Introduction of Business Environment
Business environment is the mix of variety of factors which affect the operations of the business organization. These are various micro and macro factors which plays an important role in the business operations. There was a time when business was simply buying and selling of goods, but with the changing time the complexity in business is rising. There are various macro and micro factors affecting the business of the organization (Adrian and Shin, 2008.). The current research report is the complete overview of the business environment, with respect to Vodafone.
The report will discuss about the business purpose of organization, nature of business environment in which Vodafone operates. Further the report discuss about the behavior of organization in marketplace and finally the global factors which affect the business activities of Vodafone.
Vodafone is the multination telecommunication company with it’s headquartering in London. The company was founded in Newbury (Berkshire) in year 1991. The company is the third largest company listed on the London Stock Exchange. The company is also listed on NASDAQ It has its operations in 30 countries and works in partnership in more 40 countries. Vodafone has created employment opportunities for more than 85000 and has annual revenues of more than 45 billion pounds. The company provides various services mobile telephone, internet and digital television.
TASK1: UNDERSTANDING THE PURPOSE OF ORGANIZATION
Types of Organizations and their purposes and comparison of missions, goals, and the strategic objectives
There are two categories in which a business organization is divided, Public sector enterprise and private sector enterprise. Private sector organization is those which are owned by the private entrepreneurs, they have full control over their business operations where as public sector organizations are those which have the government interference in business operations. The main objective of the private sector organization is to earn profits and also provide valuable services to their customers (Bachmeier, 2009). The main aim of the public sector enterprise is to work for the welfare of the society. Business organizations can be further classified into Sole Trader, Partnership, and Company.
A Sole trader, there is a single owner and can indulged in various different activities. They are in direct contact with customers and deal the business operations directly (Sole Trader Vs Limited company, 2013). In sole trader the paper work is less required and the profits are directly owned by that single owner.
Partnership firm is the organization where owners of the company are different partners. They have signed an agreement which is known as the partnership deed. The profits and losses are divided in the pre decided ratios. The objective of partnership firm is to earn profits distribute them so that partners enjoy equal benefits and most importantly provide services to their customers.
Companies are basically the public listed or the private company. They are the group of people which run an organization together. A Company is the organization with many partners. Companies are basically listed o the stock exchange and shareholders have the voting rights in the organization (Campbell and Craig, 2008).
Comparison of the missions, goals, and the strategic objectives of Vodafone with British telecom
Here the comparison mission, goals and objectives of the Vodafone with British Telecom is done, but before that, British telecom is multinational telecommunication company with its headquartering in London. The company was previously a public sector organization but was privatized in year 1984.
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Stakeholder Expectations Influencing Organizational Missions and Goals
Stakeholder is the group of associated people which gets affected by the performance of the business organization. Stakeholders are the people which have interest in the business organization. The growth and the decline of the organization equally affect the stakeholders. In Vodafone the internal stakeholders are the employees, managing directors, board of directors etc. whereas the external stakeholders are the customers, suppliers, and etc (Halbert and Ingulli, 2011). companies tries to transform their policies so as to provide maximum benefits to their stakeholders.
Stakeholders Expectations, from the public sector company are always to welfare the society by providing appropriate services where as from the listed companies are, that they earn more and also share their profits with their stakeholders. People expect the Vodafone to earn good revenues and also distribute their rewards to stakeholders, the Result of which they have returned more than £ 10 billion to their shareholders.
Vodafone is passionate about exceeding their customer expectation and also try to fulfill their increased demands. They also promote an innovative environment by developing new services and also identify new ways of working (Paul, 2008). They create a passionate environment towards achieving their goal and also keep an eye on their competitors and focus on providing better services then them (Sevelli, 2009). They try to achieve best outcomes and being a international brand focus on creating a local environment
TASK 2: UNDERSTANDING THE NATURE OF NATIONAL ENVIRONMENT IN WHICH VODAFONE OPERATE
Nature of UK Economic System and its Effects on Vodafone
There are basically three types of economy namely, free market, private and public sector economy. It is the environment with set of rules in which all business organization flourish. In free market economy there is a little or no control of government in the commencement of the business. It is the economy where all the buyers and sellers meets and commence business smoothly.
In Privatized economy all the business are commenced by the private individuals. There is no role of government in the any business (Sloman and Jones, 2011). The private organization follows all the rules and regulation as decided by the parliamentary authorities. In public sector, business organization are regulated and monitored by the government. Public sector economy is the major revenue source for the government. In public sector organization most of the business has their monopoly.
U.K. is the Privatized Economy, most of the business organizations are in the private sector. There are some sectors in which government also has its operation but most business in U.K. is owned by the private companies. Privatization of the British Rail was the major step toward privatization (Blanchard and et.al., 2009). Vodafone is also private organization which is listed publically. Due to this privatization it faces a strong competition from their biggest competitors British Telecom. They have to follow all government rules and regulations and also meet the customer demands. The prices they charge is moderate but they focus more on providing the value services to their customers.
How Government Manage the National Economy and Impact of Fiscal and Monetary Policy on Vodafone
There are various rules and regulations which are formed by the government; following them is must for the smooth functioning of the business organizations. Government pass acts in parliament which helps in creation of a suitable environment in which various organizations will flourish. There are policies and legislations related to environment, taxation, and employee benefits etc (Cave and Shortall, 2011). Vodafone follows all these rules and regulations so as to achieve the corporate social responsibility. Vodafone has to draft their strategies following global as well as the international rules. When government of any country changes policies related to taxation then the cost of services are also affected.
Monetary and fiscal policy also affects the business of Vodafone. Fiscal policies are policies related to government spending and the collection of revenue like the increase and decrease in taxes, whereas the monetary policies are the policies related to the supply of money like the changes in interest rates (Fiscal Policy Vs Monetary Policy, 2013).
Operations of Vodafone are affected by the monetary and fiscal policy; the changes in interest rates will change the currency values of the country. The fluctuations in currency rates are the biggest barrier in front of a company operating in international environment (Chamberlin, 2008). Vodafone spend millions in their hedging strategies. Rise in inflation rates also affect the purchasing power of a customer and simultaneously affect the business of Vodafone. If the rate of poverty will increase then the people will stop using mobile services where as if the inflation rate will decrease then more number of mobile user will increase.
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How Competition Policy and Regulatory Mechanism Work in the UK and Influence Vodafone
U.K. competition policy was introduced to create competition in the market; by this customer could avail variety of products and also companies increase their performance level. The competition policy focused on increasing the choices for customer, promoting technological innovations, and creating a price competition in market. There was a criticism faced by the U.K. competition policy like the Profitable mergers were very few in numbers which could have been the biggest reason for the growth of organizations (Fernandes, 2005). U.K. competition policy created a competition in market which motivated companies to try new strategies and also focus on improving the product and service quality. Vodafone faced the increased completion from the many small telecommunication companies.
Various rules and regulations are made by the government of U.K. in order to create a economy which is beneficial for the consumers as well as the government. Transformation in economic policies is made by the government, either the people face problems or if the economy is not growing. Government transform legislations in order to evade poverty reduce inflation; reduce unemployment, to increase the standard of living and most importantly to cope up with the changing culture (Frow and Payne, 2011). These laws are amended by completely over viewing the social, economical and political environment.
Vodafone faces problem of frequently transforming legislations, like if in one country the inflation rate is high they have to focus on reducing their prices so as to survive in this competitive environment. If the government in any country imposes legislations with reference to environmental protection then they have to spend more on achieving sustainability (Golds, 2011.). Thus the only solution to it is focusing on corporate social responsibility.
TASK 3: ORGANIZATIONAL BEHAVIOR IN MARKETPLACE
How Market Structure determines the pricing and production decisions.
Pricing decision depends on the type of market in which a company exists. There are various other factors such as the taste and preference and the social environment which helps an organization to decide its prices but the most important is the market structure (Mohamed, 2008). Market structure can be classified into four categories which are as: perfect competition, monopoly, monopolistic and oligopoly.
- Perfect Competition: In this type of market many buyers and sellers of the similar product and services compete in market. The market size is large and the products they sell is also similar. In this type of market the prices are almost equivalent to the competitors.
- Monopoly: In monopoly market there is only one seller and the buyer market is large, large number of buyers wants the product or services which are sold by the single seller (Paul and Barbara, 2009). The prices they charge is set according to sellers need.
- Monopolistic: In this type of market there are large number sellers and buyers of the various different products, the competition is perfectly imperfect.
- Oligopoly: In this type of market where product and service is categorized into a particular industry and the sellers are few in number. Competition exists in market where customer chooses the one with better quality.
Vodafone comes in the category of the Oligopoly. The industry here is the telecommunication industry where it faces completion from rivals such as British Telecom, Orange, T- mobile etc. Customer chooses Vodafone because of the services they offer. Their ways of marketing, like the zoo zoo commercial attracted millions of customers not only in U.K. but in many more country where they have their operations. They also face barriers like they cannot raise their prices above a certain level as there is a risk of losing their potential customer (Aras and Crowther, 2009). They can also not decrease their prices as they may have to compromise with their profits.
Analysis of How Market Forces Influence the Organizational Response with Respect to Vodafone
Market forces which affect the business of an organization are the demand and supply. It’s a simple rule that if demand increase with supply constant the price of the product increases where as if the supply increases with the constant demand prices reduce. Supply and demand plays a very important role in the customer satisfaction approach. In Oligopoly when the demand increases, if the organization is not able to meet the demand then the customer may switch to the competitor (Archer, 2008.). Thus there is a risk of losing the customer in case of customer demand unfulfilled.
Vodafone is actively engaged in the market research where they make continuous efforts to fulfill the needs of the customer. They also try to identify the changing demand due to changing culture; customers taste and preference. Vodafone have appointed a skilled and experienced staff which are expert in identifying the customer demands. As they are the service provider the demands may be a new type of service which a competitor may be providing, thus to create a coordination between the new services introduced and the already existing services is very important (Dunphy and et.al., 2003). Vodafone’s demand and supply is completely based on the variety of services which keeps on changing with the changing time. Skilled and Intelligent marketing professionals are required so that they identify the needs of customer and provide them the best plans so as to fulfill their demands.
Business and Cultural environment of Vodafone
Business and cultural environment of Vodafone is affected by six major factors these are as: political, economic, social, technological, environmental and legal.
Political: political activities affect the Vodafone operations in a drastic manner. When a organization operates in the international environment, they need a strong support from the government. If government policies are against the requirement or organization then it may affect negatively (Gentzoglians, 2010). Like government has provided various subsidies for the foreign companies and thus it become easy for Vodafone to expand their business in international environment.
- Economic: Economic factors also affect the operations of Vodafone, when the economy is raising then the financial condition of the people of country also improves. With this increase in the purchasing power the business of Vodafone will also increase.
- Social: Social factor, like in U.K. people prefer high quality services, where as in Asian market there is a need of low cost service provider. Vodafone has modified their services in order to meet the demands of different culture.
- Technological: Vodafone is indulged in the telecommunication sector; technological innovation is the most important part of the growth of Vodafone. There was an era of telephone whereas technology is now more advanced. Vodafone offers 2G for traditional voice services and 3G for high speed internet.
- Environmental: Environmental concern is rising and various issues related to sustainability are also increasing. Telecommunication industry is also considered to be the major reason for the emission of CO2 (Bartle, 2002). Vodafone has made such technological innovations which result in the low carbon emission. They also participate in the events like environmental run, tree plantation etc.
- Legal: Legal factors which every organization ahs to follow are of high importance to every organization. Vodafone also has to abide by different legislations such as environmental policies, employees policies, taxation, and many more (Borsch, 2004). They follow all rules and regulations and have raised their goodwill.
Business in previous times was very simple, it involved buying and selling of goods, but with the changing time the complexity in business is rising. Business is affected by various micro and macro factors. Here in this report the business purpose of Vodafone, nature of business environment in which Vodafone operates has been overviewed (Riley, 2012). This report also explained the behavior of organization in marketplace and the global factors which affect the business activities of Vodafone. Finally concluding, Vodafone is the renowned organization and the strategies followed by them has raised the standard and helped them to achieve desired growth.
- Books and Journals
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- Bachmeier, K., 2009. Analysis of Marketing Strategies Used by Vimto Based on Ansoff's Theory. GRIN Verlag.
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- Campbell, C. and Craig, T. 2008. Organisation and the Business Environment. UK: Butterworth-Heinemann.
- Halbert, T. and Ingulli, E., 2011. Law and Ethics in the Business Environment. 7th ed. Cengage Learning.
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