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Corporate Startegy - Guest House Pestle Analysis

Essay by   •  June 24, 2011  •  Case Study  •  1,115 Words (5 Pages)  •  2,176 Views

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3 Environmental Scan

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Like any other business, the Guest House is affected by the following;

3.1 PESTLE Analysis

3.1.1 Political

The improved political spectrum in the Great Lakes Region will have positive influence on the performance of the Hotel Sub-Sector in general and the Guest House in particular. This is evidenced by the end of the war in Northern Uganda, the creation of an independent Government in Southern Sudan, the progress towards an East African Federation comprising of five states and the relative stability emerging in DRC.

3.1.2 Economic

(i) Recent Global Recession;

Up until recently, Uganda had enjoyed macro-economic stability for the last 15 years. This resulted in increased purchasing power and increased investment in the hotel sub sector. The trend was projected to continue but the unforeseen global recession tended to disrupt the picture and affected people's incomes and demand of hotel facilities in the short run.

The world's developed economies have put in efforts to reverse this trend and now there are significant signs that the effects of the global economic crisis may be reducing. In Uganda this is evidenced by the strength of the Dollar against foreign currencies and increased off shore investors in our Money Markets.

(ii) Effects of Investment;

The increased investment in the Hotel sub-sector in the recent past has created a boom in the number of accommodation rooms, conference and other Hotel facilities which in turn has stiffened the competition resulting in reduced rates for these facilities.

(iii) High tax rate:

Owing to the nature of business most of the raw materials used in production are VAT zero rated inputs making the VAT remitted to URA very high. There are also other suffocating Taxes like PAYE, Corporation Tax, Local Government Tax, and Withholding Tax. All these taxes are embedded into the prices making them very prohibitive.

3.1.3 Social

(i) Changes in social-cultural behaviors of the people especially due to the influences of the global village phenomenon, and peoples' needs and wants for new products and trends dictate structural changes in the hotel facilities. For instance, Ugandans now eat out more unlike in the past when they thought that it was a thing for the foreigners;

(ii) Increased mobility has exposed people to advanced hotel facilities. This has resulted into increased expectations from clients as well as demand for "Value for Money' services.

(iii) Increase in demand for social functions is also dictating the structural designs for hotel facilities.

3.1.4 Technological

(i) Faster communication facilities especially high speed internet services greatly influences the guest's choice of a hotel;

(ii) Modern conferencing (internet conferencing), are some of the facilities whose demand is on the increase in Uganda. Due to globalization and the need to do business faster, has increased the demand for internet /video conferencing;

(iii) Partnership with the University Printery for heavy commercial document processing work

(iv) Hi-tech Security System (Card key system, safe guest property custody);

(v) Net worked Management Information System (e.g. cashiering system, order taking, accounting systems, HR systems, Front office operation system);

(vi) On line booking

(vii) Internet advertising.

3.1.5 Legal Environment

Government policies in Uganda oblige facilities in the Hotel sub-sector to fulfill all legal requirements necessary for operations. These include Licensing and Permits, Health Certifications, Workplace Safety Requirements, Environmental Safety Certifications; Insurance Policies (see details in Appendix 2)

3.2 Industry Analysis

Guest House falls under the Tourism and Hospitality Industry in general and Hotel, Foods and Beverage sub sector in particular. This sub sector also provides other related services like sports and recreation and health services, conference facilities, communication e.g. internet, document processing, space for functions among others.

The Hotels and related facilities in this sub sector are graded into one, two, three, four and five stars, each star having different requirements.

3.2.1 Current Trends and Developments

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