Marriott Hotel: An Analysis of the External UK Business Environment

This report provides an in-depth analysis of the external business environment in the UK, with a specific focus on its impact on Marriott Hotel. The report begins with an introduction to the external business environment, emphasizing the challenges faced by the hospitality sector and the importance of understanding socio-economic and political factors. It then delves into the UK economy, examining its structure, size, and policies, highlighting the significance of the service sector and the country's capitalist system, which favors private sector companies. The report also explores economic policies, including fiscal and monetary policies, and their effects on businesses like Marriott. The analysis includes details on taxation, work incentives, and the impact of monetary policy on the supply of money and customer purchasing power. Furthermore, the report examines the hospitality sector in the UK, highlighting Marriott Hotel's position as a leading player, its financial standing, and its workforce demographics. The report concludes by analyzing demographic trends, such as income levels, employment patterns, and gender ratios, and their influence on the hospitality industry, with a focus on the age distribution of the workforce. The report uses illustrations, charts, and tables to support its analysis.

EXTERNAL BUSINESS
ENVIRONMENT

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1................................................................................................................................................1
TASK 2............................................................................................................................................2
1.2................................................................................................................................................2
TASK 3............................................................................................................................................3
1.3................................................................................................................................................3
TASK 4............................................................................................................................................3
1.4................................................................................................................................................3
TASK 5............................................................................................................................................5
1.5................................................................................................................................................5
TASK 6............................................................................................................................................5
2.1................................................................................................................................................5
TASK 7............................................................................................................................................6
2.2................................................................................................................................................6
TASK 8............................................................................................................................................7
2.3................................................................................................................................................7
TASK 9............................................................................................................................................8
2.4................................................................................................................................................8
TASK 10..........................................................................................................................................9
2.5................................................................................................................................................9
TASK 11..........................................................................................................................................9
3.1................................................................................................................................................9
TASK 12........................................................................................................................................10
3.2..............................................................................................................................................10
TASK 13........................................................................................................................................11
3.3..............................................................................................................................................11
CONCLUSION ............................................................................................................................11
REFERENCES..............................................................................................................................12

Illustration Index
Illustration 1: Gender ratio in hospitality sector..............................................................................4

INTRODUCTION
External business includes various factors which highly affects the business operations
which are been held out by the organization. This will ensure the fulfilment of the objectives of
the company. Further, the firms involved in the hospitality sector have to face many challenges
while achieving the targets (Hazlina Ahmad and et.al., 2010). Thus, the factors such as socio,
economic, political etc. have a great impact on the business and it is very important to deal with
them to have positive results. Moreover, the business environment is combination of internal and
external factors. The former one can be managed and controlled as they are confined within the
company. However the external factors cannot be controlled by the business as these are the
natural factors. In the present report, Marriott hotel is been taken which is a leading business unit
in the hospitality sector and provides with several services to the clients. In addition to this, the
economy of UK is been studied thoroughly which includes its structure, size, policies etc.
TASK 1
1.1
The economy of UK is fifth largest in the whole world by the year 2014. Further, it
contributes around 0.7% in agriculture sector and as it is referred to be developed country that
has covered 21.1% of its GDP under the industrial sector. Moreover, the service sector with
72.2% of the GDP has attained the highest market share in the economy as this sector plays an
important role in the growth of the economy. As it is been studied that UK is a capitalist nation
so its government complies with capitalism and their foremost motive is to protect the private
sector companies over the public companies. Further, the population of UK in the year 2012 was
63.244 million (Botha, Kourie and Snyman, 2014).
Hospitality sector of UK is on fifth largest position in the world and is contributing
around 36.1 million to its total economy. Further, the taxation policy of UK is quite different
from other countries as it mainly involves the payment at two different levels of the government
which includes local as well as central government. The local government is been financed by
grants from central government, council tax etc. further, the central government revenues include
income tax, VAT etc. Moreover, the economic policy adopted by the UK government is quite
different. They have passed several laws which help to protect the private organization. Growth
and development of economy is taking place at a faster pace and it is providing various
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opportunities to the people living in society. By studying all the terms of the UK economy, it can
be concluded that the policies and rules are highly in favour to Marriott hotel. Thus it will help to
grow and develop the organization in the country (Boons and Lüdeke-Freund, 2013). UK is
hereby referred to operate under a free market economy with a lower level control of their
regimental parties where their market is entirely based upon two stringent concerns of demand
and supply. In context to which, a floating exchange rate is being prevailed in UK where their
currency rates often tends to fluctuate as per the adopted mechanism of their foreign exchange
market. It is mainly in context to the hospitality industry of UK where it is currently employed
by total 3.6 million employees by opting for both direct and indirect measures of occupation.
TASK 2
1.2
Economic policy comprises of mainly fiscal and monetary policies which determines the
manner in which the whole economy is been regulated and it impact on the business operations
in UK. Further, the above stated policies are been studied in detail below:
Fiscal policy- This policy assist the regulatory authorities to adjust their spending power and tax
rates so as to supervise the whole economy. Under this. There are mainly three parts which
includes expansionary, neutral and contractionary. Further, for carrying out the activities such as
infrastructure development and the expenses occurred in defence are being paid by the
government. As taxes are the core source of income for the government, every person or the
organization must ensure that they are paying their tax on the proper time (Aziz and Yassin,
2010). Marriott hotel also has to pay their taxes for rendering the services to the clients. Thus, the
tax value has a high impact on the operations and income of the firm and influence the people to
work for longer hours so as to meet their targeted income. Further it has been studied that with
the increase in direct tax it directly reduces the post income tax. Due to this policy hotel Marriott
has to come up with several changes like when tax rates are low then prices of services must be
kept low and vice versa. This is on discoursing the effects of fiscal policies on UK organisations
in context to their hospitality sector with a foremost consideration of taxation and work
incentives. In accordance to which, an increased rate of direct tax can tend to cut down the post
tax income where the hourly income will significantly lower the total net income of employees.
This will turn boost up the workers to operate for more that their usual hours of working to
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balance their targeted earnings. In opposition to that, it may also tend to discourage the
employees to work for lesser hours as a mean of reduced income level where they might together
face some major issues to operate for increased timings.
Tax Rate Taxable Income
Basic rate 20% £0 to £31,865
Higher rate 40% £31,866 to £150,000
Additional rate 45% Over £150,000
Monetary policy- In this the monetary authority of the country is responsible for controlling the
supply of money and also manage the interest rate. Thus, this policy assist the UK government in
managing the funds in an efficient manner, maintaining the credit system and also controlling the
operations of the banks effectively. Further, in UK monetary system is been regulated by the
central bank. However, the supply of money has a direct impact on the purchasing power of the
customers (Auzair, 2011). Thus if the supply decreases than the clients of Marriott hotel is not
ready to spend huge amount for availing the services. This section is to enlighten some major
impacts of monetary polices in UK where these policies are evident to make both intrinsic and
extrinsic changes in the business firms of UK. In context to which, the internal factors
necessitates the establishments to maintain a stabilised context of their pricing strategies as a
mean of enlarging their business related outputs. In contrast to which, the external impact is
hereby referred to imply a prior achievement of stabilised exchange rate.
TASK 3
1.3
The hospitality sector in UK is having the highest share and plays a major role in the
growth and development of the country. Users of the hospitality sector are considered to be
people who are availing the services whereas the providers refers to the organization or firms
which are serving with several types of services and products to the clients. Marriott hotel is the
leading one in the hospitality sector of UK as they are providing with latest and unique services
to the people. As it comes among the top hotel in the country, they are quite costly and the
people from high societies mainly visit the place. Thus, from the turnover accounted of the hotel,
it can be analysed that the purchasing power of the clients is high as they are comfortable in
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availing the costly services. Further, by seeing the capability of the customers for the purchasing
the products, the organization gets motivated for rendering high quality services so that it can
satisfy them to the best (Wang, Chen and Chen, 2012). It has been accounted that the wealth of
Marriott hotel is around 14 billion. Thus, the wealth can considered as the abundance in the
valuable resources of the organization. Further, the company is expanding its coverage by
providing with different services and products to the customers. They are developing the services
after analysing the income of the clients. At the recent time it has been found that the
organization has employed around 199929 employees at their workplace which are highly skilled
and serve the customers efficiently. But it has become necessary for organization to employ
more workforce as hospitality sector is rapidly growing. It has been studied that people living in
London prefer to work in Marriott hotel as it provides more exposure as compared to others.
Illustration 1: UK income distribution
The above chart determines the number of people with there income in a week. Further,
the stripes assist in classifying the individuals according to there income parade which involves
the people who are rich and poor. In addition to this, it can be said that 4.3 milliion people holds
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the income level of 1000 pound per week which is highest in the market. Majority of individuals
stands at the scale of 440 pound per week.
TASK 4
1.4
Demographic trends are highly linked with the historical changes which are been taken
place with the changing period of time. Further, it considers several factors which includes
income level, employment, religion etc. Moreover, these factors greatly affects the patterns in the
hospitality sector (Teece, 2010). By making the analyses about Marriott hotel, it has been found
that young people are being employed there as they believe that fresh talent can help the
company to grow and develop in the market. As it has been found that fresh talents are more
efficient in developing new services and products in the company. They are highly active and
enthusiastic to perform to the best of their ability and help to grow the firm to a greater level. In
the current time, it has been seen that the employment practices and patterns have undergone a
substantial change in the hospitality industry, largely because of changes in demographic
patterns in the country. Further, it has been seen that with the changing environment the lifestyle
and income earning capacity, gender ratios has changed drastically. In UK the population mainly
consists of younger age group which are in need of finding jobs that can help them to earn their
living and sustain their life comfortably. Moreover, the employment practices which are being
followed by the organizations of hospitality sector are now give importance to employing
younger age group rather than the ones who are highly experienced. However, with the modern
era the concept related to the dominated society has come to an end and people from both the
genders are being working in hotels.
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Illustration 2: Ageing population in hospitality sector
(Source: Fleischmann and et.al., 2014)
From the above graph it is been clear that now people who are above 70 years of age are
not preferring to continue with there profession in hospitality sector. Thus, the major crowd in
this sector are from the age group 25 to 65 years. As they are comfortable in opting for every
time shift for working.
This is on referring to the prevalent demographic trends in UK where an apparent effect
on its occupational structure of hospitality industries has been envisioned due to an increased
ageing population. With reference to which, it has been depicted that by the end of the year 2020,
almost one third of employees in the hospitality organisations of UK will attain more than 50
years of age. In addition to which, presently only 48% of workers are under 29 years of age that
will worsen the state of employment into the upcoming years. This will however tend to increase
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the scope of grey tourism with a proportional requisition of workforce planning that is needed to
be done by the UK establishments associated with hospitality with a proper age profiling and
training.
TASK 5
1.5
Social structure consist of a framework which includes various societal institutions and
practices which highly assist in the development of the society. Further, there is an efficient and
monotonous relationship between all the staff members of Marriott hotel. Moreover, they are
having highly skilled and talented worker which are efficient enough in serving the customers.
They understand their needs and requirements and according try to satisfy them to the best
(Ullah and Lai, 2011). Moreover, the management of the organization try to maintain harmony
among the employees and employers. They have made provisions for asking the customers about
their feedback for the services or products rendered to them. As this assist in developing their
lacking points so that they can become efficient in long run. Social structure between the staff
members is very friendly which can be analysed by the way in which they help each other to
serve the customers in the best possible manner. There is a great coordination among them to
manage the work in the efficient way. Further, they are also successful in attaining the
competitive edge in the market over the other competitors in the industry (Hazlina Ahmad and
et.al., 2010).
Moreover, the management of Marriott hotel makes sure that the candidates recruited for
the company are highly skilled so that they can serve the customers in the best possible manner.
They mainly focus on the young age group who are highly talented and well educated which
assist the company in developing their operations. Knowledge as well as the degree in this field
has a great importance to give their best, as it an assessment which can be made of the talent and
skills they possess. In this context, it may not be wrong to say that majority of the individuals
employed in the hotel are well educated and have a degree in hotel management. But for
ensuring that they give optimum performance for the company, authorities will be required to
take a variety of steps that will enable them to extract the best performance from their employees
(Bao, Chen and Zhou, 2012). This is on referring to the ABC1 system of social grading where its
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statistical means are segregated in six fundamental arenas to specify their distinct social status
and occupation as depicted in the below figure.
TASK 6
2.1
The local government of UK is very close to general public and assist in providing them
the services by opening small local wards and municipalities. The structure as well as operations
of UK government have a great impact on the activities performed by Marriott hotel. The
policies determined by the legal authority influence the services rendered by the company.
Further, there are mainly five types of local authorities in UK which includes district council,
metropolitan districts, country council, unitary district and London boroughs (Trkman, 2010).
These are the legal authorities formed to make sure that all the activities held in the country are
under the legal norms. Like if Marriott needs to increase their branches in one or two more cities
than they have to take legal permission by these authorities so that it is been opened by fulfilling
all the legal documents. Further, the local government has also taken several measures so as to
encourage tourism in the economy.
Further, UK government has also introduced with several policies and laws which has
proved beneficial for the growth of Marriott. Moreover, they have also made several
modifications in rules and regulations which every company needs to follow. This has made high
impact on the planning and performing the operations of the company. Whereas to save
8

environment local government has issued various laws whose core motive is to save nature and
Marriott hotel has to comply with it. Timely Co2 emission has to be checked from the buildings
of firm and company has to obtain license for different things like maintaining proper quality in
its services (Dirks, Huchet and Ribault Eds., 2012).
TASK 7
2.2
EU is considered as the political and economic union which includes 28 states. Further,
the operations of EU are been determined by super national institution. The people involved in
this union have the core objective to develop the regulations for the countries which are included
in the European area. Further, from the analysis it has been found that the law which are been
developed by EU has a high impact on the organizations. The legislation was made by the EU for
the labour who are working in several service or product providing organizations. It mainly
functions in the interest of the staff members working in the firm (Lim and et.al., 2010). Under
this, it was determined that the employees must be provided with adequate working environment
so that they can work in an efficient manner. Moreover, it also protects them from being
exploited by the employers. Therefore, it can be said that this policy has great influence on
Marriott hotel as they have to make several measures to provide the staff members with adequate
working environment. Further, they also have to check the safety and security measures for the
employees working in the organization. Thus, it can be possible by appointing executive which
can check the environment so that the organisation can provide with best workplace.
In addition to this, EU has also developed with competition policy in UK. This policy
assist in developing healthy competitive environment in the country. Under this policy they
determine that the organization has to use fair and suitable techniques for attaining the
competitive edge in the market. By applying this policy, the firm becomes restricted for using the
ineffective techniques for competing with other organization in the hospitality industry that is
purely in the nature of provisioning distinct form of services to the users. Moreover, this results
in powerful business to follow the ethical practices while making the strategy for competing with
other organizations in the same industry (Chittithaworn and et.al., 2011).
9