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Business could be understood in terms of a financial activity with the objective of earning profits, market shares, etc and the environment in which it operates is highly volatile and thus the business must adapt and respond constantly to its Business Environment. The unit global factors of business environment assignment study basically aims to discuss various kinds of organizations along with the responsibilities to various stakeholders and their interest in the business. Also the national environment in which the business operates has a huge impact on the business activities. A light is also thrown on the behavior of the organization in its marketing environment along with development of an understanding of the market structures and understanding of the market forces of demand and supply. With a special focus to UK, the study aims to discuss the impact of the global factors on the business organizations along with discussing the policies of European Union and their impact on the business activities at UK.
Organization involves a group of people striving together for attainment of common objectives. The organization could be of three types based on their ownership and purpose as
Mc Donald’s is a private organization operation as a leader in global fast food industry and operates mainly through Franchising where the later run by paying royalty fees to former under a contract. The vision of the company is to maintain its leading position in the world fast food industry and providing customers with better satisfaction through innovation in products and services. Thus the company is continuing growth in market shares, customer satisfaction and profits by serving millions of customers daily around the world while also being responsive to the needs of local community through involving in greening or environmental activities.
Stakeholder is any individual or group whose interest is in the organization and either impacts or is impacted by the business activities (Craig et al, 2005). As considering the case of Mc Donald’s which is leading global giant in fast food industry, the various stakeholders include:
Mc Donald’s operates globally in around 120 countries with over 30000 restaurants with around 80% of restaurants operating through franchise systems and only 20% owned and managed by the company. The responsibilities of the company can be understood as:
The resources like capital, land, soil, etc are in limited supply in any country and thus effective allocation of these scarce resources in order to meet the needs and demands of the people in the country is done through economic systems. The economic systems help in allocation of resources in prudent manner and it can be done in three ways as follows:
In order to keep a control over the activities of business organizations, various policies are formulated by the government with aim of stabilization of the economic systems. The main policies include the fiscal and monetary policies where the government acts through fluctuating rates as follows.
The competition policy deals with the promotion of healthy competition in markets thus leading to improvement of the business efficiencies along with providing the customers with greater choices in terms of prices and quality and technical innovations. Also it leads to effective allocation of resources through price competition for raw materials by various operators in the industries. It promotes the customer interest through safeguarding against any kind of abuses like fixing of prices by two or more firms, affecting supply through hoarding and monopoly pricing (Rosser et al, 2003). Mc Donald’s is a leading player in global fast food industry and faces hard competition from burger King, KFC, etc and thus tends to provide best quality, services and innovate and adapt its products as per consumer preferences along with differentiate its offering through provision of services like free Wi-Fi and drive thru to attract its customers and develop edge over competitors. Other regulatory mechanism are enforced by the government includes fair trading, providing appropriate services to customers, healthy competition in market, fair pricing, being responsible to environmental concerns and sustainability initiatives of the businesses, etc. This allows for providing for the best satisfaction of the customer needs and wants and fair business operations by organizations including Mc Donald’s.
The market structure refers to the number and relations between the various operators in markets in any industry along with their impact on prices and customer demands.
The market forces include the demand and supply of the products in the markets and the organization respond to changes in demand and supply which decides the profits and position of the firm in the market or industry. Demand is the representation of the overall customer needs in the markets and firms like Mc Donald’s invest heavily in understanding the demand of their products in the markets. This helps the company to provide the products at right time and in desired quantity to meet the customer requirements. If the company is able to estimate the demands this leads to increased profits margins through reduction of finances being locked up in inventory and finished products while inability to meet demands creates losses for company along with affected reputation. If the company doesn’t react to market demand and supply the products in the markets it would lead to over stacking o piling up of products thus generating losses for the company thus supply should be according to market needs. Thus being proactive and being capable of meeting the customer demands effectively leads to increased customer satisfaction and brand reputation thus leading to higher future profits and success of organization. Thus the organization must react prudently to market forces of demand and supply in order to ensure its success and viability in the industry as done by Mc Donald’s. The company must keep track of the environment in order to access changes in demands which may be affected by seasons, festivals, etc and supply accordingly (Gregory et al, 2013).
The company must consider the changes in the environment and react to it and it can be divided in to
International trade is very important consideration for various countries as it cannot be self sufficient and cannot produce all the goods and services. Also certain natural resources are found in a particular country or region only as location of major petroleum reserves in Arab countries allowing them to exchange oil and petroleum products for other products with countries (Elmer, 2015). For the UK business organizations the importance of international trade includes:
The various factors that have a bearing on the activities of multi-national organizations like Mc Donald’s not only internationally but also in its home country are called the global factors. Many of the organizations operating at UK conduct business elsewhere where the labor cost are low and through international trade help in boosting the UK economy (Paul et al, 2013). Due to good reputation of UK in the world due to its use of technology and manufacture of machines, cars, etc, the UK based organizations get an opportunity to expand business elsewhere around the world. World Trade Organization (WTO) has important concern in matters pertaining to trade and exchange between various countries and ensuring global actions of organizations properly.
UK government has important contribution in liberalization of trade and exchange through formulation of laws and policies thus focusing on the global growth of UK based organizations. However Protectionism policy of UK government restricts the import of particular items in order to ensure healthy competition between the goods and services produced within UK. Thus the UK government through application of tariffs and taxes restrict import in certain areas. BRIC (Brazil Russia India China) are the most fast developing economies in the world and hence poses threat to the economy and organizations at UK. Thus the global factor is important consideration for large organizations operating at UK and helps in improving the contribution to the UK economy through promotion of international and global trade.
EU has certain rules and policies which must be followed by all the organizations conducting business activities at UK and member countries. As Mc Donald’s operates in many countries which are member to EU thus it must abide by their regulations and one of the major policies of EU includes doing all the dealings between the organizations or subsidiaries based at member countries in the Euro currency through the European Money Transfer Union thus strengthening the European currency (Palmer et al, 2011). The various policies of EU have impact on business activities of organizations at UK affecting in the various areas as Employment, recruitment, Training and development of employees, spending, taxes levied, international trade, subsidies, etc. all the member countries at EU are allowed for free trade amongst member countries while national government has role of monitoring the business activities as per the EU policies. Thus all the UK based organizations including Mc Donald’s must follow the rules and regulations as per EU in order to avoid any legal suits for violations. The EU policies promote trade and exchanges with member countries while imposing some restrictions on trading with outside countries.
The business environment of any organization has important impact on its activities and decisions and the business must respond to changes in the outside environment which consist of micro environment or stakeholders in the business including competitor, suppliers, customers, employees , shareholders, etc and macro environment consisting of economic environment including economic policies like fiscal policy, monetary policy, competition policy, etc and the non economic environment consisting of political, natural, cultural , demographic, technological and legal framework impacting the business activities. Various organizations like EU and government regulate and monitor the business operations nationally and internationally hence any organization must abide by laws, rules, policies and procedures accordingly. Thus various organizations operating at UK are impacted by the policies of EU in terms of recruitment, money exchanges, training and development , inflation, etc and the role of the national governments is limited as EU allows for free trade and exchanges between the member countries. As mc Donald’s operates globally in various countries thus it must abide by the legal framework and policies of the respective countries and develop products and services as per the cultural , social and other aspects of environment including the tastes and preferences of customers.
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