Report: IHG PLC's Business Environment and Strategic Analysis

This report provides a comprehensive analysis of the business environment of International Continental Hotels Group PLC (IHG). It begins with an introduction to the concept of business environment and its influencing factors, both internal and external. The report then delves into a SWOT analysis of IHG, identifying the company's strengths (skilled workforce, consistent quality, strong distribution network) and weaknesses (high inventory, weak demand forecasting, reliance on hotel sales). Opportunities (market development, cost reduction) and threats (raw material shortage, currency fluctuations) are also discussed. Furthermore, the report explores the interrelation between IHG's strengths and weaknesses and external macro factors using PEST analysis, covering political, economic, technological, and social factors, demonstrating their impact on the company's performance and strategic decisions. The report concludes by emphasizing the crucial role of the business environment in achieving organizational goals, and the importance of analyses like SWOT and PESTEL for minimizing potential issues.

BUSINESS AND
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
P5 Internal and external analysis of International Continental Hotels Group PLC
company(IHG)............................................................................................................................1
P6 Interrelation of strength and weakness of International Continental Hotels Group PLC
company(IHG) with external macro factors...............................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
.........................................................................................................................................................7

INTRODUCTION
Business environment refer to the combination of internal and external factors which
directly and indirectly effects the working of an organization. The forces which constitute the
working of business environment are competitors, suppliers, investors, political,technology and
many more factors. This forces effects the business working even though they are outside of the
business edge. This report takes into consideration International Continental Hotels Group PLC
company(IHG) which was incorporated on may21 2004 and is located in United Kingdom. The
company franchises its brand to and manages the hotels on the behalf of third part hotel owner.
This report gives the brief about the internal and external analysis of IHG company which is
done with the help of SWOT analysis. Lastly, this file focuses on how the strength and weakness
of the IHG company is interrelated with the external macro factors.
TASK
P5 Internal and external analysis of International Continental Hotels Group PLC company(IHG)
The sum of internal and external factors and forces are refers to as business environment.
Internal factors which impact the business environment are suppliers, customers, competitors
and investors whereas the external factors include political, economical, social, technological
and legal environmental factors which effect the working of business environment.(Ballard
2012) In order to improve the working and business environment of IHG company the manger
should make the internal and external analysis so as to identify the strength and weakness of the
company. So the manager of IHG company uses the SWOT analysis in order to identify the
internal and external analysis of the company and which is explained below.
Strength
As Inter Continental Hotels Group PLC Company is one of the leading firm in its
industry which has numerous strength that enable the firm to thrive in the market place.(Bah and
Fang 2015) The strength of the company not only helps in protecting the market share in the
existing market but also helps in penetrating new market segments. Some of the major strength
of IHG company is explained below:
 Due to successful learning and training program the company has highly skilled
workforce. IHG company is investing huge amount of funds in the training and
development of the workforce.
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 There is a consistency in the quality of IGH company which is due to the automation in
the activities.(Caiazza, 2017) This helps the company to scale up and down taking into
consideration demand condition in the market.
 Superb performance in the new markets which has help the company to build new
revenue system stream. In addition to this it helps in diversifying the economic cycle risk
which may takes place while operating in new market system.
 Inter Continental Group company has strong distribution network and can reach the
majority of potential market all over the world and its the major strength for the
company.
 Inter Continental Group has made strong investment in building brand portfolio which
has resulted in the form of strength for the company.
Weakness
Inter Continental Hotel Group PLC(Eling and Schaper2017) company is suffering from
major weakness on which the company can improve upon using SWOT analysis. Improvement
in the weakness will helps the company in building up of competitive edge in the market. Some
of the major weakness of IHG company are mentioned below:
 One of the major weakness of the IHG company is that days inventory is high as
compared to the competitors in the market place. As the company raise more capital to
invest which directly impact on the long term growth of the company.
 Presently the investment in technologies is not at par as compared to the vision of the
IHG company.(Georgescu and Popescul 2015) This is the major weakness for the
company as the company would not be able to make investment in new technologies.
 Inter Continental Group Company is not good at demand forecasting because of which
inventory level goes high both in house level and in channel.
 One of the weakness for Inter Continental Group company is that there exist the gap in
product supplied by the company.
 Weak financial performance result in decrease in the level of revenue this can be termed
as the weakness for the company.
 Inter Continental Group company mainly rely upon hotel sales within the travel and
tourism sector this result in the form of weakness for the company.
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Opportunities
Opportunities provide the organization with the improved means of performance and
competitive advantage in the market place(Janita and Miranda 2013). Some of the opportunities
for the Inter Continental Group Company are mentioned below:
 Inter Continental Group can increase its competitiveness as compared to the competitors
through market development. It will help the company through dilution of competitors
advantage.
 By lowering the shipping price Inter Continental Group company can bring down the cost
of production which provides the opportunities to boost up its profitability by increasing
market share.
 By knowing its customers better Inter Continental Group can expand its market by
attracting customers through online channel.
 Inter Continental Group company has considerable opportunities in developing regions
like in eastern Europe region and in Asia pacific region.
Threats
In business analysis threats are negative and external which could cause damage to an
organization environment and working activities.(Prins and Cybercrime 2011) Some of the
threats which can cause damage to the Inter Continental Group Company are stated below:
 One of the threat which can hamper the profitability ratio of Inter Continental Group
company is shortage of raw materials and skilled workforce in a global market.
 Profitable product demand is seasonal in nature but due to some unlikely events during
peak season may create the threat to the profitability of Inter Continental Group
Company.
 Change in the consumer taste and preferences behaviour from online channel can become
a major threat to the existing supply chain model of Inter Continental Group Company.
 Internal market rivalry and unforeseen problems can also become a threat for the Inter
Continental Group Company as it will indirectly effect the company profitability ratio.
 Uncertain market condition like currency fluctuation specially in case of weak US Dollar
result in major threat for the Inter Continental Group company.
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P6 Interrelation of strength and weakness of International Continental Hotels Group PLC
company(IHG) with external macro factors
Inter continental Group Company uses the PEST analysis tool in order to analyse the
macro environment factor of an organization. Changes in macro external factor have a direct
impact on the strength and weakness of the Inter Continental Group Company. The
interrelationship of strength and weakness of ICG company with the external macro factors are
explained below:
Political factor: These factors plays a important role in determining the factors which
can impact the Inter Continental Group company.(Virglerová 2016) Political factors are under
the control of government rules and regulation which mainly include new legislation and
regulatory shift. The major strength of the Inter Continental Group company is high consistency
in the quality of product and superb performance in the market which the company has achieve
just because the company mould itself according to the changes taking place in the political
factors. Whereas the weakness of the ICG company is that its days inventory is high and demand
forecasting is poor which is just because sometime company does not much attention to the
changes made in the political factors by the government. In order to achieve the successful
growth in the market company should make the close analysis of political factors before
investing or entering into the new market segment area. Therefore, it can be proved that there is
the interrelationship between strength and weakness of the company with the external political
factors.
Economic factor: This factor include all important trends in the economy which can
hinder as well as help the company in accomplishing organizational aims and objectives. The
factors which commonly effect business is consumer behaviour, interest rate, inflation rate and
many more. Most important of all competitors norms impact the competitive advantage of the
Inter Continental Group company. (Ullah and Lai 2011)There is a consistency in the quality of
product and services of Inter Continental Group Company which is the strength for the company
and it is being achieved just because of the growing economic condition and the development of
the infrastructure in the country. Whereas the major weakness of the Inter Continental Group
company is high days inventory due to poor demand forecasting. The company is suffering from
this weakness just because it is not aware about the economical changes taking place in the
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country. Hence, it can be said that there is the interrelationship between strength and weakness of
the company with the external economical factors.
Technological factor
Fast development in technologies is impacting various commercial enterprise across the
board. This types of factors are variables which are used for evaluating available alternatives in
respect to technological capabilities. Moreover technological factors are termed as the external
environmental factors which affect business both positively and negatively greatly. There is no
doubt that in today's world technology advancement are taking place in order to shape future.
Major strength of Inter Continental Group is super performance in the market and high skilled
work force which is achieved just because the company has adopted the changes taking place in
the technology. (Werbach and Hunter2012) As the company uses standard technology in order to
train and develop their workforce because of which it has skilled workforce with great skills and
knowledge. This helps the company to achieve its organizational aims and objectives. Thus, it
can be said that there is the close interrelationship of strength and weakness of the Inter
Continental Group company with the external macro factors.
Social factor
Attitude and shared belief of the society creates the great impact on the culture of the
organization. This factors include the changes taking place in the society taste and preferences
pattern which directly impact on organizational working environment. Social factors plays the
important role in the development of an organization. Major strength of the Inter Continental
Group company is that they have high skilled labour which is just because they invest huge
amount in training and development programs section. The company has achieve this major
strength just because the company takes into consideration workers needs and preferences.
Whereas the major weakness of the company is that days inventory is high both in home level
and in channel which is just because the company is not making an proper research analysis
regarding the demands and need of society.
Thus, overall it can be concluded that the strength and weakness of Inter Continental Group
company have the interrelationship with the external macro factor.
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CONCLUSION
From the above report it can be concluded that business environment plays the vital role
in accomplishment of organizational goal. There are certain factors which effect the business
environment which consist of internal and external factors like technological, political suppliers,
investors and many more. In order to analyse the internal and external analysis company should
use SWOT and PESTEL analysis so as to identify the strength and weakness of the company.
This will help the company to minimize the issues that may take place during the working of the
company.
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REFERENCES
Books and Journals
Bah, E. H. and Fang, L., 2015. Impact of the business environment on output and productivity in
Africa. Journal of Development Economics. 114. pp.159-171.
Ballard, C. and et.al., 2012. Dimensional Modeling: In a Business Intelligence Environment.
IBM Redbooks.
Caiazza, R., Shimizu, K. and Yoshikawa, T., 2017. Cross‐Border M&A: Challenges and
Opportunities in Global Business Environment. Thunderbird International Business
Review. 59(2). pp.147-151.
Eling, M. and Schaper, P., 2017. Under pressure: how the business environment affects
productivity and efficiency of European life insurance companies. European Journal of
Operational Research. 258(3). pp.1082-1094.
Georgescu, M. and Popescul, D., 2015. Social Media–the new paradigm of collaboration and
communication for business environment. Procedia Economics and Finance. 20.
pp.277-282.
Janita, M.S. and Miranda, F.J., 2013. The antecedents of client loyalty in business-to-business
(B2B) electronic marketplaces. Industrial Marketing Management. 42(5). Pp.814-823.
Prins, J.R. and Cybercrime, B.U., 2011. Diginotar certificate authority breach’operation black
tulip’. Fox-IT, November.
Ullah, A. and Lai, R., 2011. Modeling business goal for business/it alignment using requirements
engineering. Journal of Computer Information Systems. 51(3). Pp,21-28.
Virglerová, Z., Dobes, K. and Vojtovic, S., 2016. The perception of the state's influence on its
business environment in the SMEs from Czech Republic. Administratie si Management
Public. (26). p.78.
Werbach, K. and Hunter, D., 2012. For the win: How game thinking can revolutionize your
business. Wharton Digital Press.
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