HND Business Course Unit 1 : Business Environment

This is solution of HND Business Unit 1 business environment Assignment given in UK college of business and computing.

Introduction

Business environment is the blend of internal and external aspects that persuade a business's functioning circumstances. The business environment is capable of comprising features like customers and suppliers; developments in know-how; its competition and proprietors; regulations and government performances; and economy, communal and financial inclinations. One nation’s business environment is different from another’s because of the rules and laws of each government.

Task 1

P1.1 the following types of organizations and their purposes

Companies appear in the entire diverse forms and dimensions, plus the similar is regarding the business compositions. Organizational structures are either “giant,” i.e. they have a lot of layers among the ordinary worker and the proprietor of the business, or they are “plane,” i.e. there are incredibly a small amount of layers among the ordinary worker and the proprietor these structures in addition diverge in the way those divisions are characterized.

a) Virgin groups Ltd.

Goods and services bearing the Virgin brand vary from airlines to fiscal services to cold drinks. The way to the flourishing development of the group is based on the foundation of well-built characteristics for the brand name, in so doing building awareness from the commencement of some industry proposal. This group has 150 small units by means of liability and management assigned to the administration of every unit, the broad notion of the organizational structure displayed by the Virgin Group is spread out or decentralized. It is a corporation, i.e. a Limited company. Virgin Group Ltd. connects in relaxation, travel, sightseeing, mobile phone, broadband, television, radio, melody, investment and health dealings in different parts of the World. It appoints in the grounds of airlines, rail facilities, holiday and journey parcels, and traveller motorcycle moving services. The corporation in addition functions gym services, event players, online casino and windows, and hot-air balloon trips; issues true-life manuscripts; offers cable blood stalk group banking, residence IT and technological maintenance etc ( investing.businessweek.com,2014) .

b) Sainsbury PLC

The Sainsbury's organizational structure is hierarchical since there is sequence of layers of individuals and the layer on top manages every layer. Every layer is the duty of the layer on the top. The structure of Sainsbury’s PLC is segregated into Sainsbury Finance, Sainsbury’s Online, Sainsbury’s energy and Sainsbury’s stores. Sainsbury is again a Limited company/corporation serving the society by offering wide range of services.

Sainsbury PLC business hierarchy diagram

c) McDonald’s

Mc Donald’s has a large chain of outlets all over the globe. The McDonald's managerial organizational branch regions are - at the pinnacle are the chairman and chief executive officer, plus the chief operating officer. Underneath that, the subdivisions are there in the form of corporate affairs, marketing, HR, countrywide operations, divisional managers, finance, strategic planning and information. Further serviceable divisions within McDonald's are security, legal, franchising, customer service, hygiene and safety, construction and property, restaurant services and the supply chain (Acciaro, 2009).

The purpose of Mc Donald’s is to be the clients' favourite destination to means to consume and drink. The company’s international functions are associated in the region of a comprehensive scheme recognised as the arrangement to succeed, which focuses on an outstanding consumer know-how – persons, produces, position, cost and Promotion

mcdonald's hierarchical structure

d) National Health services (NHS) England

The purpose of NHS (England) is to create the culture and circumstances for health and care services and personnel to convey the maximum set of concern and make sure those precious communal possessions are utilized efficiently to obtain the finest results for persons, society and societies for current and for upcoming generations.

hierarchical structure of NHS

NHS is a public limited company (PLC) as it utilises public finances and offers a service to the customers. The company focuses on fulfilling the client needs at a very low or barely any costs.

e) A corner shop near where you live

The corner shop caters the daily needs of the households. It is a informal structured business. There is no predefined structure and no same kind of structure to be follwed by these shops. However, these are a sole-proprietorship or a family business. The corner shop generally has a helper for the shop-owner.

P1.2 the extent to which Sainsbury’s PLC meets the objectives of its different stakeholders.

Sainsbury’s has a variety of stakeholders to manage. A stakeholder is described as “somebody who has spent funds into something, or has several significant association through it”. In relation to Sainsbury, stakeholders are categorized as:

  • Internal and
  • External

Sainsbury’s workers are internal stakeholders that are corresponded by the principles of enthusiasm and notifying. Variations in inspiration between agents of a variety of cultures have been revealed by Adler and Gundersen (2008). For that reason, Sainsbury’s latest policy proposes that the kind and cultural environment of every associate of personnel is considered by line supervisor and attained data is employed while appealing the worker or interacting with that workers for an assortment of other reasons.

Sainsbury’s new approach is related to its suppliers too. The ways to communicate with the suppliers embrace oral, on paper and web-based interaction. owing to the reality that Sainsbury’s is a kind of principal transnational business in UK, its suppliers are the delegates of a mixture of nations and cultures too. As a result, every Sainsbury’s supplier needs to be interacted by discussions so as to report their cultural divergences

Sainsbury’s latest business strategy has prerequisites for communicating with culture too. Sainsbury’s interaction with culture ensures that every applicable store of the business functions in an essential way so as to take on in business communal duty proposals. Since every culture inside any specified area is dissimilar somewhat in types of principles, practices, and convictions. These dissimalirities are dealt with by Sainsbury’s when kicking off some type of business shared task plans.

The key stakeholder groups of Sainsbury’s include:

a) The senior administration team – feasibly there is a greater case at this position to tear this along additional. This team influences the decision making of the firm and formulates effective decisions for the benefit of everyone. b) Shareholders – This kind can in addition be split into little shareholders, personal citizens who have seized the shares from the time of commencement and the clusters of the expert market analysts. c) Analysts and critics – acres of publish, as of the economic and information folios of the newspapers to stockbrokers’ details have been on paper on the accessible circumstances of the company. These authors may have undersized enduring influence on the other hand their thoughts are understood by many other key stakeholders and consequently cover to be identified autonomously. d) Human resources have a conspicuous fear in the view of the business as stated by job defence and attitudes. e) Suppliers – the ruling to systematically change their supply chain has inclined plenty of Sainsbury’s usual traders – with conclusion and redundancies whipping the bearings. f) Customers – the rebuff in deals is a appearance of many customers selecting to execute in whichever case a petite of their shopping to a special location – even though it is needful to twist that Sainsbury is up till now the key British non-food vendor. See here : HND Business Personal Development Assignment

P1.3 Considering Sainsbury’s PLC, explain its various responsibilities as an organisation and the strategies it employs to meet them.

The major responsibility of Sainsbury’s PLC is to serve the community with every department aiming towards it. The company has to prove its legitimacy so as to gain the faith and trust of the service users. The company also needs to have a strong monetary control. The recruitment policy is quiet vital as Sainsbury’s PLC as the reliable employees are able to develop a relationship with the probable customers and clients. The Human resource plays a vital role, so does the marketing function. Marketing strategy of Sainsbury aims at a good promotional campaign. By use of it, the business is able to manage the mediums of promotion and relate them to the clients (Stopford, 2007). The responsibilities that Sainsbury’s PLC fulfils to attain its goals are lowering ease of access barriers together with foodstuffs like Fair trade bananas and RSPCA Freedom Food attributed salmon in its provisions’ “essentials” provisions assortment. This variety includes lower-price foodstuff and grocery articles that fulfil Sainsbury’s excellence principles and central principles.

Sainsbury is also merger of financial features of corporate social responsibility with environmental and communal principles through sourcing domestic British creations. By means of this exercise, Sainsbury’s is guaranteed of the reliability of its supply chain and is able to attain inferior transportation charges, whereas in addition sustaining local economies and encouraging biodiversity. Reinforcing Sainsbury’s approach is a tradition of responsibility. The assurance to precision is apparent in the appearance of development beside aims and objectives. Over and above following aims as of its 2009 corporate responsibility information, Sainsbury offers performance in opposition to mature objectives, a lot of of which were merely attained to some extent, or discarded overall. Agreed the exercise in a few companies of disregarding previous objectives, it is stimulating to perceive Sainsbury’s straightforward conversation of the entire its assurances, victorious or not.

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Task 2

P2.1 Giving relevant examples, briefly explain how different economic systems such as: command, free enterprise, mixed and transitional systems attempt to allocate resources effectively with reference to Sainsbury’s PLC.

Mixed Economic System

Mixed system is one wherein the resources are allocated further uniformly among private and government possession whereas, in private economy, the major resources of the country are possessed privately. The troubles of resource allocation are resolved by the financial arrangement at job in a country. In the case of construction, resource allocation has been strongly influenced by the public sector. The crisis of resource allocation is worldwide as each country needs to deal with the matter of deciding what, how plus for whom commodities and services will be fabricated. In the free market, private human beings are permitted to get hold of reserves, to manage those resources and to trade the effecting merchandise in some technique they desire (Kelman, 1987).

For example: In the diagram above, on the farthest right-hand area of the illustration is the free economy model, and on the farthest left-hand side, the centrally considered form. Cuba is a nation whose organization intimately looks like the centrally planned form. On the further farthest is the USA, which appears on the brink of the free market model. In the middle of these are the mixed economies of the residual countries of the globe.

Resource allocation is described as the method in which inadequate funds are allocated to generate goods and services.

Resource allocation in free market economy

In free market, resources are assigned consistent with the market services of demand and supply. In this system, the resource allocation is decided by customers' demand and makers' supply. Demand is the mainly significant aspect.

Resource allocation in command economy

In command economy reserves are allocated by the management by federal arrangement. The central planning power chooses what to manufacture, ways to manufacture and for whom to manufacture.

Resource allocation in mixed economy

Inside a mixed economy, together private and public segment have an imperative function in economy. Private segment assigns funds as per the demand and supply. Public segment allocates funds through federal development.

P2.2 Considering Sainsbury PLC UK assess the impact of fiscal and monetary policy on their activities.

There are some distinctions in the fiscal possessions of economic and monetary regulation, on the masterpiece of creation, the competence of the 2 types of approach in meeting the management’s macroeconomic purposes, added to the intervals engaged for fiscal and monetary regulation alterations to attain consequence. Economic arrangement is loads observed as astonishing of a tedious law tool – affecting the entire divisions of the financial system though in different methods and by an unreliable break down.

In disparity, economic regulation can be besieged to control certain sets. As an instance the results of utilizing whichever monetary or fiscal strategy to attain a specified enhancement in national income as real GDP reclines below prospective GDP (i.e. there is a harmful production gap). The impacts of these on the activities of Sainsbury are:

(i) Fiscal rule expansion: since speculation expenditures result in an enhanced assets stockpile, then profits in the hope will also be higher from initial to last the crash on Sainsbury.

(ii) Economic rule improvement: amplification in economic regulation (i.e. an increase in management expenditures) adjoins directly to the demand other than if funded by enhanced administration borrowing; this might creation in higher concentration tax and smaller undertaking. The mesh consequence is the equivalent increase in fresh proceeds. Although, as undertaking operating cost is higher, the resources store up is small as compared to what it would have been, with the intention that view returns are lower (Kydland, Finn E., and Edward C. Prescott, 1977).

Inside UK lots of international organizations are in service, numerous citizens from diverse parts of the globe furthermore stopped over in UK for diverse rationales, if the universal economy collapse the dealing of UK based corporation. Sainsbury PLC too will trip over. Consequently they visages intricacies to receive revenue and eventually the shareholders bear.

The impacts of fiscal and monetary policies on the activities of Sainsbury’s PLC are:

-Control of aggregate demand

The demand is based on the economic downturns and transformations in the market.

-Central and local government spending

The support offered by the government and the policies also affects the business aids and performance of the business.

-Interest rates

The rates and policies that are formed by the government and banks with each other affect the business strategy.

The other aspects that effect the functioning of the business are quantitative easing, Euro convergence criteria etc.

P2.3 Explain the impact of the competition policy and other regulatory mechanism on the activities of Sainsbury PLC UK.

The intention of competition policy is to encourage contest; build economies perform well and put in for the enhanced competence in individual economies and improved viability of UK firms in the EU single economy. The competition policy aspires to guarantee

  • Broader customer preference
  • Technical modernization which encourages vibrant effectiveness
  • Successful cost antagonism among suppliers

There are 4 major supports of competition policy in the UK and in the EU

  • Antitrust & alliances: This engages the abolition of contracts that look to confine competition with price-setting up and other mistreatments by businesses lie Sainsbury’s PLC who have a leading market position.
  • State aid power: Competition policy examine illustrations of state aid gauges to make certain that those gauges don’t twist rivalry in the Single Market.
  • Market liberalization: Liberalization engages commencing new competition in formerly monopolistic segments for example energy contributes, postal operations, cellular phone telecommunications and space transfer.
  • Merger control: This engages the examination of amalgamations and invasions among Sainsbury’s PLC and other businesses (e.g. a fusion among two huge sets that would effect in their governing the economy).

Chief responsibilities of the Regulators

Regulators are the law-imposers and they are employed by the government to supervise the way an economy functions plus the results that effect for mutually the manufacturers and customers. These responsibilities are:

  • examining and regulating prices: supervisory bodies aspire to guarantee that Sainsbury’s PLC do not make use of their monopoly control by accusing unnecessary costs. They glance at confirmation of price performance and in addition the rates of income on funds utilized to perceive whether there is proof of ‘exploiting.’ Most of the products of the Sainsbury PLC have the maximum prices being imprinted on the tag.
  • principles of customer service: business firms that do not succeed to convene particular service principles are capable of being fined or encompass their license / permit or franchisee being snatched. The regulator might in addition need that losing operations are continued in the broader communal interest (Litch, 2001).
  • Opening up economies: The plan here is to support competition by getting rid of obstructions to access. This may be attained by forcing the leading business in the manufacturing to permit others to utilize its infrastructure system. A basic duty for the regulator is to fasten a reasonable right to use price for businesses desiring to employ the accessible infrastructure.
  • The substitute competitor: Regulation is capable of performing as a type of substitute competition – trying to guarantee that prices, incomes and operational eminence are comparable to what might be attained in competitive economies.

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Task 3

P3.1 Explain how the market structures determine the pricing and output decisions of Sainsbury PLC UK.

Sainsbury is part of the UK’s major 4 retailer businesses. These four, namely Tesco, Asda, Morrison’s and Sainsbury’s cover 70% of the grocery market of the United Kingdom. There is an oligopoly market that exists in this kind of business i.e. a few major businesses share the major portion of the industry. As there are 4 major contestants, so they compete on the costs, prices as well as all other activities. These firms are interdependent for the output as well as pricing decisions. There are also barriers to entry in the market being created, thus effecting in the small players in and around the industry to face the harmful effects. There are declining trends for the small shops like independent tiny grocery stores and dedicated shops. So, in this industry, there are very few business firms that enable the barriers to entry in the industry, by virtue of which, the new firms cannot enter the industry. Due to the vicious rivalry and competition, there is a price war which focuses on attainment of the major portion of the market. The grocery sellers in the UK are non-collusive, however enabling competition. Concurrently, there is a change in the market structure and the customer’s structure causing a high demand for a further wide-ranging sales structure.

In an oligopolistic system, competition is moreover on charge or on no-cost formed behaviour (Maskrey, 1989). If cost was chosen as the major concern with the main 4 superstores, in that case the time of Price conflict has disappeared. Competitors in their cost-decision strategies pursue the price slash although not the price hike. This might well be clarified well again by “The kinked demand arc” form proposes companies will be income optimizers.

Therefore what is the competition going on? All of these sellers are looking for building revenue connecting its association with clientele or purchasers, thus compelling clients that it presents the most excellent worth for wealth in shopping, and looks for exploiting the gap among the profits attained as of buyers and the charges of materials and value-added efforts implicated.

Each and every player in the market is attempting to attain earnings by means of diverse approaches aiming at specific vendors. The Sainsbury PLC, Tesco etc. have a major share in the grocery market of UK. That’s the reason why other small new businesses also feel tempted to join the grocery market, even though it being non-collusive in character. A suitable example is that the Tesco’s price cut can reflect a clear interdependency in response to the price decrease by Sainsbury on the milk products. Wal-Mart’s attainment of ASDA in 1999 caused additional “daily short price” in ASDA stores, Tesco and Morrison followed the trend. From the year 2004, Sainsbury’s enclose intentionally slash 6000 prices with the intention of recovering client constancy and economy share. The small prices are the major reason to compel 58% customers to a supermarket. As a result if additional than half are capable of being drawn on cost, grocery players are going on a correct path. Studies indicate that 68% prefer to be loyal shoppers

The marketing mix of Sainsbury’s PLc has 3 themes:

  1. a) Shop & save- offering the consumers with the reasonable pricing and promotional ranges,
  2. b) Cook & save- aids the consumers develop the household budgets.
  3. c) Switch & save- focuses on the attributes and eminence of Sainsbury’s PLC own commodities at relatively less prices as in comparison to all other leading brands in the market.

P3.2 Illustrate how the market forces shape Sainsbury PLC UK responses using a range of examples.

The main decision making process of the Sainsbury PLC UK is dependent on the market forces. These market forces have been outlined below with the role they play:

a) Demand and Supply of the product:

This resorts to the queries like what, how, for whom, and the quantity to be produced. The demand and supply of the market causes the allocation of the scarce resources in an economic way. In case, Sainsbury PLC needs to decide on the kind of products it is looking to sell, then it would look for the demand and supply analysis focusing on the products that have a high demand and would divert most of the resources towards the sales of that specific product (Kwok and Tadesse, 2006).

b) Elasticity of demand and supply:

Pricing and output choices are in addition influenced through the reaction of the amount of demand of the creation to alterations in cost, recognized as the elasticity of demand in addition to the receptiveness of the supply in addition. For instance If Sainsbury PLC lean to charge increased prices at the festival season or a peak time for demand of goods, as citizens will use the products in the same way regularly, regardless of what the cost is. If the supply prices rise, as the prices of the manufacture of goods supplied to the Sainsbury PLC sources their entire cost of one entity to increase, they possibly will lessen their making.

c) Economies of scale:

An incident where raise in output worsens prices consequently, offering the businesses with the motivation to create and sell additional since it would as a result bring about advanced revenues

d) Consumer prospects and strokes:

Rapidity in predicting and responding to customer needs will forever be a noteworthy constituent of competitive benefit for businesses like Sainsbury PLC UK and can’t be disregarded while building main choices. Such as, the Sainsbury PLC may settle on the anticipations of its customers and innovation of a new promotion strategy in view of that.

e) The short run and long run experience:

The short run phase is anywhere as a minimum one cause of manufacture is permanent; while in the long run the entire are capable of fluctuating, therefore influencing the decision making or reaction of businesses, for instance the kind of advertisements and medium to advertise to be used.

f) Worker skills/know-how/procedures:

Since globalization is into effect, it is very important that each business, (especially Sainsbury PLC UK, in this case) gets benefit of it to attain competitive gain in the industry and achieve its strategic objectives. For illustration, Sainsbury PLC is capable of doing this by supplying human resources with the most up-to-date proficiencies and information that would permit them to carry out their work successfully and professionally in addition to restructure each and every one of the procedures/actions of the business by utilizing superior know-how and techniques.

P3.3 Explain how the business and cultural environments shape the behaviour of Sainsbury PLC UK.

A firm needs to think about the business and cultural environment prior to building any decision because these environmental aspects encompass an undeviating blow on the selling business. At this point, the business environment is examined by the PEST study (Premchand, 2007)-

a) Political factors:

In United Kingdom, the political circumstance is further steady and the administration builds diverse helpful rules for the business firms. Sainsbury PLC UK s capable of drafting the strategy thinking about this instructive political state of affairs. Each country’s political constraints are different from an other nation.

b) Economic Factors:

These encompass the interest rate, GDP, service rate, deflation, price raises rate etc. each and every one of these features are fine arrangement in UK that helped the actions of Sainsbury to be simpler. These factors have an impact on the cost, profitability, price and demand. Due to economic slowdown, rising unemployment and high inflation w.r.t food prices are 2 main economic aspects effecting the Sainsbury’s PLC noticeably.

c) Social Factors:

The acts of the clients, their anticipations, views and deeds are decided by the communal standard and surroundings that needs to be measured by Sainsbury PLC UK for the trade actions. The social factors include community, societal aspects, team orientation, managerial aspects that effect the business organisation. Corporate and social responsibility stays a main degree of difference for the vendor in contrast to its opponents. Sainsbury’s has occupied a front on offering strong substitutes and apparent branding. It was the initial seller to execute face-of-bunch Multiple Traffic Light branding to applicable produces.

d) Technical factors:

As know-how is altering swiftly, Sainsbury PLC UK needs to regulate the functional activities by means of the altered tools to augment the creation eminence and decrease the price of the produces. Apart from these business environments, Sainsbury moreover regard as the cultural subjects of the UK. The culture of a nation straight affects the behaviour of the business (Abukhader and Jönson, 2004). Sainsbury PLC builds their advertising strategies integrating the culture of UK. Consequently the behaviour of the business is very much influenced by the business and cultural environment of the firm.

Task 4

P4.1 Discuss the significance of International trade to Sainsbury PLC UK

Owing to the up-to-the-date manufacture methods, superior intercontinental businesses (MNCs) and improved transport arrangement global buy and sell has thrived in the modern years (Botosan and Plumlee, 2000). By the means of the international trade system, every business similar to Sainsbury PLC UK is able to function in other nations by means of none or minute obstructions. Hence, international trade is incredibly noteworthy for the Sainsbury PLC UK, as it has by now turned into international working in diverse nations especially in the EU nations where the business is able to liberally work the trade activities by means of null hindrances/barriers. If there were no global buy and sell in the UK in that case the cost-effectiveness or economies of scale of Sainsbury PLC UK will be ineffective and the business would not be able to build additional profits. Alternatively, on account of the worldwide buy and sell Sainsbury PLC is able to subcontract a little of its trade actions and procedures in other nations to lessen the price and raise the superiority. consequently a corporation will at all times be gained beneath the worldwide deal that has been highlighted in the competitive advantage theory by David Ricardo that a nation will be in a better position by pattern whereas other nation will be gaining by reduction in the prices (Kirk, 1999).

P4.2 Analyse the impact of global factors on Sainsbury PLC.

Global factors are too a main concern for an association although it is in service in the worldwide method or although the business is in service just in the habitat nation. At this point diverse Global issues are well thought-out that encompass an impact on Sainsbury PLC.

Global competitiveness: Even as Sainsbury PLC UK is in service in other nations or yet in domicile nations in that case the industry has to think about other global competitors similar to Wall-Mart. If this struggle is high in that case it is hard to struggle in the global economy (Drucker, 1963).

Tax and tariff: Provided that the global market’s tax and tariff rate is huge in that case Sainsbury PLC UK facade complicatedness to contend with that nations’ corporation although in EU this is not valid.

Global Business environment: Global Business environment comprises of Political, economic, social, technical, environmental and lawful aspects (PESTEL) that contain a nonstop impact on the business. So, Sainsbury PLC UK has to think about these issues as in service in the global market.

Exchange rates: Exchange rate is one more significant international aspect for which business’s final proceeds is shaped. Consequently, impulsive enormous alteration in the Exchange rate of UK with other nations is a huge risk for Sainsbury PLC UK.

P4.3 Evaluate the impact of policies of EU on Sainsbury PLC UK

EU has a number of regulations and rules that the associate nations need to sustain at the same time as operating diverse company actions inside and exterior to the habitat nation. Here the chief strategies in use by EU are;

  • Regional strategy
  • Employment strategy
  • International strategy
  • Education and training strategy
  • Inflation strategy
  • Taxation strategy
  • Ascertaining the 'laws of the game' strategy

Each and every one of these strategies encompasses a straight blow on the trade activities of the associate nation (Pagell ET al.2007). Here, Sainsbury PLC UK has to think about if there is some rule and strategy that possibly will bound the business actions. Consequently, at the same time as performing the business Sainsbury PLC has to think about the all strategies entailed by EU or else the business will be visage beneath the universal law of breaching the contract of EU member nations. Since Sainsbury PLC is too in service in diverse EU nations the business has to uphold these rules even if as a company of EU associate kingdom Sainsbury PLC is receiving extra amenities in EU nations.

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References

Abukhader, S.M.; Jönson, G. (2004), Logistics and the environment: Is it an established subject? Int. J. Logist. 7, 137–149. Acciaro, M (2009), Container Logistics, Lecture materials, Erasmus University Rotterdam Adler, NJ & Gundersen, A, (2008), International Dimensions of Organisational Behaviour, Thomson Learning. Botosan, C.A., Plumlee, M.A, (2000), A re-examination of disclosure level and expected cost of capital. Unpublished working paper, University of Utah. Drucker, P.F, (1963), Managing for Business Effectiveness, Harvard Business Review, USA Kelman, Steven, (1987), Making Public Policy: A Hopeful View of American Government. New York: Basic Books. Kirk, J., (1999), Information in organisations: directions for information management. Information Research, 4 (3).

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