Business Environment
Task 1
Select one local charity and one national large business (large PLC or Ltd.) and prepare a report addressing the following:
(a) Identify and describe the purpose and ownership before linking these to the size and scale of each organisation. Compare and contrast these two businesses.
(b) Describe the different stakeholders who influence the purpose of the two businesses and the extent to which an organisation meets the objectives of different stakeholders.
(c) Explain the responsibilities of both organisations and strategies employed to meet them.
Hints:
Categories of organisation: legal structure; type e.g. private company, public company, government, voluntary organisation, co-operative, charitable; sector (primary, secondary tertiary)
Purposes: mission; vision; aims; objectives; goals; values; profits; market share; growth; return on capital employed (ROCE); sales; service level; customer satisfaction; corporate responsibility; ethical issues
Stakeholders: owners; customers; suppliers; employees; debtors; creditors; financial
institutions (banks, mortgage lenders, credit factors); environmental groups; government agencies (central government, local authorities); trade unions
Responsibilities of organisations: stakeholder interests; conflict of expectations; power influence matrix; satisfying stakeholder objectives; legal responsibilities e.g. consumer legislation, employee legislation,
equal opportunities and anti-discriminatory legislation, environmental legislation, health and safety legislation; ethical issues e.g. environment, fair trade, global warming, charter compliance e.g. Banking Code
Task 2
The dominant aspects of an organisation’s environment are assumed to exist in and around the industry, or industries, in which a firm competes. Thus, for strategic decision-making there is no such thing as ‘the’
environment-if the work ‘environment’ is taken to mean a single, holistic entity. Instead, organisations may confront multiple environments, each with its own characteristics and pivotal competitive issues.
Environmental variables exert significant influences on corporate performance. According to Grant (1997) these environmental variables are critical determinants of threats and opportunities a company will face
in the future. The complexity of the environment is heightened by the fact that change is a regular feature of these environmental variables and they are also in constant interaction. The demand on management,
therefore, is to establish a framework for understanding this complex web of interaction and changes in order to survive (Wendy, 1997).
Therefore, managers’ task of influencing the rate and direction of change within their organisation becomes an uphill task if the enterprise is ignorant of the events and trends outside the organisations. The fact is
that managers’ perception and scanning of business environment are crucial for the formulation and attainment of corporate goals and objectives.
According to Grant (1997) a firm’s environment can be regarded as all external influences that impinge upon the firms’ decision and performance. Extant literature’s view of business environment is not
significantly different, for example, Ducan (1972) defined business environment as all factors outside an organisation that are taken into considerations by the organisation in its decision making. Business
environment is usually classified by source or proximity. Bourgeoise (1980) segregated the environment to general (macro) and task (micro) environment: both have implications for the organisation, especially
in strategy formulation and adaptation and consequent performance.
Select one national large organiSation (large PLC or Ltd.) and prepare a report addressing the following:
(a) Explain how economic systems attempt to allocate resources effectively.
(b) Assess the impact of fiscal and monetary policy on business organisations and their activities
(c) Evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected organisation
(d) Explain how market structures determine the pricing and output decisions of businesses
(e) Illustrate the way in which market forces shape organisational responses using a range of examples
(f) Judge how business and cultural environments shape the behaviour of a selected organisation
Hints:
Economic systems: the allocation of scarce resources; effective use of resources; type of economic system e.g. command, free enterprise, mixed, transitional
The UK economy: size (gross domestic product, gross national product); structure; population; labour force; growth; inflation; balance of payments; balance of trade; exchange rates; trading partners; public
finances (revenues, expenditure); taxation; government borrowing; business behaviour e.g. investment, objectives, risk awareness; cost of capital; consumer behaviour; propensity to save; propensity to spend;
tastes and preferences
Government policy: economic goals; fiscal policy: control of aggregate demand; central and local government spending; Public Sector Net Borrowing (PSNB) and Public Sector Net Cash Requirement
(PSNCR); euro convergence criteria, monetary policy; interest rates; quantitative easing; private finance initiative (PFI); competition policy (up-to-date legislation including Competition Act 1998, Enterprise
Act 2002); Competition Commission, Office of Fair Trading; Directorate General for Competition); European Commission); sector regulators e.g. Ofgem, Ofwat, Civil Aviation Authority; Companies Acts;
regional policy; industrial policy; enterprise strategy; training and skills policy
Task 3
According to the article written by Gavin Thomson and published by the Commons library Standard on 18 September 2013, EU membership influences the UK economy in a number of ways. The most
important effects arise through the Single Market, the programme of economic integration through which the EU’s ‘four freedoms’ are guaranteed.
But the economic impact of the EU is felt in other areas of its policy, too. The EU has exclusive competence to negotiate trade and investment agreements with countries outside the Union; and it is a customs
union with a common external tariff on imported goods. Membership thus profoundly affects the UK’s trade relations with non-EU members.
There are also fiscal consequences to membership as a result of the UK’s contributions to the EU budget. Consumer prices are affected through the Common Agricultural Policy and common external tariffs
levied on imports. And the fact of EU membership may also influence decisions made by foreigners about whether to invest in the UK.
Prepare a report addressing the following:
(a) Discuss the significance of international trade to UK business organisations.
(b) Analyse the impact of global factors on UK business organisations
(c) Evaluate the impact of policies of the European Union on UK business organisations
Hints:
Market types: perfect competition, monopoly, monopolistic competition, oligopoly, duopoly; competitive advantage, strategies adopted by firms; regulation of competition
Market forces and organisational responses: supply and demand, elasticity of demand; elasticity of supply; customer perceptions and actions, pricing decisions; cost and output decisions; economies of scale,
the short run; the long run, multi-national and transnational corporations; joint ventures, outsourcing; core markets; labour market trends; employee skills, technology; innovation; research and development;
core competencies; business environment (political, economic, social, technical, legal, environmental); cultural environment
Global factors: international trade and the UK economy; market opportunities; global growth; protectionism; World Trade Organisation (WTO); emerging markets (BRIC economies – Brazil, Russia, India,
China); EU membership; EU business regulations and their incorporation in to UK law; EU policies e.g. agriculture (CAP), business, competition, growth, employment, education, economics and finance,
employment, environment, science and technology, regional); labour movement; workforce skills; exchange rates; trading blocs (e.g. monetary unions, common markets; customs unions, free trade areas);
labour costs; trade duties; levies; tariffs; customs dues; taxation regimes; international competitiveness; international business environment (political, economic, social, technical, legal, environmental); investment
incentives; cost of capital; commodity prices; intellectual property; climate change e.g. Kyoto Protocol, Rio Earth Summit; third world poverty; the group of 20 (G-20); global financial stability
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