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21 Pages 5202 Words 63 Downloads

Introduction

The situation which is prevailing inside and outside the business organization is termed as a business environment. This environment affects the business activities in one or the other manner and assessment of this environment is highly essential in order to ensure that any of the activity is not getting hinder due to the influence of these factors. This also aids in identifying potential opportunities and prevent potential threats (Allen and Raynor, 2011). This report is mainly emphasized on the working of the different working organization. Moreover, this report enables the reader to understand the reason for the existence of an organization and the characteristic of the country environment in which the business is carried out by a firm.

Lo1

Q1. Identification and description of legal structure and purpose of different types of organization

Four types of organization have been selected which operates its business in the UK. The legal structure of those organization are described below:

Table 1: Legal Structure

Organization's Name

Legal Structure

Virgin Group Limited

Public Limited Company

Thomas Cook Group

Private Limited Company

John Lewis Partnership

Partnership Firm

British Airways

Public Limited Company

Table 2: Organizational Purpose

 

British Airways

Responding to the stakeholders

Thomas Cook

Responding to the stakeholders

Vision as well as Mission

BA's vision is to become the world's favorite airline and also to become the Global Premium Airline. Moreover, British Airways has defined its mission statement as “one destination which seeks to ensure their customers fly confidently that, together, they act responsibly in order to take care of the world where all live in (HalbertandIngulli, 2014). Further, the company wants to become the undisputed leader in a world up till the next millennium.

The company wants to provide excellent services to buyers at a lower price. At the same time, it wants to satisfy its employees by increasing their pay (Cherunilam, 2010).

Its mission is to provide exceptional services to customers by employing exceptional people or employees which will aim to meet the demands of customers. Moreover, its vision is that it wanted to take personal responsibility in order to achieve the mission. Further, it wants to pursue excellence they do and display honesty and trust (Craig and Campbell, 2012).

This firm wants to protect the environment by reducing wastage so that it can best follow the laws implemented by the government.

Goals

It wanted to achieve the vision of Global Premium Airline.

 

By increasing efficiency and minimizing wasteful practices, they want to become a leaner and more innovative business.

 

Objectives

To introduce this new plan in 50% countries till December 2016.

 

To decrease the waste up to 25% by June 2016 (Commander and Svejnar, 2011).

 

Q2. Organization's Stakeholders

British Airways

Table 3: Objectives of the Stakeholder

Internal & External Parties Associated with Company

External or Internal

Assumption

Targets

Accomplishment of Aims

Government

External

They want to increase tax revenue.

To increase the tax rate by 5%.

The firm pays fair taxes on time.

Shareholders

Internal

A large amount of profit generation and an increase in shareholder value (Didonet, 2012).

To increase the growth of the firm by 15% by the end of June 2017.

Prices of the airline seats have been raised by 0.5% so that more profit generation can be done.

Customers

External

They want excellent services at a lower cost.

To travel mostly by flights.

BA attempts to make avail the best quality services to its customers.

Q3. Various responsibilities of an organization

Thomas Cook and BA are highly responsible for society and other factors and they perform their duty as per their expectations (Wetherly and Otter, 2014). As it is discussed that the company has been formed for several purposes and thus these purposes of the organization are discussed as follows:

  • Purposes: BA and Thomas cook have been formed for the purpose of gaining more profits and to satisfy their customers by providing good services. These purposes are accomplished by fulfilling corporate social responsibilities so that society and the environment do not get harm.
  • Responsibilities: As per the theory of Carroll's Pyramid, there are various responsibilities of both the companies which they are required to fulfill. The firm aims to meet the legal requirements of all the countries where it is carrying out its services such as health and safety legislation, anti-discriminatory and environmental protection so that any legal crime does not get happen by the firm (HalbertandIngulli, 2014). The company must provide risk-free services so that the environment could be protected. Along with that, such practice should be adopted by the company which is ethical for example, respecting the cultures and the traditions of customers, employees, etc.
  • Strategies for meeting out responsibilities: By making the policies of a company in such a manner that it may not break any laws of the country. Along with that, a firm must utilize the quality assurance mechanism in order to produce good quality products at a minimal cost of production. This way, customers can avail the products at lower prices.

Caroll's Pryamid

Lo2

Q4. The economic system of a nation

Table 4: Resource Allocation

Insufficient resource

Command Economic System (China)

Free Economic System (Australia)

Mixed Economic System (United Kingdom)

Coal

The government of China has total control of coal in their hands in order to prevent the misuse of these scarce resources.

In Australia, usage, and control of coal is in the hands of the private sector. This is because, the government provides complete liberalization to the private sector (Hamilton and Webster, 2015). Through this proper utilization is done.

There is an equal distribution of resources between both the government and the private sector so that harmony can be maintained.

Land

Complete control over the land is in the hands of the government of China. This is because, better infrastructure can be built by the government for the growth of a country (Cherunilam, 2010).

The land is in the hands of private companies and they build the infrastructure according to them in this nation.

Both the government and private sectors have control over land in the UK so that the optimum utilization of land is done.

Oil and Gas

These resources are in the hands of authorities because the proper distribution of the oil as per the requirements can be done.

Start from extraction till production is in the hands of private ltd. in the country Australia

The private sector as well as the government togetherly pull out and produce so that correct utilization can be done.

Q5. Impact of fiscal and monetary policy

Table 5: Monetary and Fiscal Policy

Policy

Types of Policy

Merits

Demerits

Judgment

Exchange rates

Monetary policy

If the exchange rates are down than it is beneficial for the company because they have to incur less cost on the import of resources.

When the rates go high then it causes low economic growth of a country like the UK (Ho,Wang and Vitell,2012).

It has less flexibility.

Taxation

Fiscal

policy

When the rate of tax is low than the customer will buy the products willingly which led to the growth of the economy.

Fluctuations in rates affect the UK economy as a company will earn fewer profits.

This has a greater impact on the working of a company.

Interest rates

Monetary policy

At times when interest rates are lower than the company can acquire loans at a lower cost which will help in decreasing the cost of production which will ultimately grow the economy (Popescu, 2013).

High rates of interest will lead to an increase in the prices of the products and thus, there be less inflow and more outflow of cash.

The firm can take great advantage from the interest rates as it favors the UK economy.

Q6. Competition policy and their impacts

Table 6: Competition Policy's Impact

Concept

Good Impact

Bad Impact

Conclusion

Competition Act, 1980

The act has been introduced in order to reduce the power of monopoly and also because firms comes out with unique products that help in the growth pf the economy.

This has led to the rise of fierce competition and in turn, converted into inter rivalry. Due to such a conflict economy is getting disturbed (Halbertand Ingulli, 2014).

This is beneficial for the company because it allows them to be more innovative.

Enterprise Act 2002

This has enabled the enterprise for the adoption of fair trading and helped in raising the competition policy in UK (Elliott and et.al., 2010).

Create difficulty for the company because they have to follow each and every policy of this act and sometimes hinder the working of a company.

The overall impact of this act is positive and company should adopt this.

Fair Trading Act, 1973

This Act regulates the firms and allows them to work in a fair manner. Through the trading process become efficient which helps the reduction of conflicts and other unfair means.

It cannot be assessed that all the employees are trading fairly and if any of the employees get caught by the law than the whole company gets impacted.

Through this, unfair practices have been removed (Trehan, Trehan and Jain,2013.).

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Q7. Determination of pricing and output decision in different market structure

It is known that there are four types of market structure which is prevailing in the economy. The price determination and output decisions are taken differently in a different markets. The discussion has been done as follows:

Market Structure

Illustration 2 Types of Market Structure

(Source: MARKET STRUCTURES, 2015)

Table 7: Structure of Market

Structure of different Market

Key Traits

Number of players

Illustration

Output decision

Determination of Price

Perfect Competition

Buyer and sellers are in large number and they sell homogeneous goods and services.

Many

Stock exchange, Agriculture markets.

A firm can produce any output because whatever is produced will get sold.

Industry determines the prices and the firm takes the prices.

Monopoly

One seller but many buyers. Products can be differentiated (MARKET STRUCTURES, 2015).

One

Gas, electricity, water.

If a firm wanted to sell more than the price should be lower down and vice verse.

Prices are determined by the firm or seller and the industry accepts the price.

Monopolistic

There are many sellers and buyers but sell differentiated products.

Many

Restaurants, fashion brands.

The output level is decided when the marginal cost becomes equal to marginal revenue.

Prices are determined by every seller because they have some control over the price.

Oligopoly

Few sellers but many buyers and can sell identical or differentiated products.

More than three

Banking industry, Medicinal drugs.

If prices are lower down by one firm than there will be more sales. Hence, other firms will also have to keep the prices low in order to meet the demand (MARKET STRUCTURES, 2015).

They make the collusion in case of identical products and then determine the prices. While in differentiated products price is determined by the market leader.

Q8. Market forces that shape short term and long term responses of organization

There are several market forces such as demand and supply, the elasticity of demand and supply, customer perception, etc. plays a significant role in shaping the short and long term responses of the EasyJet. If there is a high demand for airline seats than the company raises the prices of the seat in order to earn abnormal profits in the short-run (Allen and Raynor, 2011). Similarly, when the customer's perception get change and they want new innovative services in lower prices than company search for the procedure which helps in lowering down the cost and thus cost are controlled. Moreover, the company can get merge with any food company in order to control the cost and this will help in reducing the prices of the airline seats.

Q9. Assessment of business and cultural environment which shapes the organizational behavior

Shaping the behavior of organizations

  • Business Environment: It includes the external and internal environment which affect the business activities. For example, financial institutions bring changes in their policies by the order given by the government and thus it increases the interest rates. This has a direct impact on the profitability of EasyJet because the firm has to incur huge costs on the loans taken (Chavis, Klapper and Love, 2011).
  • Cultural Environment: Changing lifestyle and increasing cultural diversity has made the customer more demanding. This has forced the organization to bring new and unique products which satisfy the need of all the cultures.
  • Business Behavior:Global issues and competition among companies are increasing and this had impacted the behavior of business in both positive and negative manner.
  • Organizational Responses:All these elements have lower down the morale of employees and for getting success in this dynamic environment, the company must provide good incentives as well as rewards to the employees.
  • Consumer's Behavior: If an organization is addressing properly to the society then the perception of the buyers will be good towards the company (Xue, Shen and Ren, 2010).

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Q10. Benefits of international trade

The transaction of products, as well as services among different nations, are known as international trade. This trade will raise the economy of a world which affects the supply & demand, prices and also it is affected by global factors (Didonet, 2012). This commerce has various merits and also limitations as well which are enumerated below:

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Table 8: Benefits of International Trade

Terms

Merits

Demerits

Comparative Advantages

An organization that is conducting its business activities internationally than the UK can have comparative advantages against other countries (Wetherly and Otter, 2014). The opportunity cost will be lesser than in other countries. Moreover, the nation will get specialized in those products which are relatively more efficient, therefore, the national income of the UK will get an increase.

Transportation costs will outweigh the comparative advantage and an increase in the specialization will lead to the dis-economies of scale.

Optimum Resources Utilization

Those businesses which are indulged in global trade than resources that belong to the society will be optimally utilized. There will not be any wastage of resources and through this company can make avail maximum variety to the customers.

The extra cost will get incur if the company imports goods from other nation and this will ultimately raise the product prices (Popescu, 2013). Due to the economic crisis, the purchasing power of people in the UK is already down and products with high prices will remain unsold which will lead to resource wastage.

Economic Growth

If there is a significant increase in international trade than the UK economy will grow. It is because high business in the international market will ultimately add to the GDP which will raise the national income of the country (Chavis, Klapper and Love, 2011).

Trade between the two nations leads to conflicts and political issues due to which business activities will get impacted. Further, currency exchange will also hinder the working as well as profitability.

Q11. Impact of Global factor

After the globalization of the UK economy, many factors which are prevailing in a global environment have a greater impact on the firm which is working globally. These factors are discussed as follows:

Table 9: Impact of Global Factor

Factors

EasyJet

Thomas Cook

Political

Every day or night the flights of Easy Jet land and take off in many countries. Thus, the political issue of each country hamper the business of this company (Cherunilam, 2010).

In many countries, this organization operates its business and also it has to remain updated about the new policies of government so that tours goes smoothly. This makes difficult for the company to bring changes in its policies all the time and also as per the rule of different country.

Economical

The economic crisis in all the countries has reduced the purchasing power of people and this has reduced the demand for airline seats. Moreover, fluctuation in exchange rates has impacted the profitability of a company.

Due to the financial crisis, people prefer less to travel and spent on leisure activities, which has lower down the profits of a firm (Popescu, 2013).

Social

Every country possesses different cultures, values, and societal perspectives, so EasyJet has to care about all these aspects.

Tour packages should be designed by keeping in mind the culture, religions, and values of customers. It is because every society has different demand and this affects the business of this organization.

Technological

Every country is not developed and due to this they do not possess advanced technologies, thus Easy Jet faces difficulties in such countries (Wetherly and Otter, 2014).

Due to the uneven distribution of resources in all the countries the company cannot easily avail of technological resources in a cost-effective manner. This creates problems for Thomas Cook.

Legal

Employment law, consumer law is introduced and they are different in every nation so the firm has to take care of the laws and regulations so that none of the laws are violated.

This organization also faces such difficulties because the laws of all the countries are not the same and according to tourism laws, a firm has to plan its packages. But sometimes customers oppose such a thing and this reduces the sales of the company.

Q12. Evaluation of the impact of the European Union on UK business

Table 10: Impact of EU

Proposition

Positive Impact

Negative Impact

Conclusion

EU Policies

The policies of the EU are quite liberal and this has a positive impact on the working of firms in the UK. Policies such as free trade across EU countries, same currency usage. These are some policies which have lead to an increase in the profitability and growth of the UK economy.

This policies are rigid and applied on every industry. Some industries want flexibility which these policies do not provide. This has lead to conflict between firms and nation.

Overall these policies are viewed and adopted in a positive manner so it can be concluded that these policies have positive impact (Cherunilam, 2010).

Exchange Rates

EU member countries can be traded by using a single currency that is EURO. Therefore, foreign exchange rates will not get fluctuated. Due to this, businesses will not face any losses (Popescu, 2013).

If there is no exchange rates then there will not be any inflow of currency from other countries in the UK. So, this will have a negative impact on the growth of the economy.

Because of the lower level of currency inflow, the economy will go down.

CAP (Common Agriculture policy)

CAP is a policy that helps the agriculture sector of Europe and the UK. It provide subsidies to the farmers. Therefore, customers will pay low prices because of the cost of production will be low. Hence, this impact the UK economy because of this, the purchasing power of customers can be raised

Few experts have criticized this fact because of its cost. Thus, it has a bad impact on humanitarian as well as on the environment.

Due to this policy the UK economy and farmer's condition have been raised. Along with that, businesses can incur low costs on production (Hamilton and Webster, 2015).

Conclusion

As per the above study, a conclusion has been made that a firm must ascertain its external environment as well as its internal environment in order to identify the variations or gaps. After analyzing the company should aim to cope up with the dynamic and changing environment. Along with that, the environment of other nations in which the organization is operating has to be assessed. This should be done so that policies of the government and economic condition does not put any barrier along with the smooth functioning of an organization. While doing global trade, all the factors should be appraised so that hindrance of those global factors could be avoided.

References

  • Allen, D. and Raynor, E. M., 2011. Preparing for a new global business environment: divided and disorderly or integrated and harmonious?.Journal of Business Strategy.
  • Chavis, L. W., Klapper, L. F. and Love, I., 2011. The impact of the business environment on young firm financing. The world bank economic review.
  • Cherunilam, F., 2010. Business environment. Himalaya Publishing House.
  • Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm performance. The Review of Economics and Statistics.
  • Craig, T. and Campbell, D., 2012. Organizations and the business environment. Routledge.

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