Impact of Business Environment on Enterprises

This assignment examines the profound influence of the business environment on enterprises. It delves into various factors within the business environment, such as legal regulations, economic conditions, technological advancements, and socio-cultural trends, that directly affect the lives of individuals associated with these enterprises. The analysis explores how these factors can present both opportunities and challenges for growth and success.

Business Environment

Table of Contents
EXECUTIVE SUMMARY ............................................................................................................1
INTRODUCTION...........................................................................................................................2
OVERVIEW OF ORGANIZATION...............................................................................................2
History of the company...............................................................................................................2
Business structure........................................................................................................................2
ICT of the company....................................................................................................................3
Understanding of corporate governance with its principles........................................................3
Corporate governance and emphasis on its principles................................................................4
Effects of financial crises of 2007 - 08.......................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES ...............................................................................................................................9

EXECUTIVE SUMMARY
The global financial crisis was made in 2007- 08 the reason behind it was the wrong
corporates actions and carelessness due to this some of sound companies both in Europe and
USA falls down as the result of the financial crisis. This report is covers the effects of corporates
financial crisis on business world and on the company of Volkswagen Inc. along with it the
principles of corporate government that was framed in 1999 as the Organization of Economic
Corporation and Development are explained. These principle are framed to offers help to
government and non- government corporates in the country.
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INTRODUCTION
Business environment term are refers to those factors and forces which are beyond to
control of business but they have power to affect functioning of a enterprise such as customers,
competitors, suppliers, political and legal conditions of the nation (Klapper, Lewin and Delgado,
2011). These factors are included in internal and external environment which are dynamic and
keep changing in corporates world. Volkswagen Inc. is the German auto-makers was coined in
around 28,1937 by the German labour front. This assignments are concerning with the effect of
financial crisis on Volkswagen and its business structure along with it explains the principles of
corporates government which facilitates transparent and efficient market for business.
OVERVIEW OF ORGANIZATION
Volkswagen Inc. is the German auto makers coined in nearly 28.1937 by the German
labour front and the headquarters in Wolfsburg. This is the flagship of Marque of the
Volkswagen company (Kulkarni and Agrawal, 2014). They are the largest auto makers by world
wide sales in 2016. this is the German company named as volkswagen that means “people's car”
its name is the international advertising slogan.
History of the company
This organisation was originally framed up in around 1937 by the German Labour Front
in Berlin. In the back on almost 1930 this auto industry company composed largely luxury
models hence the average German person could not be able to buy some thing more luxurious
then motorcycle this is how the organisation Volkswagen was began in order to serve markets. In
current condition they are working as the market leader of automotive cars and grab the
attentions of customers through offers new features and range of innovations that they made up
in new arrival cars.
Business structure
Organisation structures are are maintain the relationships, activities and responsibility in
between team members. Volkswagen is a multi national brand in the automotive industry. These
business activities are includes financial services and automotive division. The Volkswagen AG
and the Volkswagen Group are managed and run by the same board of management, according
to a article. This management of committee ensures the independent and separate framing of the
business operation. They are divides in small segments named as corporates office opened in
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those nations in that they are serving their cars. The Volkswagen AG's board is the ultimate body
responsible for managing the whole segments of groups.
ICT of the company
This is the extensional term for information technology which refers to the roles of united
communications and it is the integration of the telecommunications, computers as well as
necessary software, storages and audio visual stuff. That facilitates user to assess, transmit and
manipulate information. This term has include the coverage of network such as computers and
audio visuals by single like system . In the simple way the term of ICT is refers to informations
and communications technology for the purpose, the divers set of advance tools and resources
which make use to communicate store and manage information hence this used broadcasting
techniques and telephony (Meiners, Ringleb and Edwards, 2014). Volkswagen is using advances
technology in its cars and automotive which provides sound profit to company and also
facilitates satisfaction to target customers. Volkswagen also using social media as a tool of doing
effective communication. These tools are like Face book, What's app, gmail, twitter, etc. By this
way they are able to connect with all of the workers who are present in distant locations. In
addition to this, they can also make proper connection with their users and solve the feedbacks
which are given by them. Apart from this, they are using cloud technology for storing their
sensitive data or information on the network which can be accessed from any where and anytime
where there is a internet connection. This information is also safe and secured for a long period
of time. Venture can also take help of artificial intelligence in order to design innovative goods
and services. As a result company has opportunity to attract large number of customers and also
gain competitive advantages by making innovation based vehicles. This in turn increases the turn
over of firm and also helps in gaining popularity in front of their challengers as well as users.
Understanding of corporate governance with its principles
Corporates governance is the techniques, process and relation through that corporations
are controlled and directed. Here the principles and government structure are are identified and
spread rights among different participants in the business world. This corporates governance is a
process by which objective of corporates are set and pursued in regards with social, markets and
regulatory environment. This includes action monitoring, policies, decisions of corporation and
affected share holders. These practices are affected by the interest of the share holders, the major
financial crisis arose in year 2007-08 which was the result of one's actions of carelessness and
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ignorance among some of famous and biggest financial institution hence the affect of it are
shown in entire Europe and USA where many companies are fall down and needed top shut its
businesses. To face this crisis they creates a code as organisation of economic corporation and
development in around 1999.
Corporate governance and emphasis on its principles
In the modern times there was a considerable changes that have been going on all around
the world from the past decade especially from the year of 2007 when the financial crisis
occurred. This crisis resulted in many kinds of loses to company as well as stakeholders
associated with it. This has also been reflected back in the CSR activities of the company. Other
than this the major area where it impacted was corporate governance which aims to provide
benefits to the staffs while company is making many kinds of exchanges with their workforce
(Startiene and Remeikiene, 2013). At the time of financial crisis there was many kinds of loses
that is faced by stakeholders. Hence to emphasize on safeguarding the interest of stakeholders
there are six principles that was highlighted by OECD. In the below mentioned points the
principles have been illustrated:
 Ensuring the basis of an effective corporate governance framework: This principle
illustrated about the basis on which corporate government is based. It suggests to make
corporate governance framework that must be promoting transparent and efficient
market. This suggests regarding the corporate governance that allows the staff members
in the making of policies, rules and practices through which a firm can be government
(Wetherly and Otter, 2014). Bringing more transparency which help stakeholders in
understanding their benefits. This also brings consistency with the rule of law and clearly
mention the division of responsibilities between several supervisory, enforcement
authority as well as regulatory bodies.
 The right of the stakeholders and key ownership functions: corporate governance
must facilitate and exercise on the rights of stakeholders. Some of the basic rights in this
regard is as follows:
 Securing ways of ownership registration.
 Conveying and transferring shares
 Obtaining appropriate and material data on the corporation on timely and continuous
basis.
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 Involving and voting in general shareholder meetings
 Select and remove board members
 Share in firm's profit
Equitable treatment of stakeholder: It is essential that stakeholders must receive the treatment as
per they have given their inputs irrespective of the place they belong to. Every worker needs to
be treated equally and any kind of abusive activities must be avoided.
Role of stakeholder in corporate governance: It also specifies that stakeholders must be involved
in the process of corporate governance. This also illustrates tat the views of stake holders must
be taken while making of the corporate governance.
Disclosure and Transparency: A better corporate governance should make sure that periodic
and accurate disclosure has to be made related to all materials which is concerned with
corporation including its financial situation and results (Fernando, 2011). All terms and
conditions related to purchases and supply of materials should be properly disclosed in a paper.
Every organisation should give clear, timely, feasible and reliable informations which can be
prepared adequately and these relevant informations should have equally access to all
stakeholders. For example PWC has a concept that, strong disclosure always promotes
transparency with addition to being an important part of better governance.
The responsibilities of board: Corporate Governance or CG refers to all framework related to
rules, systems and processes which includes enforcement of decision-making and utilisation of
powers and performance of the Board of Directors. Directors are responsible for make sure
whether proper books for account are kept or not. He must always practise their powers for
growth purpose. Directors must act in good faith and they should make an image in which
company might believe to be best interests of the company, not for collateral purpose. Directors
has to always favour the company. He should act with his skill and proper care.
Effects of financial crises of 2007 - 08
The financial crises of 2007 – 2008 is also known as global financial crisis. This has been
reconsigned by many economist present in UK and considered it as the worst business crises.
This was created mainly due to deregulation in the commercial industry as this allowed banks to
involve in hedge fund trading with derivatives (Craig and Campbell, 2012). Due to this, banks
then demanded more mortgages in order to support the profitable sale if these derivatives. The
automotive industry is one of the sector that was hit the most by the recession. Request or
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demand of cars fell sharply , deepening the economic downturn in major car manufacturing
nations. As there is a strong linkages with other segments of the economy, the final effect of a
shock in the automotive industry on the wide economic system was sizeable. The diminution in
the selling rate of cars from mid 2008 to 2009 was enlarged by the absence of access to credit. In
those years as customer's credit and car loans tightened, Volkswagen had faced various problems
as the selling rate of their vehicles get reduced greatly. This situation generated mainly due to
recklessness and negligence of corporates among some of the globe's biggest financial
institutions. Most of the ventures both in USA and Europe collapsed in turn of crisis. Some of
the major impacts of these economical crisis on various components of Volkswagen are
discussed below :
 Share holders : They are those people who invest in businesses of ventures and claims
for definite amount of shares from their profitability. After the financial crisis, they are
not receiving those amounts of revenue on time. Some of the shareholders loses their
source of income as all the enterprises within United Kingdom are in debt and no one's
financial condition is good (Babatunde and Adebisi, 2012). Even some companies get
closed due to this. Thus, it can said that life of shareholders get ruined as they lost their
livelihood. In- fact they are also not able to recover or achieve the money that they have
invested in various corporations. Thus, it can conclude that life of stakeholders get full of
difficulties and hindrances and they are not capable of managing these issues.
 Employees : Workers who are engaged in Volkswagen are also impacted on greater
impact as company is at the situation of closing their businesses. Work forces are not
receiving their wages as venture is not able to give proper payments to them. Due to this
life of employees are badly influenced as their whole family depends on this income
only. In addition to this, a situation came where workers have to join another companies
even at lowest wages. Thus, it can be said that personnels are getting effected at greatest
extent (Chavis, Klapper and Love, 2011). It has been reconsigned that most of
personnels have leave their jobs from Volkswagen as they are not getting appropriate
salary and get unemployed. Due to this reason, unemployable persons get increased in
United Kingdom and in turn their standard of lives get degraded. Labours who were
working in lower segments like people who used to lift loads, supply raw materials from
place to another, packagers, etc. have almost come in a condition to commit suicide as
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their wages are already low and after this financial crisis their salary get extremely
lowered even after working for long hours.
 Share price : A share is nothing but the amount or price of a single share of a number of
saleable stocks of a firm, derivatives and other financial asset. The stock price simply
refers to the highest amount which is willing to be paid for the stock or the minimum
amount that it can be bought for (Auzair, 2011). After the financial crisis, whole share
market get crashed as non investors are having huge amount to invest in this or even
purchase any share. Due to this, the value or price of shares get decreased drastically.
This causes a great loss to the users or investors who have earned those stocks in high
prices. Now a situation occurs where shares are getting sold as such a minimum cost as
vegetables and fruits are being sold in Volkswagen. Thus, it can said that due to financial
crisis, whole share market get collapsed and the shares are being sold at the price of
damaged materials or useless commodities.
 Finance : This is nothing but the cash available and the capitals of firm. The condition of
finance present in Volkswagen is very poor. Company is also taking debts from various
banks at high interest rates. Due to this, venture is not in a condition to manufacture some
new cars or vehicles so losses the brand value (Aterido, Hallward-Driemeier and Pagés,
2011). The cited firm was not in a condition to continue their business as they were
consisting of very low amount of revenues. Even bank are not in a situation to offer loans
after this economic crisis.
CONCLUSION
From the above based report, it can be concluded that whole automotive industry has
being hit by the financial crisis of 2007 – 2008. Volkswagen is one of the automotive corporation
which is badly impacted due to this. Company is not able to manufacture new vehicles as they
are having lack of funding. Their invested shares get almost collapsed as the price of shares get
reduced drastically. Apart from this, shareholders present in ventures are also not receiving their
shares. Due to this, they are not investing additional amount of revenue in growth of venture.
Workers are not getting their wages at proper timing, even some of them have to continue their
work on minimum wages as they are not having another option. Thus, it can be said that that
economical crisis has ruined the whole sector business and badly effected the lives of all people
associated with the enterprises.
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REFERENCES
Books and Journals
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Auzair, S., 2011. The effect of business strategy and external environment on management
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Performance in a Competitive Business Environment. Economic Insights-Trends &
Challenges, 64(1).
Chavis, L.W., Klapper, L.F. and Love, I., 2011. The impact of the business environment on
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Wetherly, P. and Otter, D. eds., 2014. The business environment: themes and issues in a
globalizing world. Oxford University Press.
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Yan, S. and Chew, D.A., 2011. An investigation of marketing strategy, business environment and
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