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Business Environment

In: Business and Management

Submitted By Andras
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Pages 14
BUSINESS ENVIRONMENT
UNIT:1

Introduction
Business may be understood as the organized efforts of enterprises to supply consumers with goods and services for a profit. The following essay contains some details about the business environment such as types of organisations, EU rules and regulations policies of the market control.

1.1 Identify the purposes of different types of organisation.

1. Sole traders
The sole trader is a common form of business ownership and is found in a wide range of activities such as painter, plumber, cleaner. Business has only one owner who responsible for all the expenses and legal requirements. Difficult to raise finance, also owner has unlimited liability.

2. Partnership
Partnership is a business with at least two or more owners up to twenty. Partnerships are particularly common in professional services such as solicitors accountant. Owners enjoy limited liability, share their skills, and work allowing them to raise capital more quickly than individuals.

3.Private Limited Company (LTD)
The Company is an artificial person made by law, offers limited liability. The major private limited company’s restrictions are about the shares and shareholders. Shares cannot be sold or transferred to the public. Shareholders enjoy priority against others in buying shares within the company. Example J. Whitaker & Sons Ltd

4 Co-operative
The co-operative is a group of people working together, making decisions together to reach common goals. Co-operative aims is not only that to make more profit for shareholders, also to offer better value and quality. Cooperatives are dedicated to the values of openness, and social responsibility.

5. Franchising
The person taking out the franchise pay a sum of money as capital and hire or buy necessary equipment from the franchising company. The company selling the franchise is called the franchisor and a person who paying for the franchise is called the franchisee. The franchise agreed the requirements and regulations given by franchisor regarding the business. Mc Donald’s e.t.c

6. Public Limited Company
Most common name is the PLC. Company which has offered shares to the general public and has limited liability. Two or more people are required to form such a company, assuming it has a lawful purpose. Barclays Bank PLC

7. Public Sector
Providing basic government services such services as the police, military, public roads, public transit, primary education and healthcare for the poor. For example NHS

1.2 Describe the extent to which an organisation meets the objectives of different stakeholders
Objectives about market share, customer satisfaction, employee satisfaction, returns to shareholders, cutting pollution, reducing waste etc. The owners or BOD creates business plans to enable it to achieve goals, in order to satisfy stake, and stockholders. The stakeholder is a person who effect, or effected by the organisation, having interest in it. All the shareholders are stakeholders, dut no stakeholders are shareholders. All businesses have a wide range of stakeholders, the objectives that a company establishes are based on them. Increase customer satisfaction levels, reducing consumer complaints, they should be understandable so that they are easy to communicate. More satisfied customer means more business. In order to achive that, the organisation needs to have happy employees.
Bonuses, premium, regularly wages reviewing, raising if necessary. Training program to introduce employees to a new piece of legislation. Making payment on time for suppliers, also tax return has to be made on time by an accountant.

Financial Stakeholders: · Shareholders – Returns · Partners – Investment · Employees – Job status · Customers – Delivery and quality of product · Suppliers/Contractors – Contracts

Social Stakeholders: · Local Communities – Impact to way of life · Friends/Family – Personal welfare · Government – Legislation · Civil Society – Impact to way of life

1.3 Explain the responsibilities of an organisation and strategies employed to meet them
The basic responsibilities are to protect the interest of investors, reduce the conflict of interest, legal responsibilities, satisfy other stakeholders, environmental responsibilities, ethical responsibilities. An internal assessment is the most important key strategy that gives a view of the company’s strengths and weaknesses. Including evaluating of management process and how effectively it utilizes a value chain analysis approach. External assessment os the secondary strategy which reflect an organization’s approach to gathering and analysing market data. What need to achive to become a successful competitor in the market. Vision, mission, competitive advantage, is another important strategy which describe a business it’s current, has long term market objectives, makes company different from other competitors in the market.
Internal assessment: * Finance : utilizing a comprehensive pricing modell * Research and Development: maintaining a creative and innovative process * Production: strategic partners consistently fulfil production commitments * Marketing: having a clearly defined marketing plan * Sales: consistently achieving sales goals
External assessment: * Customer profile: Clearly defining reasons why customer buy product or services * Industry and competitive analysis: understanding what takes to be successful in market * Enviromental assessment: defining regulatory requirements
Vision, Mission, Competetive advantage: * Focused porpose: ensure mission is realistic * Future persprective: clearly defining long term outlook * Strategic Advantage: competitive advantage is clearly understood by all stakeholders

2.1 Explain how economic system attempt to allocate resources effectively

Allocation of resources
Definition
Research of human resources how is that distributed among producers, and how scarce goods and services are apportioned among consumers. This research, take into consideration the, economic cost, opportunity cost, and costs of goods and services. Allocation of resources is a central theme in economics.
Economic system
Definition
A well organized plan in which a state or nation allocates its resources and apportions goods and services in it’s own community.
An economic system is organizing and motivating, producing human labour, products and services, machines, pays attention to technology that used in production. There are three kinds of economic system. They are: Free market, centrally planned, mixed market.
Free market economic system:
The intervention of government is kept at a minimum level in free market system. A free market economy is an economy in which the allocation for resources is determined only by their supply and the demand for them.
Centrally planned economy system:
An economic system in where decisions are made by the government rather than by the consumers and businesses.
Mixed economy system:
This type of economic system includes a private economic freedom and government regulation.
Some concept in economics: * Gross Domestic Product GDP * Deflation * Balance of payment * Inflation * Public Finance * Taxation * Cost of Capital * Exchacge rate * Fiscal policy * Monetary policy

2.2 Assess the impact of fiscal and monetary policy on business organisations and their activites. In doing so, you may consider the impact of the fiscal policy and monetary policy.

Fiscal policy:
The fiscal policy is the way of use the revenue collection and expenditure to control the economy.
Government spending policies that influence macroeconomic conditions. These policies affect tax rates, interest rates and government spending, to control the economy. This policy refers to the use of gov budget to affect the economic activity. Neutral Stance in a fiscal policy implies a balanced budget where Government spending equals Tax revenue.

Monetary policy

Monetary policy is a process, controls the supply of money, it’s target is the rate of interest in order to achive economic growth, stable prices and reduce unemployment. Either expansionary or contractionary is the tools to influence the economy. Expansionary policy is increases the total supply of money in the economy rapidly in order to reduce unemployment and help businesses to expand. The contractionary policy slows down the supply of money against inflation.

Impact of fiscal and monetary policy on business organisations

Fiscal and monetary policy changes can affect businesses directly.
These policies affects other short-term and long-term rates, including credit-card rates and mortgages.
In the expansion phase, the economy grows, businesses add jobs and consumer spending increases.
At some point, the government increase interest rate to stave off inflation. Factories could shut down, job losses rise and business sales fall in care of inflation.

2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the activities of an organisation of your choice.

Competition policy
Competition policy applies some different ways in which the competition authorities governments and the European Union seeks to make markets better and achieve a higher level of economic efficiency and economic welfare. There are several types of policies:
Prevention: competition can be maintained by blocking the creation of monopolies.
Regulation of monopolies: appointing an industry regulator to introduce competition e.g. unbundling local exchanges. One of the instruments used in implementing the policies is:
- The Office of Fair Trading (OFT): Created by the Fair Trading Act of 1973, this government office collects information on trading practices and keep an eye on a market place.
Regulation creates, limits, or constraints a right, creates or limits a duty, or allocates a responsibility Rules may create costs as well as benefits to business and may produce unintended reactivity effects, such as defensive practice. Efficient regulations can be defined as those where total benefits exceed total costs. Regulations often related to wages, prices, development approvals, pollution effects, employment for certain people in certain industries. Such as Tesco or Sainsbury regulated by government in wages of employees , health and safety. Gov set the minimal wages, holidays, allowances to be due to employees. The human resources is the most expensive merchandise for companies and all these make it more expensive as well as health and safety. Organization needs to provide specific devices, machines, uniforms, and safety equipment related to new regulation.

3.1 Explain how market structures determine the pricing and output decisions of business.

Four types of market structures are: * Perfect competition: many buyers and sellers, none being able to influence prices. * Oligopoly: few large sellers who have some control over the prices. * Monopoly: single seller with considerable control over supply and prices. * Monopsony: single buyer with considerable control over demand and prices.

If there is no demand for the product of the supplier, the product or service isn't going very well. Its all about supply and demand. If the demand is high then the price goes up. If the supply is higher then the demand than prices drop. If there is no market for the product or service of the supplier, then the business gone bankrupt. There are different kinds of markets in different economies. Accordingly, there are different kinds of output and pricing decisions need to be used. In perfectly competitive markets, a single firm is so small compared to the market that it cannot affect the prices. In that case, it must take the price as given, and then decide the quantity to be supplied. Price in this market is equal to the marginal cost of production. In monopoly, however, things are different. The monopolist can change the prices, as it is the sole provider of the goods and has the market power. If the price increases quantity demand decreases. The monopolist must take under consideration both the positive and negative effects of increase in prices. In another market oligopoly, pricing is a bit more complicated and it depends upon the strategic interaction among the firms.

3.2 Illustrate the way in which market market forces shape organisational responses using a range of examples.
Market Forces can be analysed using Porter's five forces. They include the likelihood of new entry, powers of customers, power of suppliers, degree of rivalry and substitute threat. This forces change over time as the market conditions alter. The economic factors affecting the price and availability of a product in a free market. Forces of demand and supply representing the aggregate influence of self-interested buyers and sellers on price and quantity of the goods and services offered in a market. In general, excess demand causes prices and quantity of supply to rise, and excess supply causes them to fall. * Market demand * Market supply * Internal changes such as: packing, quality of product or services * External changes such as: PESTEL

An organisation’s response to market forces is the most important part of a business, as it will affect the company in any way such as profit and reputation. Market suppliers offer goods or services to customers and the quantity of supply roughly equal of the demand of buyers and producers. Supplier has to do a market research to know how much quantity to offer in a market: price of the goods or services, price of other goods, technology, expectations, number of suppliers. Supply of goods or services in specific time period for example: Seasonal product in higher demand at particular period of the year, such as Rubber swimming pool, BBQ, Lawn mower or Winter jacket. Large stores such as BnQ, Argos Lidl etc make a large profit out of seasonal product at a certain part of the year. If the ASDA increase the price of it’s certain product customer will go elsewhere, or buy less than they used to.

3.3 Judge how the business and cultural environments shape the behaviour of a selected organisation.
Organizational culture is the behavior of humans who are part of an organization and the meanings that the people attach to their actions. Culture includes the organization values, visions, norms, working language, symbols, beliefs and habits. It is also the pattern of such collective behaviors. Culture is included the values of beliefs, underlying assumptions, attitudes, and behaviours shared by a group of people. Culture is the behaviour, generally unspoken and unwritten rules for working, living together. Culture is defined as the common behaviors and interactions, affective understanding that are learned through a process of socialization.
Religion : important to assess the material culture like communications, power, transportation and so on.
Material culture :
Material culture means tools, and technology used by a group of people. Before marketing in a foreign culture it is Religion provides the best insight into a society's behaviour and helps answer the question why people behave rather than how they behave.
Research indicates that organizations may derive the following benefits from developing strong and productive cultures:
•Better aligning the company towards achieving its vision, mission, and goals
•High employee motivation and loyalty
•Increased team cohesiveness among the company's various departments
•Promoting consistency and encouraging coordination and control within the company
•Shaping employee behavior at work, enabling the organization to be more efficient
Language :
Language reflects the nature and values of society. There may be many sub-cultural languages like dialects which may have to be accounted for.
Education
Education refers to the transmission of skills, ideas and attitudes as well as training.

4.1 Discuss the significance of international trade to UK business organisations
Exchange of goods and services within the member states of EU . This allowance of trade allows for a greater place for competetion and more competitive pricing in the market. The exchange of goods also affects the economy of the world as dictated by supply and demand, making goods and services obtainable which may not otherwise be available to consumers globally. The competition results more affordable products for the consumer.
The exchange means import what the countries buy, goods or services from other countries, and export that the countries sell their goods or services overseas. Trading of goods is available with clothes, food, jewellery and many more. Tobacco, alcohol and some more products have restrictions on them. Many countries are gifted with natural resources, they can manufacture products from less investment and sell that at lower prices. EU regulations allows businesses to expand far more bigger then they might could within their own borders.

Britain has a large and rising amount of export of goods and services is tied to trade with other countries in the EU. Nowadays no countries could’t afford not to do international marketing. UK is not a big country, the domestic market is small. UK can improve its economy, through international trade.

4.2 Analyse the impact of global factors on UK business organisation
Factors what influencing business are legal, political, social, technological and economic. Businesses are affected by an external environment, and competitors.
Social factors
These factors provide insights into behaviour, tastes, and lifestyles of a nation. Buying habits are influenced by the changes in the structure of the population, and in consumer lifestyles. Consumer religion, language, lifestyle are all important information for successful business management.
Legal factors Legal factors that influence businesses are related to changes in government laws and regulations. For a successful, long term business operation it is important that to consider the legal issues. Laws keep changing, that’s why it is important the businesses are allways aware of changes. Economic factors
Economic factors involve changes in the economy. A rise in living standard and lifestyle would automatically increase the demand for products, providing more opportunities for businesses. This will cause rise in economic activity hence the price will increase too. In case of reduction in demand the prices will go down.
Political factors Political factors refers to the changes in government policies. Business have to consider the stability of the political environment. Political factors greatly affect the operation of business. Companies operating in the EU, they have to agree with their regulations.
Technological factors
Technological factors highly influence business strategies as they help businesses to apply new innovations, and inventions. This helps to reduce any kind of costs and develop new products.

4.3 Evaluate the impact of policies of the European Union on UK business organisations
The European Union is an economic and political union with 27 member states, are located in Europe. The European Economic Community (EEC), formed by the Inner Six countries in 1951. The EU has developed a common market throughout a standardised system of laws that apply in all member states.

Benefits that EU gives for organisations: * Exports will increase sales and profits of organisations. * International trade helps organisations in their operations whenever the domestic market is saturate. * Organisation will be provided new options to reach more potential customers.
UK national government as well as the European Union controlling and influencing business activity within the EU: taxation and spending, encouraging business activity, subsidies and support, laws directives and regulations, providing advice and support for business.
Some examples how gov influences business activity: * Inflation policy: The government keep an eye on the market to make sure that there are no sudden general rises in prices. They use Monetary Policy Committee of the Bank of England which sets interest rates. Interest rates are put up if there is a danger of people borrowing and spending too much. * Regional policy: European Union’s funds are made available to support regions of high unemployment and social deprivation large areas , jobs have been lost in other areas
Employment policy: Governments trying to stimulate employment. For example, the government is keen to improve business efficiency so that UK businesses are competitive in international markets. For those who have no job or difficult find work, the government has created a plan is called 'The New Deal', offering people the opportunity of training and education on government budget. * Education and training policy. The gov plays an important part in forcing through education and training changes, for example by creating more Vocational Subjects in the school curriculum
Taxation policy: Businesses can make a valuable contribution to the community by the taxes they pay. In return, the government helps businesses by spending money on common used objects like roads, airports.

References: * 1.1 Read more : http://businesscasestudies.co.uk/business-theory/strategy/types-of-business-organisations.html#axzz2YkYMBA5c * 1.2 http://businesscasestudies.co.uk/business-theory/strategy.html#aims-and-objectives * 1.3 http://www.omafra.gov.on.ca/english/rural/facts/96-013.htm * 2.1 http://www.studymode.com/essays/Explain-How-Economic-Systems-Attempt-To-929349.html * 2.2 http://www.economicsonline.co.uk/Managing_the_economy/Fiscal_policy.html * 2.3 http://www.historyandpolicy.org/papers/policy-paper-70.html * 3.1 http://www.youtube.com/watch?v=YBv-tfn7ulk * 3.2 http://www.studymode.com/essays/What-Is-The-Relationship-Between-Market-1298676.html * 3.3 http://www.studymode.com/subjects/judge-how-the-business-and-cultural-environments-shape-the-behaviour-of-a-selected-organisation%27s-page1.html * 4.1 : http://www.markedbyteachers.com/as-and-a-level/economics/assess-the-importance-of-international-trade-to-the-uk-economy.html * 4.2 http://www.essay.uk.com/business-environments/global-factors-strategy.php * 4.3 http://www.studymode.com/essays/Impact-Of-International-Trade-And-European-1745062.html

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...HND BUSINESS MANAGEMENT LECTURER: MR TAIWO OLAJUMOKE BATCH: 11 LEVEL: 4 BY SHAHZAD MIRZA UKCBC PARK ROYAL LONDON ID: 12878-RB HND BUSINESS MANAGEMENT LECTURER: MR TAIWO OLAJUMOKE BATCH: 11 LEVEL: 4 BUSINESS ENVIROMENT | Introduction | 3 | 1.1 | Identify the purpose of organisations | 3-4 | 1.2 | Describe to which extent Iceland Supermarket Ltd meets objectives of its different stakeholders. | 5-6 | 1.3 | Explain various responsibilities of Iceland | 7 | 2.1 | Different economic systems | 8-9 | 2.2 | Fiscal and monetary policy | 10-12 | 2.3 | Competition policy and other regulatory mechanism | 13-14 | 3.1 | Market structures determine the pricing and output decisions | 15-21 | 3.2 | Which market forces shape Iceland Supermarket responses | 21-22 | 3.3 | How the business and cultural environments shape the behaviour of Iceland | 22-23 | 4.1 | Significance of international trade to Iceland Supermarket | 23 | 4.2 | Impact of global factors on Iceland Supermarket | 24 | 4.3 | Impact of policies of the European Union on Iceland Supermarket | 25 | | Conclusion | 26 | | References “ | 27 | CONTENTS “ Introduction of Business......

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Premium Essay

Business Environment

...Unit Title: The Business Environment Guided Learning Hours: 160 Level: Level 5 Number of Credits: 18 Learning Outcome 1 The learner will: Understand the significance of the environment on business activity. Assessment Criteria The learner can: Indicative Content 1.1 Explain the features of business activity. 1.1.1 Explain the business organisation as a transformation process. 1.1.2 Describe the different ways in which a business may structure its activities. 1.2 Discuss the complex interactions that operate between a business and its environment. 1.2.1 Discuss the complexity, volatility and uniqueness of an organisation's environment. 1.2.2 Explain the influence of shareholders on the internal environment of an organisation. 1.2.3 Outline the nature of the external environment (PEST). 1.3 Explain the need for change and its management within an individual business. 1.3.1 Discuss the need to monitor changes in the external environment. 1.3.2 Discuss the implications of environmental change for a business, its stakeholders and society. 1.3.3 Explain reasons for resistance to change by firms, managers and employees. 1.3.4 Describe ways in which resistance to change may be overcome. Learning Outcome 2 The learner will: Understand the structure and organisation of business. Assessment Criteria The learner can: Indicative Content 2.1 Discuss the impact of industrial and legal structure and size on organisational behaviour. 2.1.1 Classify...

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