Intercontinental Hotels Group: Business Environment Analysis Report

This report provides a comprehensive analysis of the business environment of Intercontinental Hotels Group PLC (IHG), a British multinational hospitality company. It begins with an overview of IHG, including its legal structure as a public limited company, its objectives, and its vision. The report identifies the market structure in which IHG operates, which is monopolistic competition, and discusses its impact on the company's ability to achieve a competitive advantage. Furthermore, it identifies and analyzes IHG's stakeholders using stakeholder analysis processes, evaluating their needs and influence. The report also employs the PESTLE framework and Porter's Five Forces model to explain the impact of the macro and micro environment factors and competitive market environment, both nationally and internationally, on IHG. Finally, the report concludes with key performance indicators and recommendations for improvement, providing proper justification for each.

The Business
Environment

Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
Overview of selected organisation...............................................................................................1
Identify and explain the market structure under the organisation operates as well as discuss
how the market structure affects the behaviour of company in order to achieve competitive
advantage.....................................................................................................................................2
TASK 2 ...........................................................................................................................................3
Stakeholders of Intercontinental Hotels Group PLC ..................................................................3
Apply Stakeholder analysis process to identify the company stakeholders groups and evaluate
their needs and influence ............................................................................................................3
TASK 3............................................................................................................................................4
Using PESTLE framework and Porter's five forces model explain the impact of micro
environment factor and competitive market environment both nationally and internationally...4
TASK 4 ...........................................................................................................................................4
Key performance indicator as well as recommendation with proper justification for
improvement ............................................................................................................................4
CONCLUSION ...............................................................................................................................4
REFERENCES................................................................................................................................4

The Business
Environment

INTRODUCTION
Business environment consists two elements that is external and internal factors which
affect directly and indirectly the operations or profitability of organisation. The internal factors
includes employees, managers, team members, management, stakeholders and many more.
Where as external factors includes market condition, suppliers, government, political parties,
competitors, customers, general public and many more (Băeşu and Bejinaru, 2020). To define the
concept of business environment the selected company is Intercontinental Hotels Group PLC
which is a British multinational hospitality company located in England. It was established in
2003 by Juan Tripp which provides hospitality services, food and beverages to the people.
This report highlights the introduction, legal structure, purpose, operations, objectives of
the chosen organisations. It covers the market structure along with its impact on the organisation
in order to gain competitive advantage. Further, it covers stakeholders, stakeholders analysis to
evaluate their needs and influence on company. Along with that, it define the impact of macro
environment factors which currently affecting the organisation as well as importance of Porter's
five forces model. At last, it explains Key performance Indicators and recommendation with
proper justification for improvement.
TASK 1
Overview of selected organisation
Intercontinental Hotels Group PLC is multinational British hospitality company which
was founded in 2003 by Juan Tripp to provide food, beverages and accommodation services to
the people and tourism across the country. It has around 350000 employees working in its 5900
hotels. The main objective of the IHG hotels is to provide better quality hospitality services in
order to distinguish their product and services from competitors by making unique experience for
their potential customers. The vision of the company is to generate great Hotels clients and Guest
love by offering or delivering most effective hospitality services for everyone. The purpose of
organisation is to informs and inspire by their true hospitality to brining their brand to life,
shaping their strong culture as well as showing a dedication to make a difference to their clients,
guest, communities, stakeholder, employees addition to protecting the planet for pollution (Case
study Intercontinental Hotels Group (IHG), 2020).

Various type Legal structure in context to Intercontinental Hotels Group PLC are shown
underneath-
Private company- It is a type of entity which belong to private ownership as it can issue
stock as well as not trade to the general public. Also, the owner of company cannot offer shares
to them as initial pubic offering (Chukhray and Mrykhina, 2018).
Public company- It refers to the business organisation which operate their activities by
offering shares to the general public in term of initial public offering.
Voluntary- These type of business is voluntary organise and run by individuals in order
to meet the basic needs of society without any motive of earning profit.
Public sector- It has been determined as sector that consists the governmental cerises,
public goods or services and many more (Cristofaro, 2020).
Charity- It is a type of voluntary organisation that conducted their operations for the
welfare and betterment of society. They provide their services without any profit motive to the
needy people in a country for their well being (Gao and Li, 2020).
Intercontinental Hotels Group PLC is a public limited company which offers their shares
to the general public in order to acquire more funds in their organisation for growth, day to day
working and many more.
Identify and explain the market structure under the organisation operates as well as discuss how
the market structure affects the behaviour of company in order to achieve competitive
advantage.
Market structure has been determined as how different industries differentiated and classified on
the basis of nature as well as degree of competition for goods and services. There are four types
of market structure such as monopoly market, perfect competition, monopolistic competition as
well as oligopoly market which are different in nature. The market structure of hospitality
industry in UK under Intercontinental Hotels Group PLC operates their activities is Monopolistic
competition. Monopolistic competition refers to the market structure in which many organisation
competing against with each other by selling products and services which are differentiate form
one another, thus their imperfect competition in hospitality industry of UK as well as there is not
perfect substitute available in the market (Gogokhia and Berulava, 2021). The monopolistic
competition affects the operations and behaviour of Intercontinental Hotels Group PLC as they
can earn competitive advantage by offering better quality of product and services to customers.

They decided prices of their unique and different product according to their production cost and
brand value. In this market structure every organisation has different prices of their goods and
services due to different in features and quality. So the management of Intercontinental Hotels
Group PLC fix the price high for their unique, branded and different product and services. Also
company operates at large scale and have huge customer base so they take advantage of it in
order to gain huge profitability or competitive advantage by offering true hospitality services to
meet the expectation of customers.
TASK 2
Stakeholders of Intercontinental Hotels Group PLC
Stakeholders refers to the people, parties who are interested in the operations, affairs and
services of the organisation. Stakeholders of Intercontinental Hotels Group PLC includes
customers, investors, sponsors, general public, staff members, directors, owner and many other
who invested their money and time to meet the desired goals of the company (Hamilton and
Webster, 2018).
Apply Stakeholder analysis process to identify the company stakeholders groups and evaluate
their needs and influence
Stakeholders also known as shareholders as they are the owner of the company which
holds two or more shares in an organisation. Also they participated in the decision making
process of business and have right according to their shares in company. The stakeholder who
hold minimum amount of company stock and shares are known as minority shareholders along
with they have less right in decision making process. The rights of shareholders are they can
inspect records, books and accounts of organisation any time, they have authority to perform
their duties and complete responsibilities effectively as well as have right to get dividend, profits
and salary on time (Berman and Dalzell-Payne, 2018)s.
Stakeholder analysis
It refers to the business process that assists the professionals of Intercontinental Hotels
Group PLC to determine many factors as well as implement changes in organisation in order to
meet goals effectively. It also helps the relevant stakeholders of Intercontinental Hotels Group
PLC to make effective decision in order to get more benefits and profits. The stakeholder
analysis in context to Intercontinental Hotels Group PLC are as follows-

This process consists many steps which an organisation need to follow to fulfil
requirements of stakeholders (Lam and Wong, 2018).
Determining the shareholders- It is first step of stakeholders analysis, in which
management of Intercontinental Hotels Group PLC can determine their potential internal and
external stakeholders. It includes employees, staff members, clients, general public, government,
investors, suppliers and many more who invested their time and money. As all these have great
impact on deals, operations, product, services and revenue of Intercontinental Hotels Group PLC
which makes company more profitable.
Prioritizing and Grouping the stakeholders- It is second stage, in this the management of
Intercontinental Hotels Group PLC can understand the interest level of their all stakeholders in
order to grant power to them to interfere in activities of company. By using Mendelow's matrix
they can determine easily which are as follows-
Mendelow's Matrix
It refers to the business tool which is used by management to determine the power of their
stakeholders as well as their attitudes. This includes two aspects such as level of interest and level
of power of various stakeholder in order to influence the operations of company.
Level of interest
Level of power High Low
High Investors, top
management
Employees
Low General people Government
High interest with high power- In Intercontinental Hotels Group PLC, Investors and
management have high interest and also have more power because they invest their time or
money in product and services. Also they have to inspect company financial books to conduct
effective working to meet desired goals.
High interest with low power- In Intercontinental Hotels Group PLC, general public
have high interest to increase their experience by meeting their demand with better quality
hospitality services as well as they have low power in decision making process.

Low interest with high power- In Intercontinental Hotels Group PLC, government have
high power which influence the growth and operations of the company by visiting their financial
account for tax as well as have low interest in their internal operations.
Low interest with low power- In Intercontinental Hotels Group PLC, employees have
low interest in profitably and many other stakeholders benefits because they received fixed salary
and belong to category of minority stakeholder along with they have less power in inspect
accounts and participate in decision making.
Figuring out the effective mode of communication with stakeholders in order to
impress them- The management of Intercontinental Hotels Group PLC can choose most
effective mode of communication according to their priority and how much they want to convey
or share information to them. As they can choose email to share information to investors,
employees and management regarding internal progress or working as well and social media and
other marketing tools to provides information about their product, services, innovation and
achievements to customers and government in order to meet their demands and provide best
quality services to them to gain competitive advantage (Le, Ling and Yau, 2018).
TASK 3
Using PESTLE framework and Porter's five forces model explain the impact of micro
environment factor and competitive market environment both nationally and
internationally.
PESTLE analysis
It is business analytical tools which helps the management of Intercontinental Hotels
Group PLC to determine the impact of various macro environmental factors on their operations,
productivity as well as profitability. The evaluation of various factors in context to
Intercontinental Hotels Group PLC are as follows-
Political- The political environment of UK is stable and many political parties or
government provide subsidies, tax benefits and funds to company in order to promote tourism for
development of country. All these activities of government provides benefits Intercontinental
Hotels Group PLC which they can use to expand their business operations. Also they conduct
their business practices fairly and under government laws by which they can increase their brand
image and market value.

Economic- The income level of people, inflation rate and availability of suppliers in UK
are high or favourable which helps company to survive in long run. Management can use this as
opportunities to bring more innovation by purchasing raw material form many suppliers which
reduce their cost and increase profit margin.
Social- The changing customers taste, preferences as well as culture of UK are dynamic
which has positive and negative impact on the organisation. So the management of
Intercontinental Hotels Group PLC must change their services by adding more innovation and
features as per recent trends in order to meet expectation of customers, reduce challenges and
earn huge market share (Lungu, 2020) (Ma, 2020).
Technological- There are various new and advance technology available in UK which
provide many benefits to company to increase their productivity and reduce their delivering
time. Professionals of Intercontinental Hotels Group PLC can use advance technology like
automatic scanning machine, digital marketing and many automatic machine which helps them to
reach more customers in less time and offer innovative services to guest in order to increase their
experience.
Legal- There are various rules and law formulated regarding tax, consumer protection and
employment in UK. All these laws helps Intercontinental Hotels Group PLC to take proper
guidelines in order to conduct fair trade practices. As they provide their services as per UK Food
and Safety law to add value to their potential customers. Also they pay fixed amount of tax on
their income to government every year to maintain their reputation in market.
Environmental- It is related to climate condition, weather and natural resources are in
UK as well as government set standards to protect environment form harmful gases.
Professionals of Intercontinental Hotels Group PLC conduct their operations as per the
government standards and make changes like eliminate the use of plastic based containers, poly
bags in order to safe environment. Also they try to replace many machine which generate
polluted gases with environmental friendly machine in order to develop their image in market
(Nam and Bao Tram, 2021).
Porter's Five Forces Model
It is an effective approach which management of Intercontinental Hotels Group PLC can
use to determine current market condition of hospitality industry in nationally and

internationally. Porter's Five Forces Model in context to Intercontinental Hotels Group PLC are
shown below-
Competitive rivalry- The impact of this factor on hospitality industry is high due to
many organisation provides hospitality services in domestic and international market. The
Intercontinental Hotels Group PLC operates their business at large scale and have huge
customers base which allows them to gain competitive advantage over competitors to achieve
huge success.
Bargaining power of customers-The impact of this factor on hospitality services is high
due to many organisation are available in domestic and international market as well as low
switching cost. In order to increase more customer base and retain them for long run,
Intercontinental Hotels Group PLC have to improve their quality of services by bringing
innovation to satisfied customers needs (Nikitina and Lapiņa, 2019).
Bargaining power of suppliers- In hospitality industry, the impact of this factor is low in
domestic and international due to low switching cost and low requirement. The impact of this
factors on Intercontinental Hotels Group PLC is low because they can easily take inputs, raw
material and equipments for many suppliers which make easier to them to switch effectively.
Threat from new substitute- In hospitality industry, the impact of this factor is low in
both nationally and internationally due to product and quality differentiation. For Intercontinental
Hotels Group PLC the impact of this factor on their business is low because they provide
innovative and quality services which make their product different and attract more customers.
Threat from new entrants- The impact of this factor on hospitality industry in both
nationally and internationally is for new company due to innovation and huge capital
requirement. But the impact of this factor on Intercontinental Hotels Group PLC is low because
they operate at large scale ans have positive brand reputation as well as loyal customer base.
TASK 4
Key performance indicator as well as recommendation with proper justification for improvement
Key performance indicator is refers the business analytical tool which helps management
of Intercontinental Hotels Group PLC to measure their employees performance and quality for
long term. The key indicators of key performance matrix in reference to Intercontinental Hotels
Group PLC are as follows-

Growth of sale and revenue- By determining the growth rate of revenue and sales on
particular period of time, the manager of Intercontinental Hotels Group PLC can measure the
progress of their internal performance. As it helps management to examine their working records
and performance of short term in order to find many areas which they needed to give more focus
and efforts for future growth.
Profit margin- By using many sources like cost policy, pricing index management of
Intercontinental Hotels Group PLC can determine their employees performance and progress in
order to reduce operation cost (Poulose and Sudarsan, 2018).
Satisfaction and positive review of customers- It refers to the most effective method
tom measure the performance and effectiveness of company. The goods and services requires to
meet maximum satisfaction among customers. Intercontinental Hotels Group PLC can meet
maximum customer sanctification by providing best quality product and services. Management
can use this method to identify the customer response, reviews about their services.
Measuring Intercontinental Hotels Group PLC performance with Balance Scorecard
Balance scorecard
It refers to strategic business performance management metrics that assists company to
determine many factors as well as improve their overall performances in most effective manner.
This process includes four key elements which manager of Intercontinental Hotels Group PLC
can use to improve that are as follows-
Business process- In this stage, the professionals of Intercontinental Hotels Group PLC
check and evaluate their internal working process and quality of their product and services. By
this they can make effective changes in current business procedure to enhance the quality of
hospitality services in order to meet demands of customers and make positive brand image.
Learning and growth– In this stage, management of Intercontinental Hotels Group PLC
can conduct huge market research to determine recent trends and give training to their employees
so they can improve their skills. By this they can increase the productivity and quality of their
services which increase their growth rate, market value and customer base.
Financial data- This stage consists various aspects such as capital, budget, expenditure,
sales, income target and many more. Intercontinental Hotels Group PLC can measures their
current position or situation in order to comply all there available resources in effective manner

to gain competitive advantage. By making effective strategy to allocate finance in all business
operations they can achieve their goals and increase their income.
Customer perspective- It is most important aspects which helps management of
Intercontinental Hotels Group PLC to gain proper insight about the customer response,
expectation and demands along with their impact of services. By this they can make changes and
improve quality of their services in order to meet their demands effectively as well as increase
their customer base (Uluskan and Godfrey, 2018).
Recommendation for improvement
It has been recommended to Intercontinental Hotels Group PLC, that they have to add
more technology in their operations and marketing function like digital and social media platform
in order to offer innovative services to increase customer experience.
They can also use various effective approaches and strategy to determine recent trends or
performance in order to give training to their employees. So they easily adopt the changes in their
performance and improve quality of services to maximise their brand name.
CONCLUSION
As per above presented information, it has been concluded that business environment
plays most significant role in the success, growth, operations and development of an
organisation. In order to achieve success in competitive market every company have to bring
some innovation in their product and services. By using stakeholder analysis they can easily
determine the interest level and power of every shareholder in their company. With the use of
PESTLE analysis, Porter's Five Forces, professionals of company can easily determine the
impact of current environment and market condition on their business growth. Further, by using
key performance indicator they can evaluate internal performance to bring more efficiency.