Impact of External Business Environment on UK Hospitality Sector

This report provides a comprehensive analysis of the external business environment impacting the UK hospitality industry. It begins with an overview of the UK economy and the structure of the hospitality sector, including market dynamics and key operations. The report then delves into the influence of government economic policies, such as monetary and fiscal measures, and their effects on businesses like Marriott. It examines income distribution, employment patterns, and demographic trends, highlighting their impact on the industry's workforce and service delivery. Furthermore, the analysis covers the social structure within major hotel groups, the role of local and national government, and the impact of the EU. The report also explores legal frameworks, business types, and processes related to company formation and control. Overall, the report provides a detailed understanding of the external factors shaping the UK hospitality sector, offering insights into challenges and opportunities within this dynamic industry.

External Business
Environment
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1: STRUCTURE AND OPERATIONS OF UK economy .................................................3
task 2: Current government economic policy and their affect.........................................................4
task 3: Income, wealth, employment and occupational distribution in relation to provision of
business............................................................................................................................................5
task 4: The demographic trends that influences employment patterns............................................6
task 5: The social structure of people employed in a major UK hotel group .................................7
task 6: the structure, operations and influence of local government on major UK group...............7
task 7: The role and influence of EU and its impact on business and service industry ..................8
task 8: The role of pressure groups and political influence in relations to national and local issues
..........................................................................................................................................................9
Task 9: legal framework within the UK and difference between English and Scottish systems.....9
task 10: The UK and EU legislative processes .............................................................................10
task 11: Different types and characteristics of business that operate within hospitality sector.....11
task 12: Legal process necessary for formulation and dissolution of a registered company.........12
task 13: The structure and processes which determine the responsibilities and control within a
registered company .......................................................................................................................13
CONCLUSION .............................................................................................................................13
References......................................................................................................................................14
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INTRODUCTION
Business environment consists of different aspects that directly and indirectly affect the
operations of business. It basically includes internal and external factors which impact the
business (Wang, Chen and Chen, 2012). Internal factors are controllable factors that affect
company functions which mainly include employees, management, business regulations etc.
another important factor of business environment is the external factors as these are the factors
which are uncontrollable in nature and these factors exists outside the business and affect their
external business. External factors consist of change in demographic trends, political norms;
economic stability of the region etc. and manager have no control on these factors. However,
business organization may frame strategies to minimize the effect of external business factors on
the business. The present report key focuses on external business environment of fastest growing
service industry that is UK hospitality industry. The external business environment primarily
affects the planning, directing and controlling of hospitality organization.
However, the present report also covers different sections that impact of socio-economic
change on the improvement of organization operating in the hospitality industry. In addition to
this, report will also measure or analyze contemporary economic policy of UK government and
their effect on organization as well as on overall service industry.
TASK 1: STRUCTURE AND OPERATIONS OF UK ECONOMY
As per the calculated nominal GDP, UK economy is considered among the 6th largest
economy in Europe region and it has also ranked as the 7th largest service industry in the whole
world. The service industry of UK mainly contributes in resource which further helps in
enhancing the economy condition of UK (Adeoye and Elegunde, 2012). This leads to increasing
the standard of living of the individual residing in UK. In the year 2008, UK economy has faced
strong financial crisis which changed the overall scenario of the country. It lowered down the
income level and standard of customers which resulted in reducing the purchasing power of the
customers. Therefore, the situation of financial crisis has negatively impacted the hospitality
industry of UK.
There are different types of market structures existing in UK economy that mainly
include perfect competition, imperfect competition, oligopoly etc. For instance, the hospitality
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industry of UK focuses on perfect competition market structure as large number of customers
and competitors exist in the market. The UK economy deals in different operations within
hospitality industry so that they can satisfy or meet different requirement of their customers
(Gupta, 2013). The hospitality industry of UK economy focuses on different operations and
dealings which are lodgings services, restaurants, pubs & bars, travel and tourism, airlines,
banqueting and conferencing etc. all these services within the hospitality industry contribute in
the UK economy and also helps in developing the economy. Therefore, UK hospitality sector
primarily contributes in the up-liftment and development of UK economy and thus, it result in
creating different job opportunities for unemployed individuals of UK. However, it has been
measured that international travellers prefer to visit UK destinations. Thus, hospitality industry
contributed around £4.25bn within the UK economy (Neubaum, Dibrell and Craig, 2012).
There are several other corporation which contributed towards growth of UK economy.
Here, the aviation industry of UK contribute towards economic growth of nation is £52bn.
Further, tax generated by this industry is £8.7bn and it own supports 327000 job with 241000 job
with aerospace manufacturers. On the other hand, in 2011 food industyr of UK contributed
approximately 7.3% of national gross value added. Furthermore, in 2010 it contributed 7.8%. It
depicts that several industries working in UK are contributing towards economic growth and also
generating huge employment in the nation. In addition to this, fashion industry, retail and auto
mobile sector are also developing at rapid speed and helping nation to ensure continuous growth
and development.
TASK 2: CURRENT GOVERNMENT ECONOMIC POLICY AND THEIR
AFFECT
Government are the one that devise and frame different legislation and laws for the
business organization and the company is required to enforce the law and regulations within their
operations so that it can benefit them in accomplishing the objectives (Lee, 2011). In the regular
interval UK government is modifying or amending the legislation and regulations according to
the external market forces. The main purpose of devising economic policy is to raise sustainable
growth of the economy as this result in enhancing the economic condition of UK by generating
employment opportunities for the unemployed. Therefore, the current economic policy of UK is
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coordinated with fiscal and monetary policy that further affects the operations of leading
Marriott hotel which is a leading hospitality organization (Filatotchev and Nakajima, 2010).
In the contemporary scenario UK is facing unemployment situation in their region.
Therefore, to minimize or reduce the unemployment level within the UK economy, the
government will change or modify the existing monetary policy to lower the unemployment rate.
Monetary policy of UK focuses on interest rate to control the level and growth of collective
demand within the UK economy. For example, UK government has modified the monetary
policy by changing the rates of interests which will further affect the business of Marriott and
then they would also modify the prices of the ir products, service tax according to the modified
interest rates of the government (Cantwell, Dunning and Lundan, 2010). Therefore, in the
situation where UK government lowers or reduces the interest rate it will result in modifying
rates of hotel premises and their other charges. However, with the help of low interest rates it
will tend to attract large customers towards the hotel. For instance, if the government increases
the interest rate then the purchasing power of customers will get reduced and they will spend
their income on the leisure services provided by the Marriott (Fereidouni and Amiri, 2010).
Furthermore, corporate tax has been cut by government just be support business to grow
at international level. Here, in 2010 the approximate tax rate was about to cut from 28% to 23%.
Further, it was planned that till 2015 that tax rate will be cut down till 20%. Furthermore,
government of nation also laid emphasis on encouraging investment and export in order to
maintain balance in economy. Also, action has been proposed to create educated workforce to
give positive support for different industries (https://www.gov.uk/government/publications/2010-
to-2015-government-policy-uk-economic-growth/2010-to-2015-government-policy-uk-
economic-growth).
TASK 3: INCOME, WEALTH, EMPLOYMENT AND OCCUPATIONAL
DISTRIBUTION IN RELATION TO PROVISION OF BUSINESS
With the constant increase in the economic GDP of UK economy it can be stated that
growing hospitality industry has contributed their major share in enhancing the GDP of
economy. Marriott is among the renowned and luxurious hotel of UK region need to maintained
the standard of services and workforce within the organization that results in delivering quality
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services to their guests (Kew and Stredwick, 2005). The hotel believes that purchasing and
spending power of customers assist the Marriott in determining their target customers. Therefore,
with the help determining their customers they can easily manage services to satisfy and meet the
requirement of customers.
Thus, in turn lead to higher the income level of employees and staff working in the
hospitality organization that ultimately affect their standard of living. With the increasing
competition level within the hospitality industry results in increasing the income of the staff and
workers who are in the relation to provision of business (Matthews, 2005). For instance,
organization providing high income to their staff and employees will prefer to be committed
towards the organization and also result in rendering quality services to their customers and
guests.
However, hospitality industry is consider as the key contributor that increases the
economic wealth of the UK economy (Miller and Friesen, 2003). Therefore, with the increase in
the number of services in the hospitality provision it result in enhancing the ratio of employment
that contribute in the amending the economy wealth. In the contemporary scenario it has been
revealed that staff or workforce mainly prefer to opt or choose the administration related job as
compare to the marketing and sales job (Xiao and Fu, 2009). Therefore, contemporary hospitality
industry has maintained the interest level among the unemployed candidate by providing them
wide range of employment with different services like conferencing, banqueting, restaurants,
bars etc.
TASK 4: THE DEMOGRAPHIC TRENDS THAT INFLUENCES
EMPLOYMENT PATTERNS
The needs and demand of people in market change very frequently which directly affects
the pattern of employment. Most of the businesses that operates in hospitality industry seeks for
hiring young, energetic and experienced professionals so that amended and superior services can
be delivered to their guests and customers (Zahra, 2003). The fact cannot be contradict that the
experience of old people is very essential for the success of any business but the hospitality
industry is so intense that it required high level of innovations. Individual between age group of
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20 to 35 are highly creative and innovative hence, Marriott will prefer to select and hire the
young candidate.
The contemporary UK hospitality industry has been getting impressed by demographic
characteristic such as age, sex and change in the customer preferences. Therefore,
transformations in upcoming scenario has also modified the entire scenario of hospitality
industry and tourism industry and employment pattern within the industry (Kang, Lee and Huh,
2010). For instance, according to the age requirement of customer get modify likewise
youngsters now a days prefer to use online services. Therefore, Marriott manager has to make
modification in their service provision and thus, as per the customer convenience hotel need to
introduced different amenities to attract the customers. However, with the increasing online
services Marriott must focus on developing their sites that may be handled by the personnel who
possess technical skills (Ryu and Han, 2010).
TASK 5: THE SOCIAL STRUCTURE OF PEOPLE EMPLOYED IN A
MAJOR UK HOTEL GROUP
Social structure is the way through which business manages social relationships with the
society and it also determines how much business is concerned about social interest. This helps
business in developing crucial and longs lasting relationships with customers. However in the
present case, social relationship exists between employee and customer and employer and
employee. It is quite apparent that business has to develop crucial relationships with customers
so that it can promote services in different sectors and this is also the core reason that leads the
hotel to enhance profitability ratio (Morschett, Schramm-Klein and Swoboda, 2010).
Employees at Marriott International are required to develop cordial relationships with
customers so as to serve effective services. For accomplishing such purpose, Marriott
International’s management has organized several training sessions so that employee can
enhance their efficacy level. It is quite apparent that business always needs to maintain interest of
employees and that can be done by integrating with their cultural aspects. Hence for such
purpose, varied sorts of innovative services can be provided (Xiao and O’Neill, 2010). For
instance, manager employs new employee in the Marriott restaurant for serving or catering the
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needs of guests. Therefore, employee must be provided with the apprenticeship training that
would assist in amending the knowledge and skills.
Therefore, for managing the recruitment and selection process within the Marriott they
usually employees the candidate whose qualification matches the organizational requirement
(Myung, McClaren and Li, 2012). Now a days hospitality organization select the qualified
personnel and workforce as they can clearly determine the demand and requirement of the
customers and guests. However, the experienced employees can also manage the Marriott work
processes as they are aware about the situation.
TASK 6: THE STRUCTURE, OPERATIONS AND INFLUENCE OF
LOCAL GOVERNMENT ON MAJOR UK GROUP
It has been reviewed that structure as well as operations of the local government of UK
has mainly influence and affect the operations of Marriott international (Voiculet, Belu and
Rizea, 2010). It has been revealed that enterprise trading operations are getting impacted by
different local councils and likewise hotel Marriott is also acquiring to get affected and thus,
result in changing business policies as well as strategies.
Within the UK economy there are different governmental agencies and councils that
mainly include country councils, unitary authorities, London Boroughs etc that has impacted the
operations of Marriott and result in changing the structure of the Marriott hotel (Türkay, Solmaz
and Şengül, 2011). The operations of local government that is imposing restrictions in importing
and exporting that in turn lead to major issue for Marriott hotel as the they work in the different
regions and also engaged in the different import and export activities. For instance, the food
ingredients are often imported from different countries so that they should provide quality food
services to their customers (Hazlina Ahmad and et.al., 2010). Therefore, if local government
impose the restriction of import and export then it may directly affect the operations of business.
TASK 7: THE ROLE AND INFLUENCE OF EU AND ITS IMPACT ON
BUSINESS AND SERVICE INDUSTRY
The EU (European Union) plays an essential function in enabling the cross boundary
trading and development with the global organization (Craig and Campbell, 2012). It also
termed as a politico-economic union that consists of 28 different member states that are primarily
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located in the Europe region. All the 28 region constitutional termed as EU that form different
rules and policies for attaining the objective of free flow of goods and services between the
member states. The main role of EU is to encourage the legal practices and trade between the
different region. Therefore, impact of EU on the business and services industry will result in
proving quality product across the region without any boundaries. EU has also plays a vital role
in enabling trade free regulations with the main aim to manage legal and ethical activity at the
workplace (Nandakumar, Ghobadian and O'Regan, 2010). However, the union has also
developed an effective regulatory mechanism so that member state can easily exchange goods
and services. The different policies framed by the EU and its impact on the organization are as
follows- Regional policy- The main of framing regional policy by EU is to grow and develop
those areas that involve government support and where unemployment rate is quite
higher. The main purpose of this EU policy is to develop and amend the economic
condition of different region. The impact of regional policy on the business and services
industry is that it provide a platform to international hotel to expand their business in the
different region and attract their customers (Economic System, 2013).
 International policy- UK government plays a significant role in enhancing the ratio of
import and export within the economy,. Therefore, EU also focus on the international
policy that assist the business so that organization can easily sustain in the international
market. The impact of this policy on the business and service industry is that it reduces
the trade obstacle from the international perspective.
TASK 8: THE ROLE OF PRESSURE GROUPS AND POLITICAL
INFLUENCE IN RELATIONS TO NATIONAL AND LOCAL ISSUES
Pressure groups are consider as the group of an individual with mutual interest and
opinion that possess power and ability to influence the organization systems as well as the norms
of government policies. However, individual involve in the pressure group are not from the
political parties or background (2014 Index of Economic Freedom, 2014). The pressure group
and political group of UK economy is extremely concerned about the preservation and protection
of natural resources and environment under which organization operates their business. The role
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of pressure group is to minimize the environment related problem and issues. The pressure group
mainly focus on generating the awareness respect with reduction of the ecological imbalance.
Therefore, political parties through intervention or developing different policies and regulations
for the organization so that they should preserve the environment from pollution and
environmental hazards (Hospitality industry and Marriott International, 2012). Therefore,
Marriott hotel in respect to overcome the national and local issues may develop different
campaigns that focuses on creating safe world. However, the different initiatives taken by the
hotel will result in supporting and developing the society under which they serve their services
thus, will further increases the customers base.
TASK 9: LEGAL FRAMEWORK WITHIN THE UK AND DIFFERENCE
BETWEEN ENGLISH AND SCOTTISH SYSTEMS
Apparently UK economy mainly focuses on three form of legislation systems that is
England and Wales, Northern Ireland and Scotland. Within the UK economy supreme court is
considered as the highest and foremost authority that mainly classified into the two divisions that
is civil and criminal division. It can be stated that legal policies in the English systems constitute
only law while, the Scottish systems is considered on both civil and criminal system. There is
distinction between English and Scottish systems that include:
Under English and Scottish systems age of capacity is also different that is under English
systems at the 16 year of age individual is acquired to get the legal right but the voting power can
be gained after completing 18 year of age (Neubaum, Dibrell and Craig, 2012). On the contrary,
in the Scottish system individual have right and power of voting until he has attained 18 year of
age.
However, English system has their own judicial philosophical system since 1189 and both the
law that is criminal and civil law are taken by the this system. On the other hand, Scottish system
is based o the Roman law that mainly highlight the characteristics of historical period and also
have some uncommon laws. This system is not often used within the UK economy.
One of the most interesting fact about the English law is that judges which sit in the court
makes all its laws.
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The remedies which are provided to innocent parties during the breach of contract is also
different in both the kind of laws. In Scottish law, the party or personal is completely entitled to
ask other party to complete its performance. On the other hand, the English law begins with
opposite side. The Scottish law do not require any kind consideration at the time of formation of
contract. As per British law consideration is must for contact formation. English law relies on
estoppel(s) whereas the Scottish law as a seprate law for personal bar.
TASK 10: THE UK AND EU LEGISLATIVE PROCESSES
UK Government and European Union (EU) had enforced and developed different kind of
legislation and policies that need to taken care and even mandatory for the hotel groups those are
operating their services and branches both in the national and international market. The main aim
behind such legislative process is to ensure that there must be no obstacle for the organizations
those who are rendering services in hospitality sectors (Removing barriers to growth in the
hospitality industry, 2013). Companies those are operating at both international and national
level for instance, Marriott international needs to assure that they must engaged in the fair
practices. Although, organization must also fairly and pay adequate wages to their staff and
workers by considering the minimum wage Act 1998. Furthermore, the legislative processes also
focuses that no minor should be nominated to do any sort of work or job in the business
organization. According to the EU and UK legislation, it is banned and prohibited to hire minors
to execute any form of work. However, Marriott organization are also obligatory to take care of
well-being and safety of their staffs and employees those who are rendering services in the hotel
premises (Marriott Aging Workforce Project, 2011). Therefore, EU and UK legislative process
has positively impacted the Marriott hotel business at both local and national level.
TASK 11: DIFFERENT TYPES AND CHARACTERISTICS OF BUSINESS
THAT OPERATE WITHIN HOSPITALITY SECTOR
Hospitality sector is the fastest growing industry in the world that mainly focuses on
different types of businesses so that they can attract large customers by providing various
services. The different types of business and services provided by the Marriott include:
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 Hotels and houses made for guests- This is the foremost amenity that has been provided
by hotel to satisfy their customers by providing leisure and luxurious services. The
characteristic of accommodation must be that hotel room should be safe and hygienic
(Filatotchev and Nakajima, 2010). Travel agencies-It is another type of business which operate under hospitality industry
only. Here, travel agents contact to hotels and tour operators and accordingly plan for
visitors related to transportation. It assists visitors to easily move from one to another
place. Tour operators-Tour operators are those which provide holiday packages to customers in
affordable prices. They contact hotels, travel agencies and accordingly attractive package.
However, they have detail information related to attractive tourist destination and support
tourists to find the best place to visit.
 Restaurant and bars- These form of businesses mainly focuses on providing food and
beverages as ell as drink services to the tourist and guests. The characteristic of business
include that food served in the restaurant should be well presented and must possess
higher nutritional value while being served to the customers.
However, the business are categorized as per the nature and different businesses are
mentioned as follows-1. Private limited- These are the business organization those are preserved and managed by
entrepreneurs. The authority regarding the decision making, formulation of strategy and
implementation of strategy in the hands of private owners and entrepreneurs (Cantwell,
Dunning and Lundan, 2010). The main advantage of this kind of business in less
interruption from government and they have freedom to operate their business at their
own. However, disadvantage can be regarded in term of scarcity of sources due to lack of
support of government.2. Public limited- These are the establishment that are mainly taken care by the public
bodies, agencies or governing authorities of the country. Such business organization
mainly aims at social welfare and improvement of society rather than concentrating on
increasing the profit margin. Public limited organization are operates under proper
guidance of government. Here, organizations are provided assistance with regards to
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