Key Issues in Business Environment


Business environment is the study of all the external and internal factors that may affect the operational and executional ability of an organisation. These factors may leave positive as well as negative impact on the business (Business environment, 2018). It is vital for every organisation to have information of such factors as all of them may help to resolve sudden issues that may harm the organisation. All these elements need to be identified so that it can be examined that what the managers have to do in critical situations. This projects report aims at the issues and challenges that may occur in business environment.

This project consists various topic such as key issues in travel and leisure sector, impact of these issues, challenges that are faced while identifying the same.

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Main Body

A. Identification and description of key macro issues

Now a day’s organisations under travel and leisure sector of UK are facing various issues and challenges in business environment all of them can affect the operational efficiency of the business and the employees who are working in the company. One of the major issue is Brexit which has affected the working ability of the workforce. It is very important for the managers of the business entity to identify those issues and make effective plan to resolve all such issues. All of them can be identifies with the help to two different level of external environments. Both are explained below:

General or contextual environment

Such type of factors generally influences the operations of the firm. These are related to the government policies, political interference, social culture, ethical influence and can take place from the different departments of local, state, national or global legal authorities (Cheng and et. al., 2014). All the factors involved in this environment can be described as PEST analysis which is as follows:

Political: These factors are mainly related with the government policies and legal interference and direct affect the operations of the business. If government of UK implies a new tax rate of any other policy which cannot be adopted by the company than it will affect the ability to perform all the operations effectively. As travel and leisure organisations in UK are concerned with those activities that are performed in various countries as they have to manage all their customers who are from different regions. If the government of UK and other countries implement any new rule and regulation like increased rate of taxes for travelling industry than it can be affected with this step and the business get decreased (Zsambok and Klein, 2014).

Economical: Travel and leisure industry in UK is considered as good source of the income for the country nation and it can help to increase the national income of UK by contributing a higher amount. Such type of companies pays better wages to the employees as compare to others. The growth of the industry depends upon the income and lifestyle of the customers. If customers are not able to bear high cost for their comfort than there will be no growth in this industry. Continuous fluctuation in the rate of the currency of UK also affects such type of industry as every year many tourists come from different countries to travel.. For leisure sector if the rates of inflation in UK increase or decreases constantly than it is not possible to run the business smoothly.

Social: These factors are related to the customer’s taste, age, paying capacity, education level and preferences that can be changed by them any time. If the price of the services is very high that may not be faced by the customers than it may affect business of the organisations who are running their business in travel and leisure industry. In this sector if companies are providing good quality services to the customers with innovations than this may help to enhance business (Charter, 2017). If they are not able to provide good services than this may affect their operations as customers will switch to another company as they want effective ad satisfying services. While company is not bable to consider social values and norms than this will also affect business environment in which the profits get decreased in less time.

Technological: These factors are related to the new and innovative technologies that are continuously launching in the market of UK. If travel and Leisure companies are using latest technology to attract customers than it can result in enhanced profits and number of customers. As in current era people are very much interested in the technologies and always willing that companies should adopt them. If organisations of UK are not able to adapt the new trends and technologies while rendering services to the customers than it may affect the business operations.

Immediate or operational environment

These are the factors who are fundamentally influencing operations of a business entity and its activities. All such type of elements are explained below:

Suppliers: The number of suppliers which are present within Travel and leisure sector in UK has sufficient in number then this will have positive for an organisation which operating under there as they can easily provide their services to customer's in prominent manner. If there The suppliers are not in sufficient manner than it may decrease the profitability of the companies as they may not have efficient equipments to provide services to the customers and than they will switch to another company.

Competitors: All the competitors affect at macro as well as micro level and affect the operations as they also deal in same sector. Different customers from separate regions can result in decreased profits because of the reduced input and output. All these factors create issues more than opportunities as company have to expand more monetary resources to deal with them (Bendell, 2017). There are various large companies like Hilton Worldwide, Marriott International, Thomas cook and Inter continental hotel Group who are providing services to acquire market share of each other and to enhance their profitability.

Customers: They are king of market and also treated as the same. Their demand always changes with time and they always will to have innovative services so that it can satisfy them. If the companies in travel and leisure sector are not able to provide good services to the customers than it can leave an adverse impact on their profitability. Decreased number of customers can also lead the organisation toward a failure.

Brexit: Various industries have been affected due to Brexit and their profitability has also decreased as travel and leisure sector is not related to only UK all the business operations are run by the companies in various countries. Now it is not possible for the companies of travel and leisure sector to import the goods from European countries freely now the government has put various regulations on the purchase.

All the above mentioned factors may affect the business environment macro as well as micro level as they have direct impact on the operational efficiency. All the factors are creating issues for the business because they are related to the environment of the business and have ability to influence the business activities.

B. Impacts of identified issues

An organisation has to deal with various issues that may arise in the business environment. It is very important to deal with these issues as they directly affect the organisational efficiency and profitability. Two main issues that are affecting business of travel and leisure sectors are decrand suppliers from different regions. Both the factors are explained below:

Operational efficiency: It is mainly concerned with legal authority of UK where the organisations are running their business. Government implement various policies every year and if the policies are not adopted by the companies than it is not possible to run the business in the country (Gough and Scott, 2014). Sometimes the companies under travel and leisure sector in UK are not able to adapt the rules and regulations introduced by the legal authority of the nation. In this situation the companies may get influenced by government bodies and they may also get restricted by them. For example, if government of UK has implemented a new taxation policy and a hotel named The Big Blue Hotel is not able to adapt the policy than this may affect its operations as government of UK will not allow the hotel to run its business. This will also affect the profitability of hotel.

Decision making: There various suppliers in the market who supply goods from different regions to the companies in travel and leisure sector. If the exchange rate changes than it is not possible for them to provide goods on less price they may charge high amount some time to match the exchange rate. This will affect decision making of the organisation as they have to identify new suppliers in the market and make effective decisions to buy items from them. For example, if suppliers of The Big Blue Hotel of UK are providing goods or other items on high price than hotel may face a loss as it is buying item on high price as compare to market (Schaltegger and Burritt, 2017). This issue can affect the profitability and decisions of the organisation as they will have less funds to operate business because they are paying a higher amount to suppliers due to frequent change in exchange rate of the country.

Majorly there are two issues that may affect business operations as they are related to the legal authority of nation. As exchange rates and policies are formed by government and both of them leave impact upon businesses and affect the capacity to operate and execute business and also affects the decision making.

C. Challenges faced while identifying the issues

Every business has to face challenges while operating the business as there are various factors that may affect the operational activities of a company. As analysed from above study that organisations have to deal with two major issues that are political interference and frequent changes in exchange that affect the prices of the goods that are purchased by organisation who are operating business in travel and leisure sector.

As analysed by me that all the companies who are operating business under travel and leisure sector have to deal with various challenges that are related to their decision making and operational activities. Political factors are affecting operational activities of the company and decreased number of suppliers may affect decision making. It is very important for the organisations of UK to find effective ways to overcome the challenges. According to me following ways can be implemented by the travel and leisure sector companies of UK to deal with challenges: 

Adoption of government policies: The companies who are running their business under travel and leisure sector are suggested to follow the government policies that are implemented by the legal authority of the country. This can help to deal with challenges that are currently arising in the sector because if the companies are following all the regulations and rules of government than the interference of them will get reduced (Benn, Edwards and Williams, 2014).

Keep information about exchange rate: The organisations should have the information of the exchange rate so that they may switch to another supplier who are from same country where the business is operated. This can result in increased profitability because if the company is having the idea of exchange rate than they may choose local suppliers to buy same goods on less price. It is an easy way to deal with these challenges.

Gather information about the market changes: Having right and appropriate information about market change can also help to overcome the challenges that may affect the organisations because now they can choose those suppliers who are providing goods on less piece as compare to others. It is very important for the companies who are a part of travel and leisure industry to have the exact market information so that they may modify their services according to the market.

Follow market trends: It is very important for the firms of travel and leisure sector to follow market trends to overcome the challenges because all of them can help to enhance productivity of employees and efficiency of whole business entity.

All the above describes ways can be adopted by the companies operating business under travel and leisure sector to overcome the challenges of frequent change in government policies and frequent change in exchange rate of the country (Swarbrooke and Horner, 2012). If the firms are not able to follow the ways than it is not possible to overcome such challenges. It is very important for the firms to gather information of market changes so that the issues can be dealt easily.


From the above project report, it has been concluded that, business environment is related to the factors that may affect the operational efficiency of a company. Currently every business is facing various challenges that may be resolved with the proper planning for the solutions. It is very important for the managers of an organisation to identify the issues so that all of them can be resolved and the operational activities can be performed effectively. If the organisations are having a proper knowledge of market, government policies and exchange rates than all the issues can be resolved easily by them.

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  • Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
  • Cheng, M. and et. al., 2014. The international integrated reporting framework: key issues and future research opportunities. Journal of International Financial Management & Accounting. 25(1). pp.90-119.
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