Impact of External Business Environment Factors on Marriott Hotels UK

This report provides a comprehensive analysis of the external business environment impacting Marriott Hotels in the UK. It delves into the structure and influence of local government, examining taxation, inflation, and employment policies. The report then explores the role and impact of the European Union (EU) on the hospitality sector, focusing on economic, legal, and employee-related aspects. Furthermore, it assesses the role of pressure groups and their influence on the hotel's operations, including their impact on public awareness, environmental protection, and employee welfare. The legal framework in the UK is also examined, contrasting the English and Scottish systems. The report evaluates legislative policies of the UK and EU. The report also discusses different types and characteristics of businesses within the hospitality sector, along with the legal processes for company formation and dissolution, and the organizational structures that determine responsibilities and control within registered organizations.

External Business
Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 2............................................................................................................................................3
2.1 Structure, operations and influence of local government on UK hotel group.......................3
2.2 Role and influence of EU and its impact on business and service industries........................5
2.3 Role of pressure group and their influence............................................................................6
2.4 Legal framework in UK and the differences between the England and Scottish systems....7
2.5 Evaluate legislative policies of UK and EU..........................................................................9
3.1 Different types and characteristics of business operate within the hospitality sector.........10
TASK 3..........................................................................................................................................11
3.2 Legal process necessary for the formulation and dissolution of registered company.........11
3.3 Structure and responsibilities that determines the responsibilities and control within a
registered organization...............................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment refers to sum total of all the factors affecting organizational
functioning. Organization gets influenced both internally and externally. External business
environment encompasses into it macro factors such as political, social, economic, technological,
legal and environmental factors which directly or indirectly affects the planning, organizing,
directing and controlling of different segments of a. Hospitality industry is one of the fastest
growing industries having significant share in Gross Domestic Product (GDP) of UK (Aziz and
Yasin, 2010). With the extensive domain of its working, it functions in wide range of sectors
such as hotels, tourism sector, events, catering and many more with the estimated contribution of
around £49 billion in 2014 to UK’s GDP. With considerable extended services in each area, it
undergoes changes with the development in economic conditions prevailing in the country.
Report is prepared to elucidate the impact of external environment on the operations of
organization running in hospitality industry. For that purpose, Hotel Marriott is taken into
account. It is the leading hotel group chain with branches all over the Globe.
TASK 2
2.1 Structure, operations and influence of local government on UK hotel group
Structure and operations of local government in UK
With the long history of legacy to govern and control the constituencies, UK possess
planned and systematic structure of hierarchy of government officials. Based on the westminster
system, UK has parliamentary form of government. IT is segmented in three parts central, state
and local governments (Needle, 2010). Local government further runs either in one tier system of
the two tier system.
Two tier system
Two tier systems includes in it county and districts councils. County councils are the
smallest unit of government which is directly linked to the public and address issues such as
waste disposal, libraries, social care, passenger transport, education, highways and many. District
councils is having larger are than this (Lucky and Minai, 2012). In this it includes the
fragmentation of several counties that is responsible of housing, recreation, environmental
health, planning applications, local taxation collections and many. Divided into smaller areas it
performs many functions with respect to the maintenance of it. Additionally, it helps in
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safeguarding the environment so that factors of sustainability can be assured. Also, local taxes
are collected in order to support development of infrastructure for the welfare of society. Apart
from it, local council is also responsible for licensing act to develop new business, food safety in
order to assure hygiene factor at restaurant and food corners. They are even responsible for
cultural promotion in order to cater the attention of travelers across the globe.
One tier system
One tier system prevailing in UK is refereed as unitary authority. With the prevailing of
only one tier system there are large towns and cities under section. These can be city councils,
borough councils, county councils or district councils. Being the single tier system authorities are
responsible for all the operations such as social care, transport, housing leisure and recreation,
transport planning, highways, local taxation collection and other related (Teece, 2010).
Influence of local government on hotel group
An operation of local government has the significant influence on the working and
functioning of the hotel group in different aspects.
 Taxation policy: Local government is entitled to collect taxes and generate revenue with
it. It has laid many taxes on the areas related to the hospitality industry such as sales tax,
income tax, corporate tax, service tax and many. These taxes directly affect the
profitability and revenue generation of hotel group (Weske, 2012). It makes the
management to make changes in tariffs and charges of the services extended by the
organization.
 Inflation policy: Organization such as monetary policy of committee of bank of England
decides the interest rates and other bank rates. It affects the investment decisions taken by
the hotel group. Low interest rates attract large number of investments which leads to the
expansion of the venture and bring betterment to the q1uality of services.
 Employment policy: Local government of UK caters to the enhancement of the efficiency
and talents of the employees working in different sections of the industry (Nofsinger and
Wang, 2011). For that purpose it has laid the policies and regulation for their protection
and addresses all the related issues such as their salaries, wages safety and precautions,
providing healthy and resourceful work culture and many other related. It enables the
Hotel group to comply with all the laws and regulations and maintain legality.
4

2.2 Role and influence of EU and its impact on business and service industries
EU is an international organization which runs to stabilize the condition of all the
member countries with respect to different areas such as economic, social, political, trade and
environmental. It is the organization in which freedom and liberalization is offered to all the
member countries such as free movement of factors of production, relaxation in tariffs, custom
duties etc so that they can working and operations of these member countries can be optimized
and can be led to growth and development (Aula, 2010). Main role for the formation of EU is to
boost the trade activity within member state by developing common policy. This helps in
developing sound base for trade through which growth of business is witnessed. Further, it helps
in moving employees within member state freely so that businesses can run their operation
effectively. Another role to EU is contribution to peace, responsible neighbor, defending human
right, global security and other related. As the policies and regulations are laid down on the
member countries, impact get trickles down to the organization operating in the country. It
influences the strategies and policies framed by it in various dimensions significantly profit
margins and revenue generation. With the 78% share of service industry, hospitality sector also
holds considerable amount. Consequently, it gets affected by the working of EU.
 Economic aspects: EU is an organization with certain relaxation offered to the member
countries such as low rate of tariffs and custom duties, free movement of factors of
production, low rates of interest at the banks existing in the member countries. With this
there is the provision to the hotel groups to hire the efficient employees from all over the
globe (Filatotchev and Nakajima, 2010). With the inculcation of efficient employees in
the organization services are delivered in the effective manner and get the work done
lucratively.
 Legal aspects: With the laying down of rules and regulations by the organization in
different aspect, there is significant effect the organizations and their working. Laws such
as for the consumer protection that is to charge and fare the services according to their
quality, assure the authenticity and accuracy of the segments and other. It has also laid
laws related to the environmental issues such as maintenance and conservation of climate
and atmosphere from the harmful impact of industrial working (Malhotra and Temponi,
2010). Some of them are like while providing the entertainment facilities to the travelers
and visitors they are strictly restricted from harming the environment.
5

 Employees: Employees play vital role in the operations of organization and their
successful execution. Realizing the significant count of the employees working in the
country EU has laid the laws and regulations for the protection of employees and
increasing their efficiency. Allowing the free movement of the factors of production has
reduced the costing. Further, there is the law framed to provide better job opportunities
and growth prospects to the employees. In that regard training programs and development
sessions are organized (Wong, Lai and Cheng, 2011). It enhances the skills and talents of
workers and gives them exposure towards the advanced world and areas.
2.3 Role of pressure group and their influence
Pressure groups are the group of people who are politically neutral who works to
influence the opinions of country in reference to the enhancement of growth and development in
the country. They play vital role in bringing amendments and improvement in the political
system. They have wide area of working that influences different aspects of the country. As a
result, they also affect the business operations and their working. Hospitality in one of the major
industry running in UK. It is the customer oriented industry that whose working is based on the
choices and preferences of the customers (Local Government structure, 2016). Along with the
providing quality services their aim is to abide by the laws and regulations laid down by the
government and other legislative bodies. Pressure group plays the vital role in stabilizing the
situation in the country and also maintains the legality. Pressure group can affect the operation
within hospitality sector in either way. In case, if pressure group witnesses that policies of
government is affecting the operation of hotel, then they merge with hotel management to not
follow the regulations. On the contrary, if pressure found that hospitality organization is harming
the interest of society or environment, they it raises voice against the hotel management and shut
down the business. Considering this, advantages of pressure groups are raising public awareness,
voice for justice, have sound knowledge and information about the cause, support from society
and other related. However, limitations include inevitable biased view, no components of
balanced argument, breaking of law due to undesirable tactics and other related. Pressure Group
work in the following manner:
 To ensure that all the laws and obligations laid down by the government bodies are
followed in the efficient manner and organization keeps the consideration of all
components.
6

 Their duty is to keep in consideration that there is no damage to the environment and
atmosphere. Hospitality industry provides the services such as entertainment and
adventure trips that affect the natural resources of the country in a very significant
manner (Sim and Teoh, 2011). Hence, pressure group ensures that environment is
protected and organization does not compromise with the exiting situation.
 Pressure groups primary aim is to bring improvement in the economy and the political
situation prevailing in the country. They keep on check the existing environment of the
work and culture that binds the employees to work within. They regularly monitor the
status of the facilities provided to the employees and their situation to protect their
interest and equality.
 Pressure groups also influence the laws and regulations laid by the government and other
legislative bodies (Piecyk and McKinnon, 2010). Political and administrative structure is
altered by the influence of the pressure groups as they pressurize the legislation to change
the existing laws and bring improvements in it with respect to the improvement in their
situation prevailing in the country.
 Pressure group comprises specialist and expertise of different areas that have the key
focus on the improvement of the efficiency of the employees and their capabilities. It
helps in the enhancement of the profitability and revenue generation of organization that
is the selected hotel group Marriott. In that group employees are working from several
segments that is marketing, finance, human resources and many. It becomes imperative
for the organization to improve the quality (Lee, Olson and Trimi, 2012). Frequent
monitoring and checking enables the organization to conduct training programs,
development sessions and other methods that gives them exposure to the quality and
better services.
2.4 Legal framework in UK and the differences between the England and Scottish systems
The Legal framework of UK is divided in three different systems which are Scotland,
Northern Ireland and English & Wales. The UK parliament enacts and controls all the regions
except Scotland by its laws and legal framework. Scots law is a hybrid system that includes civil
law and common law. Types of laws:
7

 Common Law: it is made by judges sitting in courts, applying their knowledge and skills
of legal precedent to the case and making judgment for it. It is also said to be “Case law”
as it is taken from the judgment made in previous case because the same judgment has to
be made if similar case came up in the court (Chiaroni, Chiesa and Frattini, 2011). The
doctrine of precedent means that lower courts are bound by the higher courts judgments.
 Statute Law: it is prevailed by the Parliament and will always supersede common law. If
there is a fight between two statutes, the later one exists. Abortion is chiefly governed by
statute law (Abortion Act 1967) and the power to consent is judged by Mental capacity
Act (2005) and English Common Law.
 European Law: UK is in the list of members of European Union hence its regulations
have to be officially incorporated into English Law before the courts have to apply them.
UK applied the principles to the Human Rights Act 1998 which places right on all courts
to interpret legal framework so far as needed with the rights made in ECHR (European
Convention Human Right). So now a breach of such Right would go to UK courts rather
than European courts of HR in Strasbourg (Carroll and Buchholtz, 2014).
However, there is difference between the legal framework of English and Scotish which
is classified below:
 Responsibilities: in English laws, the responsibilities for regulatory requirements lie with
the applicable regulator. However, in Scottish laws, the regulator does not have the power
to prosecute.
 Charges against the Accused: in English Laws, charges are generally short and simple
which are normally accompanied by a separate summary of the case alleged against the
accused (Wang, Chen and Chen, 2012). But in Scottish laws, all the particulars of the
offense must be set out in charges.
 Evidence: in English laws, a single evidence works as a source of proof. But in Scottich
Laws, more than one evidence is required to prove the offense.
Basis English system Scottish system
Formal
cautions
Regulators need to conduct their duty
based on publish formal cautions
while carrying out prosecuting.
No such requirement is there in Scottish
system
Legal Here, child under age of 18 are Here, child under age of 16 are excluded
8

System excluded from legal cases.
Hotels and bar have permission to
serve alcohol 24 hours a days.
from legal cases.
Only hotels can serve alcohol 24 hours a
days.
Witness
statement
It plays a significant role while
carrying out hearing in court.
It doesn’t consider as evidence in the court
of law.
2.5 Evaluate legislative policies of UK and EU
Both the organization that in on national and international level caters to improve the
condition and situation of the working as a whole and segments in the proper manner. Both the
organization have different structure and different policies. Having same targets and intentions of
the working that is to bring improvement and optimization in the working, their approach and
methods are different in nature. UK's organization works to monitor the functioning of business
entities. There are laws such as competition act that checks the authenticity of the working of
trading partners and degree of legality maintained by them. Office of fair trading ensure that
there is no unfair trade practices undertaken by the organization engaged in the hospitality
industry (Chabowski, Mena and Gonzalez-Padron, 2011). Competition and monetary authority
enables the execution of mergers and acquisition in the prescribed way and legal formalities.
Further along with this there is certain organization under the legislation of UK that functions to
bring innovation and creative methods in the processing of trade activities. They aim to inculcate
different practices in the operations so that industry gain more profit and boost expansion of
venture. With this manner, impact also trickles down to hospitality industry as a whole which
further experiences profit and enhancement in share at GDP (Beynon-Davies, 2013). On the
other hand European Union has laid certain laws such as Environmental protection act that
commands all the countries to minimize the carbon emission, the damage to the environment.
Further, as per the law of EU, it is stated that supply chain management of the industries is to be
ensured with the maximum facilities. It also demands the safety assurances and health measures.
Additionally, UK government has introduced varied laws and regulation for safeguarding
the hospitality business. It developed Minimum Wage Act, 1998 and Environmental Protection
Act etc. that aids in running the business in desired manner. On the other hand, EU legislatives
practices Right to Equality and Right to Employment. This aids in developing healthy relations
9

among employee and employers. Such laws aids in safeguarding employees from getting
discriminate at workplace.
3.1 Different types and characteristics of business operate within the hospitality sector
A business stands for an organization that uses economic resources or provides goods and
services to the customers. There are different types of business entities described below within
the hospitality sector, which is as follows: Sole Proprietorship: In this type of organization the business is owned, run and managed
by one individual. It is the simplest form of organization, easy to establish with least cost
incurred (Aula, 2010). The liabilities associated with the business are possessed by the
single owner. The business terminates on the death of the proprietor. He/she undertakes
the risks of the business. It includes professional people, service providers, small
businessman and traders, retailers. Here the financial activities are maintained separately
from the owners personal financial activities. For e.g.: local convenient stores. Main
advantage is full control over business and less tax amount to pay. Contrary, it has less
capacity to boost profit and need to face competition from giant organization. Partnership: A partnership regulated business has two or more persons to contribute
resources into the entity. The partners join together to carry on a business venture for
profit. Each of the partners contributes according to the agreed ratio. They contribute
capital, property, resources and workforce and share profits and losses of the business in
proportion (Björklund, 2011). This type of business formation is divided on the basis of
liability. The limited liability partnership limits the personal liability of partners while in
the unlimited liability all are projected with unlimited risks and liability. For e.g.: John
Lewis Partnership. Main benefits are sharing risk and more resources to boost the growth
rate. Limitation is sharing of profit and dilutes control. Corporation, the business organization has separate legal personality from its owners.
The ownership lies in the hands of shares of the stock. The corporation is represented by
shares in the stock market. The stockholders enjoy limited liability and enjoy limited
contribution in the working of the company. The board of directors represents the elected
group from the stakeholders. Marriott Hotels are an ample example of such business
structure (Filatotchev and Nakajima, 2010). The stockholders are protected from liability.
10

The employees of the organizations who are its shareholders take the advantage of some
tax-free benefits such as health insurance.
 Voluntary Organization: The voluntary organizations are also termed as non-
governmental organizations. These are voluntary framed organization to contribute for
social welfare in the society. It contributes and participates for awareness and working of
various social, political and cultural issues. For e.g.: NHS. It has advantage of tax relief
and easy funding. However, limitations of this organization are restriction from
government on the use of fund. Also, there is no scope of equity investment.
TASK 3
3.2 Legal process necessary for the formulation and dissolution of registered company
To maintain the consistency and legality in the country, there are certain laws framed
with reference to it in all the aspects. Similarly, there are some obligations and regulations laid
down by the legal framework that decides the proper procedure to pen a new company of
venture. In this regard a sequence of activities is required to be followed by it.
 Information: Name of company available in eyes of law i.e. it should not be resembling
to the existing name.
 Necessary documents: Following documents are made for registering the company by
considering the above described information.
◦ Preparation of Memorandum of association (MOA): It is the formal document that is
signed by all the parties engaged in the treaty. This contract is the evidence of all the
aspects laid to proceed by both the parties (Carroll and Shabana, 2010). It states that
parties are ready to proceed for further processes. It encompasses into it all the
liabilities and other details such as location of the firm, its description and their share
of profits and working.
◦ Article of association: It is the formal document which states all the rules and
regulations that are supposed to be abides by the parties engaged in it. It lays
foundation for the process of company by directing the way.
◦ Form 10 and form 12: these are the documents that lay certain information with
respect to the members such as their personal and professions details like birth date
11

and other related (Lucky and Minai, 2012). Further, form 12 mentions the clauses
about the bankruptcy and other projected issues that can be faced by companies.
 Registration with the company office: Above stated documents are submitted with
registrar of company house.
 Issue of certificate of incorporation: Here, certificate is issue of incorporation.
Dissolution of Registered Company
Liquidation can be defined as a process when company becomes involvement and hence cannot
pay debt as and when it comes. For this aspect, initially liquidator is appointed (if voluntary the
by company and of by creditor or court then appointment will be done by respective party).
Further, Member's voluntary liquidation is prepared under the consent of all the members of the
company in which causes related to the loan and debt are resolved and inked. It mentions the
credit statement of all the finances that are taken with the mutual decision of all the creditors.
Liquidator generates funds by disposing the asset of the company in order to pay for debt on the
priority basis.
3.3 Structure and responsibilities that determines the responsibilities and control within a
registered organization
There are different types of company structure namely vertical and horizontal. In vertical
structure, power is emanate from top to down and this signifies the distribution of power also. It
possess benefits in terms of better delegation of authority, well defined responsibilities and better
management. However, such organization is dependent upon strong leader on top and weak
upper management may leads to poor decision making. On the other hand, horizontal
organization has less chain of command and it is arranged on parallel level. Due to this, each
department work as SUB (Strategic Business Unit) that aids in completing work with high
quality. Main problem is that employees in such organization need to learn more skills to work
with ease.
A registered company followed the particular format in which a particular hierarchy of
members is followed. At the apex level there is the CEO under which all the processes are
undertaken. Then a board of directors is made which comprises all the members of significant
designation such as senior management of different departments and their segments. These
mangers supervise their subordinates in their working. The board of director is responsible for
the formulation of strategies and policies to enhance the profitability and revenue generation.
12

There is the secretary of company who is entitled to increase the sales and profit of the
organization in different segments along with the consolidation of large number of customers
and trading partners. Further there are shareholders who have invested their finances in the
organization to undergo the process and operations (Wheelen, T.L. and Hunger, J.D., 2011).
CONCLUSION
External business environment refers to the total sum of all the factors that affects the
functioning of organization. It influences the different components of the organization such as its
planning, organizing and strategic formulation. Strategies are framed under the influence of all
the factors and the prevailing conditions of the organization. Report is prepared in the context of
hospitality industry and organization Marriott is taken into consideration. With the present study
it can be inferred that it gets influenced by the structure, operations of the UK economy.
Operations of the local government and European union. Apart from these international and
national political entities it also gets affected by pressure groups. Further, a framework is
discussed in which a new company is made.
13

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