Unit-19 External Business Environment Assignment
This is a External Business Environment Assignment in which we discuss business environment and its external factors and concepts.
Service sector has traditionally dominated the European market. In the UK economy hospitality industry and other related industries are on the surge. Several sectors including hotel, restaurant, recreation and entertainment are contributing towards the country’s economy and GDP. The government policies and attitude towards the hospitality industry matter a lot because of their long ranging impact on the business. The business and services industry has been greatly affected by the recent developments in the social and economic changes in the United Kingdom. Various regulations and treaties imposed by trade organizations like EU, etc., have the potential to change the way business are operated in the UK. Government policies also play vital role in implementing the necessary regulations in the UK hospitality industry. This paper also covers the legal framework of the UK, and political environment in the region.
AC1.1: Analyse current government economic policy and its effect on business and services industries
Present economic policy of the UK government is largely affected by the global debt crisis. As a result of the global crisis the economic outlook has been toned down, and actual performance has shown the negative impact of the crisis. The austerity drive, which has been devised keeping 2015 as the target year, has resulted in decline in output because of steep decrease in the demand from the market. The latest budget policy indicated clear motive of the UK government towards more stringent austerity policies. The drive for austerity however is under question whether it will be helpful in boosting growth or it will act negatively impacting the economic downturn further. The government’s stand about the 2012 European Union summit in Brussels was not very clear whether it wants to move the economy forward or to wait and watch the results of the EU crisis. The unemployment is on the rise, and there is decline in demand and market output; the hospitality sector especially the hotel industry in the UK has played a vital role in reviving the employment and boosting the economic growth. However the taxation on hotels, pubs, restaurants and other hospitality industry components needs to be lenient in order to boost the morale of the people employed and invested in the sector. It will also result in high production output and hence better revenue contribution towards the overall economy. Taxation levels and red tape laws are in the need of immediate reform so that the industry can feel better in the difficult times (Lucas, 1995).
InterContinental Hotels Group plc is one of the largest hotel groups in the UK, and also in the world. The company owns and operates a number of brands across the globe, including Holiday Inn Express, Holiday Inn, Hualuxe, Crowne Plaza, Inter Continental, Staybridge Suites, Hotel Indigo, and Candlewood Suites. The company experienced its dependence on the confidence present in the prevailing consumer market, and the resulting sentiment among buyers. The company has been trying to do few updates about finding out new possibilities in its range of services, because of the tightened consumer spending which is a resultant factor of continuous prudence of the UK economy and the government’s austerity measures. The frugality started by the government is clearly affecting the consumer’s spending and has taken a shape of consumer frugality. The company has presence and operation in several continents and countries. Hence the foreign currency exchange rate is important in terms of realising the actual revenues and profits. The visa policy for employees is also important because the management moves around the globe to align the global network of business with the parent company’s strategies.
AC1.2: Discuss income, wealth, employment and occupational distribution in relation to the provision of business and services operation
The employment scenario in the hospitality industry is not a smooth ride. The new and incoming fresh candidate entering into the sector will experience a fast paced work environment and busy day at office. The employment will come with a number of roles in the same job; the same employee may have to play numerous roles in order to fulfil the demand of customers. The customer interaction level in the industry is very high; hence it requires human interaction and interpersonal skills to be sharp enough so that job will be easier. In terms of wage and salary the hospitality sector has traditionally been on the lower side. It offers one of the lowest figures in terms of average hourly wage per employee as compared to all other sectors. However the figure is better for few companies and for a few roles in the company. Better performers and employees with higher roles get better compensation. Because of the low wage and high employment opportunity, most of the employment is part time. About 40% of the employment in the hospitality sector works on part time basis to gain handy experience at work and earn quick money (Kelliher&Perrett, 2001).
There has been continuous rise in the employment of new recruits in the hospitality sector, along with the steep increase in the number of applicants seeking opportunity in the sector. In the UK context, power of hospitality sector in terms of employment is quite phenomenal. It can be hardly matched up by any other industry in generating new jobs in the entire UK.
The hospitality sector faces direct correlation with the rise in the country’s tourism attraction. For better tourist income the tourism outlook of the country needs to be robust and friendly. The UK travel and tourism sector is doing fine even in the time of financial frugality. Major sources of income are the foreigners who visit attractive locations of the UK. The number of incoming visitors did not see drastic changes in the recent times. However the expected growth rate has been affected. There has been increase in revenue generation from the meetings and conferences taking place in hotels. The meeting industry has been growing steadily with further promise of healthy growth. However along with the growth in the industry, the competition has been rising heavily. Number of new entrants and their initial low pricing strategies has made the playing ground even tougher (Novelli, Schmitz, & Spencer, 2006).
AC1.3: Assess the demographic trends that influence the employment patterns in the hospitality industry
The demographics trend which is noticeable around the world has the capability to shape the future of the hospitality industry in the UK. The changing trend suggests that in the last few years and also in the coming years, there will be anew pattern in the demand scenario of the hospitality sector. Two key demographic trends which holds key to change the industry pattern are baby boomer population which is getting old, and the advent of middle class population in India and China. Emergence of middle class will attract new customers who are healthy in spending towards travel and tourism (Jones, Comfort, & Hillier, 2006). The new patterns will be the key sources from the East, but they will change the market perception and trends in the West. The leaders and operators in the hospitality industry need to understand the changing pattern and hence modify their approach towards the global market (Theobald, 2005).
The service sector plays a large role in contributing revenues to the UK government. Especially the hospitality service industry dominates the contribution scenario. The size of the employment contribution is also high. Employment in hospitality sector in the UK is varied and wide just like the variety of the sector itself. But the employers face difficulties in recruiting better and high skilled workers. The UK labour force also faces the problem of immobility, because of the cultural barrier. Hence it is difficult to give everyone their choice of jobs in the market. There is an overall shortage of skills in the job market and hence the high vacancies in the organisations (Blake, Sinclair &Soria, 2006; Lucas, 1995).
However the hospitality sector needs to understand the changing pattern of demographics in the market. They need to carefully observe the changes taking place at global level and which hold impact making influence on the business. There is a need of increasing the workforce which is skilled and diverse. It is very important to possess culturally diverse workforce in order to appeal to the greater customer base which encompasses non-Western lifestyle and attitude. The new employments in the hotel industry need to have culturally sound knowledge, and ability to adapt to the new challenges occurring from cultural backgrounds. They need new approaches and require different actions at all levels of service. Hence it is very important to hire employees who understand the new pattern in the global travel market, and it is critical to teach the new recruits about the changes they need to adapt and encourage innovations at work (Jenkins, 2001).Order Now