Table of contents

I. Introduction

This report places its focus on investigating both the micro and macro environment
elements affecting the operation process and commerce-related practices of business in
the field of hospitality with the case study of Sofitel Hotel in Australia. The beginning of
the paper will mention the basic information of the hospitality industry in Australia and
the background of Sofitel in this country as well. A brief evaluation of micro forces such
as rivals examination, consumers investigation and more thorough exploration of the
company activities will be analyses at next part of the report. Besides, the reports also
looks at macro factors such as technology, economics as well as demography and so on.

In terms of Sofitel, it can be seen as the only high-end hotel originating from France
which thrives well in Australia market with the expansion of numerous branches in key
cities such as Brisbane, Gold coast, Melbourne and Sydney. Sofitel has also built its
reputation in lots of capital cities and developed countries worldwide. Its success can be
seen as a result of its clear understanding of the micro and macro environment forces
and its wise application of suitable marketing strategies (AccorHotels Australia, 2016).

II. Business Overview

Sofitel Hotels & Resorts represents itself as a chain of luxury hotels firstly established in
Paris, France, and under the management by Accor for over 41 years counting til now. Built
in France in 1964, Sofitel amazed the world with its fast international expansion to many
global countries, various regions with the existence of over 200 properties. 2008 witness a
huge leap in its branding when Sofitel built its name as a brand of luxury hotels only,
reducing its property number to less than 100, and formed new brands (Wentworth, 2016).
.

III. Macro and micro environmental factors

1. Its definitions
With a view to obtaining an efficient strategic practice, a firm needs to match its competences
with its business setting. To be more specific, these competences must be compatible with the
promising chances as well as risks which the company might confront in the future. A major
point in the notion of achieving success lies in the act of examining the environment in order
to consider organizational trends and modifications in creating tactics. To comprehend this,
the concept of “external environment” or “Macro forces” should be thoroughly discussed and
recognized. Macro forces a company can be exposed to embrace all the elements which the
firm can not exert control on or even if possible, the impact is very minor. Regarding broad
definitions, the main environmental elements can be divided into macro environmental
factors and the micro one. The emphasis is to view the chances and possible risks while
planning effective tactics (Kaplan & Norton, 2008).

The notion of macro factors is its being dynamic in nature hence it never ceases to change. It
embraces the external elements which are not determined by the firm’s power yet they make
a huge impact on the firm’s operational activities. It involves people, groups, agencies and
others which the firm maintain business contact with during the business.
The element of Macro forces will be taken into account when the companies are active in a
dynamic politics, economics, social and technological environment. Macro Environment can
be analyzed at greater depth via PESTLE Analysis. PESTLE is the short form of those
variables existing in the business setting such as Political, Economic, Socio-cultural,
Technological, Legal and Environmental. These elements investigate both economics and
economics-irrelevant features like public concerns, governmental regulations, launched
policies, family structure, population, inflation rate, GDP perspectives, income division,
ethnics, political news, taxes, and duties, and so on

Micro forces or internal environment of an organization embraces variables regarded as

strengths and weaknesses which exist within the company and are not usually within the
short-term management. These elements establish the environment in which work can be
executed. Corporation structure, cultural features, and resources can all be found in micro
forces. Applying micro forces in the operation process of the organizations allow them to
enhance its competitiveness to gain more market share and avoid so-called strategic surprises
and ensure the sustainable growth of the company also (Estrin, 2009)

The concept also indicates the setting which has the direct interaction with the company and
can influence the usual activities of business immediately. It is closely intertwined with a
small field in which company operates. The micro forces contain a set of the forces that are
close to the firm. As shown in the picture below, its elements can be listed as suppliers,
opponents, marketing intermediaries, customers and the organization itself.
 2. Discussion of the identified forces within the chosen industry

Evaluating the Macro Environmental Forces

Customer factors: The major objective of the Sofitel hotel always lies in offering the above-
average class with luxurious services on a global scale. The targeted customers of Sofitel
might be those with high stable income so that they can afford the expensive, unique
services offered by them. With a view to upgrading its care towards customers and the
brand value, the company has dedicated to providing high-end with good quality service. In
Australia market, the customers of the hotel mostly are tourists visiting the country. The
visitors coming from different corners of the world tend to be willing to pay for luxurious
experiences which also matches the objective of the company (Hollensen, 2015).

Opponents in the Market: With a close look into Australian hospitality market , it seems
clear that the Accor group is faced with threats from other huge rivals. The main
competitors of the Sofitel had already built their names and cemented their positions within
the market. The big opponents like Hilton hotels, Hyatt and JW Marriott are all well founded
and have the power to pose a challenge to the existing position of Sofitel in Australia. Those
competing with the company have their own effective marketing strategies and are aiming
at the elements such as service quality, facilities, price and so on to threaten Sofitel’s status.
Besides, the company is also confronting higher competition coming from new potential
competitors starting to enter the market. It is true that Australia market is in high demand
of high-end service which hence attracts lots of investors in the Hotel industry. As the
market is getting more and more competitive, Sofitel must apply very wise pricing strategy
to maintain or even expand their current position (Erel et al. 2012).

Analyzing the Macro Environmental Factors

Economic elements: Australian economy owns considerable elements which can fluctuate
the operation activities of Sofitel hotel within country. In Australia, luxurious products and
services are taxed at quite high price. Should the governmental authorities decide to raise
the luxury tax, it will influence the company abruptly. This will also influence the tourism
segment of Australia since the greater rise in hospitality surcharges will make the tourists
opt for more affordable alternatives. Because Australia is regarded as a developed country,
its economy is quite stable and has good flow. Even so even a small change in its economic
status will create an impact on the revenue of Sofitel. The variation in the financial elements
tend to influence the requirement in market, services fee, and profit range created. Except
from these relatively insignificant perspectives like integration and acquisition of the
institutions will also influence Sofitel. Although these features are existing within the field,
Sofitel is showing good performance and boosting its revenue (Skokic et al. 2016).
In 2020, the pandemic of Covid 19 has affected hospitality industry heavily in terms of
economics. The interruption happening within the industry to ensure people’ safety, the
closure of hotels and any hospitality-related services creates an economic stagnation within
the country as so many people lose their jobs and also their income. This year has also
witnessed many hotels announcing bankruptcy due to economic breakdown created by the
pandemic. 2021 is expected to see the economic recovery within the Australian hospitality
industry

Technological forces: this feature is an influential one which immediately impact both the
business and the consumers. Today, the company managerial practices has motivated the
establishment of the majority of advancing technologies in their hotels to draw more
customers’ attention. Sofitel has formed numerous convenient websites offering all
information with online facility to the consumers. Accor group the mother corporation of
Sofitel highly recommended the application of online payment methods such as prepaid
cards, and other payment methods to make things easier for customers. The utilization of
technological advancement has made positive impact on the market of Sofitel, helping to
gain more market share and redefined its positions in the market (Skokic et al. 2016).

Demographical Forces: It is true that in service-oriented industry, the population lifestyle

and the trend created by it is very central to making profit. If demographical elements like
gender, population and so on overcome changes, the business will also be affected. The
demography in this case both include their customers and Sofitel staff. Sofitel management
board has strictly executed the equity policy to ensure gender fairness among men and
women. To decide if the products are in high demand, the consuming power is greatly
significant especially as for Sofitel which offers luxurious services (Skokic et al. 2016).

Political Factors: In the case of Sofitel, its business thrive well also because of the stable
political setting in Australia. Australian government has been very supportive and helpful to
the corporations within hospitality industry as it contributes greatly to the country (Skokic et
al. 2016).

IV. Conclusion and recommendation

The paper has evaluated the case of Sofitel regarding how micro and macro factors play an
important role in its operating process. The paper also suggest some ways to improve the
situation.

In terms of suggestion, the paper will apply Smart marketing goals for Sofitel to see what
they execute for future improvements in the next 12 months. The SMART goal is the
combination of specific, measurable, achievable, relevant and timely. In terms of specific,
the company can be clearer with its customers analysis. If they can come up with greater
planning to aim at more specific customers groups or new ones, more markets with more
potential can be harnessed.

In terms of Macro, measurable elements is definitely the goal in 2021. With so many huge
influential changes within the market including economic one, it is necessary for the
company to create effective measurable means to ensure they always keep track of revenue
and make profit out of any situation and avoid financial loss. The plan also involves the
suitable collaboration with the booking sites, agency, marketing plans and so on to work
smoothly and earn highest profit.

V. References

Kaplan, R. S., Norton, D. P, “Mastering the management system” Harvard Business Review,
Volume No. 86 Issue 1, 2008, pp 62-77. Retrieved from http://hbr.org.

Estrin, J, “Closing the inn ovation gap” New York, NY: McGraw-Hill. 2009.

AccorHotels Australia. (2016). Sofitel. [online] Available at:

https://accorhotels.com.au/brands/sofitel-hotels [Accessed 22 May 2016].

Erel, I., Julio, B., Kim, W. and Weisbach, M.S., 2012. Macroeconomic conditions and capital
raising. Review of Financial Studies, 25(2), pp.341-376.

Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.

McManus, L., 2013. Customer accounting and marketing performance measures in the hotel
industry: Evidence from Australia. International Journal of Hospitality Management, 33,
pp.140-152.

Skokic, V., Lynch, P. and Morrison, A., 2016. Hotel entrepreneurship in a turbulent
environment. International Journal of Hospitality Management, 53, pp.1-11.

Wentworth, S. (2016). Luxury hotel SYDNEY - Sofitel Sydney Wentworth. [online]

Sofitel.com. Available at: https://www.sofitel.com/gb/hotel-3665-sofitel-sydney-
wentworth/index.shtml