External environment of the business is referred to as those factors that exist outside the firm and influence ability of the company to perform its business functions. This is due to the reason that such factors cannot be controlled and managed by the executives even after the implementation of wide range of strategies (Fraser and Pong, 2009). In the present study, external business environment has been discussed with respect to Ritz Carlton. It is a luxury hotel brand that was founded in 1983. The present report entails to understand the impact of socio-economic change on the development of commercial firm. Further, it includes the impact of legal and political environment on business and service industries.
1.1 Structure, operations and influence of local government in major UK hotel group
The structure of local government of England is categorized into various divisions that include country council, district, borough and city council. In certain part of country, unitary trier of local government can be viewed. It is comprised of unitary authorities, London borough and metropolitan borough. There is greater responsibility of local government of England for the varied services (Boons and Lüdeke-Freund, 2013). For example: country council takes decisions with respect to the transportation, waste management, education and trading. Likewise, city council has responsibility related with tax collection, recycling and housing. Functions of different government have huge impact on Ritz Carlton.
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For instance: waste management function is managed by country council.
Therefore, such needs to be complied by the firm. In case of non-fulfillment, operations of organization are affected significantly.
It is essential for local government of UK to develop sound relationship with public. This can be done through designing of rules and regulations that offer greater benefit to residents of the country. It has been gained that both structure and operations of UK government affect Ritz Carlton. Government of UK includes various divisions such as country council, district council etc that have potential to affect hospitality business operations (Hamilton and Webster, 2015). In case of new product launch, prior approval needs to be taken from government. Major challenge arises for Ritz Carlton in case of regulatory authority denies for the same.
Local council's rules and regulations also affect the operations of hospitality business. For instance: various legislation has been developed by UK government regarding sustainability measures. This assists in reducing the impact of hotel on environment. In case, firm does not comply with these regulations then UK government will possess authority to cancel the permit of hospitality firm. Thus, it is essential for the organization to comply with the rules of UK government with the aim to attain pre-determined targets.
1.2 Role and influence of EU and its impact on business and service industries
European Union is regarded as politico as well as economic union which is comprised of 28 member states. Operations of EU are carried out through super national institution. Members working in this union possess objectives of developing regulations for the country that operates its function in European area. It has been determined that law developed by European Union exerts greater impact on business and service industries.
There is certain legislation developed by EU members. Authority has devised regulations in relation with labors who are working within firm. This policy functions for the interest of employees. The stated policy demonstrates that organization is required to offer suitable working environment to the personnel. Further, it protects employee from the exploitation by employer. Therefore, it has been determined that this policy has implications on Ritz Carlton. This is due to the reason that it exerts pressure on business to make sure that safety and security measures for personnel are complied with (Hult, Hurley and Knight, 2004). Such can be carried out by the executives through performance of alterations within human resource policy. In addition to this, European Union has devised competition policy in UK. The policy aims at building sound competitive environment in the country. In this relation, the stated policy presents that organization needs to use fair and suitable technique for the purpose of competing with rivalries. With the application of such policy, company is restricted from the use of ineffective technique for competing with other firms in the hospitality sector. This results in compelling business to follow all the ethical practices when developing strategy for competing with other businesses performing in the country.
1.3 Role of pressure groups and their political influence with respect to national and local issues of hospitality industry
Pressure group is referred to as the group which does not put any candidate for election but influence the regulations that are being devised by the authorities of country. They play an essential role in developing political and social systems. Moreover, they possess capacity to influence the rules and policies imposed by regulatory authority within UK. Thus, there is greater need for the UK government to include such groups within business. As such it assists in attaining suitable outcomes in an effective manner. This group performs protest against major causes emerging in the nation (Rodiek, 2008). For example, in case it is determined by pressure groups that local environment of the country is influenced by the inappropriate environmental protection practices performed by Ritz Carlton, and then such would result in affecting the performance of business in the UK. With the aim to resolve such, pressure group impose force on organizations so as to attain desired goals.
In contrast to this, in case pressure group determines that UK government is imposing ineffective policies and legislation on hotel then at this they can influence regulatory authority by associating with hotel in not complying with the regulations. Thus, it is important for both hotel as well as government to perform suitable practices so that pressure groups will not affect business operations within UK. There is need for Ritz Carlton to carry out effective measures in order to resolve issues that are being faced by them in maintaining relation with pressure group. Moreover, such groups organize several campaigns like protecting contamination food and disposal of waste at safe place (Chang, Hughes and Hotho, 2011). Therefore, by conducting such campaigns, it can force organization to improve the type of services provided by them. Thus, it can be stated that business needs to comply with the rules and regulations developed by pressure groups.
1.4 Analysis of legal framework within UK
It includes several kind of legal systems examined within the firm which are required to be complied with by UK system. Wales, Scotland and Northern Ireland are the countries that need to follow such kind of legal system in order to attain desired outcomes. European Union is answerable for developing several legislation that assists in taking suitable decisions for the nation. In addition to this there are two types of courts being determined within UK. This includes criminal and civil court. Moreover it has been gained that civil court has magistrate family court, Queen’s Bench as well as chancery division.
There are several basis of difference among English and Scottish system. This has been enumerated in the manner below:
- Responsibilities: In case of English system there is responsibility of regulatory authority for the act performed by them. In contrast to this, under Scottish system regulators have no obligation to prosecute their right but they can breach the issues.
- Formal cautions: In English system the regulators needs to perform their duty in relation with publishing of formal cautions while conducting their prosecuting procedure. However in case of Scottish system they do not take into account stated kind of caution.
- Legal system: English system complies with common law. Moreover this law protects the children under age 18 years from the legal cases (Singh and Mahmood, 2014). Along with this both hotel and bars posses legal right to offer alcohol 24 hours a day. In contrast to this Scottish system follows both civil and common law. Under this law children below 16 years are prevented from legal cases. In addition to this only hotel have legal power to serve alcohol 24 hours a day.
- Witness statement: Under English system these plays critical role while conducting criminal procedure and acts like evidence. In Scottish system witness statement is not considered evidence in law court (Smith, 2008).
1.5 UK and EU legislative process as it affects major UK hotel group
Following is the legislative procedure that is being complied with by UK and EU. This influences the operations of Ritz Carlton at both national and local level. In this relation it has been determined that legislative procedure being followed by European Union is more complex in comparison with UK system. UK government has introduced certain laws and regulations that assist in protecting hospitality firms. There is existence of various legislation followed by firm including Minimum Wade Act 1998 and Environmental Protection Act. Organizations need to undergo Minimum Wage act so that this can act as an aid for employees in receiving suitable wages from Ritz Carlton. Therefore such does not affect their employment rights. The implication of this act is in terms that the organization needs to follow appropriate wage rate so that rights of employees are not affected.
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Moreover in case organization fails to carry out such act then individual has complete right to file complaint against the hotel. In contrast to this European Union carries out several legislative practices like Right to equality and Right to employment. For example, there is greater need for the business to undergo such right with the aim to ensure effective practices and provides satisfaction to the workers in order to gain desired goals (Stackelberg and et.al, 2010). The Right to Equality act demonstrates that employees should not be discriminated and further equal opportunities needs to be provided to them. Further they are required to take into account skills and capabilities of workers and provide them appropriate task. This is order to gain best services from them and satisfy the needs of workers in an effective manner. In case it is determined that firm performs discrimination within the employees then EU has power to take legal actions against the hotel.
2.1 Different types and characteristics of business that operate within the business and service
There is existence of various kinds of firms that operates in hospitality sector. All such businesses carry out operations with an objective to offer high quality of services to the customers. This is due to the reason that through this activity business like Ritz Carlton can maintain satisfaction among customers. The types of business that operates within hospitality sector have been enumerated in the manner below:
- Travel agent: All the travel agents are involved under this category. Their role is towards booking tickets and arranging holiday packages for the customers. The major feature of such business is to resolve the customer’s queries in relation with traveling.
- Sole trader: It is a kind of business that is owned and managed by an individual. The owner has full control over firm (Titheesawad, 2012). Therefore such is considered as major benefit of this type of organization. However sole proprietor possess limited capacity regarding rising of profits in shorter time span.
- Partnership: It is referred to as the firm in which two or more individual’s makes investment and pool skills and resources in order to attain greater profits. Under this an individual alone does not have control over the business which acts as major demerit to this. Through adoption of such business type the issue in relation with rising of capital is resolved to a greater extent.
- Private company by shares: Under this type of business offers shares to shareholders and in turn delivers ownership to them. In this manner organization is able to fulfill the requirement related with funds. It is considered as the popular technique for obtaining finance. However with this form, organization tends to lose control over operations.
- Private company by guarantee: It is the kind of organization wherein business does not possess shareholders. Under this liability of members is limited.
- Public limited company: It is regarded as firm that aims at working for the benefit of the society (Manral, 2010). The major advantage of this business is to raise funds in shorter time span. In such business it is important to comply with several legal obligations. For instance public limited company needs to possess at least 2 directors.
2.2 Legal processes necessary for formation and dissolution of registered company
The individuals who are required to open new organization have to comply with certain legal procedure. This is due to the reason that in case it is not followed then the company formulated would not be considered valid. In this regard following steps will be followed for formation of new registered company.
- Memorandum of association: The procedure of formation of registered company begins with Memorandum of association. It is the document that covers detail on name of company, location of business headquarter and liabilities of parties involved. It is important for the organization to develop such kind of document. This is because with this firm can establish itself in an effective manner.
- Articles of association: After preparation of Memorandum of association another step relates with development of article of association. This document presents the rules and regulations which need to be complied with by organization (Klapper and Parker, 2011). It is effective as it acts as an aid in setting direction of organization towards regulatory and ethical path.
- Form 10 and form 12: Following the preparation of both types of document next step is related with development of two types of forms. Form 10 provides information regarding date of birth of members, their home address and passport number. Similarly form 12 is a kind of declaration wherein director of the business needs to declare that in case of bankruptcy they will be considered accountable.
- Deciding the company name: After the fulfillment of above aspects the last phase relates with decision regarding name of the organization.
Apart from this the steps that need to be followed by managers in case of dissolution of registered company are enumerated in the manner below:
- Creditor’s voluntary liquidation: In this type of dissolution director of the firm and stakeholders makes mutual decision regarding whether or not to dilute the organization (Abubakr and Esposito, 2012). In this kind of liquidation members does not have any liability in relation to payment of loan and debt of organization?
- Member’s voluntary liquidation: Such form of dissolution emerges when the board of director offers statutory declaration of solvency. Under this members will be liable to make payment of loan and debt of organization.
2.3 Analysis of structure and processes which determine the responsibilities and control within registered company
The firm having limited structure possesses the members such as director, secretary of company and shareholder etc. The stated individuals need to fulfill several roles and responsibilities. For example, broad of directors of business are responsible for organizing annual meeting of business. Along with this they are responsible for taking important decision regarding firm. Further it provides direction towards increase in sales and profitability. Moreover board of director of business provides useful information to the shareholders on time. By complying with such kind of activity organization can maintain satisfaction among stakeholders.
In contrast to this, secretary of business has to comply with several kinds of roles and responsibilities. This ensures that business needs to follow all the legal practices and financial standards. Moreover shareholders of the business act as an aid for the manager while making decision regarding company in an effective manner (External business environment, 2015). Along with this business organize several types of meetings like statutory meeting, annual general meeting and member's meeting. Such are arranged by the broad of directors. Right to vote lies in the hand of shareholders. Their votes are taken into account in the general meeting of firm.
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It can be concluded from the study that it is essential for the executive to collect information regarding the factors existing in the external environment of the business. This is due to the reason that through such factors suitable decision can be taken by the manager of Ritz Carlton hotel. Along with this by gaining insight to the current economic policy several strategies can be developed by hotel so as to deal with it in an effective manner.
Journals and Books
- Abubakr, S. and Esposito, F., 2012. Bank concentration and financial constraints on firm investment in UK. Studies in Economics and Finance.
- Boons, F. and Lüdeke-Freund, F., 2013. Business models for sustainable innovation: state-of-the-art and steps towards a research agenda. Journal of Cleaner Production.
- Chang, Y. Y., Hughes, M. and Hotho, S., 2011. Internal and external antecedents of SMEs' innovation ambidexterity outcomes. Management Decision.
- Fraser, I. and Pong, C., 2009. The future of the external audit function. Managerial Auditing Journal.
- Hamilton, L. and Webster., 2015. The International Business Environment. Oxford University Press.