Business and Business Environment Analysis Report: IHG

This report provides a comprehensive analysis of the business environment, focusing on Intercontinental Hotels Group (IHG). It begins by defining the business environment and differentiating between internal and external factors, including micro and macro environments. The report explores ...Read More

Business and business
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASKS.............................................................................................................................................1
P 1 Different types and purposes of organisations......................................................................1
P 2 Size and scope of a range of different types of organisations.............................................2
P 3 Relationship between different organisational function......................................................2
P 4 Positive and negative impacts of macro environment........................................................4
P 5 Strengths and
weaknesses of
Intercontinental hotel ................................................................................................................6
P 6 How
strengths and
weaknesses interrelate
with external macro
factors.........................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
The business environment can be simply defined as the internal and external factors
affecting the functions of corporation such as their employees,consumers, management, delivery,
demand and the norms of business (Granger and Schroeder, 2013). The demand of customers
fulfilled by the company is also a part of this. These are of two types namely internal and
external business environment. The first one includes physical assets, technological capableness,
man power, finance, resources needed for marketing, structure of management, goods, aims and
objectives. While the latter one is made up of different corporations,institutes and forces that are
operating outside the enterprise that impacts individually and collectively on the environment.
The external one is again classified into two types i.e. micro and macro environment. The present
report is based on the business of InterContinental Hotels Group and its surrounding whereby the
different types and purposes of organisations; public, private and voluntary sectors and legal
structures are explained.
TASKS
P 1 Different types and purposes of organisations
There are different sectors of organisations namely private, public and voluntary. They all
have different purposes. The public sector is generally composed of companies that are owned as
well as run by government. Their aim is to serve all the citizens of nation. They are not interested
in making profit. The civilians pay taxes to the authorized body and that revenue is used to run
most of the public sector organisations. The main aim or purpose of this type of firm is to make
available different types of public services to the population and also to resource well for the
welfare of community. NHS (National Health Service) can be the best examples of such sector.
On the contrary, the private sector businesses are owned and operated by the individuals. The
business of franchises, partnership and trade holders, etc. are included in their task (Onetti and et.
al., 2012). The objective of this sector organisations are making more and more profit, expanding
their business, enhancing the shares of market and maximizing their sales. InterContinental
Hotels Group is a private owned corporation that is established in United Kingdom. They are
offering the hospitality services to thier clients. There are different partners of this organisation
that are Holiday Inn, Hotel Indigo, Crowne Plaza, etc. The volunatary groups or community
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sector is a non profit organisations having the duty of social activities. But these are not owned
by government and also they are not interested in making profits.
P 2 Size and scope of a range of different types of organisations
The size and scope of a range of different types of organisations are listed below:
InterContinental Hotels Group A Red Carnation Hotel
Employees 28589 24700
Customer 350000 250000
Net income 417 million Euro 315 million Euro
Area served Global London, Europe
The Inter Continental Hotel Group is a multinational company having 28,589 numbers of
employees working in the year of 2017. They offer a handsome salary to them. So, they give
their best service to the customers. There are also a large of consumers that like their services.
The number of customers lies are around 350,000 that are found globally (Cavalcante and Ulhøi,
2011). As the number of consumers are large, their net income is also high that is 417 million
Euro. The Red Carnation
Hotel have the 250000 consumers and 24,700 employees. They have a net income of 315 million
Euro and they operate their business in London and Europe.
P 3 Relationship between different organisational function
The different organisation has different organisational function but they have the same
motto that achieving profit and expanding their market. There is a relationship between Inter
Continental Hotel group and Red Carnation Hotel. They consists of following main departments
or functions:
 Production: The companies are producing best services and facilities specially
luxurious so that large number travellers get attracted toward their hotels for staying
(Aterido and et. al., 2011).
 Research and development: The corporations are investing a lot ion the process of
research and development. For example surveys are globally conducted by the
Intercontinental Hotel Groups. They invests a large amount of money as well as time in
examining the demands and life style of customers. On the basis of their choices they are
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making their hotels so that they will not suffer fro any type of problems. On the same Red
Carnation Hotels are sending their employees to visit the local areas of London and
Europe as they are not serving globally. They have the aim to provide the best services
top their customers so that they visit their hotels again and again.
 Purchasing: They try to purchase best quality raw materials like royal beds, foods of
healthy and good quality, luxurious transportation, etc. in minimum prices so that they
give the tourists a also low cost service.
 Human Resource Management: The enterprises are also using the human resource
management in their business in order to hire skilled workers. They want to be
recognized globally so they are interested in recruiting the best employees in their hotels
who have effective communication skills, politeness in their behaviours, have good
interpersonal and intra personal skills, etc. The training and development programmes are
arranged by them in order to achieve these skills in their employees (Chow and et. al,
2011). They give at least 6 month training to the new comers so that they become expert
their jobs and contribute in increasing the turn over of the business. For hiring best
workers they have to conduct different colleges and universities and this takes a lot of
time. So, they also conduct online interviews so that less time is consumed in this work.
 Accounting and Finance: The Intercontinental Hotels manages their work of
accounting and finance effectively so that no mistakes will occur. The daily income of
corporation is entered in the software so that at the time of final counting at last of month,
calculations are done very easily (Klapper and Delgado, 2011). The net income and
profit are calculated on the basis of this. Same work is done by the Red Carnation Hotel
in order to manage the task of account and finance.
The Intercontinental Group follow the divisional organisational structure. In this, they
expand their functions across branches. As the company have different product lines, so each
product lines are divided in different areas like marketing, research & development, sales and the
finance departments. The benefit of this approach is that each and every branch has the
departments to perform important functions. Additionally, the drawback or disadvantage is that
in each divisions employees are carrying out similar functions. This causes end up having lot of
redundancy. On the contrary, the Red carnation Hotel precede with matrix structures. This
provides them greater flexibility regarding the business functions than a more hierarchical
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corporation. Following this structure, the each and every employee are working in a function-
based sector, like marketing and finance, While they work under different managers as they are
assigned several types of projects. The structure adapted the functions of corporation as the
needs of consumers are changing. It has a disadvantage as the chain of matrix might become
cloudy and ambivalence.
P 4 Positive and negative impacts of macro environment
The macro environment are nothing but the conditions that lies in the economy as a
whole, rather than a specific or particular region. It includes trends in GDP (Gross Domestic
Product), employment, fluctuating prices, spending and fiscal policy. In order to scan the
external macro environment of organisation, pestle analysis is used. In this the impacts of
different factors are explained such as political, environmental, social,technological, economic,
etc. The pestle analysis of Intercontinental Hotel Group are listed below:
 Political factors: The political stability is one of the basic need to achieve success in the
hotel industry. In this, such factors impacts the number of visitant both tourists and
business travellers who visited in the nation in direct or indirect ways. For example,
person would be concerned while visiting the northern part of Ireland as the controversial
politics are seen there. This reduces the turn over of company. Also, the acts of terrorism
which is based on the religions in the London, acts as a threat for the IHG corporation in
the year of 2005 (Boons and Lüdeke-Freund, 2013). This also decreases the quantity of
travellers to that region. Certain sanctions are also imposed on the different nations
within the Europe, specifically towards Russia that aids a type of involvement which can
be view as disputable. In total, because of light-handed political factors are examined
progressively, the company is concerned about the loss of money in upcoming days or in
the future. As enterprise is serving their business in all over the world, the fluctuating
nature is seen in currency of different nations. This is viewed as a threat for the firm. This
all was negative impacts, there are also positive impacts of political factors. They
encourage the business of IHG as they are making job opportunities for not only local
people but through out the globe (Zott and Massa, 2011). The company is also
performing corporate social responsibility. It is nothing but the social welfare tasks that
are done by venture like giving money in educating poor kids, making more employment
opportunities, enhancing the life style of local people, etc. This also led a positive image
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in front of government and in return the authorized body praises its working and making
the corporation a recognised brand.
 Economic: There are also so many economic implications that impacts the business of
IHG group, specifically in United Kingdom. For instance, the company is still recovering
from the economic crisis of 2009 even many years have passed. The firm, depends on the
share-market of UK as they are not making more revenues. During the year of 2012, at
the time of Olympics, the hotels of Europe were booked to a large quantity whether there
are several struggles before and after the event.
 Social factor: There are certain social factors that influences the working of company.
For example , the life style of civilians, the population growth, consumers demographics,
etc. The population of the nation changes year after year,so the company ought to
develop more services or accommodation policies in order to complete the desires or
needs all the people (Commander and Svejnar, 2011). Additionally, the lifestyle of the
consumers are also modified as the time passes, they now need more luxurious services
in relation to previous. The firm have to examine all such changes in the demand and
make their services as per them. Also, the young consumers are increasing specially in
Asia and they visits the UK periodically. This is plus point for the IHG as the sales is
continue increasing with proper visitations.
 Technological factor: The development of technology positively impacts on the business
of corporation. In the hotel industry, the main task is communication. This can now be
easily and effectively performed by using some internet based techniques like video
conferencing, chatting, messaging, through social media such as face book, whats app ,
twitter, etc. They now do not need to physically meet each of their clients, but the
meeting and orders are taken through online (Hamilton and Webster, 2015). The
company is also performing online business of booking their rooms. So, this reduces the
time and money and investment are done on another practices like advertisement. The
enterprise are using social media, posters, Television channels, books and journals, news
paper, etc. for promoting or advertising their business. The technology also gives certain
software like spreadsheet, MS office, Ms excel, etc. This make the task of calculations
very easy as they are performed automatically by using some formulae. This also reduces
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the paper work and the errors due to that working. Certain activities like making
presentation can be made effectively through power point.
 Environmental factor: The environment plays a leading role in improving the business
of corporation as the consumers wanted beautiful scenario. Hence, the business owner
ought to establish their hotels in natural places like around hill stations, mountains, etc.
The hotel owners are fulfilling the demands of their consumer by listening to them while
the historical areas such as forests, beaches, etc. gets impacted by this as they are not
visited by them. The company should also perform their business where there are more
populations so that they run effectively. If they make their hotels in those areas where
there less population then their business will not grew properly. So, the corporation ought
to perform their business in green or most populated regions or states.
 Legal factors: There are certain laws that are imposed by the government like employee
law, wages law, child labour law, etc (Wild and Han, 2014). These all led a impact on the
performance of IHG. If the company is found to be neglecting any of the norm then they
are given punishment in the form of compensation or many other forms. There are
different taxes imposed by the government, due to this most of the revenue goes on
paying these taxes only.
P 5 Strengths and
weaknesses of
Intercontinental hotel
The strength and weakness of the Intercontinental Hotel group are listed below:
 Strength : This hotel have a large diversified brand portfolio. Its mostly income comes
from its franchises. It provides more quality services then other hotels. This company has
a great competitive advantage. This organisation has a number of internal as well as
external strengths (Bryman and Bell, 2015). Some of its internal strengths are its unique
interior and its relation with customers. Intercontinental hotels group is famous for its
distinctive and special interior which other hotels do not have. Its external power is
positive feedbacks from its customers . A company can survive in competitive market
only because of its healthy relation with its customers. Organisations in today's time is
highly focused on their customer satisfaction. In present scenario customers are becoming
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more demanding and if any company wants to survive in competitive market then it has
to satisfy its customers at any cost.
 Weaknesses : Everything in this world has some pros as well as some cons. This
organisation also have some internal and external weak points some of are number of
competitors,poor staff relations and their high prices. without proper communication no
business enterprise can get desired results. Middle class peoples can not afford such high
prices of intercontinental hotels group which can be a weakness for this enterprise.
Increasing number of competitors is also a infirmity for this company.
P 6 How
strengths and
weaknesses interrelate
with external macro
factors
An organisation have some strength and weakness on which their survival is completely
dependent. In this relation they have proper manage their operations as well they have to conduct
a analysis through which they get aware about their customers and their preferences. If they
consult this policy and work in proper manner then it leads to make their work more and more
appropriate and their survival become easy. One of a major reason through which any business
organisation work get affected is macro factor. In macro analysis all such elements should have
to be consider which creates barrier in working. The present report is all about Intercontinental
hotel who provide high level services to their guest. Hence they first have to prepare a
investigation report through which they can analyse that their working is appropriate or not as
per the condition of external market. A major thing which is related with this scenario is as
follow:
Strength: This is a thing which signifies that an organisation will lead to survive at competitive
market place or not (Welford, 2013). If a firm have good market relation with their customers
then it termed a strength for their business. Macro factors which provide strength to cited
organisation are as follow:
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 If a company is good in manage everything then it states that all political instability do
not affect their business. This is an initial factor which is related with political factor of
external market.
 Technological factor signifies that if a cited business entity is using new technology on
the place of obsolete one then it leads to attract more and more customers (Wheelen and
Hunger, 2011).
 Also they have to fulfil their social responsibilities through which their work become
appropriate in nature and society will lead to accept them.
Weakness: Some of their competitors utilise weak point of an organisation through which their
work get affected more and more and thus it leads to affect their profitability also. If an
organisation will not able to manage everything and failed in organise everything then it leads to
affect their guest and their working also. Also managers have to get updated with external
environment technology. If they failed in do so then it leads to provide a chance for their
competitors to use this factor as USP.
CONCLUSION
From the above based report it has been concluded that business environment mostly
effects the business of all types of organisations whether they are public, private or voluntary.
The aims and objectives of Intercontinental hotel group is discussed that is they want to expand
their hotel business in all over the world. The pestle analysis shows the impacts of
government,technology, environment,society, economics, etc. on the corporation. The taxes are
imposed by government body that consumes most of the revenues of IHG. The technological
development aids the firm by making effective communication between their clients and
employees. There are certain social changes like modernisation in the life of people, the
population growth,etc. demands changes in the services of venture. They now need more
luxurious facilities at the minimum cost. The strength and weakness of the corporation are also
explained. The strength of the company is its brand value, increasing consumers, marketing in all
over world,etc. While there some weakness of the company too like increasing competition in
the market of hospitality and entry of new ventures in the market offering the same services at
low price.
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