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Unit 19 External Business Environment Assignment
Diploma in Hospitality Management
Unit Number and Title
Unit 19 External Business Environment
The hospitality sector has shown dominance in Europe over the past few years. External business environment has seen the increase in the hospitality industries especially in the UK (Becker et al., 2010). Accommodation, amusement and hotels have contributed largely to the growth of the economy. The long lasting effect of the hospitality industry has seen many businesses thrive. In the United Kingdom social and economic changes over the years have led to the business industry being greatly affected. Regulations and laws have been put into place to govern how the hospitality sector is run. The managers then also have the mandate to find out what the customers want and how they can be tailored to meet its specifications. The government then plays a crucial role in ensuring that all the businesses should follow and the proper standards that it should meet. In this report, the external environment of the UK will be analysed in details. Such an analysis is vital in enabling business organisations to come up with the appropriate or effective business strategies to achieve their goals, financially, non-financially or both.
2.1 Structure, operations and influence of local government on a major UK hotel group
Duties of local governments include promotion of cultural, economic, environmental and social wellbeing of their communities thus their involvement in the travel and tourism industry has to be connected to that. Local governments have the power to chart out their own tourism strategies that define their priorities and in what ways local authorities plan to make a contribution to the wellbeing of the community (Mathias, 2012). The strategy must include the outcomes of the community resulting from development of tourism, how they have been determined and the local authority’s contribution. Local Government Tourism plans make a contribution to tourism, regional and economic development plans. The Horsley Park Hotel in the UK comprises of its founder and shareholders and they make decisions in regards to its operations. Local government plays a role in promoting cultural and social welfare of the hotels community by contributing to costs incurred in advertising the hotel internationally. It is vital in supporting the hotel to achieve its overall goals and objectives. It protects it protects the company from unfair competition, which is likely to threaten its growth and development in the hospitality and tourism industry. Through the local government, the security of the hotel is assured as the government ensures that all people in the area and those that access the hotel are cleared in terms of any security threat. This is vital in making the work of the hotel’s internal security much easier. As a result, the company easily attracts the customers that it targets and this is vital in enabling it to meet it annual sales and revenues. The licensing norms of government in UK require that the businesses and hotel groups, who intend to sell, supply or serve alcohol in England and Wales need to obtain license from the licensing authority or council. The Foods Standard Agency is the regulatory body of government in UK to protect public health and interests of public related to food safety. Other influence of government on the hotel groups in form of regulations and legislation include applicable provisions of Food Standards Act 1999, Codex Alimentarius which is a set of international standards applicable on food and agricultural products for fair trade practices. The Environment Act 1995, The Clean Air Act 1956, Environmental Protection Act 1990 are some of the legislations imposed by the government in UK on the hotel groups for the protection and cleanliness of environment. All these factors will create the influence of government on the business of the company.
2.2 Role and impact of EU on business and service industries
The EU and tourism industries are interdependent on each other highly with large levels of expenditure and travels in both directions.EU impacts industries through its single market policy which allows free movement of labour, goods, services and capital within and outside the markets of European Union. The four policies are as follows:
- Free movement of goods: This policy ensures that the European Union is a single market which allows free movement of goods. The control on the flow of goods within internal market were abolished in the year 1993 resulting in making the European Union a single territory with internal frontiers. The external controls will be removed with the abolition of customs, tariffs etc. This will promote intra-community trade which contributes to the increase of imports and exports within and outside member states of European Union.
- Freedom of movement for workers: Among the principles of the European Union is movement of people freely across borders. This policy guarantees that each EU citizen has the right to move freely, stay and work in another member state. However certain exceptions still exist. Immigration control is another area that requires resolving. It is unlikely for the UK to require visas for current EU members. This facilitates the tourism industry which employs a substantial number of people in turn growing the economy.
- Freedom of movement of services: The need for knowledgeable staff in the tourism sector is not likely to dwindle soon with predictions of needing more staff as a result of high turnover rates and growth (Johnson et al., 2014). This demand for employees means that most enterprises report that their staffs lack crucial skills. It is safe to assume that if the EU separates from its member states, there will be shortage of staff thus increasing wage costs for enterprises hence decreasing the quality of services availed to consumers. This policy covers the professional bodies and public institutions which are provided with the freedom to provide cross border services.
- Free movement of capital: This policy ensures that all the restrictions that relates to the movement of capital both within EU and member countries and also with outside countries shall be removed with some exceptions. It also defines the different types of capital covered within the free flow movements.
- Regulations : The legislation created through the EU aims at assisting the primary purpose of the union. As such, the EU legislation affects the tourism industry. Depending on the result of negotiations with the EU a secondary effect on business travel may exist. If the result doesn’t integrate with enterprise models of companies in third states there exists a possibility in reduction in enterprise travel affiliated with these enterprises relocating their headquarters to an EU state.
2.3 Role of pressure groups in the hospitality industry
Bodies formed to advocate for and influence change are known as pressure groups. They may do this by funding political party activities and run campaigns. They have a common interest in wanting to change something’s in society. They achieve this by pressurizing politicians in parliament. Pressure group members believe that desired changes will be achieved by working together (Kent, 2014). They campaign by writing letters to newspapers and magazines and by creating awareness on social media. Other ways pressure groups can achieve their objectives are;
- Meetings and Magazines: pressure groups hold meetings regularly for members to ensure that they are up to date on happenings and what should be done. National magazines are sent to members.
- Gigs and Music Festivals: this allows for members and supporters to come together and share good times (Lockwood and Walton, 2013). It is also a way of showing that people can live together in peace and have fun at the same time. Speeches can be made at the gig to create awareness and chart a way forward.
- Arts: Movies, songs, poetry, photographs and sketches are various mediums that could be used by pressure groups to convey messages and create awareness. They can also be used to promote a cause.
In the hospitality industry, they could advocate for the government to promote local tourism through decreasing fees for citizens of host country when touring within and advocate for provision of jobs for local residents in the industry. Internationally, they could push for best representation of their country by insisting that appointed ambassadors are competent and will portray their country in the best possible image. The pressure groups influence disposal of waste by implementing and imposing regulations on industries with regards to proper disposal of the waste resulted from their industry operations on the grounds of environment cleanliness and protection. They work for the prevention of hospitality organisations in reserved green belt areas since the workers in these areas are deprived of the facilities due to lack of hospitality organizations. The hospitality organizations in reserved green belt areas are promoted by these groups to motivate workers and enhance tourism in these areas.
2.4 Differences between English and Scottish legal systems
Scotland was apart and owning its legal framework by the time it was united with Wales and England. This meant that it now had similar legislature as Wales and England at the same time maintaining its legal frameworks and laws. New laws were introduced by acts of parliament in Scotland however this didn’t adjust or replace the law of Scots.
Scots law acknowledged marital unions devoid of ceremonies or church services. The requirements up until 1938 were consummation and mutual consent. The age of capacity is 16 in Scotland whereas it is considered to be 18 in England. Consent from parents wasn’t a requirement for validation of marriage. Consummation and mutual consent was all that was required for the recognition of marriage. Such marriages were registered either by a declaration by the couple in writing or evidence provided by two witnesses. Children that are illegitimate become legitimate following their parents’ marriage as long as the parents had the freedom to marry at the time of childbirth (Nolo, 2011). In Scotland, the church has the power to pass judgment on cases of defamation, marriage, clergy discipline and grant divorces and annulments. In the English system, only courts of law have these powers. Courts of equity records provide a good source of history of family research in most states such as Canada and England but not Scotland. A law of equity that is separate has never existed thus there are no courts of equity in Scotland.
In Scotland, immoveable property inheritance is set by law. The surviving oldest son inherits the land. If sons do not exist, daughters share the land equally. In case no surviving children exist, the spouse then inherits all the lands. Inheritance of movable property is subjected to the rule that at least 1/3 is left to a spouse and another 1/3 to the children. Scots have the right to direct inheritors of immovable property provided rules laid out are obeyed. English law property allocation is done according to deceased’s will. Unlike in England, in Scotland, Land transfers need a public ceremony. A notary who attends the ceremony records it in a protocol book. Particular areas in Scotland were under the Lords court and not general courts that are generally preferable. The number of jurors for criminal cases in England is 12 whereas in Scotland, the criminal juries have 15 members. The regulating body for the prosecution and investigation of criminal cases in Scotland is The Crown Office and Procurator Fiscal Service (PFS) whereas in England it is the Crown Prosecution Services (CPS) which prosecutes and investigates the criminal cases and judicial proceedings.
2.5 Evaluation of the UK and EU legislative process as it affects a major UK hotel group’s business and services at both local and national level
The UK plays a major role on how it affects the normal functioning of a hospitality sector especially motels mainly through taxation processes, laws and guidelines it follows, the government giving subsidies to businesses. In the EU and UK laws they clearly state that employees should be covered under an employee working time limit that prevents them from being overworked (Lovelock, 1999). This policy aims to maximize working time and the least amount of time on break. The policies have led to the business organizing a policy shift so that they are in line with the regulations. The National minimum wage act wants the employees to be paid on an hourly rate that is between the age of 18 and 21. This affects the hospitality industry directly and also affects the company. The employees in the business are part and parcel of the trade union bargaining agreement this has a major influence on how they make their decisions concerning the business. It is key that the hospitality industry maintains good contact with the trade unions. These policies help to ensure that the customers’ expectations and standards are met and that the services they offer are up to par. The minimum age of buying alcohol in cigarettes in UK has been increased from 16 to 18 which affected the revenues of the hotel group since the consumers of alcohol decreased. The fiscal and monetary policy of UK government set aside 29.5 million pounds as a result of effect of enforcement of law of ban on smoking.
3.1 Different types and characteristics of business that operate within the business and services with a focus on the hospitality sector.
In the hotel service sector it is divided in to three main sectors which it focuses on and has lead it to thrive. Food and beverage is one of the sectors, one of the main reason why people go to the hotels is to eat which may be in luxurious restaurants and also eateries that sell fast foods. The second category is where the hospitality industry aim to provide accommodation for people this is where visitors go to a certain town where they mainly focus on accommodating them by providing them with a place to stay during the time they are in the town (Nieves and Segarra-Cipres, 2015). The hospitality industry also offer travelling and tourism services to guests especially those from foreign countries where they are also able to go an extra mile and even offer a guide who is well conversant with the terrain and will be able to explain to the tourist the rich cultural and heritage of a place. The hospitality industry also goes an extra mile to provide transport for the tourists and take them to all the destinations from the airport to all their detours which acts as part of the hospitality.
The hospitality industry has a lifespan in that they cannot be put on hold the must be made use of according to plan otherwise it will all go to waste. Services offered in the hospitality industry can be aggregated in the sense that they can be gathered and packaged as one services comprising of different services; it is difficult to achieve these as they cannot be controlled and cannot be scheduled to take place at the same time. Services offered are also produced and consumed at the same time which means the consumers have to all the way to the place so that they can consume the product. The different types of businesses operating in the hospitality sector are as follows:
- Sole trader – This type of business involves single owner who owns and manages the business by himself. The sole proprietor invests the capital in the business and owns the whole profit or makes withdrawals in the form of drawings from the business. Additional capital is also introduced by the proprietor whether by using his own funds or obtaining loans and investing as debt funds.
- Partnership – This form of business involves group of individuals who start a business through an agreement among them known as the partnership deed. This deed contains the terms and conditions in relation to the partnership between them. The profit sharing is done between the partners on a certain basis either equally or in pre defined proportions. The minimum number of persons to establish this form of business is two where capital is invested by each partner.
- Private company – In this form of business, a company is formed by a group of persons where the company incorporated has a separate legal identity from its members. The hospitality business is run in the name of company and the profits earned by the company are distributed to its shareholders or members in proportion of their ownership in the company. The Board of Directors manage the company for conducting its operations.
- Public Limited Company – It is a business form which includes incorporation of a company similar to the private company with the difference that the shares of such company are listed on recognised stock exchange and are traded by general public. The members or shareholders of such company are general public who invest capital through shares and earn returns in the form of dividends. There is no restriction on such companies for maximum number of members.
3.2 The legal processes necessary for formation and dissolution of a registered company.
During the creation of an organization as documented in the Companies Act of 2006 the people forming the company are then required to send the Articles of Association, the Form IN01 and the Memorandum of Association accompanied with the registration fee to the registrar of companies which will take up to 5 working days to be processed. Some may however opt to go about it the electronic way whereby they use software that is linked to the companies’ house e-filing systems and also have an account. All the processes of registering the company can be done online. In the Memorandum of association, this comprises the names of the people that want to make the organization. It also clearly lays out the rules that will have to govern the company and also the objectives that the company wants to achieve (Becker et al, 2010).
During the dissolution of a company all the members in the company should be in the same boat in that they all are in consensus and are all for the idea that the company should be dissolved (Pisano, 2015). In the event that there is some contention the stakeholders then have to vote and the majority make the decision of whether or not it should be dissolved. The company after reaching a consensus should then inform the tax collection authorities because they have obligations to settle the tax returns this is to avoid being penalized and to avoid breaking the law. The company also has the obligation to inform its creditors that it is dissolving. This it to give them ample time to make their claims, the creditors have 120 days to make their claims from the day the notice was put in place if not submitted during this period of time then their claims will not be considered. The company then should start to settle the claims and notifying the creditors of their rejected claims with assist from the attorney general. The shareholders of the company after settling all the claims are now free to split the remaining resources among themselves mostly according to their percentage ownership of the shares. The formation of company will require cost of £50.000 which will have to be incurred initially as the cost of formation. The dissolution of the company can be done either voluntarily or compulsory dissolution. Where the members of the company resolve in a meeting for dissolution and make application to the court for dissolution or where the creditors apply for the dissolution of company, it is considered as voluntary winding up of company and on the other hand where the court orders for the dissolution of company in the general interests of public, then it is considered as compulsory dissolution.
3.3 The structure and processes which determine the responsibilities and control within a registered company.
In the organization there is a hierarchy of how it is managed. It begins from the manager who is in charge of the company paves way for how people should meet the expectations of their customers. The managers in the company work together across the board to improve its efficiency and at the same time improve accuracy. Supervisors are next in line and their mandate is to ensure that the procedures are followed to the latter and that the services offered have an added value. Operators are then the ones that are hands on in making sure that all the processes in the business are done and are well (Mathias, 2012). Financing is important in each and every business in that they ensure that each and every cent is monitored and how it is being spent, this also improves the decision making process and this is where budgets may come into place. Human resource management also by the managers is important as it settles the requirements of the staff and also picking the best suited people for that particular project. It is obvious that without the right team all projects may not see the light of day. How the company also markets its product will affect how it makes its sales for instance those that market their goods after having understood the customers’ needs will be able to make majority sales. It is the job of the manager to make sure that they understand what the customers want and find out how they can tailor their goods to meet the customer’s specifications, it is then the job of the supervisor to devise ways by which this will be achieved so that the operators factor in their best work. The hierarchy in the structure of the company flow in two directions which include horizontal and vertical. The vertical hierarch move from the CEO/CFO to the Board, top level management, middle and lower level management, executives and supervisors, employees, staff, labours and clerks. The horizontal hierarchy flows within the managers of various departments such as production, finance, marketing, selling, administrative etc. and the executives under the departmental managers within these departments. The roles, responsibilities and control within the company is also determined through the meetings of its Board of Directors known as Board Meeting and the meeting of its shareholders and members known as Annual General Meeting (AGM) and Extraordinary General Meeting (EGM). The AGM of the company is held every year within the time periods specified in the business law whereas the EGM is called for under extraordinary circumstances.
The previous years have seen further expansions protest group activities. In turn, a lot has been achieved in trying to bring change to societies and communities. People have become more aware of their rights to voice out their opinions and get reactions from their target audience. The European Union impacts the hospitality industry greatly in that member states separating themselves are affected negatively. Several differences exist between Scottish and English laws creating a collision of interests. Legislative procedures play huge roles in the hospitality industry and have impacts as well on the industry. Clients and staff in the hospitality industry are protected by laws to ensure that they are not exploited. These laws sometimes lead to losses for the industry but at the end integrity should be upheld. It’s logical to conclude that business organisations in the UK have to analyse the UK external business forces above in order to come up with strategies that will facilitate their realisation of the set goals and objectives.
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