External Environment and Organisational Response - Hotel Industry In New Zealand - Essay Example

Hotel Industry in New Zealand As the business environment becomes increasingly competitive and volatile, it is important to seek for market niches that are supportive of economic growth, sustenance and development. Although the hotel industry in Sultanate of Oman is prospective, the cultural environment is threatening and undermines the ability of one to embrace western international standards. It is for this reason that it has become increasingly important to venture into other markets available in the global arena. New Zealand offers the most lucrative environment for hotel industry. This tourism destination is ideal for establishing a luxurious six star hotel. It is against this background that this paper provides an in depth analysis of the external environment of the proposed Castle Hotel in light of the PEST model. To enhance coherence, the paper begins by justifying the entry into the hotel industry. As indicated earlier, the hotel industry in New Zealand offers a lucrative environment for sustained growth. The decision to enter into this business was informed by various factors. To begin with, the industry is all seasonal. In this regard, Hall (2000) indicates that the hotel industry deals with the most basic human needs and it is unlikely that one would miss clients at any point in the year. Preliminary researches indicate that Auckland City is a hub for tourists and business persons from across the globe. Providing a hotel with six star standards will probably give the investor a chance to explore this market niche with ease. PEST analysis reviews the political, economic, social and technological facets of the business environment. This is fundamental in enabling the investors to identify any opportunities for growth and seize them in a timely and effective manner. Furthermore, investors can use this information to minimize threats that compromise sustainable growth and development of a particular business. The political environment of any country greatly influences the performance of both local and international business. Respective governments have put in place rules and regulations that need to be adhered to by investors. If these are not supportive of economic growth, they can cripple relative development initiatives. With respect to the hotel business venture, the political environment in New Zealand offers distinct opportunities that can be effectively explored for growth and development. In his review, Elebiary (2012) indicates that the enlargement of the European Union has opened up the destination for increased international tourist arrivals. In addition, the government has huge incentives for the establishment and development of luxurious hotels. This according to Elebiary (2012) is due to the fact that the hotels contribute significantly to the country’s gross domestic product. However, there are political threats that are likely to affect the success of this business. Reportedly, governments charge huge taxes from these star hotels. In addition, there are stringent rules and huge penalties for hotels that fail to comply with the established health and safety rules. To address issues pertaining to huge taxes, the hotel will equally charge high prices to cater for all the operating costs. The economic facet of this analysis underscores the economic trends in the country which have direct impacts on the performance of this luxurious hotel. Being an international venture, this business will attract clientele from the international pool too (Birt, 2004). The first opportunity offered in the economic sphere pertains to the 17.1% rise of the global net worth of individuals (Elebiary, 2012). This implies that the industry is likely to receive more clients. Then, economic trends ascertain that this industry is not commonly affected by recession. Most importantly, the growing national Growth domestic product (GDP) of New Zealand and other countries in the European Union imply that more individuals will be able to afford the luxurious services that are offered by this hotel. The only economic threat that the hotel is likely to face involves fluctuating exchange rates. To curb this, the management will adopt the US dollar as a main currency of exchange when dealing with revenue and use the local currency when addressing its costs. The social sphere of this country also impacts on the performance of the industry in different ways. Basically, this constitutes the lifestyles and social tendencies of the client populations and how these affect the business. According to Evans, Jamal and Foxall (2009), the current social environment requires individuals to work for lengthy hours in order to sustain their lives. Mintel (2000) believes that resultantly, this enhances their desire to recuperate and relax. Relative services are readily availed by this hotel venture. Due to this strict and demanding work schedule, modern populations tend to prefer shorter trips to longer holidays. Usually, luxury travellers tend to seek for high status holiday destinations. In order to satisfy their demands, relative facilities need to constantly stay exclusive, glamorous as well as stylish. This implies increases capital expenditures. To address this, the business will seek for potential investors to provide additional resources for running the hotel. Equally important is the technological sphere of this industry. In light of PEST model of analysis, the technological aspect addresses ways through which the current technology affects the wellbeing of the environment. Currently, Evans et al (2009) ascertains that a significant percentage of the population can access luxury hotel through online reservation. Emergent researches indicate that most individuals have a desire to protect the environment due to increased environmental awareness. Use of environmentally friendly technologies such as Balaji Gem Land for spa is likely to attract more customers (Elebiary, 2012). The only technological challenge that the hotel might experience pertains to the need to maintain modern and expensive technology. In sum, the ability to successfully make business investments requires one to be well versed with the external environment of the business. From the preceding analysis, establishment of a luxurious six star hotel in New Zealand is a viable business venture. From the political point of view, the national government offers incentives for such investments. Economically, the improving GDP makes the industry prospective. Socially, populations are increasingly advocating for luxurious lifestyles. Technologically, online services will be explored for hotel reservation. References Birt. I. (2004). Writing your plan for small business success. Frenchs Forest: Pearson. Elebiary, A. (2012). Drivers of guest loyalty in the hotel industry in New Zealand: A new model for academics and practitioners. UK: LAP LAMBERT Academic Publishing. Evans, M., Jamal, A. & Foxall, G. (2009). Consumer behaviour. Chichester: Wiley & Sons. Hall, M. (2000). Tourism planning, policies, processes and relationships. Essex: Pearson Education. Mintel. (2007). Luxury travel-International. London: Mintel International Group Ltd. Read More