Business and the Business Environment: An Analysis of Hotel Cafe Royal

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Business and the Business Environment
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Table of Contents
Introduction................................................................................................................................3
LO1............................................................................................................................................4
LO2............................................................................................................................................8
LO3..........................................................................................................................................10
LO4..........................................................................................................................................12
Conclusion................................................................................................................................14
Reference List..........................................................................................................................15
Appendix..................................................................................................................................17
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Introduction
In this module, different types and purposes of organizations are discussed along with the
differences between them. Moreover, different the size and scope of various range of
different types of organizations are explained. This topic also includes the demonstration of
the interrelationship of the various functions within an organization and their link with
organizational objectives as well as structure. For a contemporary example, the case study on
a large hotel industry in London named “Hotel Café Royal” is elaborately discussed.
Different types of business structures and the interrelationship of the organizational functions
are shown in this case study via critical analysis. The effects of macro and micro
environmental factors on the decision making of the said company are critically evaluated by
using PESTLE model. A SWOT analysis is also provided to find out the strengths and
weaknesses of the hotel. Finally, the assignment is submitted in the report form along with
sufficient statistical information.
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LO1
Explain the different types, size and scope of organisations
P1. Explain different types and purposes of organisations; public, private and voluntary
sectors and legal structures.
Different types of Organisations-
For-Profit Organisations: For-Profit organisers are those whose main target is to make a
profit in terms of money.
Non-Profit Organisations: Non-profit organisations are those whose main target is to help
the community using their product and services (Weerawardena, 2018).
Non-Government Organisations (NGOs): Non-Government Organisations (NGOs) are
generally non-profit organisations, but they may be sometimes international or independent
of the government activities.
Figure-1: Classification of different types of Organisations
(Source: created by the learner)
Basis For-Profit Organisations Non-Profit
Organisations
Non-Government
Organisations
Goal Is to make a profit in terms
of money
Is to help the
community by their
services or products
and services
Is to operate independently
without any influence of
the government and serves
for the welfare of the
society
Objective To sell the products to the
consumers on their
To promote
commerce, art,
To work for the societal as
well as economical causes
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Organisations

demand and to earn a
profit
culture, science and
any other beneficial
purposes
Area of
Operation
Cannot be defined as it
depends on whether it is a
domestic or a
multinational company
Limited Large
Table-1: Differences Between For-Profit, Non-Profit and Non-Government
Organisations
(Source: Created by the learner)
Different types of Enterprises- The classification is made depending upon the size of an
enterprise.
Micro-Sized Enterprises: Micro enterprises are the small or micro-businesses employing
less number of employees having a low amount of profit and loss accordingly.
Small Sized Enterprises: Small enterprises are the small businesses that consist of fewer
employees and yearly income is less than the standardly sized business enterprises.
Medium-sized Enterprises: Medium Enterprises are the business whose human resources
numbers fall lower than a certain limit (Belás et al., 2015).
Figure-2: Classification of Different Enterprises depending upon their sizes
(Source: Created by the learner)
Basis Micro-Sized
Enterprises
Small Sized
Enterprises
Medium Sized
Enterprises
Business purpose Is to grab the local
area market
Small-scale
employment
Medium-Scale
Employment
Objective To have fame as a
brand name locally
To spread the
business up to the
certain region
Is to create employment
opportunities
Supply of services and goods Local market To regional or
Domestic market
To a national market
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Table-2: Differences between Micro, Small and Medium Sized Enterprises
(Source: Created by the learner)
Legal Structures of Different Business Forms-
Sole Traders: Sole proprietorship is the simplest form of business body. Sole traders are
responsible for the overall company’s profits and losses. Legally, this business form does not
provide the flexibility to protect and separate professional and personal resources (Bachev,
2017).
Partnerships: Partnership is the type of business entity which is owned by two or more
individuals. Legally, there are two main types of partnerships, general partnership and limited
partnership. In case of general partnership, the whole share is divided equally, but for limited
partnership, only one of the partners has the operational controls. However, the decision
making actions should be fair enough depending upon the funding amount as per the legal
structures (Bendell, 2017).
Private Limited Companies: A private limited company is the form of business entity that
includes a hybrid structure and which provides the flexibility to the partners, shareholders and
owners to limit their liabilities by the legal issues (Hiebl, 2015).
P2. Explain the size and scope of a range of different types of organisations.
Basis Large Organisation Medium Organisation Small Organisation
Objectives
and Goals
To achieve a
competitive advantage
in the industrial market
T spread the business
up to a larger level
To have more business
outlets in the local or
domestic market
Market Share High Moderate Low
Profit Share Irrespective of the
employee count
Independent of the
employee count and
divides as per the
performance of the
employees if there is a
profit
Only shared among the
employees when the
company counts a profit
Growth and
Sustainability
Depends upon the
shareholders and
government
legislations
Depends upon the
customer services and
managerial skills
Depends upon the local
employee involvements,
which may include business
partners or family members
Table-3: Differences between Large, Medium and Small Organisations
(Source: Created by the learner)
Global growth and developments-
Transnational Organisation: Transnational Companies (TNCs) have recently grown rapidly
in the last thirty years throughout the globe. This global growth occurred because the
Governments in Newly Industrialised Companies (NICs) have recently attempted to attract
transnational organisations to their countries (Özveren, 2017).
International Organisation: International organisations recently gone through global
development as government laws and tax policies have a smooth activity over the business
merchants. Another factor that has an impact on the international organisations is the
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presence of investors. Nowadays, governmental trade structures smoothen the involvement of
the investors (Jones, 2018).
Global Organisations: The development and growth of global organisations mainly depend
upon the implementations of technologies as the world is getting smarter and the competition
is getting more and tougher. No global organisation want to compromise in inventing the
latest technologies with any other issues (Seid, 2018).
Basis Franchising Joint Venture Licensing
Industrial Structures The product and
service is distributed
through industrially
affiliated franchisees
From the structural
point of view, a joint
venture may consist of
shared ownership or
governance
Authenticated
permission is granting
in an official and
formal way.
Competitive analysis Franchising for a
particular product may
face competition in
terms of the analytical
view of other
competitors belonging
to the same industry
The policies of the
joint venture allow it to
go for competitive
analysis of other
ventures
For private sectors, the
licensing directly
enhances the positional
security in the
industrial market
Table-4: Differences between Franchising, Joint Venture and Licensing
(Source: Created by the learner)
Scarcity: Scarcity is defined as the limited availability of goods and products or services.
This may be a case of market requirements. The economic operation also consists of an
individual’s lack of funds to buy any product or services and goods.
Supply and Demand: Supply is a market force that represents the nature of the market by
the measure of how much it can offer. Demand is the need or requirement of buyers towards
a particular product or goods and services by a certain amount.
Income Elasticity: In an economic point of view, the income elasticity is measured on the
demands which precise the change in quality for goods or services and products to respective
change in the amount of income (Bazzi, 2017).
Stakeholders are the persons who show attention or anxiety towards business.
To meet different interests and expectations of stakeholders, the organisations should run a
profitable business in a long-term policy. Moreover, for comparatively smaller organisations,
the managers or owners should maintain a good relationship with the stakeholders (Voinov et
al., 2016).
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LO2
Demonstrate the interrelationship of the various functions within an organisation and
how they link to organisational structure
P3 Explain the relationship between different organisational functions and how they
link to organisational objectives and structure.
The various functions within an organisation-
Role of Marketing: The marketing department of an organisation plays an essential role in
promoting the business such that it connects the business to the outer world. This increases
the chances and scopes of the company to get more customers which enhances the
development of the company.
Role of Finance: Finance is a business-oriented function that is responsible for collecting
funds for the company. The function also includes funds management and expenditure
management which help to meet the overall goals of the company.
Role of Human Resource Management (HRM): The human resource management of an
organisation looks upon the factors like employee welfare and interrelationships among them
keeping the structural policies and systems of the company in mind so that there exists a
conflict-free working environment, which can increase the overall productivity of the
organisation.
Organisational structure- The different organisational structures are classified on the basis
of their scope and size.
Bureaucratic Organisation: Bureaucratic Organisation is a compact business structure
which follows a pyramidal flow of command (Byrkjeflot, 2018).
Figure-3: Bureaucratic Organisation
(Source: Created by the learner)
Post-Bureaucratic Organisation: Post-Bureaucratic organisations consist of total quality
management (TQM), matrix and cultural management among each and individual.
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Parent Organisation: A parent organisation is an organisation that has enough voting
reserve in a different company to control the managerial operations by influencing or
selecting the board of directors (Povey et al., 2016).
Strategic Business Units (SBUs): This unit is a comparatively autonomous division of a
larger company that operates freely for a categorised range of goods and services (Krush et
al., 2015).
Matrix Level: Matrix structure is an organisational structure in which all the employees
work across different project groups or teams along with within their own section of activity
(Theocharis et al., 2016).
Functional Level: This is the most common and traditional structure in business in which
one employee is appointed to his or her department or in any other similar team that is
functioning under a similar set of tasks.
Topics Transnational
Organisation
International
Organisation
Global Organisation
Organisational
Structure
It is the hybrid
combination of multi-
domestic and global
structure
Membership as well as
scope and presence in
different nations
International trade in
structure advocated by
globalisation program
Complexities Have to deal with
different governmental
issues with the change in
environment
Have to make effective
communication to avoid
complexity
Have to cope with
complicated
managerial functions
like decision making
Table-5: Organisation structures and complexities of transnational, international and
global organisations
(Source: Created by the learner)
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LO3
Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.
In this learning outcome, “Hotel Cafe Royal” is taken as the contemporary example to
demonstrate both the positive and negative influences the macro environment has on its
business operations through PESTLE model.
“Hotel Cafe Royal” is a large five-star luxurious hotel company in Central London, United
Kingdom. It was a restaurant previously since its conversion in the year 2008-2012.
PESTLE Analysis is a tool or framework to evaluate and determine the external micro-
environmental factors that may influence an organisation. It stands for the six factors as,
Political, Economical, Social, Technological, Legal and Environmental (Fozer et al.,
2017).
Figure-4: PESTLE Model
(Source: Created by the learner)
The PESTLE analysis of Hotel Cafe Royal is described in the tabular form as below-
Factors Impacts/Influences
Political The major political issue that can affect the hotel is a multinational
relationship. For being in the hotel industry for more than 150 years, it has
already developed its international relationship at a very high standard.
However, Brexit effect created chaos and uncertainty in the political
environment.
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PESTLPoliticalEconomicaSociaTechnologicLegaEnvironmenta

Economical The UK was the fifth largest economy in the world according to the statistics in
2017. Other brands such as Tune Hotel, Premier Inn and Travelodge provide
more family-friendly rooms at lower prices. So, there is a competition where
the hotel may fall apart in the economic scenario.
Social When the hotel was converted fully in the year 2012, the London Olympic
Games in 2012 opened the opportunity for the hotel to establish and proliferate
as a hotel brand. Since then, the company never had to look backwards.
Technological The hotel uses modern technologies wisely in saving energy by using features
like daylight harvesting, automatic turn off and on lights by motion sensor
technology. They also use low wattage lights having high light intensity
measured in LUX, which saves energy as well as their economic costs of
operation. Since the hotel needs to launch the brand new technologies like
robotics as the many other hotels have already launched to achieve a
competitive advantage.
Legal The Trade Descriptions Act (1968) regards the marketing activities in the
UK. Under this law, the hotel needs to provide only the correct information
about the hotel along with a sufficiently fair amount of reflection to the
consumer as well as to the Government. When visitors book hotel rooms, then
the hotel authority required to be complaint under both the laws named as Data
Protection Act (1998) and Credit Card Order (1990). During the payment
procedures.
Environmental The major environmental issues in the UK include greenhouse effect, climate
change, acid rain and waste management system. The concerned hotel has a
separate recycling unit of waste management activated. The company has
several groups of staffs possessing certified hotel management courses. The
main job of the senior manager who operates the whole system is to monitor
the whole procedure and report it to the higher authorities to avoid
environmental issues. Still, the environment of the inside part of the hotel
needs to be improved as it is very much formal.
Table-6: PESTLE Analysis of “Hotel Cafe Royal”
(Source: Created by the learner)
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LO4
Determine the internal strengths and weaknesses of specific businesses and explain their
interrelationship with external macro factors
P5 Conduct internal and external analysis of specific organisations to identify strengths
and weaknesses.
SWOT Analysis is carried out on “Hotel Cafe Royal” to conduct its internal and external
strengths and weaknesses.
SWOT Analysis is a study to identify the internal strengths and weaknesses along with its
external opportunities and threats. SWOT stands for the four factors, named as- Strength,
Weakness, Opportunity and Threat (Bull et al., 2016).
Figure-5: SWOT Analysis
(Source: Created by the learner)
The SWOT Analysis of Hotel Cafe Royal is described in the tabular form shown below-
SWOT Analysis
Strength One of the most important strength of the hotel is its position. It is situated on
Regent Street in Central London. The area is very much populated along with
the benefits of public transportation systems. Moreover, Heathrow Airport is
not much far from it, which helps in attracting international tourists.
Weakness Like any other hotel industries in the UK, this hotel should also launch the
modern technologies like robotics, especially for the room servicing purposes.
The company should also focus on local customers by effectively dropping its
high room booking charges.
Opportunity The hotel has established as a brand name in the hotel industry. After its
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SWOT