Report: Analyzing the External Business Environment of Marriott Hotel

This report provides an in-depth analysis of the external business environment of Marriott Hotel, a leading hospitality chain. It begins with an introduction emphasizing the importance of the external environment for organizational success and outlines the use of the PESTLE model to scan the extern...Read More

Elements Of The External
Business Environment

Table of Contents
Introduction......................................................................................................................................3
PESTLE model: ..............................................................................................................................3
Competitors and their assessment: ..................................................................................................4
Customers and their need: ...............................................................................................................5
Conclusion: ....................................................................................................................................7
References........................................................................................................................................8

Introduction
Environment plays an important role in the success or failure of organisation as it directly
affects the working performance of company (Rosemann and vom Brocke, 2015). External
environment refers to all the external factors which are handled by the situations of the market.
For this report, Marriott hotel is taken for consideration. It is one of the largest hospitality chain
in the world which has more than 6520 hotels all over world and headquarter in Maryland,
United State Of America. Techniques like Pestle model will be use to scan the external
environment. Competitors and their strategy will be explained with functional example.
Customers behaviours, needs will be elaborated.
PESTLE model:
Every company has to do external scanning to find out the threats and opportunities
which they could face in the future. There are different types of models which company uses to
scan their environment but Pestle is one of the trusted and helpful model which is explained
below,
Political factor: Marriott being the hotel industry has many political factors which
affects organisation. Government charges great amount of tax on the luxury and star category of
hotels. It is also affected by international relations and political climate in famous tourist
destinations (What is PESTLE Analysis? A Tool for Business Analysis, 2018).
Economical factor: All the economic factors of country like inflation rate, currency
fluctuation, interest rates ,etc. (Botha, Kourie and Snyman, 2014) which have a important impact
on organisation. All over the world, Marriott hotel own wide number of tourist arriving for the
various purposes like conferences, workshops, business dealings, etc. So Marriott can customise
its travellers because tourist bring great amount of money with them.
Sociological factor: Culture and climate of company where business is operating, age
discrimination, labour cost, disposable income, attitude towards life ,etc. comes under
sociological factor. Marriott have to change their products and its specifications according to the
latest trends which is running in UK so that they can capture more market and customer.
Disposable income of UK people is increasing due to rise in economy which is an opportunities
for Marriott hotel.

Technological factor: It states all the latest technology, R&D, automation etc. If
company are equipped with all these factors then it would be easier for them to improve their
product quality and reduce their cost to a certain level. For instance, if Marriott is using lean
management or TQM in their hotel operations then it would automatically increase customer
experience engagement which is good for the company.
Legal factor: It depicts all the laws, rules and regulations which is made by the
government. It helps in improving the working environment of Marriott which increase
motivation of employees resulting in higher productivity and efficiency. Different laws like
labour law, employment laws, working hours laws, working environment laws ,etc. which should
be follow by Marriott hotel to avoid any legal issues (Schaltegger and Wagner, 2017).
Environmental factor: Environmental factors includes weather, climate changes,
natural resources etc. Main focus of every company is to to save the environment from where
they are getting the natural resources. Marriott should invest on green energy, renewable energy
so that they can play their part in saving the environment and improve their goodwill
simultaneously.
Competitors and their assessment:
Competitors are the one who is running their business in the same industry and fighting
with each other so to gain market and customer share so to attain competitive advantage over
others (Navarro-García, Arenas-Gaitán and Rondán-Cataluña, 2014). It is really hard for any
owner to enter into this market as there are already big players like Marriott, Hilton, Holiday
Inn ,etc. which are already fighting with each other to grab the market. For entering in this
segment, organisation will have strong financial resources, good brand value, need international
expansion, etc. so it is difficult for any organisation to match the competition with Marriott hotel
or to enter into hospitality sector but still different types of barriers is explained below,
Different types of Barriers for a new competitor is explained below,
 Hospitality industry requires huge funds to run their business as resources like
technological, human resources, equipments, marketing activities etc is important to beat
the competitors or gain new market share. Other than that acquisition cost of any
customer is high due to which ROI will be less.
 Customer can only switch their previous brand and goes to other Hotel if their product or
services which differentiate from other competitor. Proper research is required before

entering in to market which incurs high cost and time consuming which is negative for
any company.
 Legal barriers that can affect Marriott are status of services provided by them. The factors
include health and safety laws related to security of customers and hygienic food. In
many countries there are certain age laws related to child labour laws , etc. which are to
be followed effectively and efficiently to avoid any type of legal issues.
Different types of competitors:
There are two types of competitors which are explained below,
 Direct competitors: In this when two or more than two are providing same products and
services to the same customer and market base. For instance, Hilton hotel is taken as a
direct competitor.
Strengths Weakness
Their quality of products and services is better
as compare to Marriott due to advanced
techniques which are used by company like
technology integration in food processing
department so to increase the quality of
products.
Price of products is high due to which
customers prefers to stay in other hotels which
have low prices.
 Indirect competitors: These are the one who indirectly set the prices of products like
Vendors, farmers etc (Kuratko, Hornsby and Covin, 2014). For instance, Foremost
product company is taken for consideration.
Strengths Weakness
Most of the market is covered by them due to
low prices of raw materials as compare to their
competitors.
Company has low margin of profit which
demotivate owners of company as rate of ROI
is less.
Customers and their need:
Different types of customers of hotel are given below,
Family groups

Needs: Safety while staying, big room spaces, delicious foods etc.
Behaviour: Possessive about their family members, choosy about foods etc.
Decision making process: Decision is make according to the price and the quantity of
products.
Business person
Needs: High speed internet speed, switch for charging, peace in the room etc.
Behaviour: They are more focussed on quality of product rather than on quantity.
Decision making process: Fast decision maker.

Conclusion:
From the above report it can be concluded that, company should scan the environment so
to take the opportunities and prepare for the threats so to gain competitive advantage over others.
Any new company should conduct a market research before entering in to any market as it will
help them to find out the factors which should be considered by company. Products should be
made by the company according to the customers needs and preferences as they are the who will
consume it.

References
Books and Journals
Botha, A., Kourie, D. and Snyman, R., 2014. Coping with continuous change in the business
environment: Knowledge management and knowledge management technology.
Elsevier.
Kuratko, D.F., Hornsby, J.S. and Covin, J.G., 2014. Diagnosing a firm's internal environment for
corporate entrepreneurship. Business Horizons.57(1). pp.37-47.
Navarro-García, A., Arenas-Gaitán, J. and Rondán-Cataluña, F.J., 2014. External environment
and the moderating role of export market orientation. Journal of Business
Research.67(5). pp.740-745.
Rosemann, M. and vom Brocke, J., 2015. The six core elements of business process
management. In Handbook on business process management 1 (pp. 105-122). Springer,
Berlin, Heidelberg.
Schaltegger, S. and Wagner, M., 2017. Managing the business case for sustainability: The
integration of social, environmental and economic performance. Routledge
Online
What is PESTLE Analysis? A Tool for Business Analysis. 2018. [Online]. Available Through:
<https://pestleanalysis.com/what-is-pestle-analysis/>.