Economic analysis and PESTLE for a London hotel and restaurant.

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Mr Abhishek R Patil                                                                                                                               735607



MR Abhishek R Patil




Business environment comprises of two words “Business” and “Environment”.


According to Worthington. I, Britton.C, 2009.

‘Business’ is a commercial activity which is designed to provide goods and services or both to the consumer

 in order to generate profit on a consistent basis.

On the other hand ‘Environment’ refers to the different aspects of surrounding. Therefore Business environment can be defined as surrounding which affects the performance of the organization which cannot be controlled.

Environment has two components:

  • Internal environment.
  • External environment.

 Internal environment: it consists of 5M’s, Man, machinery, management, money, material. It is can be control easily and can make changes accordingly.

External environment: it consists of micro and macro environment.

 Micro environment include suppliers, customer, competitor, buyer and public which are close to the organization.

Macro environment include social, economic, political, legal and technology which normally gives opportunities or creates threats to the business. It not only affects the performance of the organization but also there is the need to change the strategies accordingly.


According to Burton.D and Wall.S, (2011).

Demand can be defined as the quantity of goods or services that customer is willing to buy or purchase at a given price in that given period of time.

 For e.g. Even in recession UK hospitality shows 12% rise due to large number of international visitor visiting Britain and the demand for rooms has been increased at any given price.


From this example we can conclude that if there is demand for a particular product it needs to be fulfilled by supplying right amount of product at any given price.

Each of us have an individual demand for a particular goods or services and demand reflects the value of the product in a particular market. The term ‘effective demand’ means when a consumer willing to buy a particular product is backed up by the ability to pay for it. e.g. if I have a desire to buy an aero plane but don’t have purchasing power it does not mean it is effective demand.

Law of Demand:

According to economists Wessels.W, (2006), if all the other factor are constant there is an inverse relationship between the price of goods and demand it can be also called as ceteris paribus (other things equal) assumption:

  • If price of the goods increases demand decreases.
  • If price of the goods decreases demand increases.                


According to Sloman.J, (2006), Demand curve is defined as the relationship between price of the goods and quantity of goods desired or willing to purchase by keeping the constant levels of other variables such as income, taste, price, buyer and quantity.



         Price of X      









  1. quantity of X demanded

                   Q1           Q2                 per time period.

        Baumol.W,  Blinder.A (2007)           

From the above figure we can clearly illustrate that slope downwards from left to right, recommending that when the price of X decreases, more product is demanded, if price of X rises, demand decreases.(taking into assumption that only price of the product changes). So changes in the price will result in either an expansion or contraction. For e.g. if we take product X to be salmon and if price of the salmon falls from P1 to P2, the demand for salmon will expand from Q1 to Q2 and we can expect some individual to switch towards salmon than any other fish.

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1.1) Shift in Demand

Shift in demand can be referred to a factor that causes the demand curve for product X to move either to the right or to the left.



                       Of X                   ...

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