International business environment

Table of Contents

  1. Executive Summary

  2. Introduction

  3. External environment factors

  4. Internal environment factors

  5. The interest of external and internal stakeholders

  6. Comparison of Restaurant Industry with Tourism Industry

  7. Conclusion 

  8. References

Executive Summary

This report is an analysis of the external and internal environment of Quay in Australia. The main contents of the report are:

  1. Analysis of external environment using PESTLE analysis and Porter’s Five Forces analysis. 

  2. PESTLE model identifies the impact of political, economic, socio-cultural, technological, legal and environmental factors on the operations of the food retail industry. 

  3. Porter’s five forces model identifies the impact of five factors, namely, the threat of new entrants, threat of substitutes, bargaining power of buyers and suppliers and degree of rivalry in the industry. 

  4. Analysis of internal environmental factors. 

  5. Stakeholder matrix to identify the interest of different stakeholders in the organization.

  6. Comparison of restaurant industry with tourism industry

  7. Conclusion

  8. References


Quay is a well-known restaurant located in Sydney, Australia. It has great panoramic views of the Sydney Opera House and the Sydney Harbor Bridge (Quay Restaurant, 2018). It offers luxurious dining to its customers and there are very fewer chances to find more quintessential restaurant than Quay. The restaurant remains closed for a three-and-half month in year 2018 for some renovation purposes. At that time also, owner of the restaurant Leon Fink and the chef Peter Gilmore indulged themselves in the development of new and innovative dishes. Snow Egg has been removed from the menu and in its place; White Coral is added to the Quay’s menu. White coral is a light white-chocolate ganache which is aerated in a vacuum and frozen with liquid nitrogen. It is served with feijoa ice-cream and a coconut cream. Many new dishes are added like Tasmanian uni and winter broth; duck with slow-cooked carrots and red dates; and smoked pig’s jowl with shell razor clams, sea cucumber, shiitake and crackling (Broadsheet Media, 2019). Supplier of red speckled peas, Newcastle Greens grows some special ingredients exclusively for Quay restaurant. Similarly, Epicurean Harvest produces a wide variety of Japanese Tennouji turnips for various dishes like sand crab, squid, kombu and Wakefield cabbage. The tables of the restaurant are custom-made by Planet Furniture using sustainable spotted gum. The Quay Chairs are designed by the Australian leading industrial designer Adam Goodrum which makes it all different from other restaurants. The ambience of the Quay restaurant is designed by George Freedman having a curvy shape and natural timber colour along with the bright blue carpet to be presented as an ocean. All this enhance the looks of the restaurant and makes it warm. It grabs the best dining destination in Australia Title.  

All business organizations need to analyze the internal and external environment as it influence the functioning and accomplishment of goals and objectives of the business organizations. 

External Environment Factors

It is significant to analyze external environment to maximize business performance. It explains the impact of political, economic, technological, legal and environmental factors on the company (Epstein, 2018). With every launch of a new dish, it has some social impact on people as people’s values are directly linked with Quay. Porter’s five forces model and pestle analysis can be used to examine the external environment. 

Porter’s five forces model- This model helps create the understanding of the dynamic environment and the relative position of Quay Restaurant in the restaurant industry. It can identify game changing trends at the early stage. 

  1. Threat of substitute goods- It is easier for the customers to choose while switching from one restaurant to another as switching cost is very low. However, Quay restaurant can attract a large pool of customers as it offers a panoramic view of the Sydney Opera House and Sydney Harbor Bridge (Blow, 2012). Also, it offers range of services to its customers to gain competitive advantage and poses stiff competition in the industry. 

  2. Buyers’ bargaining power- Customers are demanding and have a desire to buy the available offerings at the least possible cost. This creates pressure on the Quay restaurant’s profitability in the long run. Buyers’ bargaining power is high when the customer base is smaller and powerful. 

  3. The threat of new entrants- Entry of new firms in the industry brings innovation and new ways of doing things. Major challenges are posed by the firms by undertaking cost reduction techniques, lower pricing strategies and providing new value propositions to the customers. Quay restaurant must take suitable measures to compete with market challenges and build effective blocks to safeguard its competitive edge. 

  4. Bargaining power of suppliers- Quay restaurant buys its raw materials from various producers. Suppliers who are in a dominant position may raise the prices of its suppliers and thus decrease the margins Quay restaurant can earn in the market. Quay restaurant must establish efficient supply chain with numerous suppliers and develop dedicated suppliers who supply raw material exclusively to Quay restaurant to prepare various innovative dishes. 

  5. Rivalry among existing competitors- Rivalry among the existing firms in the restaurant industry is intense and therefore driving the prices down and reducing the overall profitability of the industry. Quay restaurant is trying to build sustainable differentiation and collaborating with competitors to tackle the intense rivalry. 

PESTLE Analysis- It is considered as a strategic tool to analyze the external factors such as Political, Economical, Legal, Technological and Environment. These factors have a great influence on the business decisions as these are not under control of the organization like tax reforms, consumer taste, technology, etc. 

  1. Political factors- Various political reforms like tax reforms, health and safety guidelines, etc. have a great influence on the restaurant industry. Appropriate decisions can be made only after careful evaluation of the political regulations in which the company runs its business. 

  2. Economic factors- Prices of the ingredients are affected by the inflation rate that prevails in the economy. Increasing inflation rate raise the prices of the ingredients used by the restaurant to make various dishes which further lead to the rise in the prices of the menu. Income of the consumers is also another important economic factor that is affecting the food industry. Consumers with higher available disposable income will hang out with family and friends and order food from prestigious restaurants like Quay. 

  3. Social factors- Social factors can affect the Quay’s business both positively and negatively. Health-conscious consumers demand organic food instead of junk food. Lifestyle of the customers is also another important social factor. Office going people face difficulty in getting proper food, sleep or workout. These major challenges pose a great threat to the food industry. 

  4. Technological factors- Introduction of new and modern technologies have a great impact on the restaurant business. To have a closer look at the employees’ activities and other operations, CCTV cameras can be installed. Maintaining the account manually is a difficult task. Various accounting software like QuickBooks, Toast POS, etc. can be purchased by the firm. Proper food management policy must be implemented. All this leads to having high chances of profitability. 

  5. Legal factors- Legal laws and regulations is a major factor which affects the firm’s business. Regulatory authorities have complete access to move into the kitchen area and store of the restaurant to check the quality of the food items, staff and other hygiene conditions (Barlan-Espino, 2017). 

  6. Environmental factors- Maintenance of cleanliness and healthy environment is the responsibility of every business entity. Customers must feel relax while sitting in the restaurant premises. Clean and hassle-free environment attracts more customers to the place. 

Internal Environment Factors

Inherent capabilities, competencies, available resources, structure of inner systems and processes constitute the internal environment of the organization (Sanghi, 2016). Analysis of internal environment is equally important as it helps in identifying the strengths and weaknesses of the organization. To ensure competitive advantage, strategies, policies and procedures are formed after careful evaluation of the internal environment. Resources act as the fundamental inputs to carry out day to day operations in the organization. Quay restaurant can utilize the physical, human and financial resources which enhance its leadership position and make it a No.1 restaurant in Australia. It provides high-quality dishes and services to its customers and thus able to establish significant brand presence in the entire food industry environment. It undertakes effective marketing campaigns which act as another important resource helping in attracting a large number of customers to visit the place. It is a restaurant having three hats and considered as Australia’s most decorated restaurant. It emphasized increasing the wealth of the shareholders to ensure constant and profitable growth by focusing on marketing leadership in the food industry. It undertakes various practices like food waste management policy, refrigeration system, donation of left-over food to needy people and charity, etc. All this not only helps in reducing the cost of operations but also helps in meeting the ethical work standards. Quay restaurant provides its employees with sufficient techniques to upgrade their skills and making them competent enough to prepare numerous dishes effectively and efficiently. Updated technologies are used by the restaurant in accounting processes and identify the effective areas where improvement measures are required to be undertaken. Decision-making authority is shared to all employees working at different levels. 

External and internal stakeholders

5 most important external stakeholders of Quay Restaurant

  1. Government- Government influences the functioning of the enterprise through various policies, changes in the tax rates and subsidies. Its interest lies in the timely payment of taxes by the restaurant. 

  2. Local residents- These are the people or the families who live nearby to the restaurant. They may be affected by the crowd on the streets due to deliveries or traffic noise. They have a high influence on the firm’s business. The restaurant must inform people about the project and the deliverables that may impact them through presentation or campaigns. 

  3. Media- Media consists of channels through which communication takes place like newspapers, magazines, TV, radio, billboards, mail, internet, etc. They have a great influence on the operations of the restaurant as they have interest in revealing out the quality of the food and services and types of customers visiting that place (Kim, Li & Brymer, 2016). 

  4. Competitors- These are the other firms in the industry offering close substitutes and unique services to the customers. Their interest lies in the pricing strategy, quality of food and services and the location of the restaurant. 

  5. Food Standard Agency- It ensures that the food provided by the restaurant to the public is met by the food agency standards, health criteria and guidelines. 

5 most important internal stakeholders of Quay Restaurant 

  1. Sponsor/owner/shareholders- They have both control and responsibility for the cost and returns from a project. Their interest lies in the creation of an environment that leads to the success of the project ensuring the performance quality, timely completion and budgetary constraints.  

  2. Staff/managers- These constitute the employees of the organization that perform various tasks to accomplish the objectives of the restaurant. Their interest lies in the formation of proper HR policies, recognitions, remunerations, incentives, work environment, skills development, career opportunities, health and safety. Influence of employees is large as without them, the restaurant will not be able to produce anything. 

  3. Customers- Key concerns of the customers are food quality, excellent service, a warming family experience. Customers are the backbone of any organization which helps them in earning income from the business which is important for its survival and growth. 

  4. Suppliers- Interest of suppliers lies in the fair payment terms and conditions and fair treatment. 

  5. Creditors/bank- Stability of the restaurant is their major concern as they have provided loans and advances to the restaurant (Yost & Croes, 2016). Timely repayment of the exact amount is essential to maintain long term relationship. 

Comparison of restaurant industry with tourism industry

Revenue growth of the restaurant industry has risen over the past few years due to favourable changes in the social trends (IBIS World, 2019). Busy routines and high workloads have boosted the demand for restaurant food. Similarly, Australia’s tourism industry has also developed over the past decade. It has made a significant contribution to economic activity and employment in Australia (Ghosh, Siddique & Gabbay, 2017). National governments play an important role in the development of both industries. Interdependence between the industries is quite high as tourists require high-quality food and drinks provided by the restaurant industry. Employees, professionals, consultants are also responsible for tourism development. Inadequate number of employees or shortage of skilled labour may lead to the failure of the firm in the economy. Likewise, a shortage of chefs and waiters in the restaurant may acts as a hurdle in providing good food and services to the customers. The interest of the restaurant customers lies in the offering of new food and services whereas tourists have an interest in exploring new places. Employees’ interest lies in the development of proper plan and policies and standard quality to ensure the accomplishment of mission statement formed by higher-level managers and board of management. Suppliers are not considered as the stakeholder of the tourism industry. Instead of suppliers, there are tourism planners. 


In this report, it can be concluded that instable government and economic situation may significantly influence the operations of the restaurant industry. Quay restaurant offers numerous dishes at competitive prices and high-quality services to attract a large number of customers (Lai, Khoo-Lattimore, & Wang, 2018). Human resource department and marketing strategies are affected by the lifestyles of the consumers, attitudes, religion, social conventions, gender roles, etc. Cost structure and value chain structure of the Quay restaurant is affected by the innovation practices. Legal laws and regulations is a major factor which affects the firm’s business. Regulatory authorities have complete access to move into the kitchen area and store of the restaurant to check the quality of the food items, staff and other hygiene conditions. Health and safety regulations, intellectual property rights, anti-trust laws influence the operations of the restaurant industry. Environmental factors must be carefully evaluated to establish better strategies and policies to gain a competitive advantage in the industry. Quay restaurant focuses on the development of supplier strategy, performance and improvement strategy to stand on a better edge over its rivals in the industry (Council, 2016). Porter’s five forces model analysis indicates that all the five forces have little to moderate influence on the operations of the restaurant industry. Formation of a strategic plan is a must to ensure competitive advantages and sustain their operations. 


Broadsheet Media, 2019. Introduction. Retrieved from 

Barlan-Espino, A. G. (2017). Operational efficiency and customer satisfaction of restaurants: Basis for business operational enhancement. Asia Pacific Journal of Multidisciplinary Research, 5(1), 122-132.

Blow, C. (2012). Transport terminals and modal interchanges. Routledge.

Council, N. S. (2016). North Sydney Economic Development Strategy.

Epstein, M. J. (2018). Making sustainability work: Best practices in managing and measuring corporate social, environmental and economic impacts. Routledge.

Ghosh, R. N., Siddique, M. A. B., & Gabbay, R. (2017). International tourism and economic development. In Tourism and economic development (pp. 19-29). Routledge.

IBIS World, 2019. Research Report. Retrieved from

Kim, W. G., Li, J. J., & Brymer, R. A. (2016). The impact of social media reviews on restaurant performance: The moderating role of excellence certificate. International Journal of Hospitality Management, 55, 41-51.

Lai, M. Y., Khoo-Lattimore, C., & Wang, Y. (2018). A perception gap investigation into food and cuisine image attributes for destination branding from the host perspective: The case of Australia. Tourism Management, 69, 579-595.

Sanghi, S. (2016). The handbook of competency mapping: understanding, designing and implementing competency models in organizations. SAGE publications India.

Quay Restaurant, 2018. Introduction. Retrieved from

Yost, E., & Croes, R. (2016). Conditions associated with increased risk of fraud: A model for publicly traded restaurant companies. The Journal of Hospitality Financial Management, 24(2), 92-109.

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