Here in this BITE College Business Environment Assignment we discuss Sainsbury PLC..The global factors, the policies of the European Union pay a significant role in deciding the behaviour of the organization in Europe and outside world. All these will be discussed in this paper.
Task 1: Understand the organization purpose of businesses
P 1.1 Explain briefly the following types of organisations and their purposes:
There are various types of organizations which are available in the market or which are possible but there are mainly 4 of them which is very popular and which is followed by most of businesses. These 4 types of business organization will be Sole proprietorship, partnerships, corporations, and Limited Liability Companies (LLC). These 4 types of organizations are completely different from each other in their structure and in the way they own the ownership of the organization. To start with Sole proprietorship, as the name suggests it is having a single owner who owns all the responsibility of the organization activities. Then there are partnerships where the number of partners can vary from 2 to 20 (Börzel, 2003). The ownership for the business activities is decided between these partners. The profits of the business are divided among the partners according to their alignment.
Let us discuss the type of business the following organizations are and what their purposes are:
Virgin Group Ltd: Virgin Group is MNC organization which started by British. This is one of the most popular organizations which have space in many sectors like telecom, mobiles, health and wellness, finance, travel, music, holidays, leisure, etc. This company has a global presence and has to deal with the different policies of different countries while doing business. Virgin Group is an example of Sole proprietorship which is owned by a single owner named as Branson
Sainsbury plc: It is one of the most popular chains of super market in UK and stand in the third place in UK. The share of supermarket in UK which is captured by Sainsbury is 16.7 per cent approximately. This was started in the year 1869 by John James Sainsbury in London. In the year 1995 it was overtook by Tesco to become the market leader in this sector. It has a lot of shareholders and the maximum shares owned by the family for Sainsbury is Lord Sainsbury of Turville with 4.99%.
McDonald’s: McDonald's Corporation is the world largest chain of hamburger fast food seller. It is based in US and has presence in all over the world. It is one of the most famous fast food centres in the world and serves in more than 119 countries. The model they follow is franchise model.
National Health services: This is the largest recruiter in UK and is a public sector company in the UK. The organizations runs on the funds provided by central taxation and their objective are to secure of the people in the country.
P1.2 Considering Sainsbury PLC, describe the extent to which it meets the objectives of its different stakeholders.
There are different stakeholders in the organization as we have discussed earlier and all of these stakeholders have their own interests to be linked with the business. It is responsibility of the organization to meet the objectives of these stakeholders to keep them happy and make them support the business in the way they do. Sainsbury PLC also does a lot of activities to make their stakeholders happy by meeting their objectives. Different stakeholders have different objectives and they have to be dealt accordingly. The main stakeholders whose objectives need to be satisfied are customers, employees, suppliers, investors, government, etc. (Cannon, 1978). The investors want to have a better rate of return on their investment. This is taken care by Sainsbury that they provide better rate of return to their investors and keep them happy. Other important stakeholders are the customers. Sainsbury also take good care of their employees by providing they want they want at the best rates and of good quality. Sainsbury also provide good customer service to keep their customer happy and meet their objectives properly. Employees are also the stakeholders of the company. Sainsbury take care of their employees and provide them all the facilities and better opportunities to grow. They also give awards and rewards to its employees for their contribution towards the better performance of the company. They also satisfy their lenders by keeping their confidence intact in the Sainsbury’s performance. Apart from them, government are also another stakeholder which is affected by the business activities. The organization Sainsbury keeps the government happy by giving their taxes at time and following all the business regulations that are laid by the government for Sainsbury.
P1.3 Considering Sainsbury PLC, explain its various responsibilities as an organisation and the strategies it employs to meet them.
Being such a big organization there are many responsibilities which are associated with such business houses. These responsibilities are towards the customers, government, society, etc. The business has to make sure that they fulfil all their responsibilities and perform their roles. Sainsbury also fulfil the responsibilities which it needs to fulfil. The responsibilities which Sainsbury fulfil are social responsibility, environmental responsibility, and employee responsibility to government responsibility, etc. Sainsbury fulfil the social responsibility by indulging in the corporate social responsibility activities (Helpman, 1989). There are many social activities which are adopted by the organization Sainsbury like protecting the environment and plantation activities. Sainsbury also use these activities to create a strong brand. They also promote to create a pollution free environment by decreasing the pollution and to use renewable sources of energy. They avoid releasing hazardous materials in the environment and encourage others also to do the same. This way they are playing their part in the environment and social responsibility to help keep the environment pollution free as far as possible.They have been avoiding the plastic usage and encourage people to avoid the use of plastic. They make sure that they do a lot for the society from where they make so much of money. They provide employment to the poor people. They also do the government responsibility by following the policies that are being made for the organization while doing their business activities. They also pay all their taxes in time and make sure that do their part as a responsible organization in the development of the region. (See complete solution of Unit 5 Aspects of Contract and Negligence for Business Assignment Help)
Task 2: Understand the Nature of the National Environment in Which the Business Operates
P 2.1 Giving relevant examples, briefly explain how different economic systems such as: command, free enterprise, mixed and transitional systems attempt to allocate resources effectively
There are different economic systems present in the market like command, free enterprise, mixed and transitional system and all of the systems try to allocate resources in their own way. Among the above mentioned systems the most common ones are 3 of them that are free market economy, command economy and mixed economy. They all follow different methods for the allocation of resources and these decisions are driven by many factors which depend on the way these systems work. Let us discuss each of them separately. First is the free market economy. Now as the name it suggests that this is free market economy where there is total freedom for the producers and the buyers to produce whatever they want and buy whatever they want (Holden, 1996). They can deal between them to buy and sell the products and services in the way they want and there is no intervention from any third party.This type of structure enables the problems to be handles automatically by the system and the market is responsible for the allocation or managing resources. In the free market economy the stakeholders have a lot of options to choose from because of the independent market forces. Here the Seller decides what they want to produce depending on the preferences of the customers. Here the customer requirement and preferences are given the top priority. The main motive of the business here is to make maximum profit. Next we have the command economic system where the controlling authorities are responsible for the effective allocation of resources. The controlling authorities here are the government and its related organizations.They are the ones who interfere in the business activities are responsible for deciding things on behalf of the organization. In the command economic system, the decisions are made based on the need basis. The companies have the right to decide what to produce, for whom to produce, how to produce, how much to produce, etc. The allocation of resources in such a system is done by proper planning and strategy. So according to some of the economists, the command economy is better than the free market economy. Next comes the mixed economy which is nothing but a mix of the above mentioned two economies i.e. free economy and command economy. Here the decision like what to produce how much to produce is taken partially by the consumer preferences in that region and partially is decided by the government policies and their intervention. The decision regarding how to produce is taken by the organization but under the government intervention. The customers for whom the products are produces are decided by the consumer purchasing power, their interests, and government policies as well (Spar, 2006).
P2.2 Considering Sainsbury PLC UK, assess the impact of fiscal and monetary policy on their activities
The fiscal and monetary policies affect the business to a great extent and the business activities largely depends on the fiscal and monetary policies. The Sainsbury PLC also is affected to a great extent by the fiscal and monetary policies laid down by the government of UK. These monetary and fiscal policies are set up by the government for controlling the money supply and for the betterment of the society and to control the business activities. The businesses have observed that policies set up by the government like the fiscal policy or the monetary policies play a very crucial role in formulating the fiscal and monetary policies of any country to keep a balance between the expenditure of the government with respect to its earning to meet its objectives. All these objectives of the government are achieved by fixing these policies keeping in mind the objectives that need to be served. The main things which will be governed by these policies which will be affecting the business would be the tax rate that are charged from Sainsbury and the spending which will be done by the government (Scherer, 1990). The policies which are setup by the government mainly falls under these two sections i.e. the fiscal and monetary policies. The fiscal policy can take the form of automatic or discretionary depending on the present conditions and the government preferences. In the UK it’s not considered to be favourable for the company to expand in different geographies. There are many reasons behind this. One of them is that the tax rate is too high. When the tax rate is too high it will become difficulty for Sainsbury to pack to their lenders and investors. This also means that the company would be having less disposable income. This will also mean that the customers will append less and this will in turn give rise to the supply demand issue.
On the other hand, monetary policies also affect the business in the same manner. Mainly the monetary policies are setup in such a way that it controls the money supply in the market. This affects the businesses like Sainsbury as well.
P2.3: Evaluate the impact of competition policy and other regulatory mechanisms on the activities of Sainsbury plc UK.
Apart from the monetary and fiscal policies another policy which is set up by the government and which affects the businesses a lot is the competition policy. Sainsbury is a very big name in the UK industry. It is one of the most popular chains of super market in UK and stand in the third place in UK. It has a very strong presence all over the world. It also have a lot of competitors all over the world and this means that they have to carry on activities that they remain competitive in the market and they provide the customers better goofs at better prices (Whitley, 1994). All these are under the competition policies which control the way the organizations providing the goods to the customers and the prices at which they are offering their products to the customers. This is necessary as this will control the businesses and this will stop the business to take the undue advantage at times for the goods that is necessary for the consumers. In the UK, the company had to face the regulation of the competition law which was incorporated by the UK government in the year 1948. This law was passed with the prime motive of creating a healthy and robust competitive market where every competitor has a fair chance to compete with its competitors. This also helps for stopping the big players to take the advantage over the small players and every player in the market gets equal opportunity to flourish. These laws are in favour of customers in giving them multiple options to choose from. This also helps in the fair pricing of the products and services offered by different organizations.
Task 3: Understand the behaviour of organisations in their market environment
P3.1: Explain how market structures determine the pricing and output decisions of Sainsbury plc UK.
The market structure majorly determines the pricing and the output decisions of the Sainsbury PLC. The decision making as to how much to produce and at what price the product should be sold in the market is a very crucial decision to make and there are many factors which comes in into play before deciding this. The decision of price and output can affect the business highly and is responsible for the success of the organization if the organization can correctly determine that what will be demand and how much the customer would be ready to buy (Kollmann, 2002). This decision is highly influenced by the market factors. Market structure is very crucial in making these decisions by Sainsbury. Market structure is basically the way in which these interactions between the seller and the buyer happen. Market structure generally defines the number of players in the market, the price at which they are selling the goods, the kind of competition which prevails in the market, the kind of market structure it is whether it is free market or command market. If the goods and services which are sold in the market is different from each other than the decisions of what to produce and at what price it should be sold lies with the seller but if in the market the products and services offered are similar to each other than the decision on the quantity to be produced and the price at which it should be offered depends on the competitor products that how much the competition is producing and at what price they are offering their product.
P3.2: Illustrate the way in which market forces shape Sainsbury plc responses using a range of examples
The market forces play a very crucial role in shaping up the businesses like the Sainsbury PLC responses to the market. As we have already seen in the above segment market are largely responsible for determining what should be produces, how much to be produces and what should be the price of the product. The market forces communicate with each other in order to have better profits and this depends on the market structure. For Sainsbury plc, the decision making is done depending upon the market preferences i.e. the customer preferences, the competitor analysis, price elasticity, supplier relations, etc. (Young, 1999). All these forces drive the way Sainsbury behave in the market.In a perfect competition the number of buyers and sellers re high and they play a crucial role in deciding the prices of the commodities traded in the market. This is often termed by the economists as the price taking property rather than a price making property as the sellers get to know that at what price they should sell their products instead of deciding it themselves.
P3.3: Judge how the business and cultural environments shape the behaviour of Sainsbury plc UK.
The cultural environments and the business environment shapes up the way the business behave be it in the caser of Sainsbury PLC. The businesses have grown global and they operate in many countries which have different cultures. These different countries have different cultures and impact the business and their activities. The culture of the UK where the Sainsbury is based is inherited from ancestors and the customer preferences define the behaviour of any organization. Different regions in UK have different cultures and business environment. Different regions also have different policies as they have different policies in different regions which affect the business. The competitor strategies also differ in different regions depending on the products offered by the competitors and the strategies adopted by the competitors. Sainsbury also have to act accordingly depending on the culture and the business environment in different regions.
Task 4: Be able to assess the significance of the global factors that shape national business activities
P4.1: Discuss the significance of international trade to Sainsbury plc UK
As we all know that the businesses are going global these days and they have expanded their business cross borders. Also as we have already discussed that the government in different countries have their own policies and rules and regulation which the organization needs to follow. There is high significance of the international trade to Sainsbury plc UK. In the beginning the organization was only based in UK but as the organization saw the benefits in expanding the organization in countries outside UK, they expanded accordingly. There are a lot of forces which motivate the companies to go global. These are the cheap labour present in certain parts of the world. There are also many geographical locations which are technologically very advanced so opening business in those geographies will help the business to take the advantage of those advanced technologies and use it all over. There are places where the cost of production is very low; the cost of raw materials is very low, so opening business in those locations will be very profitable for the businesses. All these factors are being made use by the Sainsbury UK. They have very well understood these benefits have properly made use of these benefits by expanding the business globally. Hence in a nutshell there is a great significance of the international trade to Sainsbury plc UK.
P4.2: Analyse the impact of global factors on Sainsbury plc
The global factors have a high impact in the businesses like Sainsbury PLC as the organization is present globally. There are many global factors which affect the business like the political system of different countries, laws and regulations of doing business in different locations, international trade policies, etc. The UK-based businesses which are operating at global scale face two major challenges in coping with the dissimilar business environment. The European Union has a major role to play here. It is the legal body who is responsible for formulating riles and regulation for the businesses to do business in UK. The political factors of different regions in UK also impact the business of Sainsbury. The economic conditions of different regions is yet another important factor to be considered in global; factors which affect the business in Sainsbury. The political changes affect fundamental economic drivers of the countries, and hence the tax rates, interest rates, etc. get affected.
P4.3: Evaluate the impact of policies of the European Union on Sainsbury plc
The European Union has a very major role to play to define the policies for the business to follow in the UK which helps to keep a control over the businesses. The European Union define the policies in such a way that it helps the common people. The European Union plays a very significant role in reshaping the businesses in UK. Sainsbury has to follow the policies set by the European Union. There are many factors and policies set by the European Union which affects the Sainsbury plc. Some of these are the taxation policy, interest rate policy, process of business operation, etc. Higher the tax rate, higher is the amount paid by Sainsbury plc which in turndecreased the profit margin and demotivates the company to expand its business in new geographical areas. The policies set by the European Union have to be beneficial for the organization and it should at the same time also be favourable for the common people. SO in a nutshell it should be a win-win situation for both the parties.
This paper can be concluded by saying that there are many different business environment in which the businesses like Sainsbury has to do business but the way Sainsbury is doing business is commendable. They are facing the fiscal policies and the monetary policies, competition policies and they make their strategies keeping all that in mind. The companies are going global and they are doing business understanding the different situation in different countries. This different situation can be the different business environments and different cultural environments. In the current scenario, it has become very necessary for companies to go global and expand enormously but the global factors sometimes acts as roadblocks to them. Hence the government should keep this in mind and should formulate such policies which should prove to be beneficial for both the organization and the government.