Analysis of contextual factors responsible for performance and achievement of the business

Executive Summary

The said report presents the analysis of the key contextual factors that are responsible for the enhanced performance and achievement of the strategic objectives of the business. The contextual factors like globalization, regionalization or regional and economic issues and cross-cultural management have been analyzed and regionalization factor has been chosen. The regionalization is one of the factors that impacts the internal and external factors of the business and helps the business to have barrier free trade. It enhances political and economic integration and impacts the development of business. The report also comes up with justified and relevant recommendations for the Home Food Restaurant in relation the discussion and analysis done.


The report discusses about the contextual factors that impact the development and growth of the business. There have been many researches from where the researchers have come to the conclusion that to keep the business ideas feasible and to enhance the performance quality every business has to understand and be context-aware. This will help the business enterprises to be more resourceful and the entrepreneurs will come to know the factors that can impact their growth and success for sure. The business environment is dynamic in nature and there are different internal and external contextual factors that affect the business structures in different ways.
The strategies are also impacted by the contextual factors (Kronsbein, Meiser, & Leyer, 2014).  It is important to analyze the contextual factors for each business and then to realize the importance of each one of them to that particular business context. There are three main contextual factors like regional economic issues or regionalization, globalization and cross-cultural management. These three main factors affect the business structures and strategies. Among these factors one of the most important suitable for the business idea discussed in the earlier is regional economic issues or regionalization.
The business idea is for opening a home food restaurant in Eastside square centre in Melbourne. The main objective of the business is to serve the people with delicate home type foods and ambience in the location. To enhance the performance quality and to ensure further growth the regional economic issues or regionalization factors have to be considered and to be included in the strategies.

Key terms and relevant theories

Regionalization is the contextual factor that refers to the engagement between the nation states within located close proximity or geographic regions with the intention of seeking common platform for trade and security and economic partnership through common agreements that can be beneficial within that particular geographic region. The main objective of the agreement is to ensure huge pool of consumers within that region where the business is being operated or will be operated and to avoid trade barriers including other obstacles of fund and human resources. There have been several initiatives which have been initiated and among them Regional Economic Integration (REI) and Regional Trade Agreement (RTA) are worth mentioning.
The economic agreements that escalate the economic integration have been remarkable (Freund & Ornelas, 2010). The members of World Trade Organizations notify the WTO if they want to be one of the participants in regional trade agreements (Crawford & Laird, 2000). Since 1995 when the WTO has incepted, there have been more than 400 extra agreements that include trade in the domain of goods and services. Between 1948 and 1994 there have been almost 124 notifications for Regional Trade Agreement (RTA) (Whalley, 1998). 
The custom union is another way to move towards the promotion of economic and regional integration. The trade barriers are removed by the custom union. It also eliminated the trade obstacles among the member nations where a common external policy of trade is adopted. It is to be understood that development of common trade policy oversees the trade relation with the non-members (Frunz?, Maha, & Mursa, 2009). Majority of the nations when they become a part of the custom union they desire to ensure high rate of economic integration (Frunz?, Maha, & Mursa, 2009).  The custom union has been started by European Union but it has reached a different level all through. There is another level where the economic and regional integration can be achieved and the level is Common Market concept.
It provides an open platform where the member nations include a common economic trade policy and motivates the free flow of important resources or inputs of production between the member nations (Hill, 2009).  Since there is no limitation being established on the movement of labour and capital there two resources can be moved without any restriction. These two resources are free as there is neither immigration/emigration restriction on them nor cross-border flows between member nations. There is high requirement of balance and harmony among the policies for fiscal, monetary and employment (Hirata, Kose, & Otrok, 2011). 
Initially there have been many loopholes in establishing high degree of harmony and peace in the policies. For a long tenure the European Union has played the role of common market and in recent time it has reached to some higher level to ensure better integration and now it plays the role of European Parliament that frame the legislation in relation to trade and commerce. Like the common market, economic and monetary union also initiates the free movement of factor of production or the inputs and the movement of the final products.
This movement takes place among the member nations (Freund & Ornelas, 2010). It needs harmony on one hand and common currency on the other. There is also a need for common monetary and fiscal policy (Bilas & Franc, 2010). The level of integration can be made higher if the bureaucracy and the sacrifice national sovereignty to ample amount are reached. There are issues in relation to the differences in rate of taxation, regulation and currency among the member nations. There is a need for robust regulation in the framework. These factors are highly important to the business context (Contel, 2015).
The business idea of home food restaurant can be made more resourceful if the contextual factors are analysed and understood. The impacts of these factors on the performance of the business have to be realized. The restaurant is focusing on the localization strategy but in near future it can develop the idea for expansion and there the need for economic and regional integration is needed.
The business should be encouraging the development of economy of the region and the state and the nation as a whole. If in future it wants to expand its branches beyond the state borders then it has to consider the regionalization factors. To become the leading restaurant in the location it needs to consider the economic and regional factors and have to understand the extent to which these factors are influential (Awan, Haq, & Ali, 2006). 

Explanation of Internal and external contextual factors and the ways they affect the business structure and strategy

For any business the management of the processes of the business is one of the major challenges. The researchers have conducted analysis on the evaluation of the process performance and have found out that there is a requirement for the business enterprises to be aware of the contextual factors and to understand the ways of measuring the process performance of the business. The performance of the business gets affected by the changing pattern of the business environment.
The factors sometimes get less importance and then the issues arise. There can be different measures of measuring the performances like Data Envelopment Analysis (Hoshiro, nd).  It is a way of measuring the performance with the help of adequate data. The contextual factors can be relevant to the location, time and culture in which the business grows or initiates to develop. It is true that a single business organization cannot identify all the factors (Taylor, 2003). Every business has to categorize the contextual factors and has to understand the natures of each factor.
The restaurant business has to understand the need for the consideration of the regionalization factors to improve its performance and to increase the business avenues. Internal and external contextual factors impact the cost, quality and time of the business activities. The entire effect is reflected on the performance of the business. The major performances indicators include the quality, time and cost. These three are major factors that are influenced by the changes in the environmental dynamics (Hideaki, KOSE, & OTROK, 2013). 
There are certain variables which cannot be quantified that are customer behaviour or expectations of the customers. The business can conduct a feasible PESTEL analysis to analyze the external factors like political, economical, social, technological, environmental and legal factors (Kolios & Read, 2013). The external environment is highly dynamic and changing in nature. The business has to be highly responsive to them and must be able to understand the factors and their influence on the business performances.
There are three important internal contextual factors like organizational conditions, resources related to the business and customer related aspects. These are to be taken care of adequately. The business must understand that to achieve the vision and objectives it is important for it to remove the trade barriers. The business should be aware of the existence of the contextual factors even if their origins are not known by the business with certainty (Magel, 2011). 

Well-justified and feasible recommendations

The following are the justified and feasible recommendations for the business idea:
  • The business has to be aware of the existence of the contextual factors.
  • It has to understand and realize the impacts that the factors put on the business performance.
  • The company has to categorize the internal and external contextual factors. 
  • The contextual factors have to be classified as internal or external to the business enterprise. 
  • The internal and external factors can be further grouped into sub-divisions. 
  • The company has to conduct a feasible and resourceful PESTEL analysis to evaluate the impacts of the external environment factors on the business. 
  • The analysis can be done with the help of a structured framework and there should practical application of the framework in real-time.
  • The performance can be measured well if the business ensures effective analysis of the contextual factors and their impacts on the business performance. 


The business of restaurant can be feasibly carried on and its performance can be enhanced if the factors are rightly identified and analyzed. The regionalization factor is one of the most important contextual factors that impacts the performance of the business and helps to enhance the quality of the deliverables. The factors of production can be rationally utilized if the context-awareness is there. The report has highlighted the in-depth analysis of the regionalization and has also come up with some of the relevant recommendations useful for the business.

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