Unit-21 External Business Environment Assignment

AC2.4: Analyse legal framework within the UK, identifying the main difference between the English and Scottish system

The parliament in the United Kingdom is responsible for enacting legal system in the English & Welsh legal system, and the legal system in Northern Ireland. Supreme Court of the United Kingdom is the apex authority in the legal framework. The immediate subsidiary courts of law are divided into civil division and crime division. The hierarchy is followed by the High Courts of Justice comprising the Queen’s Bench Davison, Family Division, and Chancery Division. The bottom row of the UK legal framework comprises county courts, crown court, and magistrate’s courts. The UK legal framework is largely dominated by the practice of the English Common law, which practices legal delivery processes through derivation form former cases. There is also the Statute Law which is superseded from the common law. The Statute law is enacted by the British Parliament. Being part of the European Union the UK also abides by the European Laws. Those are already absorbed and incorporated in the British legal system. Legal framework in Scotland is independent of that in the other jurisdictions under the United Kingdom. The Scottish Parliament has right to reshape and pose new regulations in the country. The country has a Supreme Court as the apex authority. It is followed by the High Court of Justice, Court of Session, and Court of the Lord Lyon. The bottom row of the legal frame work is comprised of Sheriff Courts, Scottish land courts, Tribunal, and Justice of the Peace Courts (Kiralfy, 1967).

AC2.5: Evaluate the UK and EU legislative process as it affects a major UK hotel group’s business and services at both national and local level

InterContinental Hotels Group plc has been reshaping its operation related strategies and modifying business requirements with accordance to the UK and EU laws. According to the EU laws and the UK regulation, employees of the group have to be shielded under Working Time Regulations. The regulation has resulted in the company’s active control and monitoring of minimum rest time, maximum working time, minimum wage policy and off-hour policies (Zielonka, 2006). It has impacted the human resource policies and has forced the company to take policy shift on order to keep the organisation aligned to the regulations. The National Minimum Wage Act warrants the companies to pay a minimum hourly wage to employees between 18 to 21 years (most of who work on part time basis), which is more than the actual service offered by the employees. It has direct impact on the hospitality sector, and on the company. Employees of the company are also covered under the trade union bargaining agreement, which makes the human resource decision making more careful. It is important for the company to maintain good relationship with the trade unions and similar organisations in the UK and other European countries. The EU and the UK regulations mandate the company to have a continuous and cautious approach towards the external factors which may have adverse impact on the employment of its workers (Christiansen & Larsson, 2007; Lucas, 1995).

A major economic policy of the UK after the debt crisis is the austerity drive which has caused tighter expenditure in consumer market. It has direct impact on the company’s business and if it continues then it may pose further adverse impact on the business. Other major change is the tighter policies in money lending adopted by the UK lending authorities, which makes it difficult to get required capital for business expansion (Christiansen & Larsson, 2007).

AC3.1: Assess the different types and characteristics of business that operate within the business and services with a focus on the hospitality sector

The hospitality services and business covers a number of activities and businesses under its umbrella. It covers expansive types of fields within the service sector itself, and also few additional fields under tourism sector, and a few sports services. Fields such as hotel, restaurants, event planning, transportation, lodging, theme parks, and cruise line service fall under the canopy of hospitality services. In the UK hospitality sector the various fields are present can be broadly categorised into accommodation services, food and beverage services, betting and gambling services, sports and leisure services, and travel and tourism services. The hospitality sector along with tourism and sports sector in the UK provides employment to more than two million people and operates through about 220,000 organisations of various sizes. The business organisations in the UK hospitality sector provide food and beverage services through restaurants, pubs, clubs, and bars; accommodation services though hotels and lodges; batting and gambling services through casinos and gambling websites; and leisure services through theme parks.

The primary characteristics of business in hospitality sector are to increase usage rate or occupancy rate. The occupancy rate determines the frequency of customers visiting the facilities and hence reflects in the health of the business. The factor which determines the occupancy rate is the available leisure time with people and available income they have to spend on leisure and travel activities. Hotels and restaurants put much importance to old and classic places in order to generate an image in the market place which suits their business purpose. Pubs, bars, clubs and certain theme based restaurants need modernised facilities to ensure the service quality is up to date and matching the customers’’ expectation. The hospitality industry is famous its fast paced business activities and innovation at work every day. The sector demands flexible and skilled employees in order to cater to wider customers across the globe.

AC3.2: Discuss the legal processes necessary for formation and dissolution of a registered company

Forming a registered company in the UK involves a number of legal and administrative steps to follow. The process can be exciting and at the same time cumbersome in few cases. The first thing to decide is the company structure. There are various ways to own the company: sole ownership, ownership through partnership, limited liability partnership or limited company. The business owner must decide his or her best suitable format of ownership structure. The selection of business location is the next step to decide. Lease terms and other ownership related charges must be resolved before taking a property for business purpose. Planning permission for the new business entity is also required for smooth initiation of business process. Next step is to decide the sources and terms of financing sources. Mortgage related legal formalities and equity related legal steps should be decided by the owners. Level of taxes and tax related periodical formalities are important to deicide; systems must be at proper place to file taxes properly. Insurance is necessary for a business which covers the risk related to the workplace, employees, company assets and customers visiting the business facility. It is also important to have a clear idea about legal duties related to the goods and services offered by the business. The legal process requires the register company to decide upon the contract terms of the business. Legal terms about product liabilities and permission for promoting the business ideas also need to be decided in order to avoid future legal complexities. If the business activity involves a number of innovations regularly happening while conducting the business, then it is important to protect the intellectual properties and hence shielding the business ideas. Company logo and design of the name must be registered to avoid illegal copying of intellectual right. Products and certain services can also be protected intellectually though legal rights. If the business is a result of the franchising model then it is important to be clear about the previous franchisee’s liabilities, if any. A license to trade is very primary to obtain. Keeping the business aligned with the employment laws is also important (Cheffins, 2001). The laws of employment are constantly changing because of the European Crisis backdrop and increase in employment related issues across various sectors.

Dissolving a business also involves a number of steps. The first requirement to close the registered business is to stop the trading activity of the firm for at least three months. The company must not change its name in the last three months. The company must not be involved in any sort of legal proceeding, or there should be no proposed legal proceeding which may occur after the business is wrapped up. The company should not dispose any of its rights or properties before getting dissolved. If the company has directors, then they must agree unanimously to the decision of sealing off the business (Leech & Leahy, 1991).

AC3.3: Analyse the structure and processes which determine the responsibilities and control within a registered company

The structure of control and responsibilities are very critical for a business as it gives the corporate directions and is often important in deciding the company performances. The control over the business can be held through various ways such as sole proprietorship, partnership, limited company, limited liability partnership or hybrid structure (Smith, 1990). When the business is owned by a sole owner it is under the control of one shareholder. The sole shareholder decides the business directions and activities including every aspect of business operation. He is solely responsible for any wrong doing by the business and various processes of the business follow his decision. Hence it is important for the proprietor to take steps carefully in order to avoid any legal or operational tangles. If the company chooses its control structure to be shared by the founders or a number of entrepreneurs then it can pick out to be a limited company. The business entity and its owners are separate by the legal frameworks, which mean the business losses will not impact the limited shareholders beyond their personal interests in the business. The owners or shareholders gain from the company’s good performance either in the form of dividend payment or salary received from the business. They can also be paid by transferring the repayments to the director’s loan account. In partnership format, the partners involved in the business enjoy the freedom of making independent decisions but they possess risk of other partner’s wrongdoing. Processes of profit sharing and capital providing (or further investing) and capital drawings need to be formalised among the partners. If the Limited Liability Partnership is the structure of the firm, then the individual owners or partners have greater security of not being responsible for the things done by others. Some businesses choose to be hybrid in their ownership and control format. They change the main holding company as Limited Liability Partnership in order to keep the primary business intact; other subsidiaries of the business are controlled through limited ownership enabling the business to take risk taking and active business steps (Pedersen & Thomsen, 1999).

In a registered company with board of directors, the decision making is central and it is with the directors. The relationship of directors with other stakeholders of the business, such as shareholders and employees, is important. The decision making process affects business clients, suppliers, and the company’s employees. The responsibilities of the business are with the company’s higher management and the board of directors who represent the interest of all stakeholders. Various business activity and related decisions of the company including investment, R&D expenditure, ownership structure, and capital intensity determine the direction of the business, and are decided by the people who control it (Leech & Leahy, 1991).


In the changing scenario of the global economy it is important to understand the macro-economic trends. The business in the UK economy is greatly affected by the role of both local government and the EU policies. The hospitality sector has been reshaping its strategy because of the changes in socio-economic trends in the region. People who are employed in the hospitality sector are getting influenced by the trends in the UK, as it affects their employers. However they continue to contribute towards the GDP of the economy.


Blake, A., Sinclair, M. T., &Soria, J. A. C. 2006. Tourism productivity: evidence from the United Kingdom. Annals of Tourism Research, 33(4), 1099-1120.

Capie, F., & Webber, A. 2013. A Monetary History of the United Kingdom: 1870-1982. London: Routledge.

Cheffins, B. R. 2001. Does law matter? The separation of ownership and control in the United Kingdom. The Journal of Legal Studies, 30(2), 459-484.

Christiansen, T., & Larsson, T. (Eds.). 2007. The Role of Committees in the Policy-process of the European Union: Legislation, Implementation and Deliberation. Camberley: Edward Elgar.

Hoque, K. 1999. Human resource management and performance in the UK hotel industry. British Journal of Industrial Relations, 37(3), 419-443.

Jenkins, A. K. 2001. Making a career of it? Hospitality students’ future perspectives: an Anglo-Dutch study. International Journal of Contemporary Hospitality Management, 13(1), 13-20.Order Now

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