Contemporary Challenges in Global Business and SME Sector in Hong Kong

This report analyzes the contemporary challenges faced by the global business environment, with a specific focus on the impact on the SME sector in Hong Kong. The introduction highlights the increasing demands, high competition, and customer expectations that businesses face, particularly in the hospitality sector, using Evergreen Hotel as a case study. The report delves into contemporary issues such as ethical considerations, corporate social responsibility (CSR), and the digital era. Ethical issues, including franchise operations and employee loyalty, are explored, along with the importance of CSR activities like environmental protection and employee well-being. The digital era's impact, including the need for technological adaptation and online services, is also discussed. A PEST analysis is conducted to assess the political, economic, social, and technological factors influencing the SME sector. The report then examines the broader effects of globalization on SMEs, emphasizing the opportunities and challenges of international expansion. The conclusion summarizes the key findings and recommendations for navigating the evolving global business landscape. References are included to support the analysis.

Contemporary challenges in the global
business environment and the impact on
the SME sector in Hong Kong

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
CONTEMPORARY ISSUES..........................................................................................................1
CONTEMPORARY CHALLENGES IN GLOBAL BUSINESS ENVIRONMENT....................1
Ethical issues..........................................................................................................................2
Corporate social responsibility...............................................................................................3
Digital era...............................................................................................................................4
PEST ANALYSIS...........................................................................................................................8
GLOBALIZATION IMPACT ON SME SECTOR.......................................................................10
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Contemporary challenges are related with recent time, or in other words problems which
are facing by company in present days. Hence, it is essential for them to overcome from these
kinds of difficulties. As it can affect an organisation either directly or indirectly. When company
is doing their business at global level then they can face many challenges in front of them. It can
influence an international business in various ways, such as increasing demands, high
competition, maximum cost, too much expectations of customers and so on. Evergreen Hotel is
operating their business in Hong Kong and in addition they are doing their business in many
other nations (Zhang and et. al., 2016). Therefore, they are facing many troubles. This report is
going to describe that there are many difficulties which are facing by firm and it will includes
ethics, digitalisation and corporate social responsibility. To determine external problems,
manager can conduct PESTLE investigation because it can affect firm in broad manner.
CONTEMPORARY ISSUES
It can be defines as any idea, topic or event on a provided topic which is related to
present day. Contemporary problems can be determined in any kind of interest. Similar to this,
firms that are running their business in hotel sector are facing various kinds of difficulties in the
present scenario. It will comprise many forms of troubles, such as lack of staff members, new
technologies, less capital, high expectations of clients and so on. But foremost issues are to
utilize unique method, less satisfaction of buyers, maximum production cost, broad competition.
These all factors can provide impact to growth and success of Evergreen Hotel (Contemporary
issues, 2017).
According to James and Prout, (2015) there are several sorts of contemporary issues in
hotels which are facing by them, it will include social media, minimum wages, limited services,
increase of cost and so forth.
CONTEMPORARY CHALLENGES IN GLOBAL BUSINESS
ENVIRONMENT
There are many kinds of issues which are facing by Evergreen hotel, are mentioned as
beneath:
1

Ethical issues
In hospitality sector, satisfaction of client is fundamental priority of manager. Way by
which they are doing their business, customers are must for them. They have to be friendly with
their guests, thus they can attract towards company. As a result, firm can enhance their reputation
and incomes. But there are several ethical problems which can be face by them. Major difficulty
which is facing by them, when franchise organisation of Evergreen is doing their operations with
off balance books. If prices of any overhead is force to marketing fund then it will enhance their
revenues. Therefore, if profits of an enterprise is increasing then this will improve their market
share (Xue and et. al., 2015).
Another problem is honesty and loyalty, it is required that each and every individual who
are working in company has to do their work with honesty. It is must for them to be loyal for
their customers. Unnecessary salaries should not be provided to workers as it will develop
conflicts at workplace. Along with this, if an association is not doing their work ethically, then it
can provide impact on their reputation (Hospitality ethics, 2017). It is fundamental for an
employer to pay salaries to their labours as per their working hours; rather than their age, caste,
colour etc.
Instead of all of this, if an organisation do their work ethically then, they can easily take
benefits from their competitors at competitive world. This will aid to improve their goodwill at
marketplace. If an association is doing their ethically, then they can set a good example of it.
Along with this, it aids to maintain healthy relations with their staff members as well as clients.
2

Corporate social responsibility
It is essential for each and every kind of company to accomplish CSR activities into their
business. If they do it in an adequate way, then it will assist them to compete their competitors at
marketplace. As a result, they will enhance their revenues easily. Responsibility of an association
is not only for their customers but also employees. It is must for an enterprise, that not to harm
their surroundings. For this purpose, they can reduce wastage and additional cost.
Along with this, it is necessary for Evergreen Hotel to maintain health and safety of their
staff members at premises. Additionally, they need to provide best services to their guests; thus,
it cannot affect their health. Manager has to give best quality of food and beverages to their
customers. Hence, it will aid them to attract numerous clients towards them (Höchstädter and
Scheck, 2015). They have to do their business fairly without any misrepresentation.
3
Illustration 1: Ethical issues
(Source: Hiller, 2015)

It is required for an organisation to follow each and every law which is associated with
their business. As indicated by wages act, employer has to give an appropriate salaries to their
workers; thus, they can maintain their living standard. It is must for superior to cater safe
working surrounding to labours; therefore, they can accomplish their task effectively. For their
protection, manager can provide training to them. It will give them motivation and along with
this, they will complete their task more effectively.
Rather than this, by accomplishing corporate social responsibilities an organisation can
easily maintain their goodwill at marketplace. For above stated purpose, they need to reduce
wastage and protect environment in an effective way. Along this this, they can improve their
productivity and sales. This will enhance their growth and advancement.
Digital era
In modern time, each and every kind of company is using new technologies into their
business. For marketing they are utilizing unique tools, such as internet, social sites and so on.
Not every individual is familiar with digital methods; therefore, they will face many difficulties.
4
Illustration 2: Food wastage in hotels
(Source: Tuppen, 2014)

As now almost all firms are providing their services with assistance of internet. Younger people
know that how to use it, but the old ones do not know (Peng, 2016).
Similar to this, in an association entire staff members don't know about digitalisation. For
this purpose, manager can provide training to them which will assist them to improve their
learning. It will enhance additional cost of hotel. As quality is a major problems; so that, if
company is giving online services to their clients then it is must for them to maintain it
effectively. If it is not appropriate, then it will decrease customer base of company.
There is maximum requirement of fund for Evergreen Hotel, as they are going to start
their business on internet too. Hence, it is required for them to update their data and information
on their website timely. As a result, clients will easily acquire recent info.
If Royal Green Hotel is using new techniques and methods into their business then, they
can compete their competitors at marketplace. They will easily book rooms of customers, with
aid of their websites. It increases flexibility at workplace. Along with this, company will provide
some additional offers or discount, if people online booking.
5

6
Illustration 3: Digitalisation
(Source: Bannister, 2015)

7
Illustration 4: Global flow in digital age
(Source: Manyika, 2014)

PEST ANALYSIS
Environment is dynamic in nature, thus it is essential for manager to identify their
surroundings in an effective way as, it can affect business either directly or indirectly. There are
two kinds of environment micro as well as macro (Johnson and Schaltegger, 2016). Micro
factors can influence internally but macro elements can provide impact externally.
To determine macro components, Evergreen Hotel conduct PEST analysis. It will include
political, economic, social as well as technological. It can be discussed as below:
Political factors: It is fundamental for hotel to be aware about political circumstances of
each and every nations, in which they are doing their business. Along with this, firm has to be
sure that they have an effective position in country or not. Evergreen hotel is always ready to
face issues which are associated with political segment, as it can affect organisation either
directly or indirectly. All this is irrelevant for hotel, if it is not affecting business. Therefore, laws
and regulations of Hong Kong are not influencing success and development of Evergreen inn.
Furthermore, they are providing direction to company; thus, they will achieve their desired
targets in an adequate way (Seethamraju, 2015).
Instead of all of this, an enterprise is doing their business in many countries; so that, they
have to follow laws of every state. They need to make an effective cooperation amongst
regulatory bodies. Political elements can comprises tax policies, employment laws and so on.
8
Illustration 5: Growth of Evergreen Hotel
(Source: Hay, 2017)

Economic factors: Evergreen Hotel is much stable in regards to economy; hence, they
need to increase their services to provide best to customers. This component is not only related
with intrinsic situation of firm but also nation's economy. Before taking any decision for
association, manager has to identify their economical elements. If an enterprise is doing their
operations in well manner, then it is essential for them to decrease unwanted cost. Employer of
company need to determine opportunities to take benefits from their competitors at marketplace.
Framework of association has to be adequate; therefore, there rivals cannot copy it. Along with
this, if needs and wants of buyers are high then they need to accomplish it; as, it assists them to
enhance their incomes (Rattan, 2015).
There are several examples of economic factors, such as inflation, interest rate, GDP
trends and so on.
Social factors: It is essential for company that no do any kind of activity which can
affect their goodwill in society. Therefore, it is required for each and every type of association to
consider their surroundings before taking judgement. Along with this, services which are given
by Evergreen hotel has to be accepted by individuals. Manager of firm can conduct some
activities which assist them to create an effective relationship with society. As a result, they can
improve their profits as well as market share.
Rather than this, hotel needs to accomplish demands of every customers, as it can differ
as per their age or gender. Now days, almost all person has their own life style which they want
to satisfy. Many examples related to social factors, such as demographics, ethical issues and so
forth (Kasemsap, 2015).
Technological factors: In modern days, if an enterprise wants to survive for long term,
then it is required for them to utilize new or unique methods into business. In this context,
Evergreen hotel is using new methodologies in their firm which will aid them to compete their
rivals at marketplace. It will help company to enhance their security system in various areas of
hotel such as lobby, corridors and lifts. Therefore, it is must for them to update their technologies
timely and make sure that everyone is happy with modifications. Additionally, it will provide
growth as well as development to Evergreen hotel and as a result, they can easily increase their
reputation at market.
Organisation is utilizing new methods for marketing, it will include internet, social sites
and so forth. With assistance of this, manager of firm can easily communicate with their clients
9

and it will aid them to determine demands of their customers i.e. domestic as well as foreign
(Oparaocha, 2015). As a result, they will accomplish it within a specific time span and compete
their competitors. Some example of technological factors are innovative items, global
communication, licensing etc.
GLOBALIZATION IMPACT ON SME SECTOR
Globalization portrays to entire economic exercise which is related to world. By using
this term, company can do their business in many nations and along with this determine various
opportunities in foreign market which will assist them to improve their market share.
Additionally, they can take benefits from their competitors.
Globalization can affect small business enterprise in distinctive manner. Therefore, it
gain too much attention in global circle from past years. If organisation is doing their work
internationally then they will acquire maximum chances for growth and development. Along
with this, as they are expanding their business then they will cater more job opportunities to
people. Many country is only giving limited items to people but with assistance of this they will
get various products from other nations. Additionally, market range is also high.
Instead of this, there are many disadvantages of this, such as if organisation is quickly
increasing their business then individual will consume more junk food; as a result, it can cater
negative effect on their health. Several companies are outsourcing many items from other nations
then it can reduce job opportunities; so that, it can provide impact to economy of Hong Kong
(Marques, 2017).
There are some other competitors of Hotel Royal Green, such as Marriott and Panda.
Marriott is using new techniques and methods into their business, which provide hike to them in
their growth and development. Rather than this, Panda is also using digital techniques, but they
are not able to improve their customer base. Because their website or online bookings are not
effective to attract people. Sometime it shows that all rooms are book but actually some rooms
are vacant. Therefore, this is not much proficient for them.
10

As indicated by this graph, it represents rates of room of hotel. It can be fluctuate as per
demand of an individual. Basically, at the season it will be high; therefore, manager will increase
the price.
11
Illustration 6: Room rates of Hotel Royal Green, 2017
Illustration 7: Hotel Tariffs in Hong Kong
(Source: Convention and Exhibition Industry in Hong Kong, 2017)

12
Illustration 8: Employment
(Source: Job vacancies, 2017)

GDP rate of Hong Kong:
CONCLUSION
As per above mentioned report it has been concluded that company is doing their
business on global level; therefore, they will face many challenges in front of them. It is required
for them to cope up from them; thus, they will get success and growth. In this assignment there is
a description about many problems which are facing by an organisation, such as corporate social
responsibility, digital era and so on. Along with this, to determine their external factors,
organisation can conduct PEST analysis; hence, they will develop strategies accordingly.
13
Illustration 9: Hong Kong GDP rate
(Source: Hong Kong growth, 2016)

REFERENCES
Books and Journals
Höchstädter, A. K. and Scheck, B., 2015. What’s in a name: An analysis of impact investing
understandings by academics and practitioners. Journal of Business Ethics. 132(2).
pp.449-475.
James, A. and Prout, A. eds., 2015. Constructing and reconstructing childhood: Contemporary
issues in the sociological study of childhood. Routledge.
Johnson, M. P. and Schaltegger, S., 2016. Two decades of sustainability management tools for
SMEs: how far have we come?. Journal of Small Business Management. 54(2). pp.481-
505.
Kasemsap, K., 2015. The role of marketing strategies in the tourism industry. Emerging
innovative marketing strategies in the tourism industry. pp.174-194.
Marques, J. C., 2017. Industry business associations: Self-interested or socially conscious?.
Journal of Business Ethics. 143(4). pp.733-751.
Oparaocha, G. O., 2015. SMEs and international entrepreneurship: An institutional network
perspective. International Business Review. 24(5). pp.861-873.
Peng, M.W., 2016. Global business. Cengage learning.
Rattan, J. K., 2015. Is certification the answer to creating a more sustainable volunteer tourism
sector?. Worldwide Hospitality and Tourism Themes. 7(2). pp.107-126.
Seethamraju, R., 2015. Adoption of software as a service (SaaS) enterprise resource planning
(ERP) systems in small and medium sized enterprises (SMEs). Information systems
frontiers. 17(3). pp.475-492.
Xue, X. and et. al., 2015. Environmental and social challenges for urban subway construction:
An empirical study in China. International Journal of Project Management. 33(3).
pp.576-588.
Zhang, X. and et. al., 2016. What drives the internationalization of Chinese SMEs? The joint
effects of international entrepreneurship characteristics, network ties, and firm ownership.
International Business Review. 25(2). pp.522-534.
Online
Bannister, D., 2015. Replacement of digitalisation. [Online]. Available through:
<http://www.bankingtech.com/283661/digitisation-replaces-regulation-as-top-concern-
for-retail-banks/>. [Accessed on 20th September 2017].
14

Contemporary issues. 2017. [Online]. Available through:
<https://www.hospitalitynet.org/opinion/4071106.html>. [Accessed on 20th September
2017].
Convention and Exhibition Industry in Hong Kong. 2017. [Online]. Available through:
<http://hong-kong-economy-research.hktdc.com/business-news/article/Hong-Kong-
Industry-Profiles/Convention-and-Exhibition-Industry-in-Hong-Kong/hkip/en/
1/1X000000/1X0018NP.htm>. [Accessed on 20th September 2017].
Hay, D., 2017. Political factors. Available through:
<https://blog.evergreengavekal.com/evergreen-virtual-advisor-unexpected-outcomes/>.
[Accessed on 25th September 2017].
Hiller, S., 2015. Issues in Hotels. [Online]. Available through:
<https://ehotelier.com/insights/2015/01/23/top-5-risks-and-security-challenges-for-
hotels-in-2015/>. [Accessed on 20th September 2017].
Hong Kong growth. 2016. Available through:
<https://blogs.wsj.com/chinarealtime/2015/09/23/hong-kong-growth-could-slow-to-1-in-
2016-ubs-warns/>. [Accessed on 25th September 2017].
Hospitality ethics. 2017. [Online]. Available through:
<http://www.besthospitalitydegrees.com/faq/what-is-hospitality-ethics/>. [Accessed on
20th September 2017].
Job vacancies. 2017. [Online]. Available through:
<https://sites.google.com/site/hongkongandsingaporejobs/>. [Accessed on 20th September
2017].
Manyika, J. and et. al., 2014. Global flow in digital age. [Online]. Available through:
<http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-
insights/global-flows-in-a-digital-age>. [Accessed on 20th September 2017].
Room rates of Hotel Royal Green. 2017. [Online]. Available through:
<https://www.hotelplanner.com/Hotels/214447/Reservations-Omni-Royal-Crescent-
Hotel-New-Orleans-535-Gravier-St-70130#HotelName>. [Accessed on 20th September
2017].
Tuppen, H., 2014. Reducing and managing food waste in hotels. [Online]. Available through:
<http://www.greenhotelier.org/know-how-guides/reducing-and-managing-food-waste-in-
hotels/>. [Accessed on 20th September 2017].
15