2. LEARNING OUTCOMES
• By the end of this Lecture, you should be able
to:
– Describe the various layers of the business environment
– Relate the nature and significance of common frameworks
and methodologies employed when analysing business
environments
– Identify examples of macro- and micro-environmental
influences on hospitality organisations
3. THE BUSINESS ENVIRONMENT (1)
• Every organisation finds itself developing and
operating within a given business
environment, each of which has different
layers:
– Macro-environment
• Broad factors likely to impact on most or all
organisations
– Industry (or sector)
• Group of organisations producing the same principal
product and/or service
4. THE BUSINESS ENVIRONMENT (2)
• Competitors
– Different organisations with different
characteristics competing on different bases
• Markets
– Customers and consumers of one or more
organisations’ products and/or services
• The organisation
– Networked with, and economically tied to, other
organisations
(Johnson, Scholes & Whittington, 2005)
5.
6. THE MACRO-ENVIRONMENT
• Macro-environmental influences are commonly
analysed using the PESTEL Framework
– categorises such influences into six main types
• Considers key factors at work in the macro-
environment
– in particular, their potential impacts in the medium and
longer terms
9. COMPETITION
• Competitiveness is, obviously, inherent within
the notion of strategy, the aim being to gain
advantage over competitors
• Sources of existing and anticipated
competition within an industry or sector are
most readily identified, and commonly
analysed, using the Five Forces Framework (Porter,
1980)
10. THE FIVE FORCES FRAMEWORK (1)
Source: Johnson, Scholes & Whittington, 2005, p.80
11. THE FIVE FORCES FRAMEWORK (2)
• Barriers to entry
– Factors that need to be overcome by new entrants if they
are to compete successfully e.g. capital costs; economies
of scale; access to distribution channels; experience
• Substitution
– Reduces demand for a particular “class” of products as
customers switch to alternatives e.g. impact of ICTs
12. THE FIVE FORCES FRAMEWORK (3)
• Power of buyers and suppliers
– i.e. the relative power of buyer and supplier in a given
competitive context, e.g.:
• buyer power is high when there are many alternative sources of
supply
• supplier power is high in the case of a powerful brand
• Competitive rivalry
– Wider competitive forces at play in competition between
rivals i.e. organisations with similar products and services
aimed at the same customer group; e.g. size and balance;
market growth rates; life-cycle analysis; differentiation
13. LIFE-CYCLE MODELLING
• Life-cycle analysis helps determine the relative
positions, and thus competitive conditions,
between rivals
• In practice, hospitality and tourism product
life-cycles tend to be cyclical e.g. destinations
inevitably stagnate over time and either have
to keep rejuvenating themselves, or face
decline
15. MARKETS
• Within most markets there is a wide diversity
of consumer needs, wants and expectations
• A market segment is “a group of customers
who have similar needs that are different from
customer needs in other parts of the market”
(Johnson, Scholes & Whittington, 2005, p. 91)
16. SOME BASES OF MARKET
SEGMENTATION
Source: Johnson, Scholes & Whittington, 2005, p94
17. THE MICRO-ENVIRONMENT
• “Consists of forces close to the organisation that can affect its
ability to serve its customers” (Hudson, 2008, p. 23)
• Organisations have more influence and control over their
micro- than their macro-environments
• SWOT analysis “summarises the key issues from the business
environment, and the strategic capability of an organisation,
that are most likely to impact on strategy development” (Johnson,
Scholes & Whittington, 2005, p. 102)
18. EXAMPLE OF A RESTAURANT SWOT ANALYSIS
Source: Davis, Lockwood, Pantelidis & Alcott, 2008, p. 124
20. REFERENCES
• Bowie, D. & Buttle, F., (2004), Hospitality
Marketing – An Introduction. Oxford: Elsevier
Butterworth-Heinemann. Part A.
• Cousins, J., Foskett, D. & Gillespie, C., (2002),
Food and Beverage Management, (2nd Ed).
Harlow: Pearson. Ch 1.
• Hassanien, A., Dale, C. & Clarke, A. (2010),
Hospitality Business Development , Oxford:
Elsevier.
• Davis, B., Lockwood, A., Pantelidis, I. & Alcott,
