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Business Environment

Understanding roles affecting business growth

Introduction To Business Environment

Business environment consist of both internal as well as external environment in which firm operates. It has strong connectivity with management and influence of changes taken in the several factors of environment. It affects overall operation of firm over a specified time span. Present report is about Marriot hotel which provides variety of services across several geographical areas. It manages business by the help of franchises so as to cater requirement of different types of customers. Further, report elaborates about uncertainty and risk prevailing in the business which affects overall operation of firm for long run. In addition to this, market analysis of firm is done by the help of PESTLE and Porter's five force model which facilitate management to plan accordingly so as to achieve long as well as short term objectives of company.

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Critically assessing Kotler and Caslione’s view

In the present era, uncertainty is the most prominent aspect which create barrier in the long-run survival of business. It affects overall production as well as profitability of the firm. There are several activities which are directly associated with Marriot hotel such as customer preferences, strategy of competitors and financial position of firm which is affected due to changes in the legislative policies (Cornuel, 2007). Owing to this, management of Marriot hotel needs to adopt effective strategies which facilitate to face these challenges and create competitive edge. Here, changing strategies of competitors has direct impact on sales turnover of hotel because of switching of customers from one to another brand. Further, strategy of competitors set limit for Marriot hotel gain attraction of customers. By this effect, management makes changes in the internal operation such as mission, objective and employment policies. Here, they also provide training to personnel so as to enhance their knowledge and skills which facilitate them to cope up with changing scenario (Viswanathan and Dickson, 2007). It proves to be effective to cater requirement of different types of buyers and give them higher level of satisfaction. It can be critically evaluated that planning in advance for the future uncertainty reduces chaos to a great extent.

Changing perception of buyers is also cause of instability whereby firm does not get constant rate of return. It creates barrier in the long run survival of business and also decreases profitability to a great extent. However, views of Kotler and Caslione's is appropriate because it is new normality of company by which management anticipate about future risk (Lihitkar, 2013). They remain prepared for risk so as to cope up with changing scenario. Under this, Marriot hotel keep on access to those data which provides information related to detail of customers such as their income, liking, preferences which facilitate to deliver good quality of services to them (Grimsley, 2014). It can be critically evaluated that preferences of buyers can be influenced by the marketing strategies adopted by the competitors such as lower prices. It creates barrier for Marriot hotel to cater their requirement in an effective way (Iqbal and Strong, 2010). Further, internal environment which included effective human resource management policies and competent employees who are directly associated with operations of Marriot hotel. They affect business of firm because of resisting change which leads to decrease sales turnover and decreases level of satisfaction among buyers. It can be critically evaluated that human resources management can tackle such type of changes in an effective by the help of giving monetary as well as non monetary rewards to personnel. Hence, these practices are normal for management of Marriot hotel which they keep in mind while recruiting personnel (Allen and Raynor, 2004). It facilitates them to provide time to time training and coaching to workers in order to deliver good quality of services to large market potential.

It has become normal for Marriot hotel to manage Turbulence and manage all the business activities in an effective so as to ensure optimum utilization of resources. It can be critically evaluated that environment is main consideration which bring sudden changes in the operation of firm by earthquake or physical damage to company. It hampers overall performance and creates uncertainty for management and decreases profitability to a great extent (Blaževic and Jelušic, 2006). Further, increasing awareness of people towards food is also prominent aspect by which management have to take care while preparing food. Otherwise, it affects overall productivity of company and reduces rate of return of the Marriot hotel. However, it has direct impact on growth and development of business.
Critically evaluate the PESTEL framework

PESTLE consists of several factors such as political, economic, technological and legal. Along with that environment is also main competent of external environment which has indirect impact on operation of Marriot hotel (Iqbal and Strong, 2010). The whole competent of Pestle comes into external environment of firm which is focused with great care. Political factor of Marriot hotel affect its business to a great extent because company is operating in several countries and the changing party leads to change the working of the same. Here, government imposes restriction on the entry and exit of firm in the market which set limit in order to increase overall rate of return. In this, government of UK works with EU which has removed trade barrier that promote services of Marriot over the globe. It facilitates to increase productivity as well as profitability (Wessels, 2006). However, other countries where company is operating may not allow for the same which creates barriers in the long run survival of business with greater profitability.

Another factor as economic is the most important element that affect sales turnover of Marriot hotel. Under this, EU as well as parliament of UK keeps on changing regulatory policies in order to increase revenue for the government. It facilitates to promote other service industries and ensure infrastructural development (Free Trade Agreements, 2014). Here, legislative authority increases rate of interest which increases revenue for sources of finance that has direct impact on productivity of firm because it will maximize expenses (Al-Najjar, 2012). It can be critically evaluated that high rate decreases purchasing power of buyers and they cannot afford such as expensive service of Marriot hotel. It minimizes rate of return and employees cannot be able to achieve their give targets.

Social factor which includes taste and preferences of customers which keeps on changing that affect present productivity of company. It forces management to bring improvement in the present working and adopting effective strategies so as to cater need of buyers in an effective way. Owing to this, firm conduct market research that keeps them up to date regarding liking and preferences of buyers that facilitate to increase sales turnover of company (Bracci and lauran, 2013).

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Technological changes also obsolete present work and increases cost of production for Marriot hotel. Under this, management of company need to adopt newly launched technology in order to get complete wedge in the marketplace other buyers may shift from one to another brand. For acquiring highly equipped technology, Marriot hotel need to invest large amount of money and also provide training to workers (Dickinson, 2013). It enables them to cope with changing scenario and increase overall rate of return of Marriot hotel. However, it hampers productivity and ratio of loss at the initial stage but gives long run benefit to company.

Legal factor as one of the component of business environment set limitation for increasing profitability of firm. Here, government of UK makes several regulations related to human resources such as Equality Act, Human Rights Act which facilitate to ensure well being of employees. It is also imperative in order to reduce employee's turnover and deliver good quality of services to customers (Moon, 2010). Further, corporation has to ensure about compliance of regulatory framework then enables management to ensure about ethical conduct of business and increases overall rate of return (Baldwin and Scott, 2013). However, if management does not abide by the law, authority and employees can take legal action company. It creates barrier in achieving long as well as short objectives of Marriot hotel and decreases profitability of firm. It also affects goodwill of company and management cannot ensure about continuous flow of production. Here, company provides safe working environment for employees and ensure their safety by providing basic amenities. It proves to be effective for Marriot hotel because employees work with zeal and enthusiasm so as to achieve long as well as short term objectives of firm (Stackelberg and et.al., 2010).

Environment is the foremost factor for Marriot hotel which affect business indirectly. Under this, management of company fulfills regulation of laid down by the government of UK which included social responsibilities and other responsibilities towards society such as making environment clean. However, non-compliance of legislation affects overall business for long run. Hence, it is the prime responsibilities of management of Marriot hotel to abide by the law and provide safe environment for general public (Kew and Stredwick, 2005). It creates competitive edge of firm in the marketplace and attracts large number of investors in order to expand business over the globe.

Globalization is perceived as threat or opportunity for the Marriott hotel

Marriott hotel is one of the largest hotels as it has opened many numbers of branches in different country. Basically, globalization means that when a company is opening its chain around the world and even it carrying out its business. In case of Marriott hotel which is famous for its hospitality services (Cornuel, 2007); It is the opportunity for those company and the organization which manages their business by using appropriate technology and the strategies. There are different types of factors which are needed by the company to expand their business and make them global. The most important in globalization strategy is to manage the business properly. There is large amount of profit which is attached to the globalization. In case of the Marriott hotel, which is successful in the business for this it is beneficial for globalization. But sometimes, it is also a threat when there is large number of competitors which is prevailing in the market and the target consumers are same (Viswanatha and Dickson, 2007). In case of small hotels as they target the middle level consumers, for them globalization becomes a threat. But in case of Marriott hotel as the customers are mostly the rich class consumers so, for them globalization is useful in expanding its target market and the areas.

Even sometimes, it is perceived as a threat for the hotel which is working in that country. As Marriott hotel is known for its services and the facilities which it provides for it is beneficial as the customers it is targeting are a small section as the major target are the top class people with high level of income (Lihitkar, 2013). The main important factor which arises in case of globalization is that the demand and preference of the customers is there for the Marriott hotel. In this case, there are several countries which have opened its demand for Marriott in their country. For this, it is beneficial for the company as it helps the company to earn profit. But from the point of view of the government and the country sometimes, it is opportunity from them otherwise, it is the threat. In case of US economy, globalization is a threat to them because of the declining form. Even at the times, there are very less resources which are available in the country and then also globalization is a threat for the economy. But it is opportunity for the country which wants to expand their economy. There are various economies which need to expand and has to be developed (Iqbal and Strong, 2010). For their economy, globalization is very necessary. For Marriott, it is the opportunity as it gets helps in expansion of the market. This will help to earn more profit. Besides this, the business will expand.

There are certain factors which are responsible for the globalization as a threat and as an opportunity. When the globalization strategy is applied in the company, all the factors are analyzed which can act as an opportunity and as a threat. But in case of the Marriott hotel, globalization strategy acts as an opportunity because it is a brand name for the consumers and the resources which are needed by the Marriott hotel is also available (Allen and Raynor, 2004). Like in case of the demand factor, it also was having very much demand by the consumers. So for them, globalization is opportunity for the company. Even the demand of the consumers have been increasing as they are more likely to travel so for Marriott hotel, it is best as if they adopt the globalization strategy. The services which are provided by them are very much famous and they have created brand name. So, for them it is an opportunity so that they can provide these services to different consumers. Till now, it has proved to be opportunity for the Marriott hotel as it has created success in every country and even expanded its market share and increased the target customers (Blaževic and Jelušic, 2006).

Michael porter model in Marriott hotel which ought to seek opportunity to create shared value

Michael Porter model is one which helps to create competitive advantage for the organization. There are 5 forces which helps the Marriott hotel to achieve the competitive advantage for the company. It is very useful for the Marriott hotel as through this model, it helps to know about the competitive factors and the sources which are prevailing in the company as well in the market (Iqbal and Strong, 2010).There are various competitors which are prevailing in the market. The first task is to analyze the competition in between them and even in the market. There is threat of new entrants in the market as there are large number of hotels which has been opening as the customer they are serving are the same. To create a competitive advantage and even there is opportunity that can help to create shared value of the company. By creating profit for the company as well as increasing market share the Marriott has to fulfill the duties and the social responsibility. But at times, the duties and the responsibilities are not fulfilled at this time. To compete with the other hotels company adopts unethical practices like comparison advertisement to increase the target customers (Wessels, 2006).

Michael Porter focuses on the other area which is threat to substitute. There are various types of substitutes which are available in the market. In this case, the major substitutes are small hotels, motels which are not serving the same customer but still they are the substitutes for the Marriott hotel (Al-Najjar, 2012). To compete with them there are several opportunity which can create shared value for the Marriott hotel. Most of the times to compete with them the lower the prices affect the economy of the country as the economy does not get the proper income from the tourist which is coming in their country. To create shared value Marriott hotel has taken steps to fight ethically as it has increased the quality of the services which is provided by them(Bracci and lauran,2013).This is the practice which is creating benefit to the company as well as the industry. There are majorly three ways in which the company can create shared value for the country. The major one is enhancing the quality of the services which is provided by the Marriott hotel.

Another factor in which Marriott hotel can create shared value for the company is increasing the productivity through value chain. In case of increase in the productivity, it has increased the quality of the value chain. In case of Marriott hotel which mostly uses the natural resources for giving the services to the customers (Baldwin and Scott, 2013), they can increase the quality of the product and the services through good suppliers. Even the cost of the services can be reduced through the effective suppliers and quantity which is provided by it. This is basically the bargaining power of the suppliers as Michael Porter says that when there are large number of suppliers, the bargaining power is high(Whattington, 2013).

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The opportunity for the Marriott hotel to create shared value for the company is through the products and the markets (Moon, 2010). The Marriott hotel can serve the existing market by making the products according to the needs and demand of the customers. To enter new market, it requires more finance as well as search for the target market. It is better for the Marriott hotel to serve the same customers and provides the facilities according to their demand. Michael Porter focuses on achieving the competitive advantage through the services or the product by analyzing the market. This is done by the Marriott hotel; it is successful because of the policy which has been applied in the hotel (Kew and Stredwick, 2005). It has increased the quality of the products with lowering done the cost. The services and the quality are not affected by the threats of the new entrants and the substitute which is present in the market. There are several opportunities which are having in the environment which can be grabbed and can be used to create shared value. These are the opportunity which is taken up by the Marriott hotel to create competitive advantage for the company. Besides this, by fulfilling all the social needs and responsibility of the country, the firm has gained competitive advantage.

CONCLUSION

From this report, it can be concluded that globalization is basically an opportunity for the Marriott hotel because there are large number of market and the target customer who are available for the hotel. Besides this, because of the increasing demand and the preference of the consumers, expansion is the opportunity for the hotel. Lastly, there are different kinds of opportunity which are available in the market through which the Marriott hotel has created shared value. It has increased the quality of the services and besides this, lowered down the prices.

REFERENCES

  • Allen, D. and Raynor, E. M., 2004. Preparing for a new global business environment: divided and disorderly or integrated and harmonious?.Journal of Business Strategy.
  • Al-Najjar, B., 2012. The determinants of board meetings: evidence from categorical analysis. Journal of Applied Accounting Research.
  • Baldwin, W. and Scott, J., 2013. Market Structure and Technological Change. Taylor & Francis.
  • Blaževic, B. and Jelušic, A., 2006. Modelling regional economic development. Kybernetes.
  • Bracci, E., and lauran, M., 2013. environmental management and regulation: pitfalls of environmental accounting?.,management of environmental quality: an international journal.
  • Cornuel, E., 2007. Challenges facing business schools in the future. Journal of Management Development.
  • Dickinson, G., 2013. SMEs and the business reality of Estonia's tax regulation environment.,International Journal of Law and Management.
  • Gabriel, S. A., 2004. Quality of the Business Environment versus Quality of Life. The review of economics and statistics.
  • Iqbal, A. and Strong, S., 2010. The effect of corporate governance on earnings management around UK rights issues. International Journal of Managerial Finance.
  • Iqbal, A. and Strong, S., 2010. The effect of corporate governance on earnings management around UK rights issues. International Journal of Managerial Finance.
  • Kew, J. and Stredwick, J., 2005. Business Environment: Managing in a Strategic Context. CIPD Publishing.
 

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