Understanding the Business Environment

This assignment explores the multifaceted nature of the business environment. It delves into key elements such as legal frameworks, economic conditions, socio-cultural influences, technological advancements, and global trends that shape organizational operations and performance. Students are expected to critically examine these factors and their implications for businesses in a dynamic and interconnected world.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1 ...........................................................................................................................................1
1.1 Identify the purposes of different types of organisation.......................................................1
1.2 The extent to which an organisation meets the objectives of different stakeholders............2
1.3 The responsibilities of an organisation and strategies employed to meet them....................3
TASK 2 ...........................................................................................................................................3
2.1 Explain how economic systems attempt to allocate resources effectively............................3
2.2 Impact of fiscal and monetary policy on business organisations and their activities...........4
2.3 Impact of competition policy and other regulatory mechanisms on the activities of a
selected organisation...................................................................................................................5
TASK 3 ...........................................................................................................................................5
3.1 Explain how market structures determine the pricing and output decisions of businesses. .5
3.2 Illustrate the way in which market forces shape organisational responses using a range of
examples......................................................................................................................................6
3.3 How the business and cultural environments shape the behaviour of a selected
organisation.................................................................................................................................7
TASK 4 ...........................................................................................................................................7
4.1 Discuss the significance of international trade to UK business organisations......................7
4.2 Analyse the impact of global factors on UK business organisations....................................8
4.3 Evaluate the impact of policies of the European Union on UK business organisations.......8
CONCLUSION ..............................................................................................................................8
REFERENCES .............................................................................................................................10

INTRODUCTION
Business environment includes the external and internal factors of the particular
enterprise which affect the company. These factors influence the business operations. For that
organisation needs to took after these factors regular(Welford., 2013). These factors influence
the business how the company functions such as employees, customer, management, supply and
demand etc.
External factor are the factor which took place out side the enterprise such as government
policies, costumer preferences, population income, attitude and values of the society groups.
Whereas internal factors are those factor which take place in the company such as company
structure, employees behaviour etc. For the particular report the company which is taken into the
consideration is Nestle. Nestle is the world food largest and beverages company. They have more
than 2000 range of products in there brand. The company serve over 191 countries over the
world. The ensure the quality of the product and give the services to its customers. In this report
the different type of organisation has been discussed and how the company can able to meet
there goals by stratifying their stakeholders and responsibility which company has for these stake
holders.
TASK 1
1.1 Identify the purposes of different types of organisation
There are different kinds of companies are their which have their own objectives and
goals. Enterprise has to choose any one kind on organisation which they want to run for the
specific purpose. These are different kind of organisation which there objectives. Sole proprietorship: It is the form of business where one individuals start its business.
The only single person who run the business. Sole traders help to create the work for the
people(Halbert and Ingulli., 2011). The person can take the fund to start its business and
sole proper ship has the authority to take all the important decision by his own. This kind
of business are in smaller size and sole trader help to distribute the income and capital
between the large number of people. Partnership: It is form of the business where there are more than one business owner.
The member those who are doing the business together are called partners. The objective
of this business form is to improve the contact for the resources utilisation and also use

the capital of each partners in an effective manner which can gives them adequate profits.
The partners use there skills and knowledge to bring the innovation for the customer
satisfaction.
 Companies: Companies are made by shareholders that gives the money for the business.
Management run the enterprises behalf of the shareholders(Wetherly and Otter., 2014).
The objective of the company is to to reduce the cost, improve the customer satisfaction.
Employees safety, increase the market share etc.
1.2 The extent to which an organisation meets the objectives of different stakeholders
Every company is having the stake holders and it play a very important role in the
organisation. Stakeholders have interest in the organisation. Stakeholders includes employees,
shareholders, customers, suppliers etc. without stakeholders company can not run its operations.
Objectives of the different stakeholders are as follow. Top management and directors: Managers have interest of salary,bonus and prizes in the
company. The mangers needs the high position n ad authorities which increase his
reputation in the market. Customers: Customers are also an important stake holders because they create the
demand in the market. The customer has the interest of right product at the right prices
from the company. The customer except to get the product in quick time. Suppliers: The firms which provides the material to the companies has interest of regular
payment from the company suppliers supply the raw material. Government: These authority are interested in the tax revenues from the enterprise and
also follow all the rules and regulation regarding the company.
 Financial corporations: The are the corporations who provide funds to the companies
and their interest in the enterprise is to get the refund on time and with good interest.
In context to the Nestle the company fulfil all the interest of the stake holders. The
company provides the higher quality and wide range of the products to its customers(Sena
Ferreira and et. al., 2012). The mangers is getting all the rights according to their position and
company execute all the legal roles according to the government guidelines.
1.3 The responsibilities of an organisation and strategies employed to meet them
The main responsibility of the firm is to provide the quality of the product to its clients.
Company should give the guarantee to its clients that the product they are using is total safe.

Nestle serves the its customers what they promise to their clients. Through the marketing
strategies the company delivery its message to the audience and fulfil that promise in reality(Cai
and Yang., 2014). The company start working with the retailers and food service provider by
which they can serve its customers more healthier product and brings the change in customer live
style. In context to the workforce the company should provide the safety and good working
environment.
According to the health and safety Act the company has to ensure the employees safety
in the organisation. This Act protect the non employees risk arising due to working activities.
Nestle conduct the surveys for employees satisfaction. In that survey company ask many
questions to their employees how they feel to work with the organisation. Nestle signed the
partnership with the government to supports its climate smart cocoa project for the future of the
economy. In this project the smaller cocoa farmers are taught the agriculture practices that help
the framers to over come the climate change challenges.
To help the shareholders the enterprise publish the annual report of the company,
corporate governance report. Nestle conduct the meeting to increase the share holders value. The
company also provides the half yearly results of its sales and produce regular press release. The
company provide the calenders in which they mention the general meeting and other important
events dates.
TASK 2
2.1 Explain how economic systems attempt to allocate resources effectively
The economic system consist of socio-economic and organization relation between the
manufactures and customers for the goods and services(Harrison., 2011). There are different
systems which as its own benefits but the one problem which is common in every system is
scarcity of resources. In planned economy system government try top satisfy all the demand of
the customers. All the enterprise, factories, companies are belong to government and because of
that they have the stability in economy. The government can easily supply all the demands. But
the environmental factors are not included in this system. Company only produce the goods
according to the demand without considering the scarcity.
In free market system good and services are produce for the personal reasons such as the
profits and increase the market shares(Ullah and Lai., 2011). The prices are determine by the

demand and supply of the product. The scarcity problem is common in both of the system.
Company should allocate and use its resources it an effective manner so that they can earn the
profits, satisfy the customer and increase the market shares. Company can use the resources
effective way in the following manner.
 For the social benefits the company lower its product prices so that more customer and
buy it and it serves the economy.
 The company should go for the mix economy in which can leads to effective use of
resources between the government and private enterprise.
Nestle is having the different policies to use its resources carefully and effectively. Company
mange its human resources, equipments, machines, raw material etc. effectively to meet the
customer demand and adjust the supply accordingly.
2.2 Impact of fiscal and monetary policy on business organisations and their activities
Fiscal policies and monetary policies are control, by the government. This policies has
been used to control the impact on the economy(Wild, Wild and Han., 2014). This policy can
impact on the capital expenditure, personal buying, exchanges rates. Interest rates etc. fiscal and
monetary policies has direct influence on the business organisation. These policies monitor and
control the economy as whole(Solomon., 2014). If government decrease the rates of the tax there
can be large income and people start investing in the business and this can lead to increase in the
employment. On the other hand if there is high tax rates the disposable income can be decease
which can result into the low investments.
Monetary policies affect the interest rates which can have the impact on the stock prices.
In context to the nestle the sales of the product decrease when taxes rates increase by the
government. On the other hand the consumer buy more nestle products when tax rates decreases.
The money supply in the market affects the demand of Nestle products. This policies can have
the impact on the profits of the company. Liberal fiscal policies tends to have the high sales high
profits. While high rats of taxes cause low sales low profits.
There are three monetary tools which control the money influence such as open market,
reserve ratio, discount rates. These tools affect the macro economics factors. These tools helps
to balance the economic growth, low inflation, rate of unemployment etc.

2.3 Impact of competition policy and other regulatory mechanisms on the activities of a selected
organisation
Competition policy make the business more competitive. It is mechanism by which
company can preserve and promote its competition. This policy ensure that the company gives
the quality of the product in less prices. The main factor of the policies to is to remove the
private and public sector from the restriction of competition(Cassell and Blake., 2012). This
mechanism has the rules and regulation to conduct the competition in the market and control the
activities of the merger and acquisition. The authority who apply this kinds of laws are called
competition agency. This help to make the satisfactory marketing function. Competition policies
gives the economic stability. In context to the company nestle reduce its monopoly which
decrease the competition with the other companies who produce the same products.
Regulatory policies affects the nestle production activities of good and services due to the
high tax rates. High tax rates tends to decrease the sales which affects the enterprise profits and
because of this many employees are leaving the jobs. There is negative and positive effects of the
competition policies. Its help the company to fix the price, understand the consumers demand
and easy entrance of new competitors.
Competition policies help the company to improve the product quality and fix the prices.
Its help the economy to reduce the poverty. These policies help to grow the economy. The
government makes the rules for the big companies that they cannot have the monopoly on the
market for the longer run unless there is some specific reason of monopoly by the organisation.
Because monopoly firm affects the other small firms. But in case if the monopoly serve the
economy in better manner the business unit can continue its operations.
TASK 3
3.1 Explain how market structures determine the pricing and output decisions of businesses
Market structure refers to the number of buyer and sellers in the market. Market structure
study those factors which influence the competition environment of the business. The factors are
size of business. Market share, nature of cost, buyers structure etc. There are many types of
market structure given below. Perfect market: Perfect market refers to the market having the large number of buyer and
sellers. There is not restriction of entry and exit of competitor. The seller are price taker

in perfect market. The customer and seller has the good knowledge about the product.
The nature of the product is homogeneous. Monopoly market: Monopoly market are those market where there are large number of
buyers but few sellers. There is no product other substitute available in the market. The
seller in this market are prices maker not price taker. In this type of market there is barrier
of new entrance. Oligopoly market structure: In this market structure few sellers come into the market and
combine together to sell its product. There are few sellers and few buyer because the
prices of the products are high. The sellers has the control on the prices of the products.
Pricing and out come decision for the perfect market structure: In this type of market single
firm cannot decide the prices. The prices are regulate by the supply and demand of the product.
Pricing and out come decisions for monopoly market structure: In this company makes the
profits by producing more units. The companies take the help of demand curve to set the prices.
The firms in this market structure use the average aggregate cost and average aggregate variable
cost to examine the profits(Lee, Sohn and Ju., 2011.).
Pricing and out come decisions for oligopoly market structure: In this market the sellers has
the ability to fix the prices. The pricers are set at the higher and out come sets a lower level. The
structure help to achieve the economics of scale.
Nestle have its monopoly markets there are very few competitor and because of this
reason company sets its own pricing and earn the high profits.
3.2 Illustrate the way in which market forces shape organisational responses using a range of
examples
There are different market forces which affects the business in different way. The market
forces tends to supply, demand and marketing to consumers(Boons and Lüdeke-Freund., 2013).
The volume of the goods available to the customers is called supply. Demands refer to the
volume of the product which consumer wants from the company. Example Nestle product
Maggie demand is more than its supply. So in that case the company needs to produce more
units of the product to reach the equilibrium where demand is equal to the supply of the product.
Marketing strategy tends to increase the demand and supply. When demand is equal to the
supply in that case company gets the customer satisfaction.

Nestle always try to match its supply and demand by providing adequate quantity of the
product according to the customer desire. Nestle try to control the market forces and that is the
reason the company is having the good brand name in the market.
3.3 How the business and cultural environments shape the behaviour of a selected organisation
Business and cultural environment have the larger impact on the organisation. According
to this environment companies changes its policies. In case of nestle which is Swiss company
producing food and beverages all over the world. Nestle is the top multinational company in food
and beverages manufacturer(Zsambok and Klein., 2014). Few year ago nestle start selling the
horse meat instead of beef. In this case the European union countries stop using the nestle meat.
The union also made the company to apologies for the mistakes and fraud as been done to the
customers. There are many culture factors which affects the company such as language, brief,
norms, values, colour, customs etc. all this factors influence the consumers behaviour. For
example many country prefer the food with is health and have less artificial ingredients for this
purpose the company produces many product which have vegetable and health components in
the products. If companies can get the success at local areas it can be successful at the global
level also. The companies to think global while act local.
TASK 4
4.1 Discuss the significance of international trade to UK business organisations
International trade refers to the buying and selling of the product across the country.
International trade has very important role to the UK organisation. There are many organisation
in UK those who are engaged in these activities like Midlands world trade forums, east
Midlands international trade association(Tan., 2011). These association have their business in
India, china, USA. These organisation has the advantages in other countries like cheap labour.
Nestle is having the manufacturing unit in India because of low labour cost.
By the international trade many UK companies gets the global exposure and get the
chance to expand their business and earning higher profits with higher sales. World trade
organisation liberalise the trade among the countries in 1995. by this many companies invest
their business into other countries. International trade is not only to improve the performance but
also tends to grow the economy.

4.2 Analyse the impact of global factors on UK business organisations
The global factors such as political, economical, technology, social have the influence on
the UK business organisations(Teece., 2012). When company makes the strategies they need to
considered these factors. Following are the factors which influence the nestle. Technological factors: Important factor which influence the company. Technology
make more easier to serve their customer in quick time and less cost. Technology makes
more safe product and good packaging. With help of this factor nestle advertise its
product on internet and can reach the large number of population.
 Social factors: Change in the consumer preferences, taste, income, lifestyle, values ,
education influence the demand of the company product. When its comes to food it is
necessary for every consumer to buy it because food is the necessity. When the
consumers are from rural or urban area, whether customers are educated or not they buy
the food products. Most of the product of nestle are for daily uses.
4.3 Evaluate the impact of policies of the European Union on UK business organisations
European union has the laws which may affect the UK business. Every business
organisation in UK has to follow the certain laws to regulate enterprise operations. These laws
are related to the employees policies, regional policies, inflation, tax rates, education policies and
international policies. European union policies are directly binding all the state
members(Meiners, Ringleb and Edwards., 2014). The companies has to implement all these laws
to prevent the any consequences in the future. Nestle has to follow the strict policies for the
nutrition policy. The company has to make its product according to the government given
standards. After the production products directly go for the quality check before coming into the
market if the quality is up to the mark the product brings down in the market.
CONCLUSION
This report is based on the nestle company. International trade gives the wider scope to
business. Organisation can get the large experience while doing the international trade. It
generates the revenues and sales or the enterprise product. Because of this reason the UK
business organisation are involving in the international trade activities. This report is based upon
the use of business environment and how it is very important for the UK government. There are
different forces which affects the business and company try to mange these forces to get the

customer satisfaction level. In this report market structure has been discuss and this structure
play vitial role in the business operations.
REFERENCES
Books and journals

Welford, R., 2013. Hijacking environmentalism: Corporate responses to sustainable
development. Routledge.
Halbert, T. and Ingulli, E., 2011. Law and ethics in the business environment. Cengage Learning.
Wetherly, P. and Otter, D., 2014. The business environment: themes and issues in a globalizing
world. Oxford University Press.
Sena Ferreira, and et. al., 2012. Framework for performance measurement and management in a
collaborative business environment. International Journal of Productivity and
Performance Management. 61(6). pp.672-690.
Cai, S. and Yang, Z., 2014. On the relationship between business environment and competitive
priorities: The role of performance frontiers. International Journal of Production
Economics, 151. pp.131-145.
Harrison, R., 2011. Learning and development. Development and Learning in Organizations: An
International Journal, 26(1).
Ullah, A. and Lai, R., 2011. Modeling business goal for business/IT alignment using
requirements engineering. Journal of Computer Information Systems, 51(3), pp.21-28.
Wild, J., Wild, K.L. and Han, J.C., 2014. International business. Pearson Education Limited.
Solomon, M.R., 2014. Consumer behavior: Buying, having, and being (Vol. 10). Engelwood
Cliffs, NJ: Prentice Hall.
Cassell, M.A. and Blake, R.J., 2012. Analysis of Hofstede's 5-D model: the implications of
conducting business in Saudi Arabia. International Journal of Management &
Information Systems (Online). 16(2). p.151.
Boons, F. and Lüdeke-Freund, F., 2013. Business models for sustainable innovation: state-of-the-
art and steps towards a research agenda. Journal of Cleaner Production. 45. pp.9-19.
Zsambok, C.E. and Klein, G., 2014. Naturalistic decision making. Psychology Press.
Tan, C.N.L., 2011. Knowledge management acceptance: success factors amongst small and
medium-size enterprises. American Journal of Economics and Business Administration.
3(1). p.73.
Lee, J.H., Sohn, S.Y. and Ju, Y.H., 2011. How effective is government support for Korean
women entrepreneurs in small and medium enterprises?. Journal of Small Business
Management. 49(4). pp.599-616.
Teece, D.J., 2012. Dynamic capabilities: Routines versus entrepreneurial action. Journal of
Management Studies. 49(8). pp.1395-1401.
Meiners, R.E., Ringleb, A.H. and Edwards, F.L., 2014. The legal environment of business.
Cengage Learning.
Online
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