Development of a Conference Centre in London - Case Study Example

Development of a Conference Centre in London Introduction According to the Mayor's London Plan (2008), London is one of the three financial centres of the world as well as Europe's financial capital. It is also the most culturally diverse city in the world and has an unsurpassed range of arts and cultural activity. It is the UK and international centre for the creative industries and the new knowledge economy and a world centre of academic excellence, providing research and consulting services internationally. Moreover, London is a hub of unsurpassed international transport connections and a city with the main language as English, considered as the international language of the world. Several changes over the past 20 years have made London a fitting venue for international conferences and their development is the subject of this paper. Among these changes are the globalisation of economic sectors, the dominance of the finance and business sectors, interlinked with advances in technology; increased inter-relationship between major economies, internationalisation of investment and trade, developments in telecommunications and transport which has shrunk distances between people, markets, and business decision makers; movement of people across borders with their fresh ideas, new cultures, enhanced skills and access to new markets; growth of incomes and wealth with particularly strong demand for leisure and tourism activities; and the 2012 Olympic and Paralympic Games that will be hosted by the city of London. Objectives Greater London, the administrative subdivision of London, England covers the City of London including Middle Temple and Inner Temple, and 32 London boroughs: City of Westminster, Kensington and Chelsea, Hammersmith and Fulham, Wandsworth, Lambeth, Southwark, Tower Hamlets, Hackney, Islington, Camden, Brent, Ealing, Hounslow, Richmond upon Thames, Kingston upon Thames, Merton, Sutton, Croydon, Bromley, Lewisham, Greenwich, Bexley, Havering, Barking and Dagenham, Redbridge, Newham, Waltham Forest, Haringey, Enfield, Barnet, Harrow, and Hillingdon. As of mid-2006, the population of Greater London was at 7,512,400 official residents in an area of 1,579 square kilometers (Reference.com, 2008). According to Yell Limited (2008), there are over 300 conference facilities and services providers in London. This makes it seem like developing a new conference centre within the area would face tough competition. The objective of this paper is to conduct an analysis of the macro-environmental factors which come into play when planning for the development of a conference center, specifically within the Greater London area. Analysis PEST analysis stands for Political, Economic, Social, and Technological which describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. It is part of the analysis of the external environment which helps in understanding market growth or decline, business position, and potential and/or direction for operations. Political factors include political stability, legal framework for contract enforcement, trade regulations and tariffs, anti-trust laws, pricing regulations, taxation, wage legislation, work week, mandatory employee benefits, industrial safety regulations and the like. Economic factors include type of economic system, government intervention in the free market, exchange rates and stability of currency, efficiency of financial markets, quality of infrastructure, skill level of workforce, labor costs, economic growth rate, unemployment rate, inflation rate, interest rates and the like. Social factors include demographics, class structure, education, culture and gender roles, environmental consciousness, leisure interests and the like. Technology factors include technology developments and impact of technology on the business (NetMBA, 2007). Politically and economically speaking, London is very politically and economically stable. This is evidenced by the fact that London is a major centre for international business and commerce and is one of three command centres for the world economy together with New York City and Tokyo (Sassen, 2001). In an article published by Accountancy Age (2007), London continues to be one of the top city economies in the world despite the challenges from emerging markets. This is according to the UK Economic Outlook published by PricewaterhouseCoopers. London was the sixth largest city economy in the world in 2005 and is forecasted to rise to fourth place by 2020, overtaking Paris and Chicago. London's economy is also projected to grow faster than Tokyo, New York and Los Angeles with drivers from business and financial services. The top six mega-cities are Tokyo, New York, Los Angeles, Chicago, Paris and London. In a November 2005 report of the Corporation of London, it is mentioned that London has consolidated its position as the largest economy of the UK government regions and a key driver of UK economic success. Despite terrorist threats in 2005, London's economic performance has remained robust. Moreover, employment rate and productivity performance in London is rising and faster than the rest of the UK. The same report says though, that unemployment is also rising, but for a new business such as a conference centre, this is not a threat, but rather an opportunity, since it will provide necessary manpower and personnel at relatively lower costs. Other threats to new business are the high land prices and high rental charges for commercial properties, London's transport infrastructure with delays imposing heavy costs on business and commuters, high tax rates. However, these threats can be mitigated by taking advantage of opportunities such as the continued improvement of London's international status as a premier tourist destination and European headquarters of international corporations. This international status also allows the city to attract foreign workers to serve needs both for highly educated staff with specific skills and for workers in more routine occupations, such as hotels & catering, office cleaning, and transport services which are all needed in a conference centre business. In a study conducted by Lecomte (n.d.) using statistics from the 2000 census, metropolitan areas in northwestern Europe were compared in terms of economic positioning. The size of a metropolitan area in terms of population, jobs and production, is a factor that supports the competitiveness of companies located within its boundaries. In terms of size, London, Paris and the Rhine-Ruhr regions are northwestern Europe's three largest economic areas. Other factors considered in the study are the age structure of the population, level of education, participation rate, part-time work as a percentage of total employment, the relative weight of the industrial and service sectors, output per job, output per inhabitant and unemployment. Paris, Lille, Manchester and London exhibited a young population, which helps sustain the vigour of the regional economy. London and Brussels had the largest population of university graduates. Edinburgh and London showed the highest employment rates at more than 70%. London and the Randstad had the highest service sector employment rates as well as the lowest industrial sector employment rates. This is not surprising because the main driver of employment growth in Europe over the last four decades has been the services sector. London ranks 3rd in GDP per inhabitant among the northwestern regions studied. It ranks 4th to the lowest in unemployment rate. The study concludes that Dublin, the Randstad, London, Manchester and Edinburgh were the best economic performing areas in northwestern Europe. In January 2005, a survey of London's ethnic and religious diversity claimed that there were more than 300 languages spoken and more than 50 non-indigenous communities which have a population of more than 10,000 (Benedictus, 2005). 58.2% of London residents practice Christianity. In lesser but significant percentages, others are Muslims, 8.5%; Hindus, 4.1%; Jews, 2.1%; Sikhs, 1.5%; Buddhists, 0.8% (National Statistics, 2003). This is a source of opportunity for the conference centre business as it opens the London venue to people of different ethnic and religious persuasions. Another official survey says that nearly a third of the population of London was born outside Britain. The foreign-born population of London went up from 1,630,000 in 1997 to 2,288,000 in 2005. The highest numbers of immigrants came from Bangladesh, India, the countries of the former Soviet Union, Ghana, and Sri Lanka (Evening Standard, 2006). The 2001 census showed that 27.1% of Greater London's population was born outside the UK, and a slightly higher proportion were classed as non-white (National Statistics, 2003). This is another opportunity source for the conference centre business as these immigrants can be utilized as word-of-mouth marketers for promoting a conference centre venue to those in their countries or places of origin. The success of conference centre businesses depends to a certain degree on support mechanisms outside its business such as the variety of leisure and entertainment options available in the area it is situated in. London's West End entertainment district, within the City of Westminster, has Leicester Square where London and world film premieres are held, and Piccadilly Circus, with its giant electronic advertisements of shopping and entertainment areas. (Calvert, 2008). This area is London's theatre district. It also has many cinemas, bars, clubs and restaurants. The United Kingdom's Royal Ballet and the English National Ballet are based in London and perform at the Royal Opera House, the Coliseum, Sadler's Wells Theatre and the Royal Albert Hall (Your London, 2008). Islington has more bars and restaurants than any other street in the UK (BBC, 2001). Oxford Street is Europe's busiest shopping area and the 1-1/2 mile long street is the longest shopping street in the world. Oxford Street is known for Selfridges and other big department stores which are found in the section from Marble Arch to Oxford Circus, along with most of the big-name multinationals (Streetsensation, 2008). Because of its ethnically diverse population, London offers a wide variety of cuisine with all ethnic minorities represented (Dimond, 2001). London celebrates a variety of regular annual events which provide attraction and entertainment to its visitors. There is the New Year's Day Parade; the Lord Mayor's Show in November, which celebrates the annual appointment of a new Lord Mayor of the City of London, a centuries-old tradition; and Trooping the Colour in June, a formal military pageant of the regiments of the Commonwealth and British armies to celebrate the Queen's official birthday (Royal, 2006). London is also a popular sports venue. It has hosted the Summer Olympics twice, in 1908 (1908 Olympics) and 1948 (1948 Olympics). It hosted the British Empire Games in 1934 (Thomas, 2004). A press release on July 6, 2005 announced that the International Olympic Committee today elected London as the host city of the Games of the XXX Olympiad in 2012 during the 117th IOC Session in Singapore (Olympics, 2005). This makes London the first city in the world to host the Summer Olympics three times. The forthcoming London Olympics is one of the great opportunities for the conference centre business. According to the Mayor of London (2008), "the 2012 Olympic and Paralympic Games will allow London to host an exemplary Olympiad, to highlight London's unique diversity and to contribute to its development as an exemplary sustainable world city". Given the high level of connectivity in London and its place at the center of global networks, technology factors are both opportunities and threats to the conference center business. They provide opportunities in that a conference centre to be developed will have all the new technology at hand for incorporating into its features and enhancing its marketability. In 2007, the European Tech Tour announced 24 companies as winners among 300 others. These companies are the country's most promising high growth, early- and expansion-stage technology companies which were reviewed on the uniqueness of their technology, strength of their business model, vision, capability to execute on the business plan and the quality of their management team and track record. This is one evidence of London's being at the forefront of technological advances. According to the London Plan (Mayor of London, 2008), the city will also undertake projects to make it an increasingly learning city in which skills and the ability to use information are essential with heavy demands on education and training resources. Technology is also a threat in the sense that it involves additional costs that have to be incurred in the development of the centre, especially so, since such technologies would be expected as present in the centre's operational amenities. Technology spending represents a good portion of the budget, particularly in the startup phase. Decisions related to technology acquisition should be carefully taken. What particular technologies are needed and how advanced they should be must be determined in the planning process. Research on available products and services needs to be conducted. Knowledgeable technology consultants may need to be engaged (Pruitt, 2008). Conclusion The analysis of the political, economic, social and technological factors for a London-based conference centre has revealed a series of opportunities and threats for such an undertaking. The opportunities included political stability, equitable laws related to business, government support for development efforts, economic stability, employment and unemployment rates, currency stability, population size, age distribution, education, cultural diversity, work, career and leisure attitudes, labor and social mobility, availability of technological advances, and government support for technology. Threats include tax policies, environmental regulations, safety regulations, inflation rates, interest rates and monetary policies, commercial property costs, and technology costs. Strategies, plans and programs have to be formulated to maximize advantages from opportunities presented and complementary strategies, plans and programs also have to be devised to counteract the threats. 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