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Unit 1 Business Environment organisation types Assignment
Diploma in Business
Unit Number and Title
Unit 1 Business Environment Organisation types
This Unit 1 Business Environment organisation types Assignment program has been executed over the topic “Business Environment”so as to develop the knowledge of the business environment and the different aspects of the business environment. This Business environment organisation types assignment will discuss the impact of the stakeholders over the business and the relationship between the business and the environment at different levels. This program will be executed into four parts. The first task will discuss the different types of organisations, effectiveness of the organisation in attaining the objectives of the stakeholders and the responsibilities of an organisation and the strategies adopted by the organisation for meeting those responsibilities. The second task will discuss the type of system operating in different countries, the impact of the fiscal and monetary policies on farming and housing businesses andcompetitive policies and the regulatory mechanism adopted by United Kingdom and the impact of these policies and regulatory mechanism over an organisation. The third task will be executed in the form of a report in which discussion will be made aboutthe manner, in which the pricing and output decisions are taken by business in different market structures, how the market forces shapes the response of the organisation and the manner in which the business and the cultural environment shape the behaviour of the business. The fourth task will discuss the importance of the international trade for the businesses in UK, analysis of the impact of the global aspects over the businesses in UK and evaluation of the impact of the policies of European Union on the businesses in UK.
Task 1 – Case study
A case study has been provided for this case in which an organisation Primark is given and it is a subsidiary of ABF Group (Associated British Foods). It was founded in 1969 and it is having around 238 branches in UK, Europe and Ireland.
1.1 Identify what type of organisation is Primark and discuss its purpose. In addition identify and discuss the purpose of one organisation within the following categories;
Primark is a public limited company operating its business in UK, Europe and Ireland as it is a subsidiary of ABF Group which is a public limited company. Being a public limited company the purpose of Primark is to enhance the capital of the business with the help of the capital market. The purpose of the Primark is to provide quality products to the customers and raising the amount of funds and dividing the ownership of the business among the shareholders. Primark is providing limited liability to the management and the owners of the business so as to reduce the risk to the management and the owners. Primark is capable or allowed to sell the shares to the public through public exchange and stocks (Larsson & Hyllengren, 2013). A charitable organisation can be understood as the organisation which is operating for the purpose of promoting social welfare with a motive to enhance the quality of life of the people or ensuring the safety and security of the society and the environment. A Rocha is a charitable organisation which is operating in United Kingdom for the purpose of safeguarding the environment by encouraging people for taking practical actions for the safety and security of environment (Hayer, et. al., 2016).
1.2 Describe the extent to which Primark meets the objectives of its different stakeholders
Stakeholders can be explained as the different entities who are interested in the operations of the business. A business has various stakeholders who are interested in the operations and the manner in which the organisation functions. Different stakeholders have different needs and expectations from the business environment which an organisation need to achieve.The stakeholders of Primark include the employees, customers, suppliers and the trade creditors,shareholders and government. These stakeholders and the extent to which Primark is meeting the objectives of these different stakeholders are discussed below:
- Employees: Employees are responsible for the execution of the operations of the business. Primark is having around 238 branches and for the purpose of managing the operations of these branches it is having effective, efficient and strong employee base. The employees expect that Primark is providing a healthy and safe workplace to the employees so as to ensure their health, various other benefits such as retirement benefits, remunerations and employment opportunities (Pinto & Marques, 2016).
- Suppliers and the trade creditors: The suppliers and trade creditors supply the raw material which acts as resource. Primark is not engaged in producing the products on its own. It is getting the products produced by the suppliers.Suppliers assume that the Primark will offer goof profit to them, fair prices, market share and provide better returns over their investments.Primark is offering better prices to the suppliers for producing the products.
- Customers: Customers are the target of the business for whom the goods arebeing produced by the business. Customers expect that the products offered by the business are of high quality and reasonable or affordable. Primark is focusing over providing value for money to the customers so as to provide quality services to the customers.
- Government: Government is the regulating body which ensures that the activities of the business are carried out within the legal framework. Rules have been framed by the government of UK related to the standards, licensing, tax payments and protecting the society. Primark is ensuring that the activities are carried out within the legal framework framed by the government of UK (Turner & Zolin, 2012).
- Shareholders: These are the actual or the real owners of the business and all the activities are carried out for providing return to the shareholders. Shareholders expects that the business should provide better returns to them, higher profits, brand awareness and expansion of the business. Primark is providing better returns to the shareholders.
1.3 Explain the responsibilities of Primark as an organisation and the strategies employed to meet them
Business is operating in the environment and all the resources are supplied to the business by the environment. Business has various responsibilities which it needs to fulfil so as to ensure that the business and its activities are carried out in right manner. Primark has responsibilitiestowards the stakeholders of the business, ethical responsibilities and legal responsibilities.
- Responsibilities towards stakeholders: There are two types of stakeholders towards which Primark need to fulfil its responsibilities. These two types of stakeholders are primary and secondary stakeholders. The responsibility of Primark towards its stakeholders includesrecognition to the stakeholders, involving the stakeholders in the decision making process of the business and fulfilling the expectations of the stakeholders (Witt & Stahl, 2016).
- Ethical responsibilities: Ethical responsibilities of Primark include conducting the trade activities in a fair manner, providing protection to the environment, promoting the products in fair manner and ensuring safety of the society.
- Legal responsibilities: Legal responsibilities of Primark include complying with the consumer legislations, employee legislations, health and safety legislations and tax and financial legislations.
Strategies for meeting the responsibilities:
- Towards stakeholders: for the fulfilment of the responsibilities towards the stakeholders of the Primark it has adopted few strategies and these strategies include use of the stakeholder analysis technique so as to analyse the interest of the various stakeholders, adoption of multi-strategies for multi-objectives in which different strategies will be adopted for different stakeholders (Pedersen, 2011).
- For legal: The marketing will be done by using consumer based marketing technique, adoption of human resource management practices for the management of the human resource of the business, adoption of professional finance and accounting strategy so as to follow the rules and regulations framed by government.
- For ethical: The strategies adopted for fulfilling the ethical responsibilities include green organisation strategy adoption for ensuring the safety of the environment, ethical marketing so as to promote honest claims, using corporate social responsibility so as to fulfil the responsibility towards the society.
Task 2 - Individual questions
2.1 Different countries operate different economic systems to attempt to allocate resources effectively. Research and explain the type of system operated in the following countries and reasons why you think they follow these systems.
Economic system can be understood as the system adopted by the country so as to allocate the resources for the production of the goods and services in the boundaries of the country. Different countries have different economic system.
- Cuba: Cuba has adopted command economic system in which the allocation of the resources is done according to the directions of the central government agency. Cuba is using this economic system so as to reduce the wastage of the resources, for the allocation of the resources is done in a better manner and for using the economic power of the country for the attainment of the objectives (Ostrom, 2010).
- United Kingdom: United Kingdom is adopting mixed economic system in which the major contribution is made by the businesses and the resources are allocated by the government. The reason behind selection of this economic system is for the promotion of the private and public sector in the economy and permitting the individuals to run their business.
- China: china has adopted transitional economic system in which the economy of a country shifts from a centrally planned economy to a market economy. The motive or the reason behind the adoption of this economic system is to restructure the financial sector of the country and enhancing the private ownership of the resources in comparison to public (Chepyuk, 2016).
2.2 In the UK the Chancellor of the Exchequer and the Bank of England plays a significant role in regulating the economy. The tools used by them are referred to as Fiscal and Monetary policies respectively.
You are required to assess the impact of fiscal and monetary policy on the following type of businesses. The reason behind the change in the monetary and fiscal policy made by the government is to control the economy and the businesses of the economy. The impacts of change in the fiscal and monetary policies of UK over the farming and housing are discussed below:
- Farming: The change in the rate of interest will create impact over the farming sector as the requirement of finance will affect the farmers. Change in the spending of the government will create impact over the farming business as the production may get increase with the increase in the spending of the government and decrease with the decrease in the spending of the government (Meaning & Warren, 2015).
- Housing: The change in the interest rates can increase or decrease in the burden over the business and the customers. The increase in the rate of interest will result in increase in the in interest rates of loan and affect the business inversely as fewer customers will be able to invest or purchase houses. The change in the rate of tax will also create huge impact over the business (Fragetta & Kirsanova, 2010).
2.3 Competition is an essential element in the efficient working of markets. However businesses are of different sizes and that can create unfair competition. In the UK as in other European nations Competition policies are used to encourage and improve the competitive process, and to ensure consumers feel the benefits of that process.
You are required to identify at least five competition policy and other regulatory mechanisms in the UK and evaluate their impact on the activities of a selected organization(s). Competition can be understood as the situation where the bid is made by the businesses for the customers and that too without any restriction. Competition provides various benefits to the customers and these include encouragement to the innovation andproviding products and services to the customers at better prices. The competitive policies in UK are as follows:
- Competition act 1998: The main motive of competition act 1998 is to ensure that no abusive practices are carried out for the purpose of ensuring the safety and security of the customers. This act has been implemented so as to promote fair competition in the market. Primark need to comply with the rules of competition act 1998.
- Office of fair trading: The motive behind the implementation of this policy is to provide protection to the customers from the unhealthy practices taking place due to the increase in the level of the competition. This will help Primark in taking steps for the protection of the customers (Munyai & Jordaan, 2011).
- Enterprise act 2002: Implementation of this act or the policy in the competition policies of United Kingdom has resulted into the laws framed and governing the insolvency bankruptcy. This act will ensure the performance of Primark.
- Competition commission: This body has been formed so as to form a committee which will keep a check over the activities of the businesses so as to ensure their actions within the legal framework. Competition commission will also keep check over the Primark so as to analyse that the practices of Primark are in favour of the customers, society and the environment.
- Network regulation: This policy aims at ensuring that the market conditions are not getting affected due to the competition in the market.
Task 3 - Essay
Market can be defined as an area where all the trading takes place between the buyers and sellers of a particular area. There are various market structures in an economy which differs in terms of characteristics and nature (BARON, 2012).There is different degree of competition in every market structure and the no. of buyers and sellers also differs. Different market structures determine the pricing and output decisions making of a business and it is explained below. The first market structure is Monopoly market structure. In this structure of market there is only one or two sellers who control the market and the no. of sellers are many. These buyers have the control of market with themselves and they charge high prices from the customers because the demand of products is more but the supply is only done by one or two sellers. They do not really care about what the customers are willing to pay for the products because no competition is available in the market which encourages them to do so. For e.g. British telecom in Britain, a company having a drug which is not available with any other company. These firms are price makers which mean that they have whole control on deciding the prices of the product which provides them maximum advantage. The output decisions are also taken by them according to the demand in the market (Cherunilam, 2010).
The second type of market structure is Oligopoly Market structure in which there are few firms and they sell similar products. These firms dominate the industry and the action of one firm affect the business of others too. They control the price as they control the quality of the goods produced and sold in the market but still they have to consider the competition, rival firms and advertising there is no definite demand curve for this market. The firms have to develop their competitive position in the markets. For e.g. ban industry in UK in which some of the big banks dominate like Barclays and HSBC (Cherunilam, 2010). The next market structure is Perfect competition market in which there is huge no. of companies who operate in the market. Here, the no. of buyers is also huge in the market. The sellers sell similar products and the competition between the companies is tough due to the selling of similar products. The firms are price takers and the prices are decided according to the customer’s demands. Some large sellers have a bit control over the prices of products. For e.g. Asda supermarket in UK is a part of perfect competitive market and there are many supermarkets in the industry that fight the competition for the maximum share in the market. Asda have to decide the prices of the products as per the demand of the products (Cherunilam, 2010).
Duopoly is another market structure where there are two sellers and they dominate the market. The products sold by them are identical. These firms decide the prices by combining themselves or they agree on a single price. They try to differentiate their products to fight the competition. For e.g. Visa and Master cards can be taken as examples. Market forces can be termed as the economic factors which affect the prices, demand or supply of a product. There are different market forces which are needed to be considered as they shape the responses of the organisation. Two of the major forces of market are Demand and supply. For discussing the response of organisation to these market forces (demand and supply), Samsung has been considered which is a giant electronic products manufacturer (Aswathappa, 2009).
Demand can be referred to the quantity of product which the customers are willing to purchase at a given price and at a given time whereas Supply is the quantity available in the market in a given price and at a given time. Demand and supply have a major effect on the organisation’s decisions for business. The interaction between demand and supply of goods determines the price of products or services (Aswathappa, 2009). If the supply of a product, say, Mobiles is more than its demand among the consumers, the prices of mobile will be cheaper and if supply is lesser than demand, the prices of mobiles will increase. An example can also be taken of oil. The lesser supply of oil and higher demand increases the prices of oil in the international market whereas if the supply is enough and able to fulfil the demand of oil, the prices will be stable. The shortage of oil in the market will hike the prices in the market. Equilibrium is the situation achieved when demand is equal to supply of products in the market. In UK, demand and supply are the forces which are used together to set the prices of goods and services (Aswathappa, 2009). The law of demand states that the quantity demanded of product and its price moves in inverse directions. The below given demand curve shows that the demand of the mobiles is higher at low price and when the price increases the demand lowers (Sloman & Jones, 2011).
Law of Demand: The changes in demand curve happen due to the changes in price. It brings movement along the demand curve. The other factors in this case remain constant like income of consumer or changes in the expectations of the consumers (Sloman & Jones, 2011).
Movement along demand curve: Movement along demand curve is shown when the price movement of P to P1 and P to P2 brings and changes in quantity demanded i.e. from Q to Q1 and Q to Q2. The demand curve movement is seen in the above figure (Sloman & Jones, 2011). Shift in the demand curve also happens due to the changes in the no of buyers, changes in income of consumers, tastes of consumers, etc. it is clear from the below figure that the price and quantity demanded being the same, the other factors bring change in the demand of the goods and then the demand curve shifts. For e.g. in the below given figure, from D to D1. The left shift of demand curve indicates that at each price, quantity of product demanded is lesser whereas the right shift in the demand curve shows that more quantity is demanded at each price (Sloman & Jones, 2011).
Shifts in demand: Demand shows that buyers are willing to purchase what quantity of a product or service at a given price. If the demand increases, the price of the product of service increases and if demand decreases the price also decreases. Samsung can earn more money when the demand for smartphones is high. So, that is how Demand and supply of a product shapes the responses of the organisation (Sloman & Jones, 2011). Just like demand, Supply also follows law of supply which indicates that the supply increases at higher prices and vice versa.
Law of supply: The curve moves because of costs and profits. The manufacturers buy raw material and use them to produce the final output. The businesses try to sell the products at higher prices so that they could earn profit (Sloman & Jones, 2011). The supply curve moves due to changes in quality supplied because of changes in price. In the below figure, movement is seen when the price changes from P1 to P2 and P1 to P3.
Movement along supply curve: Shift in supply curve is made from the factors like taxes and subsidies, Technology, no of sellers or cost of resources.
Shift on the supply curve: The left shift of demand curve indicates that at each price, quantity of product supplied is lesser whereas the right shift in the demand curve shows that more quantity is supplied at each price (Sloman & Jones, 2011).
The business and cultural environment shape the behaviour of the organisations and this can be clearly explained with the help of Primark which is a major retail organisation in UK. PESTLE analysis can be done which clearly explains the effect of the Political, Economic, Social and technological factors on Primark. The political situations in UK are stable and the regulations and laws are to be followed by Primark for smooth operations (Havrilla & Baxter-Southworth, 2014). The inflation rate in UK shows the movement of money in the economy. High GDP rate shows that the nation is growing and employment rate shows that people have jobs and spending power which will increase the sales of Primark. Primark is a big retail brand which fulfils the expectations of the customers. The social norms and demands of the customers are to be considered for better business performance in UK by Primark. Technology is another factor which plays a major role in today’s business environment. Primark is adopting technology by developing its website which boosts online sale. It is also using technology for data management and customer relationship management which helps in effective business performance and profitability (WEATHERLEY & OTTER, 2014). Primark has to take care of the culture of the nation and provide products which are needed by people. Their policies should be made according to the environment of the nation. It has to follow the laws made by government so that the rights of the customers can be protected and business can flourish (PALMER & HARTLEY, 2011).
Task 4 - Objective report
This objective report will discuss the role of international trade on the organisations operating in United Kingdom. International trade is an important aspect as it is an effective measure for enhancing the performance of the businesses. There are various factors present in the global market which create impact over the businesses in UK. These impacts of the global factors will be discussed.And the impact of the policies of the European Union of the organisations of UK will be discussed.
Importance of international trade to the UK businessorganisations
The concept of international trade can be understood as the trading activities of the businesses which are carried outside the borders of the country.The increase in the trade between the different countries of the world has increased the trend of international trade in the business environment. International trade is an important aspect for every business as it enhances the chances of the business for expansion of the area of operation of the business. Businesses have used this concept so as to expand the business and trade across the borders for the purpose of enhancing their performance, for analysing the performance of the business at international level and for providing services to the large number of customers.This has helped the businesses in participating in the economy at the global level. Businesses are using this as a measure for the better growth and future prospects of the business.UK is an important place for the trade and various companies of UK are operating their businesses in different countries so as to enhance the performance and the chances of profitability. The concept of international trade is an opportunity as well as a threat to the businesses as international trade promote trade at international level as well as increases the level of competition for the businesses (Morgan, et. al., 2013).The rules and regulations have been framed by the organisations and the governments for guiding the activities or the actions of the organisations in the right direction and to make sure that the rules and regulations are followed by the businesses. International trade has provided benefit in the form of the availability of the resources required for the production of the products and services at a better price, better quality or in adequate quantity. This reduces the cost of the businesses as well as increases the chances of profitability and growth of the business. Businesses can plan to outsource the operations which are non-core activities to other countries so as to gain from the prices and the economic conditions of the different countries. Businesses also gains technological advancements so as to improve the performance of the business and technology also helps in reducing the cost of the business(Morgan, et. al., 2013).
Impact of global factors on UK business organisations
There are various factors present in the business environment which create impact over the performance of the business. Every business needs to analyse these factors and their impact over the business so as to cope with these factors. The businesses operating at international levels need to face various factors at global level which affects the performance of the business at global level. The global factors and the impact of these global factors over the business organisations in United Kingdom are discussed below:
- Level of competition at international level: The level of the competition increases at a very huge level as the business organisations are competing at international level which act as an opportunity for the business as well as threat to the business organisation.
- Economic conditions of the economies of the different countries: The interest rates, exchange rates, tax rates, inflation rates and the other economic aspects of the different economies also create impact over the performance of the business.
- Availability of resources: The resources at different places are available in different quantities and the price and the availability of the resources helps the business by reducing the cost of the businesses (Catalá-López, et. al., 2014).
- Legal framework of the economies of the different countries: The law, rules and regulations are different for different economies as these are formed for the purpose of ensuring the operations of the businesses in a legal manner. These laws affect the businesses.
- Environmental conditions of the country: The climatic and the weather conditions of the place also create impact over the businesses as these affects the performance of the business.
- Political environment of the country: The political conditions of the country are also need to be considered so as to ensure that the operations of the businesses.
- Social environment of the country: The social environment consists of the people which are the sum total of the employees, customers and the other stakeholders of the business. These create impact over the business and its operations.
- Technological environment of the country: the change in the technology enhances the functioning of the operations of the business which results in improvement in the performance of the business and the profitability of the business(Catalá-López, et. al., 2014).
Impact of the policies of the European Union on UK business organisations
There are various policies of the European Union which create impact over the business organisations in United Kingdom. These policies and their impacts over the businesses are as follows:
- Agriculture policy: this policy was aimed at to enhance the production of the food products and to increase the food security for ensuring the health of the society, on the management of the natural resources so as to protect the environment.
- Business policy:for the purpose of safety and security in the trading activities of the business this policy was framed. The free movement of the harmful products was restricted so as to ensure that the use of these harmful products is reduced.
- Tax policy:the tax rates were changed so as to ensure the competition in the economy and the conduct of the businesses in a fair manner.
- Employment policy:this policy has discussed the employment rules and regulations for the safety and security of the employees and improving the living conditions and the working conditions of the employees so as to enhance the quality of lives of the people (Stassen, et. al., 2010).
- Health policy:health policy is aiming at health and wellbeing of the society and the environment. There are different stakeholders involved in the functioning of the business and it is the responsibility of the business to maintain or ensure the health and wellbeing of these stakeholders. Businesses need to ensure the health and safety of the employees by providing better workplace and ensuring the health and safety of the customers by providing quality products to the customers.
- EU standards:as per this standard a marking will be given to the products which are being exported to few countries and this marking ensures that the products are safe.
This report has discussed the importance of the international trade for the organisations in UK as the international trade is an important aspect which promotes trade between the different countries. There are various global factors such as competition, tax rates and other policies for international trade and the other economic conditions. It has also discussed the impact of EU policies such as of the agriculture policy, business policy, tax policy, employment policy, health policy andEU standardson the organisations of United Kingdom.
This program has discussed various aspects related to the business environment and the impact of the elements of the business environment over the performance of the business. In this report discussion has been made about the stakeholders of the business and the responsibilities of the business towards these stakeholders and the strategies adopted by the organisation for the purpose of fulfilling their responsibilities towards the stakeholders. It has also discussed the different types of economic systems adopted by the countries and the competition policies. It has also discussed the market structure and the impact of market forces over the business and the manner in which business and cultural environment create impact over the business. A report has been prepared which has discussed the role of international trade, impact of the global factors and of the policies of European Union over the business in UK.
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