a women. In terms of education it can be said that very business that
operates in hospitality industry seeks for workers that are well educated and qualified.
Individual's having less education performs low level jobs such as cleaning, washing, laundry,
housekeeping etc (Katz and Green, 2007). Therefore, it can be suggested that the demographic
trends have a major influence on patterns of employment.
Age profile of the hospitality sector is
Age Percentage (%) Male (across all ages) Female (across all
ages)
16-24 33.5%
45.7% 54.3%25-49 49.4%
50-SPA 13.0%
SPA 4.1%
Within the UK economy increase in elderly population is higher as compare to the other
countries. Only 48% of workforce rendering services within the hospitality organization are
under 29 while rest of the population are above 30 years that directly impact the operations of
Hilton hotel. However, the young people are often energetic and perform their activities in
effective manner that increases their productivity and often assists in enhancing the performance
of overall organization.
One of the major reason which has affected pattern of employment is the changing
demand of all the customers. it can be explained that majority of the firms seeks for a the
combination of the both young as well as experienced professions. The Above graph shows that
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around 30% of people employed within the hospitality sector are between the age group 16-19
that are highly effective in rendering services within the organization. However, the young age
group individual are also preferred for night clubs and pubs as the places generally attract the
young guests and customers.
Task 5: The social structures of people employed in business and services industries
Social structure is consider as way through which organization succeed in building social
relationship with their customers society (Felson and Clarke, 2007). Thus,it help the company in
building long lasting relationship with their customers. Organization in the services industries
mainly employs candidate on the basic of organizational requirement and qualification that
candidate possess thus, it will result in managing effective process of recruitment and selection.
With the changing demand and preferences of customers hospitality organization mainly focuses
on recruiting the candidate with higher qualification so that they can render quality services
within the firm. For instance, in the new restaurant manager must focus on employing the
freshers for the staff level job to serve the needs of customers (Hamilton and Webster, 2012).
Therefore, restaurant manager focus on providing apprenticeship training to the freshers to
enhance their knowledge and skills. However, for the seasoned theme park they must employ
part time or seasoned employees that can render service for the specific time period. Manager of
seasoned theme park will pay their employees on the daily basis as employed candidate will only
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