BAM4009 Business Environment Analysis and Risk Management Report

This report provides a comprehensive business environment analysis of Happy Bar and Grill, a chain of restaurants. It begins with an internal environment analysis using SWOT and VRIO models to assess strengths, weaknesses, opportunities, and threats, as well as the value, rarity, imitability, and organization of resources. The report then delves into an external environment analysis using PESTEL and Porter's Five Forces models, examining political, economic, social, technological, environmental, and legal factors, as well as the competitive dynamics of the industry. Finally, it undertakes a risk assessment, identifying potential business risks such as insufficient cash flow and marketing inadequacies, along with the categories of risk and their association, and suggesting mitigation strategies. The report offers valuable insights into the factors influencing Happy Bar and Grill's performance and sustainability in the competitive restaurant industry.

Business Environment
Analysis and Risk
Management

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Internal environment analysis......................................................................................................3
External environment analysis.....................................................................................................6
Undertake a risk assessment to identify business risks...............................................................9
CONCLUSION..............................................................................................................................11
Appendix:......................................................................................................................................13

INTRODUCTION
Business environment is defined as the sum of various external factors that impact business
performance and functionality in positive and negative manner. It is the sum of all individuals,
institutions and other forces that are out of control of business enterprise so, it is important for
the business to analyse these factors and develop effective strategies to run business operations
efficiently and gain competitive advantages. In this report Happy Bar and Grill is taken into
consideration which is chain of daily restaurants established in 1994. In the year of 2020, Happy
Bar and Grill opens its first restaurant on London at iconic Piccadilly Circus. This report covers
internal and external business environment factors that impact business performance and
sustainability. Along with that, risk assessment, categories of risk that are associated with
business, risk management process and risk assessment tools are explained.
TASK
Internal environment analysis
Internal business environment is defined as the factors and forces that are directly related with
business operations and impact its activities (Aula, and Mantere, 2020). Happy Bar and Grill
opened its first restaurant in London at iconic Piccadilly Circus so it is important for the
organisation to run operations accordingly to gain competitive advantages.
SWOT analysis: SWOT analysis is defined as the framework that enable organisation to
analyse all strengthen, weak areas as well as assess opportunities and threats (Chaudhuri, Boer
and Taran, 2018). Factors of swot analysis in the context of Happy Bar and Grill restaurant are
mentioned below:

Figure 1 SWOT analysis, (2022)
Strengths
 Happy Bar and Grill restaurant provides fresh and high quality products to customers at
affordable prices that attract higher number customers towards organisation.
 Restaurant serves variety of cuisine in its menu at affordable prices, combined with
pleasant emotions and an explosion of delicious sensations (Foreman, 2019).
Weaknesses:
 Poor customer service and long wait time are the weaknesses of Happy Bar and Grill
restaurant that impact on organisational overall performance and customer base.
 High prices of wine, alcohol and noise level impacts on restaurant functionality and
customer satisfaction level (Puyt, and et,al., 2020).
Opportunities:
Happy Bar and Grill restaurant provides variety of food items to customers that will enhances
restaurant's sales and profitability (What Is a SWOT Analysis and How to Do It Right.2022).
 Conducting social media campaigns will enable business to reach wider audience and
enhance customer's loyalty level.
Threats:
 Higher level competition and economic downturn are the conditions that create threat for
overall business performance and functionality.
Bad reviews at rating site is the factor that impact restaurants customer base and brand reputation
in current market place (SWOT analysis.2022).

VRIO analysis: VRIO analysis is defined as the framework that is used by the organisation to
evaluate business resources of enterprise that provide competitive advantage (Fraser, Quail, and
Simkins, 2021). Happy Bar and Grill restaurant ensures optimum utilisation of organisational
resources that help business to attain determined goals and objectives. Factors of VRIO model
are explained below:
Resource and
Capability
Valuable Rare Imitable Organised
Employees Yes No No No
Financial
Resource
Yes Yes No No
Patents Yes Yes Yes No
Distribution
Channels
Yes Yes Yes Yes
Valuable Resources: Valuable resources lead business towards the attaining its determined
future goals and objectives. Happy Bar and Grill restaurant has various valuable resources such
as employees, financial resources, patents as well as distribution channels that helps business to
perform its operations with greater efficiency and effectiveness (Grant, 2021). Employees are considered as the assets of organisation who help business to attain its
goals and objectives. Restaurant provide training to employees for enhancing their
capability and performance level. Financial resources help Happy Bar and Grill restaurant to perform its daily operations
with efficiency and effectiveness.
 Patents are the restaurants valuable resources that differentiate restaurant and its dishes
from other competitors.
 Happy Bar and Grill restaurant has efficient distribution channels that help business to
provide its products and services to number of customers (VRIO analysis. 2021).

Rare: Rare resources are defined as the uncommon things in market. Happy Bar and Grill
restaurant put various efforts to convert its common resources into rare resources (Jankensgård,
2019). Financial resources are the rare for organisation because helps business to survive in
competitive business environment. Patent is also restaurant’s rare resource because it cannot be possessed by the competitors
easily. Distribution network is the rare resource of Happy Bar and Grill restaurant that enable
business to maintain its unique and different positioning in market.
Inimitable: Some organisational resources are not imitated by other organisations because they
are protected by legal aspects such as licensing and permit.
Patent is imitable resource because it cannot easily have accessed by others. It makes
organisation and its products differentiated from other competitors (VRIO analysis.2022). Happy Bar and Grill restaurant has unique and effective distribution channels that help
organisation to provide products and services to customers.
Organised: Organisation has various organised resources that help it to attain determined goals
and objectives in best possible manner and enable to gain competitive advantages (Moşteanu,
and Roxana, 2020). Happy Bar and Grill restaurant invest high amount in the distribution channel that
ensures that required products and services are available to customers on time. Organised
and systematic resources provide competitive advantages to organisation.
Restaurant analyses organisational internal strengths, weaknesses and external opportunities and
threats that helps business to take efficient actions that lead business overall business operations
in right direction (Pettinger, 2020).
External environment analysis
External environment analysis is the study through which business analyse the forces in which it
operates its operations. Happy Bar and Grill restaurant conducts various models to assess and
analyse different aspects of external business environment that helps business to run its operation
properly and attain the objective of growth and development.

PESTEL analysis: Happy Bar and Grill restaurant uses this model or technique to find out
market opportunities and threat. Through analysing these factors manager of restaurant can take
effective and suitable decisions as per the situation. These factors are mentioned below:
Figure 2 Pestle analysis, (2022)
Political factors: There are various political rules and regulations are introduced by the
government such as health and safety guidelines, taxation reforms, trade policies, restrictions and
environmental laws that impact business performance (Zahari, and Romli, 2019). As health and
trade regulations are changed from country to country so it become for Happy Bar and Grill
restaurant to follow these regulations to run business operations in efficient manner.
Economic factors: Customers of United Kingdom have higher disposable income that helps
Happy Bar and Grill restaurant to enhance overall sales and profitability. On the other hand,
growing labour cost and inflation of country in which restaurant operated its operations impact
overall performance and functionality (Thompson, 2019). Along with that economic factor
includes economic growth, interest rate, purchasing power of customers and other aspects that
need to be considered by the restaurant before taking organisational decisions.
Social factors: Social factors impact on the performance and efficiency level of business
positive as well as negative manner. Customers of UK are health conscious that means that
prefer health and organic food to maintain their health (Sousa, and Rocha, 2019). Culture, values
beliefs, population growth and career attitude of UK customers are different so Happy Bar and
Grill restaurant need to understand them and target customers accordingly.

Technological factors: Happy Bar and Grill restaurant bring various technological advancement
aspects such as accepting payment through smartphones and uses latest technologies to handle
accounts (PESTLE analysis, 2022). Adoption of latest technology enhances restaurant's
production and sales and lead it towards growth and development.
Environmental factor: Recently there are various environment crisis are raised that enhances the
awareness of different environmental factors. Happy Bar and Grill restaurant maintains
cleanliness and at restaurant that attract large number of customers (PESTLE analysis, 2021).
Along with that, restaurant adopts waste management techniques such as recycle and reuse,
ensure optimum utilisation of resources and follow all environmental rules that provides
sustainable competitive advantages to organisation over other competitors.
Legal factor: Legal and local bodies influence the restaurant business so it becomes
important for the regularities authority of Happy Bar and Grill restaurant to visit different areas
of restaurant regularly to check feed item quality and expiry as well as hygiene conditions (Van
Staveren, 2018). Along with that, restaurant follows safety standards, minimum daily wages,
employment and other regulations that helps business to run operations with efficiency and
effectiveness, in case, business do not follow these regulations than it has to face various
restrictions and other complications.
Porter’s five forces model: This model is used by the organisation to understanding the
dynamics of specific industry to gain competitive advantages. Forces of model are mentioned
below:

Figure 3 Porter's five forces model, (2022)
Threat of new entrants: If an industry generates higher profits than it attracts higher
number of entrants. It requires moderate investment and have to bear fix and operating cost.
Happy Bar and Grill restaurant faces moderate threat from new entrants (Porter’s five forces
model, 2022). It is important for the industry to make barriers and restrictions on new entrants to
generate higher profits.
Bargaining power of buyers: It is the another important factor that need to be considered
by the organisation. Buyers have power to influence to pricing of organisational products. Happy
Bar and Grill restaurant are getting affected by the buyer’s choice and their switching behaviour.
Bargaining power of suppliers: Supplier are the individual who provide raw material to
organisation, they can impact business decision-making (Yang, Ishtiaq, and Anwar, 2018).
Happy Bar and Grill restaurant maintains strong relationship with suppliers to get high quality
material at affordable pieces. Restaurant industry faces low bargaining power from supplier side
because they have number of suppliers and contains higher switching cost.
Threat of substitute products: Various restaurants provides similar dishes that provide
chance to customers to switch from one restaurant another. Low switching cost enables
customers to shift their loyalty one brand to other (Porter’s five forces, 2022). Happy Bar and
Grill restaurant faces high threat from substitute products so, it is important to maintain
differentiation in products them other competitors.

Competitive rivalry among industry: It is defined as the number of competitors that are
serving similar products and services. It impacts on organisational performance and profitability.
Happy Bar and Grill restaurant faces high threat from competitors.
Evaluation: Organisation implemented various models to analyse external business environment
factors such as Pestle analysis and Porter’s five forces model. Happy Bar and Grill restaurant
analyse all factors and their positive and negative impact on business performance than develop
effective strategies to attain determined goals and objectives.
Undertake a risk assessment to identify business risks
Risk assessments: Risk assessment is defined as the process assessing the risk and
identification of hazards that can impact on organizational ability in negative manner (Sharma,
Singh, and Matai, 2018). Happy Bar and Grill restaurant uses risk assessment identify
potential hazards and take actions accordingly to run business operations with efficiency and
effectiveness.
Categories of risk and its association:
 Insufficient cash flow is the risk that impact business performance and functionality. In
the lack of proper financial resources, Happy Bar and Grill restaurant cannot get
instant market opportunities that affect business overall business performance.
 Promotional and advertising efforts are important for the growth and development of
business. Happy Bar and Grill restaurant faces risk regarding inadequate marketing
that limits organizational sales and profitability.
 Happy Bar and Grill restaurant also faces problem related to fire safety, workplace
injuries and other aspects that impact on health and safety of employees and
customers. It directly impacts on brand reputation in market.
Risk assessment
Risk assessment Risk level Owner Time period
Insufficient cash
flow
Medium Financial team of
organization
24 hours
Insufficient
promotional and
advertisement
Low- medium Marketing and
sales team
2 days

activities
Workplace injuries
and accidents
High Management
department
4 days
Risk Management process: Risk management is considered as the process of identifying,
assessing as well as controlling specific threats to business capital and earning. It is important
for the organization to analyze risk and develop effective strategies to gain competitive
advantages. Process of risk management in the context of Happy Bar and Grill restaurant are
mentioned below:
 Identify the risk: It is important for the organization to identify the potential risk that
impact business overall performance and functionality. Happy Bar and Grill restaurant
analyze all financial risk, operational risk and other that enable business to improve
efficient of restaurant.
 Measure frequency and severity: Happy Bar and Grill restaurant measure the scale of
risk and their impact on business performance. It enables business to spend their time
and efforts and money in right direction.
 Examine alternative solutions: In this step of risk management, organization examine
various alternative solutions that can be used to mitigate risk in efficient manner.
 Decide suitable alternative: Among all perspective alternative, Happy Bar and Grill
restaurant selects suitable and most effective strategy that help business to reduce the
level of risk from business operations.
 Monitor results: In this stage, all results are measures by organization to ensure that
business goals and objectives are received in best possible manner. Happy Bar and
Grill restaurant take all corrective actions to resolve the conflict.
Risk assessment tools: Business uses various risk assessment tools to identify the nature and
aspect of risks. Some risk assessment tools that are implemented by Happy Bar and Grill
restaurant are explained below:
Risk Matrix: It is the risk assessment tool that is used by the organization in difficult situation.
Advantage of this model is that it put quantitative risk value on hazards that can have filtered by
the organizational policies on how different level of risks are handled. Risk is identified as the
probability that is multiplied by the potential impacts.

Decision Tree: It is considered as the effective risk management tool that help organization to
understand the how to apply policies between different modes of actions. It consists series of
questions or choices that are branch out in a variety of outcome. Professional in food industry
uses this tool to determine which hazards require critical control point and mitigate risk in
efficient manner.
Action plan to mitigate the risk: There are various actions are taken by the organization to
mitigate risk in efficient manner. Happy Bar and Grill restaurant can use avoidance, retention,
sharing, transferring, and loss prevention and reduction strategies to reduce the level of risk that
are faced by organization in current business environment.
CONCLUSION
As per above report, it can be concluded that business environment is the combination of various
internal and external factors that impact business performance and functionality in positive and
negative manner. There are various risks and problems are faced by the organisation in
competitive business so, it is important to identify these risks and develop effective action plan to
mitigate these risks.