Business Environment Essay

The successful accomplishment of this case study is the outcome of the contribution of number of people, especially those who have given the time and effort to share their thoughts and suggestions to improve the report. At the beginning, I would like to pay my humble gratitude to the Almighty God for giving me the ability to work hard under pressure. This report on â€Å"Case study on Business Environment† is prepared through continuous research for a period of about one month. This long span of work would not have been possible without the help of various generous hands. My sincere gratitude to my course instructor, for his supervision on this report. He has given a lot of assistance in coordinating the whole report. Without his perseverance and guidance this report would have been a pile of worthless paper. Page 2 of 17 Table of Content Topic Executive Summary Understanding the organisational purposes of businesses 1.1 Identify the purposes of different types of organization considering their legal structure and types (private company, public company, and voluntary organisation, co-operative, charitable) 1.2 Describe the extent to which an organisation meets the objectives of different stakeholders 1.3 Explain the responsibilities of an organisation and strategies employed to meet stakeholder interests; conflict of expectations; satisfying stakeholder objectives Understanding the nature of the national environment in which businesses operate 2.1 Explain how economic systems attempt to allocate resources effectively 2.2 Assess the impact of fiscal and monetary policy on business organisations and their activities 2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected organization. Understanding the behaviour of organisations in their market environment 3.1 Explain how market structures determine the pricing and output decisions of businesses. 3.2 Illustrate the way in which market forces shape organisational responses using a range of examples. 3.3 Judge how the business and cultural environments shape the behaviour of a selected organization. Assessing the significance of the global factors that shape national business activities 4.1 Discuss the significance of international trade to UK business organizations 4.2 Analyse the impact of global factors on UK business organizations 4.3 Evaluate the impact of policies of the European Union on UK business organizations Recommendations References    Executive Summary First of all I have introduced the company named ‘Sainsbury’s and after that I will describe organisational purposes, nature of the national environment, the behaviour of organisations in their market environment and implication of the global factors that shape national business activities. Sainsbury’s is one of the UK’s leader retailers, currently its position is just after Tesco, who is occupying the market leading position. Anyway Sainsbury’s t offer high quality with great value products and services ranging from food, cloths, daily household needs etc. they employed over than 152,000 (2012) people in the UK, and have more than 1,016stores in UK .Their markets is growing rapidly, recently they have planned to expand more in overseas markets. In brief, I am going to identify the purpose of different types of organisation, their responsibilities, strategies based on the present market situation, trade policies, and behaviours as well as economic, government and the world trade organization impacts on the organization. Then the explanation of market structures, market forces that shape the organisation’s response and impact of business and cultural environment on the organisation. Finally I will discuss the impact of the global factors and how policies of the European Union affect UK business organisations. Page 4 of 17 Understand the organisational purposes of businesses 1.1 Identify the purposes of different types of organization considering their legal structure and types. A business can be organized as follows: Proprietorship: has a singly owner, known as proprietor, who manages the business; proprietorships tend to be small business or professional services, such as accountants, lawyer Partnership: joins two or more persons as co-owners, each owner is a partner and the partnership deal can be done, it is called a mutual, mutual Agency: Organization: this organization, owned by shareholders, these people who own shares in the organization, is a certificate representing ownership in a organization, the business is a organization, when the State approved the articles of incorporation, and the first stock share published article to the lines that have been approved by the administration of the State Corporation, unlike sole proprietorship and partnerships. Public joint stock organization, limited liability organization offers limited liability to its owners and management. If want to be, that the organization can make the organization sells shares to investors, it is useful in attracting capital. Only limited liability organization can be listed on the Stock Exchange, and the character of their stocks has a suffix. So, British Petroleum PLC and BP ticker. A private organization may issue shares and shareholders. But their shares are not on public exchanges and were not granted for the initial public offering. Voluntary organizations: It’s an organization with random or regular volunteer for exploitation and may or may not have paid employees. Voluntary organization is characterized by independence of the State; organize themselves through the unpaid Board membership; Membership that is not received or ordered; support for the charity; are not for profit Cooperative Organization: Page 5 of 17 The organization owned, managed and operated by a group of users in their favor. Each Member must contribute capital and share in the control of the organization on the basis of the principle of one Member one vote. Charity: Embedded or included tax exempt; developed and used for charitable purposes ;uses its own funds for these charitable activities under its direct control; does not to distribute any part of the turnover is generated for each curator, trustier, Member, or any other individuals and does not associated with political organizations. 1.2 Describe the extent to which an organisation meets the objectives of different stakeholders The upper diagram shows Different stakeholders are engaged in an organization that have different objectives and needs which are served by the organization. Here as follows, a) Investors. Investors are concern regarding the risk of investments, interest and overall return. They need information to determine if he/she should buy, keep or sell. The shareholders are interested about the stability and profitability of organization. Organizations provide information that makes them assess the dividends. b) Staff. Organization meets the employers’ expectations through salary, bonuses and ensures safe environment for the employers. c) Lenders. They are interested in the information for their Loans and trade credits. An organization paid them back as sale proceeds come from customers end. Page 6 of 17 d) Suppliers and other vendors, who are likewise interested in information to determine whether their supplies and trade credits safe or not. An organization paid off to them for their supplies. e) Clients keep their eye on organization’s commitment, or market position. Organization ensures their interest through growth of business. f) Governments institutions, Organization help the government in the allocating the resources under country’s business regulation practices also by paying tax which are part of fundamental national income of the country. g) Public, An organization help people to find employment thus help to develop local economy as well as the country. They also help to encourage local suppliers and information about the trend and overall productivity of the country. 1.3 Explain the responsibilities of an organisation and strategies employed to meet stakeholder interests; conflict of expectations; satisfying stakeholder objectives Responsibilities of an Organisation An Organization and various forms of responsibilities to the stakeholders and at the same time they take best effective strategies to meet stakeholder’s interest, conflict of expectation and towards satisfying their objectives. Different stakeholders have different priorities in case of organizational responsibilities which are as follows: Employees: Organization needs to ensure good working environment and proper payment. Shareholders: Organization responsibilities towards their shareholder are to make sure about their profit and dividend. Government and their Institution: Proper allocation of resources, employment solution, follow business regulation of the country, pay corporate tax on time etc are organization’s responsibility towards government and supporting institutions. Customer: Ensuring best quality of goods and services at lowest possible price is an important responsibility of organization. Besides above responsibilities, every organization has been introduced with some new concept of responsibilities which is known as Corporate and Social Responsibility (CSR). Can be subdivided into four criteria (John M. Bryson, 2009) Understand the nature of the national environment in which businesses operate 2.1 Explain how economic systems attempt to allocate resources effectively The economic system is composed of various processes in the Organization and motivation of work production, distribution and circulating, including products and services. Consumer goods, machinery, tools and other technologies. There are three types of economic systems: Market Economy: this market to a minimum level of government intervention is kept or forgotten and economic resources among the private sector as well as the mechanism of price will determine how many products or services will be delivered in accordance with the requirements of the market. Centrally planned Economy System: The Government makes all the plans for economic resources and economic activities which can be seen on in Asia, Centre of Europe, Cuba, Iran and Iraq have these economic systems. In this process unemployment will not be a problem as the Government plan for all economic activities and resources. Mixed economy system: this is so far the best economic system for modern world. A mix of other systems, that is public and private both price mechanism work jointly in this process. And also distributes the resources available in the region. The country, like the United States of America, Canada, and France has this mix economic system, in this process, if one system does not work properly then other works in its process and make balance in the whole economic system. 2.2 Assess the impact of fiscal and monetary policy on business organisations and their activities Government use fiscal policy fiscal revenue and expenditure of the Government. When the Government loans from abroad, it creates lower demand of goods and services. As domestic production decreases this lending policy from abroad can affect the related organization. On the other hand organization can achieve better profits for the added capital when government cut of taxes In case of monetary policy process, thorough which government controls the supply of money within the country, most of the benefits come out when government can stabilize prices and keep Page 9 of 17   As government keeps the interest rate low, people can lend more money. Thus the extra money they can put into production or in the business cycle which in return increases the profit of the organization. On the other hand higher interest rate does the vice versa. In this way controlling monetary policy government can affect the organization of the whole country. 2.3 Influence of the policy of closure and other regulatory mechanisms on the activities of the Organization: The competition targets a market run on the boardwalk and promote better compete it the quality and price. Thus competition contributes to a broader selection of clients in the market and offers the actual and effective price competition between suppliers. With the negotiation of World Trade Organisation (WTO), world leading trading nations signed and ratified in their parliaments. Main goal is to help producers of goods and services, as well as exporters and importers conduct their smooth business. Almost all people want to have their better interests in international trade. As a result international trade and marketing can be broken sooner or later.WTO helps to prevent or mitigate the problems related to the pricing. Profit etc through their details investigation.WTO also covers intellectual property, goods and services, principles of liberalization and including exceptions. The strengthened dispute settlement mechanism of the WTO helps to strengthen to reduce the potential for unilateral and bilateral action outside the multilateral system, proponents of the WTO has long argued that the reduction of trade barriers will increase world trade, but there is hardly a rigorous Empirical research on the impact of WTO or trade or trade policy, although a recent study shows that very little, if any, effects, in another study of the IMF does not agree with this conclusion. Page 10 of 17 Understanding of environmental NGOs in the behaviour of the market 3.1 explain how market structures, determination of the price and output decisions of enterprises. UKs explain the current situation and determine what correct structure would be helpful There are five types of market structure in the UK, and they are following. Perfect competition and perfect competition market Perfect competition market is one where a very large number of buyers and sellers, all distended in the purchase and sale of product, without any unnatural and has a perfect knowledge of the market at the time. With the Koulsayaiannis words are â€Å"the structure of perfect competition market, total absence of rivalry between Individual price takers and where there is freedom of entry into and exit from the industry.† The monopoly market Monopoly is Salvatore as a monopoly is a form of organization of the common market, where there is one organization to sell the item for which there is no change. † There are a number of characteristics of monopoly which †¢ There is only one seller †¢ All control on delivery of product is in the hands of a monopoly †¢ Under the monopoly, the organization itself is an industry; it can be a solo entrepreneur, partnership, JSCs, and etc. †¢ There is no close substitute product monopoly. In the case of cross-border demand elasticity is, in any case, it is possible. †¢ There are restrictions on the entry of other companies in a product monopoly. Page 11 of 17 Duopoly Duopoly is a special case, the theory of oligopoly, where there are only two sellers and they are fully independent and conflict between them. Variations in price and will affect the performance of the other and the other bears the loss must meet the cost of the competitor. Oligopoly Oligopoly is a market where there are several companies that sell or standardized various goods. It is difficult to say, the number of companies in the competition between the pair. A few problems on the market shares of the organization, as a rule, on the other. Oligopoly industry produces a standardized product or different products. This concept is called clean and spotless oligopoly and the last incomplete or oligopoly discrimination, called. Monopolistic competition Monopolistic competition refers to market conditions, when there are many companies that sell a variety of products. â€Å"There is a competition, with enthusiasm, but not perfect, many companies produce very similar products. No organization may not have to reveal the impact on policy, the export of other sellers or price can be very affected by their actions. Define monopolistic competition competition among a large number of Sell of close, but not perfect substitutes for each other. 3.2 Illustrate the way in which market forces shape organisational responses using a range of examples. There are different forces which shape organizational responses to the market. Among them main five markets forces which can shape the responses are given below: Threat of a new entry: Any organization with innovative ideas, technologies and process can affect the existing organization. Threat of a new entry of Sainsbury’s is medium as the business process and environment relatively high barriers for any new entry. Threat of substitute products: Represents a product obtained from industry replacements, perhaps in another area, in this case is the high compensation of marketing competitiveness as Morrison and Asabi are facing big challenge from Tesco in that case. Page 12 of 17 Bargaining power of customers: There are a lot of supermarkets and brands, the customer has the right to choose a product or service that they want and need. In this case competitive price and better quality only can assure business success. Sainsbury’s are in better position with their price and quality though they have to face price war with Tesco and also they face strong challenge from John Lewis and M&S regarding the quality. Bargaining power for suppliers: As there are large numbers of suppliers. Collective bargaining in this situation is weak for the suppliers Rivalry: There is high competition due to large number of suppliers with different price and quality. Sainsbury has to compete both with the price and quality with the other competitor. Through their competency, Sainsbury’s have maintained their reputation and strong position in the market. 3.3 Judge how the business and cultural environments shape the behaviour of a selected organization. As a major retailer Sainsbury’s is well known throughout UK. They are now is one of the best British dealers among the competitors. They also spread their operation USA.they is also planning to spread their market in Asia. Though Sainsbury’s facing tough competition with other retailers, such as Tesco and Asda, but as customers are getting smarter and aware about the quality with price, they are still in a strong position in the market. As we know UK multicultural country with variety of nations, further market researched need to be done with the multicultural food habit, religion and cultures in order to hold the best position in the market. Page 13 of 17 Assessment of the meaning of global factors shaping national activities 4.1 Discuss the importance of international trade for UK business organizations International trade covers trade between United Kingdom and the rest of the world. Any country will have e limited resources of goods, services without international trade. Trade relation between countries and cheap labour and sourcing from developing countries plays an important role in shaping national activities. Moreover of invention and uses of new technologies, access into the cheap sources and labour market also playing a crucial role in shaping the national activities. 4.2 analyze impact of global factors on UK business organizations Globalization has a different impact on UK business: Technology: Organization in have gone through the Internet to promote their products and offer discounts with free delivery on their products to attract clients and makes it easy for them to their products. Sainsbury’s is not behind the progress. Social: Customer tastes change from time to time and from period to period or standard or quality of life. Globalization has put its impact to customers providing variety of taste, attitude and trend and fashions in an advanced way. Political: Political systems that are presently elevated and forced around the world in part to growth of consumption also leading to vast impoverishment and development. We can see the reflection in the UK market as well. Private sectors especially small business and young entrepreneurs are encouraged for business. Trade barriers UK businesses are facing less trade barriers than they used to face before. Page 14 of 17 Environment: Now a day’s people are getting concern day by day regarding green environment. Plastic bags are banned in so many places. People are encouraged to use reusable bags and other eco friendly products, protecting forests. In addition electronics communication are also used instead of printing papers 4.3 assessment of the impact of the European Union’s policy on UK business organizations The European Union has gained more power than before over the policy guidance for the UK business organizations.EU has taken policy to strengthen the industry and move in the direction of eco friendly environment and create jobs. It also helps to promote small companies to grow their business through associating policies, such as competition policy, which helps the fair treatment for all, and reduce costs, improve quality and choice of the customer. EU consumer policy should ensure that the client is protected in their health and safety, as well as help them improve their life. Establishment of Impact Assessment Unit and reduction of regulation cost by EU is also welcome step for UK. Page 15 of 17 Recommendations Sainsbury’s is one of the leading retailer in UK, They meet the stakeholders interest through their superior management quality and also ensuring customers by providing high quality of products. Moreover their dynamic strategies help them to grow rapidly within the limited resources and present government moderate policies. On the contrary, Sainbury’s need be more active to increase number of store in the overseas market and also market research activity especially for the multicultural community. Sainsbury’s have lots of strong competitors like Asda,M&S, Jhon Lewis etc who are also have a good positioning in the market. Actually, the competition lies in the quality and price of the product and services, purchasing behaviour of the customer and of course customer services. In that case they need to find alternative cheap sources from developing countries. Finally, not only the organization, the positive role of the Government, WTO and EU would plays an important role to ensure the overall growth of organizations in UK. Page 16 of 17 References: 1. www.sainsburys.co.uk 2. www.gov.uk/†¦/10-1257-guidelines-for-managing-projects 3. www.investopedia.com/ 4. www.investorguide.com/article/11595/introduction-to-the-economy-fiscal-and-monetary-policy-igu 5. www.wto.org 6. ec.europa.eu/trade/policy 7. www.economicsonline.co.uk/Competitive_markets/Economic_systems.html 8. John M. Bryson, John M. Bryson;Hubert H. Humphrey (2009),’What to do when stakeholders matters? Stakeholder Identification and Analysis Techniques, Institute of Public Affairs’; 9. Thomas, J. C. (1993) ‘Public Involvement and Governmental Effectiveness: A Decision-Making Model for Public Managers. Administration and Society, 24:4 pp444-69. Page 17 of 17