Business Environment Analysis and Impact

This assignment requires students to critically examine the business environment by analyzing the impact of various factors such as economic growth, employment trends, social norms, legal regulations, and globalization. It prompts students to explore how these elements influence business operations, strategies, and performance. The analysis should also consider the role of sustainability in shaping the modern business landscape.

Business Environment
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TABLE OF CONTENTS
Introduction .....................................................................................................................................3
Task 1...............................................................................................................................................3
1.1 Purpose of different type of organization .............................................................................3
1.2 Extent to which LLOYD’S as an organization meets the objectives of different
stakeholders..................................................................................................................................4
1.3 Responsibilities of LLOYDS Bank and strategies adopted by the brand to meet them........4
2.1 Economic systems attempt to allocate resources effectively.................................................5
2.2 Impact of fiscal and monetary policy of UK on LLOYDS Bank and other organization.....6
2.3 Impact of competition policy and other regulatory mechanism on activities of LLOYDS
Bank.............................................................................................................................................6
Task 3...............................................................................................................................................7
3.1 Market structure and market conditions determining pricing strategies of LLOYDS
Business ......................................................................................................................................7
3.2 Way in which market forces shapes organizational response................................................8
3.3 Business and cultural environment in UK shapes behaviour of LLOYDS business.............9
4.1 Significance of international trade on LLOYDS business and Tesco ................................10
4.2 Impact of global factors on LLOYDS business and Tesco .................................................10
4.3 Two European Union policies and the impact of these policies on LLOYD’S business and
Tesco .........................................................................................................................................11
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Conclusion ....................................................................................................................................12
References......................................................................................................................................13
INTRODUCTION
Business environment can be termed as set of different external forces which affects the
overall decision making and operations of an organization. It can be also explained that these
factors or forces are not in control of businesses (Kew and Stredwick, 2005). The present study is
based on LLOYDS Bank which is a UK based commercial and retail bank. This report depicts
how the bank respond to various kind of changes in its business environment. In addition to this,
it also reflects the impact of competition policy and other regulatory mechanism on the bank.
The present reports explain the effect of pricing and output decision on LLOYDS Business.
Other than this, it also covers Two European Union policies and the impact of these policies on
LLOYD’S business and Tesco.
TASK 1
1.1 Purpose of different type of organization
Organization can be defined as group of people which has gathered together to achieve
collective goals and objectives. It can be also argued that different type of organizations operates
with different purposes. The four different type of organization are mentioned below as:
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 Sole traders- These are the persons which carry out the operations and activities of
organization by their own. Furthermore, sole traders are also responsible for all losses
and they also take care of all profits (Capon, 2009). It is also termed as one of the oldest
and most common form of organization.
 Partnership- Partnership can be defined as the relationship between to or more person
who has agreed to carry out a particular business activity by sharing profits and losses
based on their mutual understanding (Carter, 2007). The advantage of such organization
is that it is very easy to form and more capital is available for carrying out operations of
business smoothly.
 Companies- Company can be termed as association of individuals which operates
together to accomplish a common purpose. There are two different type of companies
which are public and private limited (Chavis, Klapper and Love, 2011). The common
purpose of public limited companies is to provider customers with quality products
whereas private companies aims at achieving higher sales.
 Franchisee- It is the type of business organization in where a little amount of funds are
required to be paid along with various royalties. Such type of organization operates with
the name of another business which are well known brands in the market. The logo, name
and business model is being shared by owner to other parties.
LLOYDS Bank falls in the category of public limited company. Main purpose of the
bank is to provide the highest quality and best possible kind of services to all its customers. This
is the only reason why it keeps on upgrading and improving all its services.
1.2 Extent to which LLOYD’S as an organization meets the objectives of different stakeholders
In order to survive in long run, businesses are required to take care of all their internal
and externals stakeholders. Furthermore, stakeholders are those parties and individuals which
have some sort of interest in activities and operations of organization (Aras and Crowther, 2011).
Major stakeholder of the bank includes customers, suppliers, employees and investors.
Customers of LLOYDS Bank requires quality services at convenient prices. On the other hand,
employee seeks for better working environment and opportunities for growth and development.
Investor wants adequate and good amount of return on the investment they have made. At last
suppliers seeks for developing long term relationship LLOYDS Bank. The organization has
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always been successful in meeting the objectives of its various stakeholders. If the objectives are
not accomplished then it may happen that the organization starts loosing its present market share.
Training sessions are provided to all staff members in order to enhance their skills and
productivity. This also assists workers in getting better opportunities for growth and
development (Sloman and Jones, 2011). On the other hand, attempts to meet the objective of
suppliers by interacting with them and appreciating their opinions at the time of decision making.
By following all legal laws and employment practice, LLOYDS Bank tries to meet the objectives
of government which is one of its major stakeholder.
1.3 Responsibilities of LLOYDS Bank and strategies adopted by the brand to meet them
LLOYDS Bank operates at large scale and therefore, it is required to accomplish various
kind of responsibilities. The bank is responsible to provide customers with quality services
related to banking against the money charged for the same. Along with this, it is also responsible
for developing good and long term relationship with all its suppliers (Hiriyappa, 2013). The bank
needs to ensure the fact that all its practices and operations do not have any kind of negative
impact on society and people living in the same. LLOYDS Bank is also responsible to use fair
means and strategies at the time of competing with other banks in the marketplace. On the other
hand, it is responsibility of the bank to take care of health and safety of all its workers. It can be
argued that the bank has always been able to accomplish all the above stated responsibilities.
Effective measures are being taken by the organization regarding health and safety of its staff
members. Along with this, it also makes modifications and changes in its working practices
accordion to the changes in legal laws and regulations. The bank meet its responsibilities towards
customers by identifying their changing needs and then providing services according to the same.
2.1 Economic systems attempt to allocate resources effectively
Economic system can be defined as the way in which resources are allocated within a
particular country along with providing products and services on the basis of the same.
Economic systems consists of five major elements of production which are entrepreneurs, labor,
capital, information and all physical resources (Steger, 2010). The two common type of economy
are command economy and market economy. It can be also stated that in command economy,
government of the country is the one which takes care and manage the entire economy.
Furthermore, the prices and wages are also regulated and controlled by government only.
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Government of the country decides what they have to produce, how it is going to produce and for
whom it is going to produce. This kind of economic system are developed during situations
where resources are scare.
On the other side of this, free market economies is the one which individuals or
businesses are set free to take decisions. The concept of what to produce is defined on the basis
of preference of all customers in the market (Ghobadian and O'Regan, 2010). Producer
determines how they are going to produce the product and services. On the basis of purchasing
power the last element for whom to produce gets determined. LLOYDS Bank operations and
activities directly gets affected by the kind of economic system in which it is operating. At the
time of operating in command economies, the business is required carry out its activities on the
basis of government preferences. This means that the sales and profitability of LLOYDS Bank
gets low down in command economies. On the other hand, while operating in free market
economies, the bank has control over allocation of resources. This provides LLOYDS Bank with
better opportunities regarding growth and development. In addition to this, it also enhances over
all sales and profitability of LLOYDS Bank.
2.2 Impact of fiscal and monetary policy of UK on LLOYDS Bank and other organization
Economy of United Kingdom can be considered as tenth largest economy in terms of
purchasing power and fifth largest in terms of gross domestic product. Furthermore, it was also
termed as one of the fastest growing economy all around the world for three consecutive years
(United Kingdom GDP Annual Growth Rate, 2016). The current GDP of UK is $3.087 trillion
with a growth rate of +0.5%. It can be also argued that fiscal and monetary policy of the country
has direct impact on operations of businesses such as LLOYDS Bank. Furthermore, with the
help of fiscal policy, government of UK makes some sort of modifications in its overall taxations
and spendings to achieve certain goals and objectives. Increase in taxes directivity affected
overall profits of LLOYDS Bank as it is required to pay more taxes which increases its overall
cost.
This also affects operations of organizations such as the Asda in negative terms. Increase
in taxes lower down the purchasing power of all people in market. On the other hand, LLOYDS
Bank and other organizations such as Asda also effect the monetary policy developed by
government of the country. Expansion in monetary policy is done with the main aim of boosting
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up the overall economy. Government tries to develop large supply of money by lowering down
the interest rates. This provides businesses such as LLOYDS Bank with new and more potential
opportunities regarding growth and development. Decline in rate of restraint benefits both
organizations and people living in society. The sales of bank automatically gets increases as
people starts taking more loans to due to low rate of interest. Therefore, it can be stated that
before developing any kind of plans or future strategies, LLOYDS Bank is required to
considered monetary and fiscal policy defined by the government of country.
2.3 Impact of competition policy and other regulatory mechanism on activities of LLOYDS
Bank
Competition policy can be defined as the policy which is developed in order to prevent
businesses from developing any kind of monopoly. It can be also explained that monopoly can
lead to entire failure of market and it is also against the interest of people which are consuming
products and services offered in marketplace (Svensson and Wagner, 2015). Along with this, it
can be also argued that businesses such as LLOYDS Bank are likely to get affected by
competition policy and other regulatory mechanism. The organization is required to take care of
the fact that it do not use any kind of unfair policies or practises at the time of operating in
market. One of the major benefit of competition policy is that it forces businesses to compete
with each other in fair terms. LLOYDS Bank needs to provide quality services at convenient
prices. The advantage of non-competition policy is that it results in improving overall quality of
products and services. Along with this, it also helps people in market to have more choices and
alternatives available with them. One of the main drawback of competition policy is that it
creates dissatisfaction among workers (Hamilton and Webster, 2015). Businesses are required to
follow strict rules and regulations which directly pressurise employees. LLOYDS Bank gets
affected by other regulatory mechanism such as competition commission and enterprise Act.
Competition commission deal with issues such as anti competitive practises, market which is not
working well. At the time of carrying out their operations, it is required by businesses to take all
laws and regulations into consideration.
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TASK 3
3.1 Market structure and market conditions determining pricing strategies of LLOYDS Business
It can be explained that the structure of market and conditions in which businesses
operates have direct impact on their pricing strategies. To a certain extent, success and failure of
an organization is based on the type of prices it has adopted. A market can be defined as the
place where exchange of product and services takes place between buyer and sellers. There are
different type of market such as perfect competition, monopoly, monopolistic etc. Furthermore,
perfect competition is a market where there are large number of buyers and sellers are present in
market (Harrison, 2013.). The products and services provided by buyer are almost same in nature
and features. This clearly means that in such kind of marketplace no organization has the power
to drive away prices. Thus, the price in perfect competition is determined by the equilibrium
between demand and supply. On the other hand, monopoly is a kind of market where there is
single seller in the market (Gabriel, 2004). Products and services which has been offered by
seller are different and unique in their own way. It can be also argued that organizations
operating in monopoly are price makers. This means that they have full control over prices as
there is no competition.
LLOYDS business will directly gets affected by the market structure in which it is
operating. At the time of operating in perfect competition, it will be required to set prices
according to the market. It cannot go for prices higher than what other player in market are
offering. The price elasticity of demand in such situation is infinite for LLOYDS business. On
the other hand, at the time of operating in market structure such as monopoly the organization
can charge prices as per its need and requirement. It can be also argued that customer or people
in the market do not have any kind of problem in paying the price because they do not have any
other option available with them.
3.2 Way in which market forces shapes organizational response
Forces present in the market have direct impact on business operations. Company like
Lloyd carries out its operations in the market where large number of challenges are present.
Further, various forces are present in the market which shapes organizational response. Demand
is one of the major forces affecting Lloyd where change in demand for services of financial
institutions affects company. Apart from this, it is possible that demand for a particular service
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may fluctuate and due to this reason it is required for Lloyd to modify its services accordingly.
Company has to serve its target market on the basis of demand for services in the market (Ghosh,
2004). Further, to deal with this issue company carries out market research on continuous basis
to assess the level of demand in the market. Further, rise in competition level is the type of
market force affecting Lloyd in the market.
New companies are entering into the market of financial services on continuous basis and
this is directly having adverse impact on business. Further, this force sometime leads to decline
in overall performance of business in the market. In order to deal with this type of market force
Lloyd focuses on development of services on continuous basis. Further, all the services are
introduced keeping in view those introduced by other financial institutions in the market.
Moreover, focus of business is on service differentiation through which business is able to gain
large number of benefits in the market (Britton, 2009).
3.3 Business and cultural environment in UK shapes behaviour of LLOYDS business
Culture can be defined as set of values and beliefs which guide people in the
organization. At the time of carry out operations at such a huge level, businesses such as
LLOYDS needs to take care of cultural and business environment in which It carries out its
operations. It can be also stated that culture helps in clearly identifying what is right and wrong
for businesses. Effective culture helps businesses to operate fairly and earn adequate profits in
long run.
It can be also argued that business environment also have impact on activities and
operations of organization. It consists of six major components which are political, economical,
legal, social, technological and environmental. Any kind of changes in political environment of
the country have impact on plans and policies of business (Johnson and Lenartowicz, 2009).
Imposing new tax and duties by government will result in changing overall structure of
organizations which has been used for generating revenues. Organization also gets affected by
changes in economic environment of the entire country. For instance if the rate of inflation
increases then all businesses will be required to make changes in their pricing strategies. This
will also affect sales and profitability of organizations as people in market will be available with
less money to make purchase (Kew and Stredwick, 2005). Changes in social factors such as
income level along with taste and preferences of people in market will have direct impact on
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operations. In order to survive in market, businesses are required to make changes in their exiting
products.
Along with this, it is also required by firms to adapt and advanced technology at regular
intervals. This increase overall cost of operations for businesses. Other than this, companies are
required to follow the changes in legal laws and regulations. It can be also stated that if laws are
not followed then organizations needs to pay heavy fines and penalties. In addition to this, it will
also affect the entire brand image of organization. Nowadays businesses are also required to
make sure that their operations and activities do not have any kind of impact on operations of
environment. The best way to adapt business activities on the basis of cultural is LLOYDS
business is by developing strong culture in organization and encouraging all workers to strictly
follow the same.
4.1 Significance of international trade on LLOYDS business and Tesco
International trade is regarded as the exchange of goods, capital and services across the
national boundaries. Further, this type of trade usually leads to development of any specific
economy and contributes in overall growth. This type of trade is beneficial for Lloyd where with
the motive to reduce the overall risk of international commerce Lloyd has started to offer specific
trade finance products which takes into consideration letter of credit etc. Business is
continuously dealing in this type of instrument and it has directly contributed in the success of
the company (Zahra, 2003). Moreover, it is having both positive along with negative impact on
local businesses operating in the market of UK.
At local level companies are able to learn about the financial instruments and they have
also started to deal in the same. Moreover, at local level market is quite underdeveloped so it is
possible for local banks to understand about the operations carried out by Lloyd in the
international market. In short positive impact in taking place in the form of market development.
Apart from this, negative impact is taking place where businesses are operating on smaller basis
due to which large market share has been grabbed by Lloyd and due to this large number of
financial institutions are facing issues at local level (Carter, 2007). In short, it has lead to decline
in their level of performance and in turn they are not able to focus on their long term goals along
with objectives which have being set.
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4.2 Impact of global factors on LLOYDS business and Tesco
Globalization can be defined as a process in business enterprise starts operating at
international scale. One of the major benefit of globalization is that it helps businesses in getting
better opportunities for growth and development (Chavis, Klapper and Love, 2011). The two key
drivers of globalization are technological and economical. Further drivers along with their
impact on LLOYDS business and Tesco are mentioned below as:
 Economic factors- It can be argued that any kind of changes in economic conditions in
global environment has impact on operations of business. Business such as LLOYDS and
Tesco have direct impact of the economic conditions at global level. Further, in situations
of economic stability, both the organization can operate with smooth and free flow. On
the other hand, in situation of economic downfall, the above stated businesses will not be
able to generate higher sales and profit (Steger, 2010). The demand of products and
services provided by LLOYDS business and Tesco will also get lower down.
 Technological factors- It is required by businesses such as LLOYDS and Tesco to keep0
upgrading the technology which they are using. These organizations also needs to make
changes according to modifications or advancement in the field of technology at global
level. It can be also explained that upgrading technology at regular intervals can be costly
to these businesses in short run but in long run it can provid LLOYDS business and
Tesco with new opportunities for growth and development. Along with this, use of highly
advanced technology will also increase the profits level of above stated organizations.
Therefore, it can be stated that economical and technological conditions at global level
affects the operation's of business in both negative as well as positive aspects,.
4.3 Two European Union policies and the impact of these policies on LLOYD’S business and
Tesco
The purpose of European Union is to develop good relationship and promote better
harmony between all its member countries. Further, it also encourages smooth flow of products
and services among member nations (Sloman and Jones, 2011). It can be also argued that
stability, mobility and growth between countries is the objective of European Union. It has
developed large number of policies which banking and other form of organizations operating in
the market have to follow. Further, main purpose of European Union is to promote greater
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economic, political and social harmony among the nations of Western Europe (Employment and
social affairs, 2016).
EU has introduced guidelines which companies have to comply with necessarily. Policies
have been introduced in relation with the human rights which is linked with freedom, democracy,
rule of law etc. It is necessarily required for Lloyd to protect human rights who are associated
with the business. Moreover, business such as Tesco can promote human rights worldwide.
Apart from this, employment and social affair is another type of law which EU has introduced
through which business has to protect its staff members present in the workplace (Halbert and
Ingulli, 2014). Through this it is ensured that businesses are providing fair environment to its
employees for working. Therefore, policies developed by EU have direct impact on Lloyd and
Tesco where business has to modify their internal operations on the basis of policies introduced
by European union.
CONCLUSION
From the above report, it can be concluded that businesses such as LLOYDS bank is
affected by culture and the business environment in which it operates. It can be concluded that
global factors such as technological and economic also have impact on the practises of business.
From the above study, it can be evaluated that organization needs to take care of ever changing
business environment and need to frame their plans and strategies. This will help them to survive
in market by getting competitive advantage over other market players. It can be also concluded
that the pricing strategies of businesses somewhat relies on the kind of market in which they are
operating.
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REFERENCES
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Carter, N., 2007. The Politics of the Environment: Ideas, Activism, Policy. Cambridge University
Press.
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. 25(3). pp.486-507.
Gabriel, S. A., 2004. Quality of the Business Environment versus Quality of Life. The review of
economics and statistics. 86(1). pp. 438-444.
Ghosh, B., 2004. Economic Environment Of Business, 2E. Vikas Publishing House Pvt Ltd.
Halbert, T. and Ingulli, E., 2014. Law and Ethics in the Business Environment. Cengage
Learning.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
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Harrison, A., 2013. Business environment in a global context. Oxford University Press.
Hiriyappa, B., 2013. Strategic Management and Business Policy. Booktango.
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Zahra, S. A., 2003. Environment, corporate entrepreneurship, and financial performance: A
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United Kingdom GDP Annual Growth Rate. 2016. [Online]. Available through:
<http://www.tradingeconomics.com/united-kingdom/gdp-growth-annual>. [Accessed
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