External influences related to Jaguar Cars and Marriot Hotels

GCSE Applied Business

Unit 1: Task C

External influences

An external influence is an influence that takes place outside the business that still has an affect within the business and their overall performance. The three main external influences are: market competition, economic conditions and environmental constraints.

Environmental constraints:

Environmental constraints are the environmental issues that affect the business. This means that a business would have to do all the things necessary in order for them to be considered “environmentally friendly” which will increase the reputation of the business. Some types of environmental issues are pollution (air, noise and water) the wastage of natural resources. For each of these there are acts that have been put into place which will give a clear guideline to what the business has to abide by in order to stay trouble free, these are: the environmental protection act, clean air act, water resources acts and noise act.

Pollution for example this would fall under the clean air act and the environmental protection act. If a business is producing a lot of pollution it may put of the customers and may also make the employees want to leave the business. Customers will be put of by the business because of the fact that they will feel as the business does not care for the environment, employees may also leave the business as they may feel that they are not doing the things necessary to be environmentally friendly.

Weather falls under the clean air act; if a business is creating too much pollution it affects the atmosphere in that area. The local community may be affected with the high levels of pollution and may complain against the business because of the large amounts of pollution that they are creating. This would lead to a decrease in the businesses reputation because of the fact that they are not keeping the different stakeholders happy.

The clean water act insures that a business does not pollute the water, by pumping chemical waste into the rivers. This would harm the wildlife that may live into the rivers etc. a business must ensure that they do not throw any chemical substances down their drains in order to comply with this act.

The last act that there is the noise act; this is when regulations have been set for the amount of noise that a business makes. Noise pollution would affect the residents as they would be disturbed in their homes. The noise act would contain regulations such as not making noise after a certain time and having machinery etc that does not make a lot of noise.

Jaguar:

It is vital for Jaguar to abide by all the environmental constraints that have been set in place in order for them to succeed further. Jaguar has acknowledged that they need to follow these environmental constraints and they have carried out certain actions for them to abide by them.

The first action that Jaguar did was to put environmental notice boards in various places of the plant. This will make the employees aware of what they have to do to ensure that they do not break the rules. This would help Jaguar become more environmentally friendly as more of its employees will be aware.

The second thing that Jaguar has done is install modern machinery at their plant which is more environmentally friendly for example they have machinery that will clean up the fumes after the cars have been painted. By doing this it means less harmful gasses will be released into the atmosphere meaning that it will help them contribute to becoming an more environmentally friendly company. Another thing that Jaguar has done to ensure that they are environmentally friends is that they have installed a gas fired hear and power plant, this will help the factory minimise the amount of CO2 emissions that they are producing. This would increase their reputation and will draw in more customers as they will be more aware of how good of a company Jaguar is and it would bring more business their way meaning that they will make more of a profit.

In order to tackle the noise pollution problem Jaguar has made sure that they have insulated all of the factory so that the local residents are not being disturbed, by doing this it means that none of the local residents will have a problem with the business, this means that the production line can carry on and this will help them keep their costs down because we know that it costs Jaguar hundreds and thousands of pounds to stop it.

In order to ensure that Jaguar are abiding by the water resources act they have put covers on top of the drains to ensure that no hazardous liquids can go into the water supplies, it also helps Jaguar as it means that they can do their work freely without having to worry about any problems.

Jaguar has also started to recycle; they make sure that they recycle 99% of the unused delivery and packaging materials. By doing this it means that Jaguar is being more environmentally friendly as these materials can be reused. This would also keep the local community and the environmentally conscious people happy as Jaguar would come across as a “greener” company as they are recycling as much as they can.

The last thing that Jaguar has done is that they have changed the material that they are using for the XK and XF models. Normally Jaguar would use mild steel on the body of their cars but they have now started to use aluminium, by doing this it brings them a lot of advantages. The first advantage is that aluminium is a lot lighter than mild steel, this means that the performance of the cars would increase meaning that the customers will be happier because the car performs better then it would have. The second advantage is that while producing the cars with aluminium it is a lot more environmentally friendly than producing the cars with mild steel. The last advantage of using aluminium is that it is a lot safer to use than steel, this is because it is a lot springier meaning that in an impact it would reduce the force of the collision, this means that the safety of the car would increase and this would keep the customers satisfied knowing that they are in a safe car.

By having all of these activities it helps Jaguar comply with all the laws that have been set by the government, this means that they do not have to deal with any complaints and will not be prosecuted. Also these activities mean that the business can run smoothly helping Jaguar meet their production targets and this would lead to the business increasing their customer satisfaction and profit.

Furthermore by having these activities it means that the employees would be proud to work their because of the fact that they are very environmentally friendly, this would lead to the staff absenteeism going down because of the fact that they are happy to come to work. This also leads to Jaguar keeping their customers happy because of the fact that the employees will be enjoying their work and this will ensure that the quality of the car goes up.

By having these activities it does means having fairly large short term costs but it does bring them long term benefits, for example if jaguar do all these activities it makes their customers more aware of them because of the fact that they are more environmentally friendly, this would lead to their reputation to increase and this would lead to the steady increase in sales bringing back the money that Jaguar has spent on the machinery.

Marriott:

Marriott also need to take into consideration all the environmental constraints. The Marriott hotel have realised this and they have realised this by taking out many actions.

The first action that the Marriott has taken out is to use energy efficient light bulbs all throughout the hotel, this is a good idea as it means that they will be using less energy and will be saving the environment because of it. This also brings a benefit to Jaguar and this is that it means that they will be keeping their costs down because these light bulbs are longer lasting and are cheap to run. This means that it would help the Marriott achieve their aim of profitability and this will lead to a return in owner dividends because of the lower costs.

The second activity that the Marriot has it to have double glazed windows all throughout the hotel, this brings many benefits to the Marriott hotel. The first benefit is that the customers will not be disturbed by noise pollution that is caused outside, this leads to customer satisfaction as they are not being disturbed especially by the planes going to and coming from Heathrow airport. The second benefit it has is that it helps the Marriott keep their noise pollution down. For example if the Marriott are holding an event at the hotel and their music is fairly loud the double glazed windows will reduce the amount of sound getting out of the hotel meaning that the local residents will not be disturbed at any point during the day. By keeping the local residents happy it means that the Marriott will not have any complaints coming in which will lead to the increase in reputation as they are keeping all of their stakeholders happy. The last benefit that having double glazed windows has is that the Marriott will be using less natural resources as they will not have to use the heaters that much as the double glazed windows also keep the heat in, this means that they will be keeping the environment safe as well as satisfying the customers because they will be warm and will not be receiving any drift from the windows. Although fitting double glazed windows throughout the hotel would cost them a large amount of money the Marriott will slowly make it back because of the amount of costs that they are saving and through the increase in customers through reputation.

Another activity that the Marriott does is that they try to recycle as much as they can, this could be done by the packaging from the foods etc. by doing this it means that the Marriott is making the most of the resources that they have. They also advise the customers to reuse; this is done by them putting notices up in the hotel rooms asking the customers to reuse the towels instead of throwing them in for the washing after one use. By having this activity it makes the customers aware that the Marriott hotel is doing their best to keep environmentally friendly, this will lead to the increase in reputation because of the fact that customers will be happy to come to the hotel because they are doing their bit for the environment.

The fourth activity that the Marriott has is to try and save water, this helps them use less of the worlds natural resources. There are many things that the Marriott are doing in order to ensure that they use less water throughout the hotel, for example the Marriott hotel washes a large batch of dishes at once instead of washing a few dishes at a time, this saves a lot of water. This will help the Marriott keep their costs down and will also help them achieve their aim of profitability because the less cost they have the more profit that they will make.

The Marriott hotel receives deliveries from their suppliers a lot; this causes pollution because of the vast amount of vehicles that are used for this. There are many ways that the Marriott can overcome this the first way is to by in bulk, by doing this it means that less deliveries will be taking place because the Marriott has some of the supplies. Another way in which they can help reduce the pollution is by finding a supplier that is situated fairly close to them, this would mean that the suppliers will be travelling shorter distances decreasing the pollution levels that are being created. By the Marriott ordering in bulk it could help them reduce their costs because offers may be given to them for doing so, this would help the Marriott achieve their aim of profitability because they will be spending less.

Overall we have seen that both businesses are affected by the environmental constraints that have been put on them. However I think that the Marriott hotel is affected more by them because of the fact that the customers stay at the hotel and the Marriott's business revolves around them. for example the Marriott receives hundreds of customers a day and they all have different needs, this means that the Marriott have to take out activities that satisfy the needs of all the stakeholders involved in the business. However in Jaguar most of the customers do not come to the ...

This is a preview of the whole essay

In terms of profits and sales I think that Jaguar would be more affected because more people are becoming environmentally aware meaning that less people would be buying cars as it has been said that they are one of the largest sources of pollution. Whereas in the Marriott hotel however they are not making a product that causes global warming, they are just providing a service to the customers, this means that the customers would not be as weary as staying at a hotel then they are with a car business. If Jaguar had to take out an activity to ensure that their sales and profits are not affected they need to think of designs that keeps up with the environmental issues, for example building a hybrid car, this would increase their sales and profits as more people would buy a Jaguar due to the fact that it is very environmentally friendly.

Impact on variation:

If the laws were to become stricter it would affect both businesses vastly. This would result in the business having to come up with more activities to ensure that they are not breaking the laws that have been set.

If a law was set in place to limit the carbon footprint of each person for example limit the amount of aeroplane travels or the amount of distance travelled in a car then it would affect both businesses. It would affect the Marriott because their customers come from Heathrow hotel, however if the possible customers are limited to the amount of aeroplane travels it could result in a decrease in customers which will affect the businesses profit as not a lot of customers will be coming to the hotel. This would also affect Jaguar as people would be thinking of other ways of travel, this would mean that less people would be buying their cars because they will not be able to use them to the full extent.

If there was a law for how much CO2 emissions are produced per business this would also affect both businesses. It would affect Jaguar as it would mean that they cannot keep their production line running all day and they would have to stop, this would increase the costs because it costs Jaguar hundreds and thousands of pounds to stop this and it would also decrease customer satisfaction because it would mean that they will have to wait longer for their cars. Jaguar may also have to buy more equipment which reduces their CO2 emissions, this would cost them a lot of money and it would take them a lot of time to recover from the amount that they have spent.

If the water resources act were to get stricter it would again affect both businesses. Jaguar would have to ensure that they dispose of all the paints properly; this would cost them a lot of money as they would have to go through the process of taking it to a place where it can be disposed of. The Marriott would also be affected because it means that they would have to make sure that when they wash the dishes etc it does not contain anything that pollutes the water, they would also have to ensure that the kitchen is keeping all the toxic things to one side so that it does not go into the water supply.

I think that if there was a variation on the laws that have been set Jaguar would be affected a lot more because of the fact that they are affecting the environment more then the Marriott because of the service that they provide, for example they make the cars which affects the environment but they are also giving the customers cars which will affect the environment further, however the Marriott are just providing rooms and other facilities and they are not affecting the environment as much as Jaguar. As more and more people are becoming aware of the concern of the environment I think that Jaguar would be affected more because people would realise that Jaguar are less environmentally friendly than the Marriott hotel. Also in order for Jaguar to ensure that they keep their customers on their side it would mean that they would have to spend a lot of money so that they keep environmentally friendly.

Market competition:

Market competition is when a business wants to dominate the market and gain as many customers as possible. Businesses would have competition with other businesses that offer the same services as each other, for example if the business was a restaurant that business would have competition with other restaurants and food places in that area. There are many things that a business can do. The first thing that a business could do is to have cheaper prices then their competitors, by doing this it means that the customers will be happy because they are paying less thus meaning that more customers come to the hotel, however they will have to ensure that they do not put their prices to cheap so that they do not make a profit at all. The second thing that they could do is to ensure that the quality of the service that they are giving is better; this would mean that the customers would be happy as they are getting better quality service for their money. Another thing that they could do is to provide better customer service, this would keep the customers happy and would increase their reputation meaning that more customers would be aware and more customers would come there.

Jaguar:

Market competition affects Jaguar severely; this is because they have many rival companies also making cars in the same league, for example luxury cars. Other companies that would be a threat to Jaguar would be Bentley, Porsche, BMW, Mercedes, Audi, Volkswagen and many more. In order for Jaguar to gain a competitive advantage they will have to ensure that they are better then the competition in every way possible. Market competition stops Jaguar in achieving some of their objectives, this will be discussed in this section of the document.

The first thing that Jaguar does it to ensure that it has good quality cars, by doing this it means that they have an advantage because the customers will be more satisfied with the company and this would lead to a better reputation. If Jaguar do this properly then it would help them achieve their aims of delivering exciting new products, the increase in the UK luxury car market because of the fact that Jaguar sales are increasing because of the better reputation and profitability because more people would be buying the cars. However by having market competition it does put strain on some of the aims that Jaguar have. The first aim that the market competition puts stress on is keeping the overall costs to the 2004 level, this is because if Jaguar want to keep the quality as high as they can it would mean that they would have to spend a lot of money for the better quality goods this would mean having to spend more. Jaguar could overcome this by finding the best supplier that offers good quality goods for cheap. Another aim that market competition puts strain on is their share in the UK luxury car market, this is because the other companies will also be trying to improve their cars and if they succeed in this it would mean that Jaguar would be left behind and the customers would be going to the other car companies.

Another thing that Jaguar could do to ensure that they are better then all of their competitors is to offer cheaper cars. By doing this it means that customers would go to them because they do not have to pay really high prices for the cars. By doing this it would increase their reputation and would help them meet their aim of increasing their share in the UK luxury car market. However by offering cheaper cars it would also have a negative affect on their aims, for example if they sell their cars for really cheap they will not be making a large profit like they would have been making, this means that it would be harder for them to achieve their aim of profitability. Also Jaguar may decide to buy cheaper quality goods so that their cars are cheaper, this would have an effect on the quality of the car and this could lead to customer dissatisfaction meaning that their share in the UK luxury car market will decrease because of the bad reputation.

75% of jaguars customers go abroad and 50% of this goes to America. The exchange rate at this time is currently very weak, this means that America would not be buying the cars as it would be more expensive for them to buy, however if some of their competition have more sales in a different country that are not effected by the exchange rate as much as America it would mean that this business will be benefiting more as they will not be losing customers like Jaguar is.

Marriott:

The Marriott are also affected by market competition. The difference between jaguar’s competition and the Marriott's competition is that Marriott is located on bath road and along this road there are lots of other hotels which all provide the same service, examples of Marriott’s competition are Sheraton Skyline, Radisson Edwardian and Park Inn. This makes it a lot harder for them as it means that they have competition which is really close so one lapse in the business could mean the loss of many customers, for example if the Marriott put there prices too high and the Radisson have a cheaper price the customers are more likely to go to that hotel because it is a lot cheaper. In this section I will talk about how the market competition affects Marriott's aims and objectives.

The first section that I will be talking about is the price that the Marriott hotel puts on its rooms. When a customer looks at a hotel the price immediately stands out to them, this means that the Marriott have to get their price right as it could determine whether they win over their customers or not. When doing this the Marriott need to ensure that they do not put there prices too low because it could mean that they end up not making a large profit, if this happens it would affect their objective of making a turnover of 20 million pounds. The way in which market competition affects the Marriott is because if there competition put their prices lower then it would mean that the customers would go to the cheaper hotel, this would mean that the Marriott would be losing out on customers and this would mean that they will lose out on their chance of achieving their objective of a turnover of 20 million pounds. If the Marriott want to overcome this they will have to keep a close eye on what the other hotels are offering and what prices they are offering them at, by doing this the Marriott can adjust their pricing so that the customers still consider going to the Marriott. However this may mean that the Marriott would be making less profit because of the low prices that they are selling the room at, the way in which the Marriott can overcome this problem is by finding a cheaper supplier so that they keep their costs down which will mean that they will make more profit.

The second thing is the quality of the service that the Marriott provide their customers. This is vital in any business as they would want to provide the customer with the best possible service that they can so that the customer is as happy as they can be. For the Marriott to get the best possible customer service they will have to provide the customers with: good quality rooms, good customer service provided by the employees, range of products and facilities available at the hotel, and the help that the customers are given if they have any enquiries. Market competition puts stress on the Marriott in various ways. The first way in which they put stress on the Marriott is if they have a wider range of facilities available at the hotel, if this happens it would mean that the customer would want to go to the opposing hotel as they provide them with more services, this would mean that the Marriott would be losing out on customers and this will affect the rate in which they achieve their objective of making a sales turnover of 20 million pounds. The way in which the Marriott can ensure that they bring back the customers is to match the new facilities that the other hotels have but to also add more that they do not yet have, by doing this it would draw a lot more customers in and would help them achieve customer satisfaction as the customers will be happy that there are a lot of facilities, it will also help them meet their objective of making a sales turnover of 20 million pounds. Although adding new facilities would cost them a lot of money to put in place it would bring them money in the long run because they will have more customers coming to the hotel.

Impact on variation:

If the market competition were to change it would affect both businesses a lot, they will then have to take out activities so that they are not affected by the variations.

If the market competition was to change their prices then it would affect the business as they would also have to change their prices in order to bring the customers back to them. For example if jaguars competition changed their prices it would mean that the customers would be going to their rival companies as they will be getting a better deal, in order for jaguar to overcome this they also need to lower their prices so that they are not affected by the price changes by their competitors. Whilst doing this they need to take into account that they do not put their cars too cheap as it could mean that they will be making a loss or hardly any profit at all. This affects the Marriott in the same way, for example if the Marriott’s competitors lower their prices then it would mean that they would have to do the same in order for them to draw the customers in that they have lost, again they need to take into consideration how much they are lowering it by so that they do not make a loss whilst doing so.

Another variation that might take place is the change in interest. It affects jaguar as because the car market constantly changes because the change in design and the change in the way the cars work for example as time goes by cars become more sleek and also develop new ways of working to bring the customer driving it benefits, jaguar will have to take this into account and do their own research in order for them to keep up with the latest trends in car design. This also affects the Marriott because if their competitors make a change to their hotel which starts to draw more customers in then it would mean that the Marriott will be losing customers. In order for the Marriott to overcome this they will also have to match and come up with other ways in which to draw the customers in.

Another impact of variation is if another business is created. If another business is created it would affect jaguar as it means that they will have another company to compete against that will be bringing something new to the market. The way in which it affects the Marriott is because it would mean that they will again have another hotel that they will be taking customers away from them. If another business were to start up it would affect jaguar more as in the car industry there is lots of things that new car companies can bring to the market meaning that jaguar would have to again match this, however it does not affect the Marriott as much as in the hotel industry there is not much change that can take place.

Conclusion:

I think that jaguar are more venerable to market competition as a whole as the car market is constantly changing because of the new designs and the new technology that is being put into them, this means that they will have to improve their cars almost constantly as new cars are released all the time. Because of this it would mean that their costs will go up because of the money it would cost for them to do the research and also produce the new car. This affects how quick jaguar can achieve their aims and objectives. However at the Marriott hotel they will not be as affected as they just have to make minor changes such as changing the prices of their services. This means that their costs won’t change by a lot because of the minor changes that they are making.

Economic conditions:

The last external influence that influences the way a business runs are economical conditions. The economic conditions is the way in which the current UK economy is working (Gross domestic product) the gross domestic product is calculated by how much money is earned and spent by the individuals, businesses consumers and the government. It is the government’s duty to manage the UK’s economy and has set 3 main objectives together with the Bank of England to ensure that the UK does not go into an economical crisis. The objectives are:

Steady Growth
Low unemployment
Low/stable inflation

Steady growth is vital as it controls the money being spent and earned; steady growth makes sure that it increases steadily through time. By having steady growth it means that aspects such as the recession can be avoided and consumers are still able to buy and sell at reasonable prices. The level of employment is vital as if there is a high level of unemployment then it would mean that the consumers would not be able to buy anything. If this happens then it would mean that the first objective of steady growth will not be possible because of the fact that the consumers will be spending nothing at all. Unemployment is a consequence of recession, which is why these objectives combine to make sure that recession does not occur. Since the government is aiming for low unemployment and most consumers are working and receiving a good income this enables them to spend money allowing steady growth to happen. The last objective means that they would want the products that consumers buy to stay fairly low so that consumers can still spend there money. If the inflation were to be high then it would mean that consumers would not be able to buy products and this would stop steady growth.

If the economy meets these objectives then it would benefit businesses as it would mean that they can make plans for expansion as well as managing their costs and borrowing money more appropriately. The effect of steady growth is that businesses can afford to make the business better and improve their services because now they have more money to spend towards their organisation. By having a low inflation it would mean that the cost of borrowing will decrease this means that businesses can take out loans etc. without having a major debt problem. This will help to prevent negative aspects such as recession as there will not be a loss of money in the economy.

Inflation:

Inflation is the steady increase of prices and the falling value of money all the time. There are two ways in which inflation occurs this is because of cost push and demand pull.

Cost push is when the cost of producing products throughout the world goes up, in order for a business to still make a decent profit they will sell their products at a higher price so they still make a high profit margin. The way in which cost push usually occurs is because the price increase of natural resources, labour and materials. The cost of natural resources constantly is increasing because the lack of it, this makes it rarer and this will increase the price that it is being sold at. Oil is also a vital resource as it not only helps to make the product it also helps to deliver it. If the price of this goes up it would mean that the business would be spending more and they will either have to find a cheaper supply of oil or to put their selling price higher so that they can make some sort of profit.

Demand pull is where all businesses are trying to sell their products at a maximum price as there is a huge demand for the product itself. Businesses take advantage of the demand for their product as if a lot of people want to buy it and they need it then they will increase their prices so that they will make more of a profit. Organisations that do this are called profit maximises; they are called this because they take advantage of the demand for their product and they raise their prices in order to maximise their profit.

Jaguar:

Inflation rates affect jaguar in many ways. If there are low inflation rates It helps jaguar meet their aims and objectives in many ways however if the inflation rates are high it will stop them from meeting them.

High inflation rates would mean that the customers would not be spending a lot of their money on leisure purposes as the as the prices that they are being sold at will go up, also they will not be buying products because of the fact that there will be no increase in the consumers wages. This means that if they spend there wages that they are currently earning with the high increase of prices it would mean that they are losing a lot of money.

The second negative impact that it would have on them is their employees will be de-motivated. This is because the prices of products will be rising and because jaguar has given them no pay rise it would mean that they will be unhappy as they will be struggling with their personal lives. Because they are de-motivated it would mean that they will not be concentrating on their work as much because they are unhappy, this would mean that the car quality will be going down and this would also lead to customer dissatisfaction as it would mean that they are getting lower quality cars.

The last disadvantage to high inflation rates is that all the resources Jaguar uses to make their cars and to deliver them would be more expensive, this means that in order for them to make a healthy profit they will have to raise the prices of their cars. By doing this it brings them many disadvantages as it could mean that they will lose customers because the new prices of their cars will be too high. This would mean that there sales will decrease and it would also mean that there share in the UK luxury car market will decrease because of this.

However if there was a low inflation rate it would also help Jaguar as it would mean that there is a healthy economy. If there are low inflation rates it would mean that people would be willing to spend there money because the prices of products are not high, this would mean that jaguars sales would potentially increase because more people are willing to buy there cars. This would help Jaguar meet there aims of increasing there share in the UK luxury car market and customer satisfaction. The way in which it helps meet customer satisfaction is because they will be getting a luxury car for cheap, this then increases their share in the UK luxury car market because of the fact that more people would be buying the cars because of the cheap prices.

Another benefit that low inflation rates brings is that it would help Jaguar keep their costs down, this is because the price of the materials would be fairly cheap, because of this Jaguar can then make a large profit because of the fact that they will be selling their cars for the same price but the cost of producing the cars would be low. This helps Jaguar meet two of their aims, these are keeping their costs down to the 2004 level and to maximise their profits.

The last benefit that it would bring them is that their employees would be happy, this is because their wages would not be small compared to what they would be if the inflation rates were high. They will also have a better quality of life because of the fact that the prices for products is low so they can spend how much they like. Because of this the employees would be happy to work at the plant and they will be doing their work to the best ability that they can. This helps Jaguar meet three of their aims. The first aim that it would help meet is employee satisfaction, this is because they will be happy to work at Jaguar because there wages are good. The second aim that it helps them meet is customer satisfaction; this is achieved because the employees are happy meaning that the quality of the cars would increase. The last aim that is met is the increase of their shares in the UK luxury car market, this is because their reputation would increase because more people have jaguars and the quality of the cars would be increasing meaning that their reputation would increase with it, this would increase their sales and the share in the UK luxury car market.

Marriott:

Similarly to Jaguar the inflation rates also have an impact on the Marriott and how they meet their aims and objectives. Again if the inflation rates are high it would stop the Marriott from meeting their aims and objectives efficiently and if they are low it would help them meet their aims and objectives.

The first drawback of high inflation rates is that they will lose the small amount of leisure customers they have. Although a very small minority of the Marriott's customers are leisure customers it would still have a big impact on them. for example the high inflation rates would mean that the Marriott would have to put their prices higher because of the fact that it costs them more to run it, this would mean that people would see the hotel as “expensive” and less people would go to the Marriott to use their leisure facilities as they would be seeking somewhere cheaper. This stops the Marriott from achieving their aim of customer satisfaction and also stops them from their aim of making profit.

As 80% of the Marriott's customers are business customers it would not affect them greatly because it means that the business is paying for their stay at the hotel, however if this business were to realise that having these high inflation rates also affects them because of the fact that their costs would be going up dearly it would mean that they would stop spending at the hotel. If this happens it would affect the Marriott vastly because of the mass number of business customers that use the Marriott hotel. This would stop the Marriott meeting their aim of profitability because they would be losing their biggest source of income.

Furthermore the inflation rates will have the same affect on the employees at the Marriott as they did at Jaguar. Because of the high inflation rates the Marriott would keep the employees wages the same as it would costs them dearly if they were to increase them. Because the wages have stayed the same and the price of product has risen then it would mean that the employees would be expecting a pay rise but because the Marriott is not giving it they will feel de-motivated. Because of this they will be unhappy to work and they will be giving the customers with a poor customer service. This stops the Marriott from achieving three of their aims. The first aim that it will stop is associate satisfaction; it will stop this because the employees will not be happy because of the fact that they are not getting the right pay. The second aim that will be affected is customer satisfaction, this will be stopped because of the fact that the quality of customer service has fallen because of the unhappy employees. The last aim that it would affect is profitability, this is because the more customers that are dissatisfied the less that would come to the hotel, and this would mean a lack of sales and a lack of income. The Marriott are more reliant upon customer service as they come face to face with there customers however Jaguar do not, this means that the Marriott would be more affected if the employees are not satisfied where they are working.

However low inflation rates also helps the Marriott. The first benefit that it brings to the Marriott is that more leisure customers would be coming to the hotel because of the fact that they can spend more money. The increase of leisure customers would mean more of an income for the Marriott and this would lead to having more profits made.

Another benefit that it brings to them is that the employees would now feel happy working at the Marriott because there wages would be fairly reasonable because the price of goods is not that high. By them being motivated to work it would mean that they would be happy and the customers would also be happy as they are receiving a good customer service.

The last benefit that it brings to the Marriott is that they will make more profit, this is because the price of goods would be cheaper then they would be if inflation rates were high. For example the Marriott would be paying less for toiletries in a time where there is low inflation than when there is high inflation. Because of this it would mean that the Marriott would be making more profit as there costs are being kept down.

Conclusion:

For both businesses having high inflation rates would affect the way in which they meet there aims and objectives. In terms of Jaguar having high interest rates would mean that the price of everything would go up whereas the wages would still stay the same, this would mean that the employees would be struggling with there personal lives as they are struggling to pay for goods. This leads to employee dissatisfaction which would reflect in the quality of the cars as they would not be putting a lot of effort into making the cars. Because of this Jaguar would be struggling to meet all there aims as there employees will not be satisfied, there customers would not be satisfied, and this would also lead to the decrease of their share in the UK luxury car market.

In terms of Marriott again the employees will be unhappy if there were high inflation levels as they would not be able to pay for day to day goods. This would affect the level of customer service being given to the customers. This again stops the Marriott achieving their aims. It would stop them from achieving employee satisfaction, customer satisfaction and would also affect their profits.

Overall I think that the Marriott are affected more by inflation rates because of the fact that the employees actually come into contact with the customers and if they are dissatisfied it would mean that they will potentially lose a large amount of there customers. However Jaguar does not come into contact with there customers so the customers would not be as dissatisfied as they would at the Marriott, also employee dissatisfaction would not have that much of a large affect on Jaguar as most of the cars are built by machines, this means that the employees do not come into contact with the cars that much although at the Marriott it is all about the meeting between the employee and the customers.

Interest rates:

Interest rates are the rates set by the Bank of England; they are also known as base rates. At the moment the current base rate is at 0.5%. The Bank of England sets the base rates and interest rates taking in account the current state of the UK’s economy. They look at how many people are borrowing money at the time and they base the new base rate depending on these factors. If inflation rates, interest rates and exchange rates are low then it would mean that the UK would be in a “boom” this is when the economy is at its best position. This is what the UK’s target is instead of its negative situations such as recession of going into “bust” this is when the economy is at its worst position.

Jaguar:

Interest rates have a major affect on businesses throughout the world, they either have benefits on they affect them in a negative way. Jaguar was recently brought out by TATA motors, before this they were owned by ford which failed to brings them a profit for 19 years. This would have created problems for Jaguar and put them in major debt. However since being bought out by TATA motors they may not have been affected much by this as TATA may have paid some of there debts off.

Interest rates have many negative affects on Jaguar and there performance. Similarly to inflation rates interest rates also affect how people buy there cars. Some customers take out a loan in order to buy a car, however if interest rates are high then they will hesitate as it may mean that they will not be able to pay back the full amount of money that they owe. Because of this Jaguar will be losing out on potential customers, this will mean that they will be losing out on profit because less people are buying there cars.

Also as the car market is constantly developing as the level of technology is getting better and better it may encourage Jaguar to do more market research and develop new cars in order for them to keep up with the new trends. However in order for Jaguar to do this they may have to take out a loan because of the vast amount of money needed to do this, if the interest tares are high then it would be a bad idea for them to do so because they may not be able to pay the money back as quickly as possible. This will lead to them having a large debt that they are unable to pay back.

However interest rates can also benefit Jaguar. If the interest rates were low then it would mean that customers who take out loans can do so and they can buy jaguars without hesitating. This would mean that the amount of jaguars sold will increase and they will be making more profit as well as increasing there share in the UK luxury car market.

Another benefit that low interest rates brings them is that they can take out loans and use this to do the necessary research which will allow them to develop new cars. By doing this it would help them meet their aims of delivering exciting new products, keeping customers satisfied and also maximising their profits.

Marriott:

Marriott were previously owned by Whitbread and recently they were brought out by Marriott international. They were bought out by taking out loans, this meant that the business were immediately put into a difficult position as they had many loans to pay back. The negative effect that it had on the Marriott is that the higher the interest rates were the more difficult it was for them to pay back as it meant that they would be paying a lot more.

Another negative impact that it has on the Marriott is that approximately 70% of the population in the UK has debt due to credit card or mortgage costs. This means that if interest rates were high then the disposable income would be decrease meaning that people would be spending less as they will not be paying there debts off. This would affect the Marriott as it would mean that they will not be coming at the Marriott to stay there because they will be finding it difficult to find the money that they require to stay there. This affects the Marriott as it means that they are losing customers and this would mean that they will not be making that much profit.

Low interest rates also have a positive impact on the Marriott's performance. If the interest rates were low then it would mean that the Marriott could pay back there debts a lot easier meaning that they will be making more profit as they will not be paying of their debts. This would help the Marriott achieve their aim of profitability.

Conclusion:

I think that in terms of interest rates Jaguar are affected more because they will lose out on customers more then the Marriott. This is because a majority of them will have to take out a loan in order to buy a car however at the Marriott they are not paying as much money as buying a car so taking out a loan is not a factor. If interest rates were high then it would mean that these people would not be taking out a loan so Jaguar would be losing out on all these customers however the Marriott wont as there customers would not be taking a loan out. Another reason is that as 80% of the Marriott's customers are business customers they will not be worrying about the high interest rates because the company that they work for would be paying for it. But because most of jaguar’s customers are buying the cars for themselves they may find it difficult. If interest rates were high then it would increase jaguars costs because they have been out by TATA which means that they still have some debts to pay, but if interest rates are high it would be hard for them to do so because it would mean that there costs would be significantly higher. This would prevent them from their aim of keeping there overall cost down to a 2004 level. Also the higher their costs are the lower their profit margin would be because they are spending more, this would affect there aim of profitability. Interest rates would also affect the Marriott as their leisure customers would be coming less to the hotel, this would mean that the Marriott would be losing customers and potential profit. However the Marriott will not be as affected as Jaguar as they won’t lose that much of their sales as most of their customers are business customers.

Exchange rates:

Exchange rates constantly change; exchange rates are how much of a currency you can buy with their own currency. Exchange rates are vital when people go abroad and business purposes, the reason why they are vital is because one type of currency may not be the same as another currency so they need to be exchanged in order for you to receive the type of money in that country. For example if a British person was to go abroad to America they would have to change their pound to dollars because they do not accept pounds in America. The strength of the pound depends on the prices of the market at the time, at the moment the current strength of the pound is £1- $1.4.

Jaguar

The different exchange rates would have a variety of affects on Jaguar. As 75% of their cars are sold abroad it means that they are dependent on the exchange rate. 50% of this goes to America; this means that they need the exchange rate to be going there way in order for them to get the maximum customers in order to make profit. At the moment the current exchange rate is £1- $1.4 before this the pound was worth $2. Because of this it is beneficial to Jaguar as it means that more customers would be buying there cars abroad, this is because it would work out cheaper for them as it costs them £1.4 for every pound appose to $2. Similarly throughout the world if the pound continues to decrease then it would mean that other countries would also find it cheaper to buy the cars. If this happens then it would mean that jaguars sales would be going up.

However although it brings Jaguar some benefit it also has a drawback, this is that Jaguar may find it difficult as their costs would be rising as they buy the components of their cars from abroad. This means that if the strength of the pound was weak it would mean that they would be spending more but if the strength of the pound was high then it would mean that they are spending less. However if the pounds strength was higher it could decrease the number of customers abroad as it would be more expensive for them to buy.

Marriott:

The exchange rates also affect the Marriott but not as much as Jaguar. Just like Jaguar does the Marriott also purchases their supplies from abroad. If the strength of the pound it high then it would mean that they can buy the supplies for cheaper. However if the strength of the pound was weak then it would mean that it would be more expensive for them, if this was to happen then it would mean that they will be making less of a profit as their costs will be going considerably up.

In terms of the customers the Marriott would not be as affected as Jaguar as most of their customers are business related; this means that the business would be paying for them so the exchange rate would not be much of an issue.

Conclusion:

The change of exchange rates would have different effects on the Marriott and Jaguar. Depending on the exchange rates it either helps them meet their aims and objectives or prevents them from doing so. Firstly if the strength of the pound was high then it would help Jaguar meet their aim of keeping their overall costs to the 2004 level because it would mean that they will be buying the goods for cheaper, thus saving them money. However if the strength of the pound was low then it would mean that they will be spending more stopping them from achieving their aim of keeping their costs low to the 2004 level, this may mean that they will have to find a supplier in a country where the strength of the pound was high so that they can buy it for cheap. However when doing this Jaguar need to ensure that they find a supplier that is giving them good quality materials otherwise it would stop them meeting their aim of improving the quality of their cars.

In relation to the Marriott hotel if the value of the pound was high it would mean that when they buy their products from abroad it would be cheaper for them to do so helping them meet there aim of profitability. However if the strength of the pound was low it would mean that they would be paying more for the goods and this would mean that they would be making less of a profit as there costs will be going up, this would also mean that they cannot give there shareholders big dividends. However if the strength of the pound is low then it would mean that it would be expensive for them to be buying abroad and this would mean a reduction in the profits because of the high costs. However if the exchange rates are low it also brings a benefit to the Marriott as it means that the customers coming from abroad will increase because of the fact that it would be cheaper for them to stay at the hotel.

I think that Jaguar is more vulnerable to exchange rates because they are more dependent on their sales coming from abroad and also more dependent on the supplies that they buy from abroad. As they sell 75% of their cars abroad if the strength of the pound was high it would mean that less customers would be buying jaguars as it would be more expensive for them. However it does not affect the Marriott that much as most of their customers are business customers so the business would be paying for them so money is not that much of an issue. Also as both businesses buy their supplies from abroad if the exchange rates go up it would have more of an effect on Jaguar as it would be harder for them to change their suppliers as there materials are not as easily found as that of the Marriott's. at the Marriott hotel however if they had to change their suppliers it would be easier as they only buy smaller produce that is more easily found.

Overall vulnerability:

Overall I think that Jaguar is more vulnerable to external influences then the Marriott is. Jaguar is more vulnerable in terms of environmental constraints as there are always new laws being added to help protect the environment. These laws would affect Jaguar more as they produce cars, this contributes to global warming more then what the Marriott does which is to provide hotel rooms. In terms of market competition Jaguar are again more vulnerable because of the fact that the market is constantly changing so it means that Jaguar would have to do all the research needed for them to keep up with the market, this would cost them a lot of money and this would mean that they will not be achieving their aim of keeping their costs low to the 2004 level. However at the Marriott it is easier to keep up with market competition because all they have to do is make slight changes such as change the price according to what the other hotels are offering their customers. Lastly in terms of economical conditions I again think that Jaguar are effected more than the Marriott, this is because as they were recently bought out by TATA motors and before this they were own by ford. Whilst owned by ford they failed to make a profit in 10 years, this means that if they are taking out loans etc it would be difficult for them if interest rates are high. In terms of inflation rates again Jaguar are more affected as it would cost them more to produce and this would mean that they will have to raise the prices of their cars, if this happens then it would mean that they would have less customers as it would mean that they may not be able to afford the cars itself. It does not affect the Marriott that much as the room prices are fairly low so customers would not struggle as much to pay for the cars. Also the Marriott would not struggle as much because most of their customers are business customers meaning that they would not be worried as much about the price of the service. Jaguar is also far more reliant upon exchange rates than the Marriott is. As Jaguar buy there supplied from abroad they will need the strength of the pound to be high so that they keep their costs low, however if it is high then it would mean that they will be spending more and it would decrease their profits. Also as most of their customers buy from abroad they would want the exchange rate to be fairly high so that they do not have to spend that much but they would also want it to be fairly low so that customers abroad can still afford it, because of the fact that they are not in control it makes it a lot harder for them. Whereas the Marriott also buy their supplies from abroad they are minor supplies and they can find another supplier easier then the Marriott can as there product are more easily found then that of Jaguar. In conclusion Jaguar is more vulnerable to external influences.

Heston Community School