Unit-20 External Business Environment Assignment
People who are employed in hospitality sector face comparatively tougher situation when it comes to social stature. The impression of working in hospitality sector and other related tourism and leisure sector is the reflections of facts which are present on the ground level at workplace. Few factors which play key role in determining the image of the work are conditions of workplace, amount of wage or compensation, social structure, amount of professionalism at workplace, and status because of the job. Interaction of the companies with each other, both within the hospitality sector and also with the outside sector also matters in determining the social structure of the employees. Employees at InterContinental Hotels Group try to compare the factors with other similar industries and measure their social structure with respect to other peers. However the company makes sure that the employees should understand the sector is labour intensive and they should not feel underestimated or develop any sort of poor image (Hoque, 1999). In most of the developing countries employees face unfavourable condition in hotel industry and the factor gets coupled with lower payment, it gives rise to lower esteem for themselves and also from outsiders. InterContinental Hotels Group makes sure to understand the social structure of its employees before hiring them. The practice is uniform across all geographies and places of operation. Social structure is the way people lead their lives differently in various social contexts. The human resource department at Inter Continental Hotels Group hires employees carefully and trains them according to the company’s requirement, but keeping in mind that the employees’ social structure should not play a role in their job (Wood, 1997). Inter Continental Hotels Group practices giving importance to employees by proving timely information about business performance and company’s business strategies so that everybody is aligned with a same organisational vision. Proper communication is given utmost importance at the company and employees are made aware about international customer trends and developments in the hospitality sector. It treats the lower level employees in such a way that they can develop their soft and hard skills in order to excel at their workplace.
The major UK hotel group which I choose is Inter Continental Hotels Group plc. The company follows a business model which suits its organisational vision and long term strategies. The business model which is termed “asset light” is followed by the hotel, through which it has ownership in a limited number of hotels. However the company has management contracts and franchising agreements and it has helped in the growth of the business. The business or organisational structure is to own, manage and franchise the hospitality business. The business works on the fundamental of making best use of outsider’s capital and being able to deliver stable and quality stream of revenue income. Almost 85% of the company’s hotels are being operated under the franchising model, and rest majority of the hotels are operating under the management contracts. A very small number of hotels are actually owned by the company. The company takes responsibility of the branding and marketing activities for all the hotels operating under various ownership models. The flagship Intercontinental Hotels are owned by the company, and the rest brands are given opportunity to reap benefit of the company’s management dividend and expertise. The companies which are operating under the InterContinental Hotels Group plc fall under the beneficial ownership of the group. It has hotels spread across different countries and continents, including presence in the UK, the United States, Hong Kong, and France. The company also works towards increase awareness about environment in order to gain implied benefit from its activities of corporate social responsibility.
The company follows the regulations of the countries wherever it has presence. In few jurisdictions the tax rates are multi-levelled and comparatively complicate to follow. Some local government require the hotel to abide by certain social norms in order to keep security and other social factors. Other major factors of running a smooth business are also influenced by the local governing authorities’ requirement. A number of such regulations affect affordability and availability of capital required, provision of suitable business sites, business planning and development of business under franchising and management agreements. Other factors such as market saturation and consumer behaviour also matters while dealing with different local governments.
The European Union was founded to foster trading relationship between the participating members. The economy policy which is rational and helpful provides mutual beneficial business environment. The decisions are centralised through the centralised decision-making machinery, which are made for the trading with foreign entities (even in the Europe but outside the EU). Some of the proficiencies possessed by member countries are encouraged to be shared with the other members. Moreover centralised decision making power makes the lobbying capability of the EU members even stronger. The EU doesn’t hamper the member countries’ tendency towards getting closer with non-EU members in term of trade and mutual beneficial matters. However it is difficult to comment on the success rate of providing a multifaceted liberalisation by the EU (Zielonka, 2006).
European countries, especially members of the European Union are historically known for the service sectors, and advanced manufacturing sector. But the role of service sector in enhancing the importance of European economy has been seen in a number of exhibitions. The role of service sector is very important in terms of providing employment opportunity for most of the workers. With advent of EU, there has been increase in the free movement of services and goods. The positive effect on the free movement of labour and capital is also significant. With open opportunities, business and service sector firms have taken steps towards being competitive enough in order to exceed each other in terms of quality and efficiency. The service sector has benefited from the single market concept. It has also resulted in improved efficiency, more investments, reduction in cost, and availability of labour and capital.
Pressure groups are non-governmental and mostly non-profit organisation working towards benefitting a particular cause of the political or social system. They do not have active political decision making participation, but they play vital role in influencing the political machinery of a country by lobbying or by pressurising. The groups are also known as lobby groups or interest groups. These groups externally play their roles in changing the policies of a government by not being part of it.
The British Hospitality Association is probably the largest and most influential pressure group present in the hospitality sector of the UK. It represents the interests of a number of sectors falling under the hospitality umbrella; hotels, leisure facilities, restaurants, and other similar organisations have their interests promoted through the association. The patrons of the pressure group are the large corporate from the hospitality industry, and also from the related but non-hospitality industries. Most of the pressure groups operate through a membership based system, which allows the individual members to represent their company or sub-sector in the hospitality industry.
An example can be exhibited in regards to the pressure groups’ role in active policy making. Action on Smoking and Health is a lobbying group which works towards increasing awareness about bad effects of smoking and other harmful health related practices. The group had long tried to pose a ban on smoking in the UK, which was opposed by the tobacco industry. But over a period of time, the lobbyists from the hospitality industry in coalition with other health advocacy groups were able to convince the health selection committee of the UK government. The results were partly shown in the practice by the British government. Recent actions taken by the pressure groups of the UK hospitality industries are towards cutting down the Value Added Tax for accommodation, meals, and tourism related services. The pressure groups have been successful in lobbying for tax changes, fee structure in some of the hospitality sectors, and rising up the minimum wage in the industry.Order Now