The Macro Environment Analysis Economics Essay

The Macro purlieu Analysis Economics EssayThe macro environment is do up of 6 uncontroll commensu consecrate external factors. These factors mildew an organizations decisions, business and financial st esteemgies as well as its overall performance. These factors ar Economic, Demographic, Social Cultural, Natural, Technological, and Political.3.2 Demographic environmentThe demographic factor covers topics such as age, gender, date of birth, sightly family sizes and so on.Population harvest-timeThe United States has experienced a substantial influx of people. Within the last 10 familys there has been an enlarge of over 33 million people, making the U.S. the most heavily populated nation in the world. A steady but unvarying population flexth is gestateed for the next 50 years. We basin evaluate an increase in the number of American guests at the Marriot capital of The Netherlands. If the merchandiseing strategy is shipshape in order to draw more(prenominal) away from Hotels such as the Hilton. The situation in Europe is different than in the USA.The European Union has a totalpopulation of almost 500 millioninhabitants (27 states of theEuropean Union) whereas Europehas 732 million inhabitants.Within the next 40 years thepopulation is predicted to diminishto slightly 630 million inhabitantsin 2050.This can be seen as a threat in the long run because the impact on the industry is that the volume of the market will shrink as the total resident population will shrink.i3.3Economic EnvironmentAmong the importance of people who make up markets is the importance of their buy power, train of employment, GDP, and rate of inflation which is determined by the economic environment. Both GDP growth rates increase on a low, but steady level. imputable to the recession, it is deally that negative growth rates occur within the next five years for both western economies. Reco genuinely is predicted on a very low level for the year 2012.India in comparison ha s a quite low GDP at the moment, but is predicted to catch up with big travel of over 100% per decade. With annually GDP growth rates of 6 to 10 percent during the last decade India is one of the world fastest maturement economies. The latest recession hardly hit the country but recovery is predicted to take place more rapidly, profoundly and on a far high level than in western economies.InflationThe inflation is an important indicatorfor purchasing power in an economy.Symptoms of inflation are change magnitude bells andtherefore consumers lessen purchasing power.iiCredit crunchBy mid-2008 the financial crisis turned out as a result of the economic turn vote down, the sub-prime mortgage crisis and the collapse of the caparison market.iiiThe collapse of the housing market led to a bank collapse resulting in a massive liquidity crisis. This became a worldwide problem the on-going credit crunch. Stock markets crashed worldwide. The credit crunch is affecting business as well a s consumers.ivTo conclude, this is a threat for any company because consumers are losing their purchasing power in the EU, US, Japan and UK. Besides that, consumers are more careful with their money because they want to save it in case that they will lose their agate line due to the economic crunch.Saving rateThe saving rate reveals insights of the spending patternsof one country inhabitants. This figure shows thepersonal saving rate of the USA, Canada, UK and Germany.Due to heathen differences the saving rate of Germanyand other European countries is traditionally higher thanthose in Anglo Saxon influenced countries.The more interesting development is the increaseof the saving rate in all four countries after the year 2007. This is ca apply by the credit crunch and the pastime recession. During times of economic downturn people tend to save money. They are becoming anxious about their jobs and the future. The increase of the saving rate is a potential threat because peoples spen ding priority lies on essential goods and services sort of than on luxury items. The main market would be for business guests and baby boomers who do not mind spending some extra money in order to have the comforts they have be educe used to.Income level of the target marketsNations vary greatly in level and distribution of income and industrial structure. Our digest is focusing on industrial economies and their consumers. These economies are seen as rich markets for all sorts of goods and services.UnemploymentFrom 1993 up to 2009 the unemploymentrates for as well the EU, UK as for USare increasing and decreasingthrough the years. Increasingunemployment rates are for eachcompany a threat because when consumersloose their jobs their purchasing poweris decreasing.vThe unemployment rate will average9.2 percent in 2009, 9.6 percent is 2010 in the USA.The forecasting average for 2011 is 8.9percent and for 2012 8.7 percent is forecast.The rising unemployment rate is a threat for the Hos pitality industry in that consumers are more likely to save their money than spend it when unemployed. Even if they want our services they do not have the financial resources available to them.3.4 Social-Cultural EnvironmentCorporate social responsibility (CSR) was developed as a type of self regulation. Typically integrated directly into the business model of the slew. The premise is that the corporation that has integrated with CSR will conform to certain pre-determined norms of society when engaging in business. The norms would vary from legal, social, ethical, moral, environmental as well as an increase in touch over the various elements of the public. Elements such as, but not limited to the community as a whole, clients and employees. Although this moral business concept appears to be sound CSR has come under constant criticism. Many claim the moral aspect of CSR is nothing more than a faade, allowing these companies to, in fact, exploits the situation at hand.The psychologi cal effect of terrorism is also a factor we have to keep in mind. The frequency of travelling is decreased by this occurring factor.3.5 Natural factorsMacro factors are those factors that the company cannot influence itself, but these factors can certainly have a great impact on how the company is will perform. The Marriott hotel in Amsterdam lies in the center of the Netherlands with a sea climate. This meaning that all year round the weather will be mild with no extreme summer or winters. While these factors index not directly influence the performance of the hotel, others can. When looking at the volcanic eruption, which took place in the midst of April 2010, airlines cancelled all flights and passengers were stranded. While this at first-year presented a boom in occupancy due to stay-overs, the long run presented problems as many meeting were cancelled. This presented a downfall in revenue as luck would have it problems were solved after 2 weeks when the eruption ceased. The hotel can of course never fully predict certain circumstances but after this experience should be prepared for it.Besides weather factors that will put pressure on business, the trend is shifting towards producing eco-sustainable business. Producing and running your business in a nature palsy-walsy way.When looking at the hospitality industry we can give examples as not overly washing linen, using soap dispenser, recycled paper/pens, dividing trash, light sensors, special heating systems, laundry detergent.3.6 GovernmentalDue to relatively recent events there has been a major force affecting the hospitality industry. Of course due to the decrease world phenomenon business travel has become more and more of a necessity but recreational travel has dropped substantially. In hospitality, even before the attacks the television didnt look good. According to Smith Travel Research, U.S. hotel occupancy was 61.9% year-to-date through June 2001, a drop of 2.7% compared to the same period of 2000. RevPARs declined 0.4 % to $58.99. Preliminary figures indicate that occupancy rates and RevPARs were down 2%-4% in August of this year, compared to August of 2000 (Smith Travel Research). Another strong political force which will affect the Marriot is the increasing worldwide attitude towards smoking. Currently, the Netherlands has an up bound of only specialised areas or small, private establishments are permitted to allow smoking in their premises. Smoking in public places or train/bus post is also prohibited. By offering a specialised and separate area (the Cigar Bar) there is a greatly increased likelihood of attracting a larger customer base. This is due to catering to a larger customer base demographic.3.7 TechnologyImproving productivity is the main goal of technology. Especially for information technology (IT). In studies there is proven that there is a relationship between IT investments and the productivity and performance of the business. Due all the new techn ology that has appeared over the years. Front social function applications, restaurant and banquet management systems, and guest-related interface applications. We sorb that these rapid changes in technology will continue. vii3.8 ConclusionThreatsUS dollar exchange rate for Euro will drop by 5% in 2011.10% increase of energy prices in 2011.Smoking prohibition.Rapid change in technologyluckSmall growth in European economy of 1% in 2011.Slow recovery of US economy and rise of GDP of 2% in 2011.Corporate market in Europe will show a growth of 2%-5%.10% increase of Chinese travelers in 2011.International touristry in the Netherlands will grow 5%.Rapid change in technologyMicro Environment4.1 Market structureMarriott hotel has a monopolistic controversy, which means that the company faces a large number of firms each having a small proportion of the market share and slightly differentiated products. The main demand for the Marriott hotel is empty and business guests.CustomersSegment ation Amsterdam The NetherlandsBusiness transient 53% 36%Leisure individual 22% 37%Tour groups 8% 7% crowd 12% 15%Others (crew) 5% 5%Total 100% 100%Business TransientBased on the following self-confidences and information the Marriott can expect an increase of business transients compared to the introductory years. The main points are as follows10% growth in 2010 in produced revenue of ASEAN (Thailand, Indonesia, Malaysia, Philippines, Singapore, Brunei, Burma (Myanmar), Cambodia, Laos and Vietnam), India, Turkey and Brazil.UKs GDP economy expects to rise 2.7% and economy is recovering slowly. (http//www.finfacts.ie/irishfinancenews/article_1019481.shtml)American economy expects a rise in GDP of 2% and economy is recovering slowly.European economy will grow in 2011 with 1%The above information shows that the economies in the major segments for the Marriott are increasing. Thus, companies will have to send their employees again on business trips.One downside of this assumption is d ecrease of the US dollar exchange rate of 5%. Therefore especially the American business guests will be more then price sensitive and expect to have more service included (e.g. internet). However as we are expecting that the British pound is increasing in 2011 we can assume that the British guests (20% of guests staying at the Marriott Amsterdam) will continue to travel.Individual TouristsBased on the following assumptions and information received the Marriott can expect an increase of Individual Tourists compared to the anterior years. The main points are as followsEU citizen are expected to have a growth of 5%Expected growth of short breaks and weekend trips to cities.As the GDP in the USA and UK are expected to rise, it can be assumed that it will have a positive correlation on the monetary standard of living of citizens of that country. Only the US market will not increase tremendously as the exchange rate for the US dollar will decrease by 5 %. However the British Pound is ex pected to rise compared to the Euro.Conference ParticipantsBased on the assumption and information received the Marriott can expect an increase in conference participants compared to the previous year. The main point is as followsThe same reasons as for business transients can be used to explain the increase of conference participants segment. Companies are expected to produce more goods and therefore will attend and conduct again trade show, conferences, meetings etc.Tour Groups / Other pass judgmentBased on the following assumption and information received the Marriott can expect a decrease in Tour groups and other rates compared to the previous year. The main reason is as followsAs we are expecting a rise in the business transient, leisure guest, conference participants the Marriott will not be able to sell as many rooms through the discounted channels. Therefore the rooms sold to Tour groups will be less.ContractBased on the following assumptions and information received the Ma rriott can expect an increase in contract rates compared to the previous year The main reason is as followsIn year 2010 the produced revenue was far above the expected budget. As Marriott Corporate Office is urging the hotels to put a focus on they contract rates we can expect again an increase in this segment. However Marriott Corporate Office advises the Hotels not to discount the rates less than 25% of the average daily rate (otherwise the head office needs to be contacted for approval).4.2 Distribution ChannelsBusiness TransientIndividual TouristsConference part.Tour GroupsOtherSocial media25%10%50%25%50%Central Reservation System34%32%40%20%GDS27%10%30%Travel instrument2%15%10%25%30%Hotel Website12%17%20%3rd party websites16%Social media is a very legal way of distributing, due to the snowball effect. Direct Sales by the hotel are of course also very important. The Central Reservation System of the Marriott is also used to distribute itself so are the Global Distribution Syst em, Travel Agents (via GDS), the Hotel Website and Third Party Websites (Expedia etc)4.3 Internal financial decisionsInternal financial decisions consist of financial decisions made within the Marriott chain or the Marriott hotel Amsterdam itself, or financial opportunities within the company. The weaknesses and strengths are also a part of this. Marriott International as a stakeholder has more general objectives and goals regarding ecology, human rights, shareholder equity.4.4 PublicTo know what the public or guests thinks of the Marriott hotel, they use feedback forms, customer reviews. The reach the public we make use of marketing and media campaigns.The straw man of Social Media is getting more and more important and is already a successful marketing tool. But only the bad feedback on an online platform like Facebook, Twitter, MySpace etc will have a big influence on customer perception.We assume that our public has a good overall image of the hotel. We do not exclude complains because you cant anticipate on everything.4.5 CompanyFB shall become more coordinated in using international Marriott concepts for outlets. Two concepts will be uniformly implemented in Marriott hotels worldwide The Midtown Grill and The Cigar Bar, as these concepts are now regarded as a standard feature of our hotels by loyal guests, especially US guests.4.6 CompetitorsAfter studying and analyzing the Amsterdam Marriotts budget for the first case assignment, in this chapter we will focus on the current and future market situation and developments.No guests no business Therefore the Marriott hotel has to know its competitors by hard to be a step ahead and make use of its advantages to gain an even larger share of guests and increase revenue as well as profitability.Competition can be differentiated into four main formsproduct form emulationproduct category disputationgeneral competitionbudget competition.In this assignment we will basically focus on product form competition as well as on general competition in terms of f b outlets.In case of the Marriott Hotel this means identifying and analyzing competitors, which offer and demo the same kind of products and services.Following characteristics were used for the selection process of hotel competitorsshelterdiningbusiness facilitieshigh-quality interiorluxury ambianceThe current product competition consists of following hotelsThe GrandOkura HotelGrand Hotel AmstelThe Hilton AmsterdamEden American HotelSince the Leidseplein offers more than 120 restaurants in close proximity, it is rather difficult to define and analyze competition. In the case of the Sorels Midtown Grill we chose competing restaurants offering similar cuisine and/or attracting the same customers.Following characteristics are involved for selecting direct restaurant competitorslocationcuisine elevate/atmosphereopening timesThe competition consists of following restaurants at the LeidsepleinCaf AmericainLos ArgentinosBarbecue CastellHard Ro ck Caf AmsterdamGauchos Amsterdam4.7 attainable future hotel competitorsDue to a recovering world-economy and forecasted trends about travel behavior/ travel patternsof countries such as the USA, European, BRIC ASEAN countries, overnight stays of business and leisure guests will increase in Amsterdam. As there is still sensitivity regarding price-value ratio, especially in the corporate business, following hotels are possible new competitors in 2011.HotelClassificationRoom numbers fixtureDateEden Amsterdam Manor Hotel4****100Linneausstraat 891093 EK AmsterdamMarch 2011Conservatorium Hotel Amsterdam5*****130Keizersgracht 62-641015 CS Amsterdam,spring 2011ArtotelAmsterdam4****105Close to Centraal Stationspring2011City Inn4****540Oosterdoksstraat 41011 DJ Amsterdamspring 20114.8 Market dynamics interaction between hotel and fb regarding demand and supply is efficient. But the changes and the dynamics of the market is beyond control of the hotel. Because the hotel business is not in a n free (open) market.4.9 ConclusionThreatsSocial MediaPossible future hotel competitorsMidtown Grill as a steak house to specificOpportunitiesCommission will be reduced from 3% to 1%.Growth of fixed contracts.Growth of conference and banqueting segmentCigar bar.OccupancySocial MediaGrowth of business segmentMarketing Management 12e page 79