The reputation of the company is based on the functioning of the employees. Foodora company is facing criticism due to the exploitation of the employee acts (Animento et al, 2017). This report studies the analysis of the various factors that affect the growth of the hospitality industry and the case of Foodora and emphasizes on the recommendations that can rebuild its reputation.
PESTEL analysis is a tool to analyze the factors that affect the performance of the organization profoundly and interferes with the smooth functioning of the organization. These impacting factors are classified into six broad categories (David, 2018). These categories are defined below in the context of the Foodora company.
Political factors involve all the functions that the government plays in the organization’s functioning such as Labor law, tax policy, foreign trade laws, corruption, political policies, etc. Every organization faces government interventions however, of different intensity. These factors overlap with the legal factors and hinder the growth of the hospitality industries (Ivanov et al, 2017). In the case of the Foodora company, the interventions of the political entities affected the company by authorizing the fact that the workers who are hired on a contract basis will be treated as normal employees. However, by buying the risk insurance, the company can reduce the political risks and attract more tourists and in return, the hospitality company can flourish.
Economic factors such as inflation rate, exchange rates, economic growth and unemployment rates are common determinants of an economy’s performance. A company faces impacts due to these factors which can affect the company’s value (Jones, Hillier and Comfort, 2016). In the case of the Foodora company, the delivery man was not paid according to his services which led to the criticism of the company by the delivery man. This resulted in the demolition of the reputation of the company and trust issues in people towards the company. It affected the economic growth of the company.
The social factors include various demographic factors, income distribution, lifestyles, trends and works in operating the workforce effectively. These social factors affect the company if it manipulates the smooth functioning of the workforce and does not take its responsibility towards the social factors considerably (Jang, Ro, and Kim, 2015). For example, the worker in the Foodora company was exploited and made to work in inappropriate shifts and reduced the salary after hearing criticism. Moreover, the company was not paying sick leaves, no annual leaves were designated to him and the delivery workers were made to work inappropriate shifts with no defined shift times. These factors however have the potential to halt the functioning because the people inside and outside the organization are of utmost importance and should be valued for the proper functioning of the company.
These are the factors that constantly assist in the development of the company. However, the technological barriers are difficult to fathom if the company lacks well-trained and well-knowledgeable employees. The advancements in security surveillance and biometric installation in the company can reduce the manual work remarkably (Neuhofer, Buhalis, and Ladkin, 2015). The Foodora company was provided with technological advancements with the smart use of delivery where the delivery man will receive the order to deliver and he has the choice to accept or leave. However, the trust issues that developed with Foodora due to the exploitation of the worker, it indirectly faces hardships in recruiting an inclusive workforce who can work with advanced technologies. But the availability of an online booking facility can attract more and more people for ordering foods.
Environmental factors involve the components that can affect the company where it is operating for example, climatic conditions, resource availability, knowledgeable workers, pollution levels in the environment by the company and carbon footprint that are set by the government (Horng et al, 2016). However, this factor is recently entered into the analysis of impacting factors but this is very important to determine them for the smooth functioning of the hospitality industries. Moreover, the climate conditions are uncertain therefore, companies can take measures to secure the employees during such times.
Legal factors are the factors that a company should determine before functioning in the market so that stakeholders cannot take undue advantage of the company. The legal factor includes various laws such as employment laws, discrimination laws, laws for consumer protection, copyright laws, and patent laws. If the company or the employees does not abide by the law then they can face criticism in the market and the company strikingly fails in the long run (Peters, Kallmuenzer and Buhalis, 2019). However, the fulfillment of the legal formalities safeguards a company from the legal obligations of the government and does not face any interference in its functioning. It also protects the job security of the employees and builds the confidence of the employees in the company. The delivery rider in the Foodora company followed all the laws of the contract like wearing the company tagged uniform and he was an independent worker according to the contract. However, the company did not obey his law of subcontract and resulted in a substandard image of the company.
It is recommended that the company can implement diverse strategies to build a trustable and confident workforce. For making fair paychecks to employees based on their determination and performance so that the employee can function effectively without feeling exploited. Adam's equity theory therefore, is recommended to be applied for this purpose so that the Foodora company can rebuild its reputation in the market (Miner, 2015).
It can be concluded from the above case that, the poor functioning of the Foodora company is affected by various factors like social and political. The impact of these factors is analyzed by undertaking the PESTEL analysis for the company. These factors are hindering the growth of the company and are deteriorating its reputation in the market. Moreover, it is inferred that the criticism faced by the Foodora reduced the trust of people in the company which can affect it in its long run.
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