Case study Analysis: Business environment for the service sector (GHMG4002)

Module Title and Code: Business environment for the service sector (GHMG4002) Number of Components: 1

Component Weighting: Case study Analysis (Individual Task) 100%

Assignment Title: Case study Analysis

Assignment Deadline (Final Submission): Week 10 (10/11/2024) 5pm.

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Total Word Count: 2500

Introduction

The tourism sector refers to a wide range of organisations, services and businesses which can contribute to the growth of the industry (Rodríguez, Florido and Jacob, 2020). This is known for being able to contribute to the growth of the economy of the country and can result in the creation of jobs and development of enterprises. The market size of the tourism sector of the UK is US$41.29bn for 2024 and the rate of growth which is expected to be reached by the year 2029 is 2.48% (Statista, 2024). The environment of business of the tourism sector is considered highly complicated, and it will be examined in this report.

Sub-sectors of the tourism industry

There are multiple subs-sectors of the tourism industry. Food and beverages are a large part of the same, as its transportation and accommodation. This includes the travelling aspect of the industry. Recreation and entertainment are central to the industry, as this opens up the scope for gaining the interests of the people. Things like concerts, festivals, clubs and cinemas provide for the entertainment which the people look for, while the travel agencies, which are also highly important arrange these for the people. The airlines also work in close association with the industry and the tour operators are a part of the same.

Organisation types of the tourism industry

There are three main kinds of organisation in the tourism industry- public, private and voluntary. Private sectors include the businesses which are owned by citizens and not the government (Khan et al., 2020). The public sector falls under the government, who is responsible for funding the services and the product being put before the customers. The voluntary sector is one which includes things like the trust and the charities which are run on donations, sponsorships and fund raising. These are the main organisations of the tourism industry and each has their role to play in the development and growth of the same.

Company Background of The Galloway Hotel

About The Galloway Hotel and its vision, mission, and objectives

The Galloway hotel of the United Kingdom is located in Blackpool (Kayak, 2024). The hotel is 300m within Blackpool South and 600m within the Central Beach. The rooms are highly welcoming and there are flat-screen TVs and there are shared bathrooms. The nearest airport to the hotel is that of Manchester Airport which is 93km. The rooms are priced at £22 and there are multiple amnesties for the guests. These are the main services and products of the organisation. According to the guests, the hotel is not of a particularly good quality and the services are not up to the standards. The vision, mission, and objectives of the brand is to provide comfort to guests and improve their reputation in the operational market.

Size and Scope of The Galloway Hotel

The hotel is not particularly big and it only has 2 stars. While the location of the hotel is quite good, the guests complain that the services are not up to the mark. This means that the hotel has the scope to improve their standards significantly.

Stakeholders of The Galloway Hotel

The staffs of the hotel are the first stakeholders who are important considerations, alongside owners of the hotels. The customers of the hotel are highly important, as they are the main source of income for the company. This is followed by the community who is associated the hotel.

Global Factors impacting the industry

One of the factors of the tourism industry which is important is the safety and health of the guests. Ma et al. (2020) states the issues of poor health and safety have been an issue in the industry and this has been affecting the business. The pandemic has set of this to be a trend among the employees of the company and the issue of the lack of infrastructure have been highlighted in the industry. The rising temperatures have also been an issue and this has affected the seasons of the industry.

Shimizu and Okamoto (2024) have stated that the tourism industry has had to update their infrastructure to the latest needs of the market. The hotels do not always have the infrastructure to cater to the needs of the guests, like their medical needs. There are also the issues of poor transportation, visa and flight costs and issues and the high fares of the entire tourism industry. These are some of the problems of infrastructure and have to be dealt with by the tourism industry. The hotels of the country have been in collaboration with other institutions to make sure that they have the right infrastructure to cater to the needs of customers.

Globalisation is a trend of the industry which has been seen and this has shown all the ways in which learning the practises of multiple countries can help (Irimiás, 2021). This allows for cultural exchanges and the growth of the economy. This allows for the increasing of the awareness of the people and the services can be personalised for a wide range of people. This means that the hotel industry is able to have a clear understanding of the needs of a wide range of people who can be customers of the company. The hotel market of the UK is expected to reach a volume of market of US$21.40bn by the year 2024 (Statista, 2024). Due to globalisation, foreign tourists are likely to be present among the customers alongside domestic tourists.

Charkina et al. (2022) states the culture is a highly important for the tourism industry and this is one of the factors draws people in. Cultural tourism is a practise which has been taking place for the longest time. The issues which can often been found in terms of culture is the barrier of the same and tourists may not be comfortable with the cultural exchanges between all the countries. Having a sustainable growth is essential for the company is something which will take place when people are able to have a more open mind towards the culture.

Technology is a big driving factor of the tourism industry. These days things as small as reservations and bookings take place with the help of technology and this gives the customers the opportunity to have personalised experiences (Razzaq et al., 2021). There have been things like the making contactless payments and travelling and so on. The application of virtual and augmented reality has also been great additions to the tourism industry as these can give the tourists a more enhanced experience. The IoT technology improves the experience of the customers, control temperature and lighting and other things in the hotel, improving the experiences of the customers. One example of application of technology would be how internet has been applied in for increasing the sales of the company by 80% (Statista, 2024).

PESTLE Analysis of the UK

Political

The perception of corruption in the UK is 71, showing that the level of corruption in the country is not quite high (The Global Economy, 2024). The tourism industry can retain their profits and employ them for the purpose of the growth of the services and products. The competitiveness of the country is 81.20, which shows that the government and the business of the country are highly strong (The Global Economy, 2024). This shows that the tourism industry is likely to have a good standing in the country the country has the infrastructure to manage the same.

Figure 1: United Kingdom: Corruption perceptions - Transparency International

(Source: The Global Economy, 2024)

Economic

The rate of inflation of the country is 2.2% in the August of 2024 (Statista, 2024). This means that the costs of living in the country have lowered, showing that food and rent are likely to become more affordable. The rate of unemployment in the country stands at 4.1% as of July of 2024 (Statista, 2024). This shows that the tourism industry of the country can have a lot more people working for them. The living situation of the country has improved and there is still some unemployment, which means that the companies of the tourism industry have can gain a lot more profits.

Figure 2: Inflation rate for the Consumer Price Index (CPI) in the United Kingdom from January 1989 to August 2024

(Source: Statista, 2024)

Social

The population of the country stands at 68 million people, showing that the companies in the tourism industry can easily hire workers and have many customers (Statista, 2024). This also indicates that the companies will be able to have a good flow of working individuals and profits at the same time. The average disposable income of the UK is £34,963 as of the year 2023 (Statista, 2024). This shows that the population of the country now have the money they need to afford the services of the tourism industry.

Figure 3: Median annual earnings for full-time employees in the United Kingdom from 1999 to 2023

(Source: Statista, 2024)

Technological

According to Statista (2024), the rate of innovation of the country is 114.8, which was lower than the 119 of the previous year. This shows that the country has the scope to have many new technologies to cater to the needs of the tourists. The rate of penetration of the internet in the UK is95.3%, indicating, people can easily get information about the industry (Statista, 2024). The marketing tactics which can be used by the companies can also be easily communicated to the internet. These are some of the technological strengths of the country.

Figure 4: European innovation score in the United Kingdom from 2015 to 2023

(Source: Statista, 2024)

Legal

There are some legal requirements for employment in the country of the UK. The laws are Employment Rights Act 1996, Employment Relations Act 1999 and the National Minimum Wage Act 1998 (GOV, n.d.). The tourism industry itself is regulated by the Development if Tourism Act of 1969 (Legislation, n.d.). These are some of the laws and have to be followed by the tourism industry of the country. These are meant to make sure that the operations of the company will not be disrupted by unlawful acts.

Environmental

The Environment Act of 2021 is a law which is needed for protecting the air, water and the biodiversity of the country, and to reduce waste (Client Earth, 2022). This is a law which needs to be taken into consideration by the tourism industry.

SWOT Analysis of The Galloway Hotel

Strength Competent staff Good strategic location	Weaknesses Customer dissatisfaction Lack of infrastructure Poor management
Opportunities Website optimisation Addition of new technology	Threats Stronger competitors Changing regulations of the market

Table 1: SWOT Analysis of The Galloway Hotel

(Source: Created by the Learner)

The staffs of the hotel are highly competent and they have been responsible for making sure that the organisation can run well and the needs of the people of the same have been catered to. They have the skills needed for working in a hotel and this is strength of the place. Strength is the strategic location, which is the main attraction of the guests of the hotel (Kayak, 2024). According to Indeed (2024), one of the biggest issues of this place is the management. The employees have multiple issues with the management of the hotel and it is highly disorganised and there are issues with mismanagement.

This leads to poor quality of services, which affect the impression and experiences of the customers in the hotel. This is one of the things which have been affecting the growth and the performance of the hotel. This can lead to issues like delays in services, lack of communication with the customers and the employees, which lead to the poor usage of resources. The infrastructure of the company is also not particularly good, as this is not able to accommodate the changing needs of the customers. Some of the opportunities which are present are the incorporation of new technology and the optimisation of the website. This will satisfy the customers better and will increase the visibility of the organisation. The competitors prove to be an issue as the hotel business is a highly popular one and the UK has multiple well-established hotels. The regulations of the market can change suddenly, which would result in the hotel having to make massive changes.

Porter’s Five Forces of the UK

Forces	Impact
Competitors	High
Power of customers	High
Power of suppliers	High
Threat of new entrants	Low
Threat of substitute products	High

Table 2: Porter’s Five Forces of the UK

(Source: Created by the Learner)

The competition of the hotel industry is high, as there are many competitors in the market. Some of the best hotels of the country are Shangri-La The Shard, St. Ermin's Hotel, The Landmark London and so on (Trip Advisor, 2024). These are the luxury hotels of the country and are some of the strongest competitors of the hotel. Other competitors include hotels like Maldron Hotel, Hampton, School Lane Hotel, Novotel and so on (Booking, 2024).The presence of so many other options give the customers a significant amount of power over The Galloway Hotel, and this is also applicable to the suppliers of the hotel. The ratings of the hotel are not particularly high, and these are considered by customers before they book the services of the hotel. The substitute products which can affect the growth of the hotel industry of the country are things like the Airbnb, homestays and so on. These prove to compromise the market share of the company. New entrants cannot enter the market easily, as this is a highly resource intensive industry and this may not be available.

Impact of the external and internal environment on the organisation

The external environment of the hotel is relatively stable and this is due to the political and the economic conditions of the hotel improving. The risks of corruption are relatively low in the country and the rate of inflation has been reducing consistently. This means that the people of the country have more money to invest in the tourism industry, which shows that if the main issues of the hotel are addressed, they can gain a lot more customers. This needs to be done through marketing, and the fastest way to market in 2024 is digital marketing. This is possible due to the presence of a lot of technology in the market of the country, like fast paced internet.

There is a large population in the UK, indicating that there is a high chance that the hotel will be able to have a good growth of their domestic tourism. They can also hire many good talents if the management is taking the initiative to not be toxic. This will also help the hotel to avoid issues with the labour laws as well as the tourism laws. These are some of the factors and can affect the market of the UK. There is a lot of competition in the hotel industry of the UK, as has been noted previously. This is an indication of the fact that the customers can easily choose not to take the services of the hotel, and as it has also been noted previously, the standards of the services are not particularly high. Once the services of the hotel become outstanding, the customers and the suppliers alike will choose the hotel over the competitors.

Conclusion

In this study, the hotel industry of the UK has been examined. The external environment and the market of the same have been studied and The Galloway Hotel has been examined closely. The various types of organisations which can be found in the market of the UK have been noted and this has been followed by the development of the profile of the hotel. The strengths and weaknesses of the hotel have been noted, and the ways in which this works with the elements of the external market have been analysed.

References

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