1.

Business environment

1.1 Introduction
The procedure of analyzing internal and external influencing factors of a business, the factors
which directly or indirectly impacts business is known as environmental analysis. There are two
components of environmental factors micro environment and macro environment. The
environment which evaluates strength, weaknesses, opportunities and threats of a business is
micro environment of that business and keeps a direct influence of business environment and
practices.
Second is the macro-environment, which indirectly influences business and its strategies,
includes political, legal, technological, economic and social situations of the region where
business is established.

Both micro and macro analysis of environment are crucial for the business development and its
growth.

1.2 Importance of analysis business environment

Analysis of business environment is crucial to make by both businessmen and customers.
Business analysis reflects the internal and external environment of a business. It makes easy to
assess the competence of a business and impact or its environment over a business. If someone
wants to establish a business in a specific region he would be eager to know the success barriers
and success factors of any business in that specific region. For instance external analysis is made
to assess the condition of a country if that is able to start a new business and ripe fruit for
businessmen. External analysis tells about stability of government, implementation of law and
order, economic capabilities, environmental threats, and social attributes. All these factors play
equal and crucial role in success of business. This analysis is mostly preferred by the new entrant
or new organizations. When somebody wants to invest in a specific business he always try to get
about internal situations of theta business. For instance it is crucial for investor to know about
opportunities and strength of business and also about weaknesses and threats. It is important to
better analyze environment to spend capital with safe and sound decisions. Environmental
analysis helps to better understand the internal and external situations of business.
World is facing rapid changes so the business does. The environmental analysis helps to define
strength of business and its resources to grow. It helps to identify the current scenario and assists
to plan long term strategies. By doing environmental analysis it becomes easy to make right
decisions and take right steps.

2. PESTEL analysis of tourism and hospitality industry of Oman

PESTEL analysis conducts the analysis of external environment of a business which is engaged
with the Global markets. In the tourism industry PESTEL analysis are used to analyze the
demand of tourism at global level and behavior of word toward tourism. This analysis includes
social, technological, economic, legal, environmental and political factors with respect to tourism
and hospitality known as MICE.
Johnson and Scholes2 have defined the PESTEL analysis that it’s a model a frame which
examines and analyzes the factors which keep impacting international business or firms and
tourism is an international business operated at a global level so PESTEL analysis is used to
analyze tourism and its macro environment. Oman is endowed with cultural and traditional
heritage, people of Oman possess a friendly behavior and are welcoming by nature, and good in
hospitality. Oman is a Muslim country people of Oman are calm, and tolerant. Oman is a good
place to travel unlike other countries Oman possesses much tolerant nation. Two slogans are
chanted by the nation, these slogans are famous for the promotion of tourism in Oman. “The
Essence of Arabia” and “bring a friend to Oman” these slogans reflect that Oman is promising a
very good experience to visit there at Oman (Gregorić, 2014).

Figure1: PESTEL analysis (source Library.willey.com)

 2.1 Political analysis
Oman has opened its borders to welcome global tourist to encourage tourism in the country.
Easing tourists by Visa procedures is encouraged by Oman. There are vast places and
destinations which people throughout the world would love to see.
Government stability is the crucial pillar for the success of tourism industry. Oman is a peaceful
country people love to visit a peaceful place which ensure a danger and threat free region.
Tourists are conscious about their safety and protection.
There is another factor which privilege Oman to stand high in tourism industry is tax incentive.
Tourists are entertained with tax refund policy.

2.2 Environmental analysis

Environmental factors put a rigid and strong impact on tourism of a country. Environment of the
region is at prior concern of tourists. From 2015 to 2017 Oman has possessed huge number of
tourists (Al-suwailem, 2007). Oman is spending to improve its ecology and environment to
ensure sustainability.
Biodiversity means a lot for the country which is striving to grow in tourism industry (Unctad,
2018).

2.3 Socio-Cultural analysis

Oman is rich in tradition and attractive culture. Oman is a Muslim country and practices Arabic
culture as majority of its population is follower of Islam. Oman is making efforts to increase
customer attraction and tourist attraction to the country. Country is possessing Arabian culture
which is attractive for the tourists. But with inherited attractions country is striving to put
advancement in the country to attract maximum tourist (Unctad, 2018).

2.4 Technological analysis

Technology is the root of success of any business or any industry. Tourism and hospitality
industry of Oman is also influenced by technological capabilities of the country. People seek
comfort, innovation, and creativity that are ensured by technological advancement (Al-Badi,
Tarhini and Al-Sawaei, 2017).
In this regard Oman is earning success from all ends. Technological advancement and modernity
in Oman has ensured sustainable environment in Oman which enhances the beauty of Oman and
attracts the global tourists. Oman has increased its technological advancement and observing a
continuous growth in technological infrastructure in the country which is a good sign of growth
for tourism industry and hospitality industry in Oman. Provision of excellent communication
networks even at remote locations is ensured by Oman. Government is providing advance
communication technology to its tourists at remote areas and rural locations which are attracted
by the tourist (Unctad, 2018).

2.5 Economic analysis

Tourism sector of Oman is contributing in its national growth. Government of Oman is keeping
its eye over the economic growth of tourism industry and also targeting tourism industry to add
in its economic diversion plan. Omani government is spending on its tourism industry so an
increase in expenses of tourism poses a good consequence over the economy of Oman by
generating maximum revenues. Omani government wanted to diversify its economy the reason
behind this importance which is given by the government to the tourism industry is to depend on
something other than just oil industry. As government came to realize that that oil industry is not
that stable now so agreed on the diversification plans. Tourism contributed about 2.8% to the
national GDP. So the government is focusing on this industry as it is observing and providing
economic growth by contributing fair figures to the national GDP (Unctad, 2018).

2.6 Legal analysis

Legal framework, legal obligations, legislations relevant to tourism and hospitality, and laws of
Oman can affect the success and development of Oman’s tourism industry.
Oman is amending number of laws to welcome and attract maximum tourists. Oman is adopting
multiple legal strategies to encourage and boost tourism industry in the country.

3. Porter’s five forces model and tourism industry of Oman

An industry comprises many companies or organizations of same nature or product in same
market. Oman also possesses any tourism and hospitality agencies that are competing with each
other at high pace. Porter’s five forces model better identifies the firms and their competition in
tourism and hospitality industry of Oman.

Figure2: Porter’s five forces model (source Library.willey.com)

3.1 Threats of new entrants

A company is threatened to enter a new market only if there are barriers to enter into the new
market. These barriers comprise economies of scale, financial requirements, cost incurred by
producers, customer loyalty, and most important s image of brand. The tourism and hospitality
industry holds the characteristics of high cost including both fixed and total cost. Agency should
manage its cost properly by considering economies of scale. High financial obligations are
imposed on the firm to meet government policies and tax obligations and also to reach
distributers to reach right customers. Hotel project possesses high cost to establish, manage, and
run a hotel.
New entrants face threats to cope with high pace government policies. Same is the case with
Oman’s hospitality industry. New entrants have to spend a lot on establishment and management
of their business as there in high competition in Oman’s tourism and hospitality industry since
2015.

3.2 Threat of Substitute product

Substitute products or services trigger the competitors at very large pace. It is a mega threat often
faced by the business organization. Substitute products or services contribute in minimizing cost
and improvement in production with innovation and creativity. The tourism and hospitality
industry in Oman never face with the threat of substitute unless it face recession in the market.
Theory of porter’s five forces model states that substitute products provide products with low
cost and innovation with a high quality. This industry possesses service at different prices to
entertain people from different background. Hotel in tourism offering countries offers hotels with
economic facilities at economic prices and also offers comfortable luxurious products and
services. Hotel industry can also compete at low cost with little threat of substitute goods and
services (Vengesayi, 2003).

3.3 Bargaining power of suppliers

In the porter’s five forces model Porter focuses on presence f suppliers and their bargaining
capacity in any industry same is the case with tourism and hospitality industry. Customer and
tourists demand for improved and proper global information about booking capacities in airlines
and hotels. The supplier would be powerful only if possesses trained and experienced staff and
personnel, because such workforce is demanded by the hospitality and tourism industry so this
kind of supplier is boss supplier of that region. Hospitality and tourism industry of Oman is not
like other industries where suppliers put a pressure over business performance. In this industry
this is not keep a significant pressure at all. In this industry agencies are required to provide
quality services without possessing any significant role of suppliers and their bargaining power
which impacts the cost and expenses of business.

3.4 Bargaining power of buyers

Buyers of any industry always try to decline the margin of industry by demanding services and
products at very low price. As buyers also keep stake in business and its success so any act of
buyers influence the performance of business. Buyers have multiple options to buy services from
alternate providers. If buyers are running out of brand loyalty, and do not bother switching cost
they will easily prefer alternate option. Such kind of behavior increase competition ad pressure
over business to become diversified even in price list.
Bargaining power is mostly possessed by most potential customers. That used to visit different
places and book hotels and rooms at large capacity. Mostly tourists are not price sensitive they
travel different laces with a handsome budget. In case of bargaining power of buyers they
exercise their power to low the rates of rooms and its service. But airlines are not triggered by
this pressure as they possess standard rates for different classes.
The potential buyers easily exercise their bargaining power such buyers often organize an
international convention, they are in need or bulk service and products of hotels, rooms, air
tickets, and travel packages.

3.5 Competitive rivalry

Rivalry among competitors of tourism industry is very high. Technology has posed a threat to
businesses by removing differences among competitors. Buyer and business men always strive to
have best service at best rice and also keep trying to lower the price of service they have to pay.
The tourism and hospitality industry of Oman is covering a vast area so the number of
competitors is very large and competition among them is fierce. Competitors offer low price to
grab maximum customers (Al-Masroori, 2006).

4. SWOT analysis W Muscat Hotel

SWOT analysis is the internal analysis of any business. This report is written on SWOT analysis
of W Muscat. SWOT analysis reflects the internal environment of a business. It tells about
strength, weakness opportunities and threats that are conferred by the business (Unctad, 2018).

4.1 Strengths
 The W hotel of Muscat is part of one of the largest chains in the world.
 W Muscat hotel keeps experience of many years in this industry which is strength of
this hotel.
 W Muscat Keep a high position in the industry of tourism and hospitalitiy of Oman.
 Clients and Customers of this chain of hotels are potential and loyal.
 Other than individual customers the hotel keeps a large list of companies that arrange
their convention in these hotels (Rahmani Seryasat et al., 2013).
4.2 Weaknesses
 W Muscat is famous for regular rotation of its staff members so a factor of
irregularity is weakness of this chain.
 W Muscat hotels possess mass media marketing which is very ineffective.
 This chain of hotels never consider new supplier.
 Opportunity to work with the chain is never provided to new suppliers.
 This chain of hotels always plans to deal and work with existing suppliers and
stakeholders.
 W Muscat Hotel does not possess any sustainability plan to ensure CSR (Rahmani
Seryasat et al., 2013).

4.3 Opportunities
 Government supports tourism in Oman which is an opportunity for hotel to expand its
operations.
 Mega business conventions and gatherings are arranged here.
 Government policies are in favor of tourism.
 Tourism industry is boosting the business of hospitality too (Aulianida, Liestyasari
and Ch, 2019).

4.4 Threats
 Hotel is lacking future sustainability program.
 Unrest in the middle-east is threat.
 Public health outbreak.
 High competition.

5. Conclusion
Oman is rich in traditional culture and endowed with natural beauty that attract the tourists
from all corners of the world. Nation of Oman is tolerant and of welcoming nature and keep a
good sense of hospitality. Oman possesses sound macro environment which ripens fruit for
the tourism and hospitality industry of Oman. Government policies are in favor of tourism
and such policies ease the agencies to regulate business at high pace and also attract tourists
 to travel Oman. Tourism and Hospitality industry is also contributing in National GDP
(‘Oman : Impact of Tourism on the Economy & Diversification Dr . Nasser Saidi Agenda’,
2017).

Oman is focusing on tourism industry to diversify its economic dependency. As prior to the
adaptation and regarding of tourism industry the country was only dependent on oil industry.
When the government realized instability of oil industry it came to agree upon diversification
plan. According to the predictions government succeeded in attaining economic growth from
tourism industry. Tourism and hospitality industry contributed a fair figure in the national
GDP of Oman (Al-Masroori, 2006).

6. References
1. Al-Badi, A., Tarhini, A. and Al-Sawaei, S. (2017) ‘Utilizing Social Media to Encourage
Domestic Tourism in Oman’, International Journal of Business and Management, 12(4),
p. 84. doi: 10.5539/ijbm.v12n4p84.
2. Al-Masroori, R. (2006) ‘Destination Competitiveness: Interrelationships between
destination planning and development strategies and stakeholders’ support in enhancing
Oman’s tourism industry’, Griffith University, (July), p. 444. Available at:
http://www4.gu.edu.au:8080/adt-root/uploads/approved/adt-
QGU20070712.142534/public/02Whole.pdf.
3. Al-suwailem, S. (2007) ‘I Slamic E Conomics in a Complex World’, Complexity,
(October 2005), pp. 1–106.
4. Aulianida, D., Liestyasari, S. I. and Ch, S. R. (2019) ‘済無 No Title No Title’, Journal of
Chemical Information and Modeling, 53(9), pp. 1689–1699.
5. Gregorić, M. (2014) ‘Pestel Analysis of Tourism Destinations in the Perspective of
Business Tourism (Mice)’, Tourism and Hospitality Industry 2014, CONGRESS
PROCEEDINGS Trends in Tourism and Hospitality Industry, pp. 551–566.
6. ‘Oman : Impact of Tourism on the Economy & Diversification Dr . Nasser Saidi Agenda’
(2017), (March).
7. Rahmani Seryasat, M. et al. (2013) ‘Rural tourism development strategies using SWOT
analysis: Case study’, Life Science Journal, 10(SUPPL.4), pp. 395–403.
8. Unctad (2018) ‘National Green Export Review of Oman: Tourism, Dates and Fish’.
Available at: http://creativecommons.org/licenses/by/3.0/igo/.
9. Vengesayi, S. (2003) ‘a Conceptual Model of Tourism Destination Competitiveness and
Attractiveness’, Conceptual Papers / Marketing Theory Track, (December), pp. 637–647.
Available at: http://anzmac.org/conference_archive/2003/papers/CON20_vengesayis.pdf.
10.