Business Environment

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Introduction

An economic or organization system, where services and goods are exchanges for money and

one another is referred as business. Business environment termed as total sum of internal and

external factors that impacts a business. In respect to such aspects, the unit aims to offer

reader with understanding and background knowledge of business, function of company and

broader environment in which company operates. The size and scope of different

organizational sector will be provided.

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LO 1.

Introduction:

 This assignment is about different kind of organizations according to

their characteristic features, size and the copes for business growth.
 Link of different types of organizational functions to organisational
objectives and structure is also discussed.
 In this assignment, link of those functions to organisational
objectives and structure of St. Pancras Hotel is also discussed.

This assignment is about different kind of organizations according to their characteristic

features, sizeand the copes for business growth. There are different types of organizational

functions that are highly essential in order to ensure the overall growth of the company. In

this assignment, link of those functions to organisational objectives and structure of St.

Pancras Hotel at Kings Crossis also discussed.

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P1. Differentiation of organization according to types and purpose:

6 Types of business
organisations
 Private limited companies
 Sole traders
 Partnership
 Public limited companies
 Franchises,
 Voluntary sector organizations

Organization refers to a group of people having any particular purpose with a similar idea and

motto within themselves. There are six types of business organizations: Sole traders,

partnership, public limited companies, franchises, private limited companies and voluntary

sector organizations.

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 Private organisations
 The private individuals or groups of shareholders are the owners
 They run the organization privately
 Example: St. Pancras Hotel at Kings Cross

Sole Traders (Only one person as owner)

 who is leading the organization form one end.
 In the 21st century, it is the most common form of ownership.
 The owner enjoys the entire profit and loss without sharing it with any
other person.

Private organizations: The private individuals or groups of shareholders, who run the

organization privately, own the Private organisations (Burns 2016). The company is

answerable to board of director and investors. The managers have capability to hire rapidly

based on business cycle and they may offer or fire severance package to staffs at certain time.

Organizations in private sector profit from quicker procurement procedures, and are capable

to use its revenue from investments and sales to buy things at time of any need.

Sole-traders (one person)

The kind of organsiations, in which there is only one person as owner who is leading the

organisation form one end. In the 21st century, sole traders business is the most common form

of ownership. The owner is enjoying the entire profit and loss without sharing it with any

other person. Sole trader are broadly dependent on own resources and have business at small

scale basis. These businesses are run with help of family members and might employ

individuals to look over routine activities of the business. They have limited liabilities and

should be an individual competent to enter in the contract.

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 Partnership traders
 Run by two or more individuals with legal agreement
to carry on the business mutually.
 there are examples like mostly the accountancy
organisations, where hundreds of partners are there
too.
Public Limited organisations
 Runs the whole business as a separately formed legal
entity.
 It is under UK company law.
 The kind of business that is fully or partially owned by the
government of that nation.
 Example: Barclays Plc

Partnership traders: It refers to the organisation run by two or more individuals with legal

agreement to carry on the business mutually. Most of the partnerships are seen to have 2 or

20 members though there are examples like mostly the accountancy organisations, where

hundreds of partners are there (Levitt 2016). There is Deed of partnership that must be

maintained by all the partners, contains the measurement of capita provided by each partner,

how profits or losses would be separated, partnership dismissing procedure and so on.

Public limited organization: It refers to a business organization that runs the whole business

as a separately formed legal entity. It is under UK company law. The kind of business that is

fully or partially owned by the government of that nation.

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 Franchise
 A business having its branch in other nation but
headquartered at parent nation.
 Examples: McDonald and KFC.
 The business holders only give an authority to the dealer
or agent to run the organisation.

 Voluntary sector organisations

 The organization, with the purpose of enriching and benefiting
society
 Run by the group of volunteers with having aim to serve
services to the local community.
 Example: Cancer Research UK

Franchise: A business having its branch in other nation but headquartered at parent nation

for example McDonald and KFC. The business holders only give an authority to the dealer or

agent to run the organisation in the new market.

Voluntary sector organization: The organization, with the purpose of enriching and

benefiting society, is referred to voluntary sector organization. The kinds of organisations are

run by the group of volunteers with having aim to serve services to the local community. One

example of a voluntary organisation is Cancer Research UK.

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P2. Explain a range of organizationsthe size and scope.

P2. Explain a range of organizations the size and

scope.
Private limited Voluntary
companies: Public limited organisation:
companies: Cancer research UK:
•Having separate •It focuses on
identity and recognition •Capital is raised in a benefiting the
provides stability. wider manner company
•Death or status of the •A wide range of •The scope of
owner does not affect shareholders spread expanding the services
the business. risk it provides to the
•Private limited •Several financial community is higher
companies also are institutions are willing
flexible. to invest money here

Size of the organizations is measured by several factors such as numbers of the employees,

numbers of the outlets, capital, total revenue or sale per year, profit, market value etc.

(Christensen et al. 2014). Depending on those factors, it can be stated that there are three

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types of organizations according to the size: micro, small, medium or large. Normally micro-

sized organizations contain less than ten employees having a turnover of ten million where on

the other hand the medium-sized organizations refer to have less than 250 employees having

a turnover of EUR fifty million (Johnson, Leenders and McCue 2017). However, in respect

of discussing the scopes of different types of organizations the clear picture of the advantages

and disadvantages of each category can be given.

Private limited companies: St. Pancras Hotel

Size: It is a private limited company with share capital incorporated in the year of 2011. It

can be listed among the organizations having medium to large size. Total employees are 201-

500 (Stpancras.com, 2019).

Scope: Having separate identity and recognition of the limited financial liability provides

stability. Death or status of the owner does not affect the business.

Purpose:In respect of maintaining a relationship with the shareholders, private limited

companies should be flexible.

Public limited companies: Barclays Plc

Size: Prayon (UK) is a Public Limited Company having one shareholder. It was incorporated

in the year of 1896. Total employees are 79,900 and turnover is £26.8b million

(Suite.endole.co.uk, 2019).

Scope: As capital is raised in a wider manner than private organizations, it proves to be very

fruitful. A wide range of shareholders spread risk (Johnson, Leenders and McCue 2017).

Purpose:Asseveral financial institutions are more willing to invest money to a public limited

company, respective organization should have strategic approach to make itself competitive.

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Voluntary organisation: Cancer research UK:

Size: Cancer Research UK is one of the best examples in this regard. It is incorporated in

2002. It is categorized in the large sized organization having more than 3964 employees and

turnover over of £634 millions (Cancer Research UK, 2019).

Scope: it focuses on benefiting the company. The scope of expanding the services it provides

to the community is higher due to the inclusion of large number of volunteers namely approx

40,000 for serving the community.

Purpose: Voluntary organization have important role in developing housing, health,

education and several other welfare services for underprivileged individuals and society.

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LO2

P3 Explain the relationship between different organisational functions and how they

link to organisational objectives and structure

Marketing function: Operation function:

•Helps to understand the need of the •It refers to the proper
customer and brand value of the product collaboration between raw
•Ensures the market position of the materials and whole
company production process
•It serves as face of hotel, producing
•It also ensures the strategies
and coordinating all materials
to set the proper direction of
depicting business. It helps to meet
organizational progress.
hotel’s objective of creating overarching
reputation that depicts hotel in positive
light, while forming profitable relation
with customer.

This hotel, with its active marketing function, measures the market value to set business

strategy. It helps to understand the need of the customer and brand value of the product that

company is producing. Not only that, it ensures the market position of the company (Gnizy

and Shoham, 2014). The marketing department have significant role in promoting the mission

and business of the hotel. It serves as face of hotel, producing and coordinating all materials

depicting business. It helps to meet hotel’s objective of creating overarching reputation that

depicts hotel in positive light, while forming profitable relation with customer. The skilful

board members of the organization, with proper collaboration between raw materials and

whole production process according to the needof the customer, ensure the strategies to set

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the proper direction of organizational progress to significantly meet the organizational

objective of higher productivity.

P3. Relationship between different organisational

functions and how they link to organisational
objectives and structure
Human resource function: Financial function:
•keeps the detailed record of he whole
•Planning and strategies in money-flow
recruitments •It includes the money, paid by
•Managing the whole organization and received money.
selection process. •Kept both manually and electrically.
•Offering worker law •Deals with legal compliance
compliance •Ensures to make strategic decisions.
•Training compensation
•Hiring and record keeping

Recruitment is a very vital part of an organisation. Without the appropriate employees, an

organization cannot run properly. The HRM department of St. Pancras is capable enough to

take care of it. The human resource department looks over several necessary function of the

business. It is instrumental in offering worker law compliance, training compensation, hiring,

record keeping, and relational assistance along with handling particular performance issues.

In respect to St. Pancras Renaissance London Hotel, HRM department has been effective to

meet business objective of productive workforce leading competitive organizational

performance. The staffs are encouraged to bring relational issues to the notice of HR manager

for resolution. Financial function is very important for an organization. This function helps to

keep the detailed record of financial status of the company, the whole money-flow including

the money, paid by organization and received money. The records are kept both manually and

electrically. Financial function is needed to deal with legal compliance and to make strategic

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decisions for the company. In this respect as well, the managers of the organization take

active role-play (Mullins, 2016).

It is important to note that without actions taken from one organisation, other departments are

unable to make their actions as well. It creates the need for a proper organisational structure.

P3. Relationship between different organisational

functions and how they link to organisational
objectives and structure

•In St. Pancras hotel, the activities have led to

the development of a hierarchical
organisational structure.
•In the hierarchical structure, each and every
member in the organization knows whom they
should report and who should report them.
•It means organization like St. Pancras hotel
has effective communication through
predictable and defined paths that allow higher
authority to direct question the appropriate
parties.
•The organization have clear path of
advancement and are specialised in their
operational areas.

In St. Pancras hotel, the activities have led to the development of a hierarchical organisational

structure. In the hierarchical structure, each and every member in the organization knows

whom they should report and who should report them. It means organization like St. Pancras

hotelhave effective communication through predictable and defined paths that allow higher

authority to direct question the appropriate parties. The organization have clear path of

advancement and are specialised in their operational areas.

Based on the marketing tactics taken by the marketing department, the board members and

CEO make decisions on their marketing strategy. The decision is then processed to the

middle management and then to the junior management to work upon. The Middle managers

of every department for example finance department allocates resources based on the

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instructions they received. In the same way, the middle management of sales department

make their sales planning based on the marketing tactics and the decisions made by the

higher management. It shows that every department is linked with each other and influence

the decisions of each other in a hierarchical way in St. Pancras Hotel (Stpancras, 2019).

Management of the organization

In an organisation there are three levels of management that has been designed with specific

roles and responsibilities. As per the given image, under strategic level system, various

factors are being focused such as ESS, 5-year operating plan, sales trend forecasting, profit

planning and personnel planning. The strategic level systems helps to calculate the

operational functions of the organisation that how the operations would be takes place in the

production field. Under the management level, sales management, sales region analysis,

inventory control, production scheduling, annual budgeting, profitability analysis, relocation

cost control and contract cost analysis is being covered. This level helps to calculate the

productivity of the organisation in terms of sales of units in the market. The St. Pancras

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Renaissance London Hotel often employs Management by Objective in order to meet its core

procedure of supervisor and employer attempting to manage subordinates by introducing

particular set of goals. In here,both staff and company strive to accomplish designated goals

in coming years (Mullins, 2016). MBO is strategic model, which hotel employs to develop its

performance and encourage commitment and participation across staffs as well as align

objective across workplace. Under the Operational management system, order processing,

material movement control, payroll accounts payable and employee recordkeeping is

handling by the management. This level of management helps to calculate the productivity of

the employees in the organisation in respect to overall performance of the organisations.

Conclusion:

On the basis of above discussion, it can be stated that each and every types of organizations

has the potentiality and scope in order to ensure growth in business with the proper

application of those different types of organizational functions.

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LO3

Introduction

The major controllable and external factors that often influence company’s decision making

and impacts its strategies and organizational performance is termed as macro environment. In

respect to such, this segment of the unit aims to discuss about external factors that have

negative and positively influence on business operation of selected hospitality sector

organization St. Pancras Renaissance London Hotel.

P4 Identify the positive and negative impacts the macro environment has upon business

operations, supported by specific examples

There are certain external factors that control business outcome and influence marketing

strategies. The modification of business operation in reference to such factors is to key to

competitive success in the marketplace. In such respect, PESTLE analysis of the St. Pancras

Hotel has been carried out to evaluate negative and positive impact of factors like political,

economic, social, legal, technological and environmental.

PESTLE analysis of St. Pancras Hotel-theimage shows the Macro environmental factors

that can affect the business of the Hotel:-

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C Figure 1: Macro-environmental factors

(Source:Sahramaa 2018)

Figure 2: Factors of PESTLE

(Source:Goulden 2019)

Political Factor: The hospital sector of the UK has been 5th largest industry that contributes

over £34 billion in gross-tax income and provides employment to the approximately 2.9

million employees (Ukhospitality.org.uk 2019). The uncertain political landscapes of EU are

significant to create disadvantageous ripple for service sector (Sahramaa 2018). The anti-

immigrant statement and travel ban might lead hotel to encounter decrease in tourist and

visitors number that are source of high income in the UK. In context to positive influence of

the respective external factor, the positive and pragmatic association with the UK government

have brought hospitality industry in the success quarter of economic growth. The government

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has been in support of business as hospitality and tourism industry that may offer hotel to

have profitable market. The establishment of provincial development funds for hospitality

industry would be major factor that depict growth in market, which St. Pancras Hotel might

engage in to gain appropriate revenue.

Economic Factor: The factors like overseas exchange rate, inflation rate, economic cycle

and interest rate determined the aggregate investment and demands in the economy. On the

negative side, the high exchange rate has discouraged business travel in the nation. The long

term economic turmoil has cause stagnation of middle-class wages and income inequality,

influencing the reduction in consumers capability to travel or stay at hotels. On the positive

side, St. Pancras Hotel may use nation’s economic factor as consumer spending and lodging

sector growth rate that has increased at current to predict growth trajectory of the

organization. The fluctuation in the EU economy increased the hotel’s turnover to estimated

£10 million with total liabilities of approximately £825.66 K at end of March, 2018

(Suite.endole.co.uk 2019).

Social Factor: The society’s culture and process of doing things often influence the culture

of company in the environment. The frequent change in customer demand and needs in terms

of quality of service at reasonable price has led the price war within the service sector

organization in which St. Pancras Hotel operates. The lack of responsiveness towards

customer needs, value for money and their satisfaction, security, and centralised system may

influence competitive nature of the hotel in the marketplace. The terrorism has impacted hotel

business to face hardship of keeping customer satisfied. On the positive side, increase in

experiential traveller and consumer spending depicts growing opportunity for hospitality

industry to expand their market share. St. Pancras Hotel by engaging its variety of service

range can track visitor and tourists across the globe (Goulden 2019).

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Technological Factor: It has huge influence on the hotel business in the form of online retail

services that allows individuals to rent private rooms or food and lodging services directly to

travellers. The recent technological enhancement by St. Pancras Hotel’s competitors has

influenced on product offering, cost structure of services at marketplace. Innovation is

driving competitive advantages for service sector organizations. In order to tap the diverse

marketplace, the integration of latest technology like ICT would help hotel to manage smooth

operation for hotel chain across various locations. The St. Pancras Hotel noted to have fair

presence over social media platform like Twitter, Facebook, LinkedIn and holds online

advertisement or promotional activities to stay connected to customer to tap their needs and

demands (Marriott International 2019). The maintenance of customer relations and

accessibility of services over offline and online platforms has been effective to improve the

business credibility of the business.

Legal Factor: The achievement of standardisation in respect to the legal compliance is the

key to ethical operation of the business in the marketplace. The employment legislation and

HRM policies in favour of the staffs in the organization allows St. Pancras Hotel at Kings

Cross to be effective its objective of collaborated and productive workforce (Marriott

International 2019). On the other hand, increase in labour costs and safety & health regulation

at workplace by the government may influence the operational cost of hotel. The compliance

to security and data protection act along with anticipation of modern slavery is important for

business like St. Pancras Hotel at Kings Cross.

Environmental Factor: The major environmental factor that might disrupt St. Pancras

Renaissance London Hotel’s business is fuel prices. The reduced fuel prices may lead to

decreased travel cost and higher demand for hotel rooms. The potential long duration

influence might be increase in electric costs that are created to curb greenhouse gases.

Increasing temperature due to global warming may impact closing of ski-resorts and hotel

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near beaches. On the contrary, St. Pancras Hotel may engage in the sustainable business

activities to build positive image of the hotel in the community it operates along with having

profitable stakeholder relations. Moreover, knowledge of millennial customers makes it

important for organization to engage in environment friendly activities to enhance business

profitability and relation.

Conclusion

St. Pancras Hotel at Kings Cross is the private sector organization with shared capital.

PESTEL analysis of the hotel facilitates strategic planning in respect to external factors to

decrease threat to business operation in the marketplace.

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LO4

Introduction

In this segment of the assessment, internal and external analysis of St. Pancras Hotel at Kings

Cross has been done to evaluate the weakness and strength of the organization. For

discussion of internal weakness and strength as well as external opportunity and threat,

SWOT and TWOS analysis of the chosen organization is carried out.

P5 Conduct internal and external analysis of specific organisations in order to identify

strengths and weaknesses

The SWOT analysis has been undertaken for the purpose of identifying strategies of the hotel

(Phadermrod et al. 2019). It is an effective tool and would help the St. Pancras Hotel to create

an effective business model and align best possible hotel’s capability and resources to the

need of the environment, where the firm operates.

SWOT analysis of St. Pancras Hotel-

Strength Weakness
 Reputed position in competitive  Limited global presence
landscape  High price
 Strong pipeline to expand globally  Narrow customer target
 Ubiquitous luxury brand  Operational inconsistency
 Impressive combination of atmosphere
and convenience
 Iconic location at King’s Cross Hotel
 Luxurious amenities
Threat Opportunity
 Currency fluctuation  Expansion
 Terrorism  Investment in technology
 Consumer Shift  Increasing solo and leisure travellers
 Rivalry  Economic growth
 Increasing customer expectation  Eco-tourism

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 Table 1: SWOT of St. Pancras Hotel

(Source:Goulden 2019)

SWOT analysis is the foundation for analysing limitation, internal potential and portable

threat and opportunity from external environment. From the above mentioned table, it can be

identified that the strength of the St. Pancras Hotel at King Cross highlights the service

qualities and ability, which hotel employ to achieve organizational goals and mission.

Strength is the advantageous capabilities of the hotel that include reputed position,

Ubiquitous luxury brand and iconic location at King Cross. Along with this, presence of

luxurious amenities and impressive combination of atmosphere & convenience are the huge

financial resource and wider product line for the organization (Goulden 2019).  It allows

company to effectively operate in the hospitality sector along with efficiently mitigating its

weakness and threats. As the external business environment is frequently changing, weak

areas of the hotel might be the elements that prevent organization to accomplish its full

potential in the market. From the table, it is deduced that St. Pancras Hotel has limited global

presence and high prices of service or products offered to customers has been reason behind

its weaker profitable business. Despite of internal expansion, St. Pancras Hotel remains

dependent on the UK market, make it sensitive to fluctuation in domestic market. With

narrow target audience they lose to become more diverse in their business operations. The

noted threat to the hotel compounds its vulnerability, when it is related to the weaknesses.

The threat of currency fluctuation, consumer shift and terrorism are uncontrollable and may

threat the survival of the hotel in market. Currency fluctuation often causes costlier operation

and unsatisfied customers may be cause of customer shift to other brands that offer value

services at reasonable prices. The rivalry from hotel chain like Four Seasons, Inter-

Continental Group, Premier Inn, and Imperial Hotel may threat the profitability of the St.

Pancras Hotel business in the marketplace (Luxuryhotelsguides.com 2019). In order to

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significantly mitigate threat and weakness of the organization, hotel should carefully

recognize and undertake opportunities to strongly grasp the marketplace at national and

international level. The expansion of hotel chain to emerging market like China, Russia, India

and Brazil might be helpful to tap better market reach (Sinha and Sheth 2018). The

investment in technology like ICT and attractive website development may help hotel to be

effective in the mitigating operational inefficiency as per customer needs and demands. The

improvement in economy, number of leisure traveller and eco-tourism may facilitate better

opportunity for hotel like St. Pancras Hotel to profitable business along with supporting

community. Thus, strategic establishment of opportunities is helpful for hotel to strengthen its

weak areas and eliminate threat.

P6 Explain how strengths and weaknesses interrelate with external macro factors

The TOWS analysis provides the information with the business organisation can overcome

its weakness and threat in market using opportunities and strengths. The internal strength of

the organisation provides the nature of opportunities for the company to expand its business.

The strengths also provide strategies to eliminate the threats. Opportunities help limiting the

threats of the business along with the minimisation of the weakness. The external threats and

factors that influence the business expansion are also covered using the TOWS analysis. The

external macro factors provide the predetermined risks and opportunities in the external

environment of the market. This in relation to the TOWS analysis can be mitigated for

minimisation of risk. In case of St. Pancras Renaissance Hotel at Kings Cross, the following

TOWS analysis will reflect the opportunities and threat reduction (Oxford College of

Marketing Blog 2019).

St. Pancras Opportunities Threat

Renaissance  Increasing demand for in-  Economic fluctuation in countries
Hotel house boutique services like China

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 (Stpancraslondon.com 2019)
 Eco-tourism awareness
 Training managers with respect
to market requirement
 Increasing demand of foreign
consumers
 Substitute service threats
decreasing credibility
 Content management depending
on third party services
 Low cost service alternative

Strength  The St. Pancras Renaissance  Renovate the guest loyalty

Hotel can expand its foreign services and service programs to
market by collaborating with attract new and old consumers
international hotels chains in simultaneously.
rich locations.  Launching mobile application
 The upgrading of the services across different
hospitality information system technological platforms to
to PMS services to increase the accessibility of the
management Big Data brand (Stpancraslondon.com
 Improving the environmental 2019)
contribution strategies and  The management of the booking
supporting eco-tourism spots to through both online and offline
attract customers mode might influence the
business growth.

Weakness  Hire competent managers to  Increasing the staff motivation

handle customer demands from and competent by introduction of
well known hospitality labour friendly appraisal
colleges structures.
 Implementation of training  Interns can be hired for the
protocols consistently reduction of workload within the
throughout the different organisation.
services  Other countries can be used for
 The equalisation of the developing partnership to avoid
debt/equity ratio with proper the impact of Brexit
reinvestment strategies within  PR firms can be hired to improve
the company. social media presence and brand
management for St. Pancras
Renaissance Hotel

The foreign countries mainly in the Asian countries might be beneficial for the development

of the international market. In addition to this, Middle Eastern countries can also be targeted

to bring five star luxury services. Keeping the association with Big Data analytics is crucial

for business expansion as it highlights the underlying business patterns and market demands.

Direct partnership with universities and colleges would make it easier to hire competent staffs

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and interns to improve the working efficiency within the Hotel (Stpancraslondon.com 2019).

Uncertainty of the foreign as well as domestic business might impact the risk and profitability

of the business. Balance between international and domestic income might improve the cash

flow. Maintaining the efficiency of the staffs through financial and non-financial benefits can

improve the business outcome even when the economic stability fluctuates in the market.

Therefore, employee engagement strategies are effective for overcoming threats in market.

Conclusion

The external and internal factors are interrelated with each other. They impact business

operation, where strength and opportunity can be collaborated to mitigate negative impact.

TWOS and SWOT analysis is effective tool to eliminate threat and utilize internal strength to

improve current situation of company in strategic way.

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Conclusion

In affirmation to the above study, it is concluded that different organization has different way

of operation, liabilities and legal structure. The relationship that company have with their

several stakeholders has been explored. The external environment found to shape and impact

corporate decision making. The knowledge and skills set gained in the unit might be helpful

to be competitive individual in the respect to professional career.

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