Business Environment Report

This report examines the business environment of Citybus Limited, a transport company operating in Hong Kong. It analyzes different types of organizations, stakeholder objectives, and the responsibilities of a firm. The report also examines the impact of fiscal, monetary, and competition policies on business activities, market structures, cultural and business environments, and the significance of global trade for UK businesses. It concludes with an analysis of the impact of international factors and EU policies on UK business organizations.

BUSINESS ENVIRONMENT

TABLE OF CONTENTS

ILLUSTRATION INDEX
Illustration 1: Economic System......................................................................................................6
Illustration 2: Market Structures......................................................................................................9

INTRODUCTION
Business is a type of activity that is performed by a person or group of individuals in
order to make money and earn good profit. For the successful establishment, it is crucial for
them to maintain their business environment as this will help them in keeping up the reputation
in industry. It includes all internal and external factors which have a huge impact on any
business (Bourne, 2016). Present report will talk about Citybus Limited which is a transport
company operating their business in Hong Kong. This is a private company and one of the
major operators, which provides both franchised and non-franchised bus service.
This report will discuss about various types of organization, objectives of different
stakeholders and various responsibilities of a firm. It will also explain about impact of fiscal,
monetary, competition policy and other regulatory mechanisms on business organizations and
their activities as well. Apart from this, market structures, cultural and business environments,
importance of global trade to UK business organizations and impact of international factors and
policies of the European Union is also discussed in this report.
TASK 1
1.1 Identifying the purposes of different types of organization
For any organization it is very important to identify their sole purpose from the business
which can help them in operating their business successfully in industry. Company is a group of
people who have same purpose together in order to earn money and profit. These can be divided
into several group based on their working pattern, such as, private, public sector, voluntary,
charity, etc. which has different vision and mission from their business, which is explained
below:
Private Sector
These organizations are owned privately by an individual or group of people. These
organizations generally operates in order to produce a good revenue for their business and to
increase their sales as well as production in industry. There is immense range for private sector
business as there is only one person for taking decision for the business for its improvement.
Their main aim of these types of company is to serve service to their buyers or expand their
business in market (Prajogo, 2016).
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Public Sector
In this sector, business is operated for the well being of nation. These enterprises can be
small or medium which is supported by their services, which is being provided to their
consumers. For public sector, there is a huge extent in terms of business, as they work for the
public welfare. The primary aim of this sector is to serve the service to their consumers whether
it has international or national customer.
Voluntary Sector
In this type of sector, businesses can be run by a single person or by a group of people.
These types of systems take money from different sources, for example, from gifts or funds,
provided by these organizations use in their business. In this sector, it consists of Non
Government Organization's that works in several fields, such as, welfare, education, women
safety, etc. These are basically non-profitable and non-governmental enterprise which works for
the society (Botha, Kourie and Snyman, 2014).
Charity
It is provided for some noble work with no personal interest. This helps in the upliftment
of the society.
Sector Name of the
Company
Scope/Nature Purpose/Objective
Private Company Citybus Limited It is a private company
which is operating their
business solely in order
to improve their
business.
These companies main
purpose is to make a good
amount of money and earn
profit which can be useful
for them in improving their
business.
Public Company Bank of China It is a type of public
limited company which
is operated generally for
the betterment of the
society as well as of
The main objective these
types of firms apart from
earning a good amount, is
to make a good brand
image in industry which
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organization. can be very useful for their
business.
Voluntary Adoptive Families
of Hong Kong
(AFHK)
It is a non-profit,
volunteer-run charitable
organization (Wetherly,
2014).
The main purpose of this
organization is to provide
shelter to those who need
it.
Charity The Hub Hong
Kong
This charity helps youth
in giving them food,
educational facility,
social health and well-
being services.
The main aim of these type
of companies is to work for
social welfare and it’s up
liftment.
1.2 Describing the extent to which an organization meets the objectives of different stakeholders
For any organization it is necessary to maintain a good relationship with their
stakeholders. They are either an individual, group or organization who has a direct link with the
company. These can be their customers, employees, directors, suppliers, etc. Stakeholders can
have a huge impact by the organization's activity, aims and policies. All stakeholders have
different impact on the business. It is responsibility of owner to maintain all the relations very
smooth in order to work effectively. Based on their requirement, different stakeholders have
different responsibilities, such as,
 Employees: These are foremost type of stakeholders which exists within organization. It
is very important for organization to maintain good relationship with their employees in
order to make them work reflectively for firm. They have to fulfill their requirements so
that they can work more hard for the organization which can help them in earning a good
revenue from industry (Bourne, 2016).
 Customers: These are the most important stakeholders of organizations which are
critical to competitive success of organizations. Customers have expectations from
company, such as, good quality services, good behavior and assistance from employees
of company, proper information about service, etc. These requirements has to be met by
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the owner of firm. Making their customers happy and satisfied from their service will
give them a positive response which is very beneficial for their business. Giving them
services according to their preference and liking will have a positive impact.
 Suppliers and Creditors: These play a very important part in the organization. They
have to be valued properly by the company. It is very important for smooth and effective
operations of the organization.
 Investors: These plays a major role in any business in improving their success and
growth. It is very important to have a good and transparent relations with these investors
as they are the one who is supporting the business by giving them financial support. They
can either increase or decrease stakes in company according to financial performance of
organization in industry. Governments and their agencies: These type of stakeholders also has an important role
in the business. These helps them in providing the resources which is required for their
organization to work properly and improve their business activity as well. All these are
performed by these stakeholders only. So, it is very crucial for them in maintaining a
good relationship with them (Ghisellini, Cialani and Ulgiati, 2016).
Conflict of Interest between different Shareholders
Organization meeting the objectives of different stakeholders can give rise to conflict
between them. As there are different stakeholders that are associated with the company, high
chances are there of generating a conflict situation. For example, as per their customer's
requirements, they are decreasing the prices of their services to some extent but this step is not
acceptable by their shareholders. As it can create a loss in their overall business activity.
1.3 Explaining the responsibilities of an organization and strategies employed by them
There are so many responsibilities to meet for an organization of their customers as well
as their employees. This is very important for them in order to improve their services. To
manage their relationship with their employees, it is very crucial to have a good communication
with them. This will help them in resolving their issues and problems related to their work.
Having a good relationship with employees will help them in understanding demand and this
process can help in making them work hard for the organization to achieve targets and
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objectives successfully. It is organization's moral duty towards its surroundings, worker and its
customers to fulfill their requirement.
There are various strategies which can be implemented by the organization to achieve
their targets and objectives. To increase customer rate, they can provide their services which is
according to their choices and needs. This will help them in satisfying them. By this process, it
will ensure growth of their business in industry. Identifying their target customers is another
strategy which can be used by the organization which is very useful for them in achieving their
targets (Carson, 2017).
TASK 2
2.1 Economic systems attempt to allocate resources effectively
Need of appropriate means of resource allocation is very essential in order to achieve
optimal resource for the business. Economics is considered to be study of distribution,
production, and consumption of commodities in market. Economic system can include a
combination of different agencies, institutions, etc. This system consists of three basic factors,
i.e., what has to be produced, how to make it and in what quantities and who receives the output
of production (Nugent, 2017). Economic system helps in allocating resource effectively for the
organization.
These are basically required in order to resolve basic problems and issues which can arise
in organization related to their production. The basic and general economic systems segmented
on the basis of allocation are described below:
 Market economy
 Planned economy
 Mixed economy
 Traditional economy
There two economic systems which is frequently used by world-wide, i.e., free market
method and planned system. Combination of both these systems is known as mixed economic
system. The best economic system which is used by the Citybus Limited is the mixed economic
as it will help them in providing benefit of both market and planned economies (Stucke and
Grunes, 2016). A mixed market economy is basically depends on both the factors, i.e.,
government bodies and markets resources. In this system, some resources are owned by the
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public sector, i.e., government bodies and some resources through private sector. This can be
very helpful for company as it will provide them benefit to use any of two economy according to
their requirements to allocate these resources efficaciously.
2.2 Fiscal and monetary policy's Impact
At present, there is a huge impact of fiscal and monetary policies on working and
functionality of company. In fiscal policy, government helps in adjusting their money
expenditure in order to monitor it and can also influence nation's economy. It is used in
concurrence with these policies which is enforced by central banks. Using money supply and
interest rates it influences the economy. The main objective of fiscal policy is to maintain
distribution of income and wealth in the organization, to manage demand in economic system
and influence supply of the economy. There is a great effect of this policy on the business
activity of Citybus limited, such as on tax and work incentives, productivity and on business
investment decision as well. There are two types of policy, i.e., deflationary and expansionary
fiscal policy. Expansionary helps in increasing demand which involves high government
spending and low tax. Whereas, in deflationary, it helps in decreasing the demand and has lower
spending and higher taxes (Define Fiscal and Monetary Policy, 2017).
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Illustration 1: Economic System
(Source: Market Structure, 2018)

In monetary policy, it involves influence of supply and demand of money thorough
interest rate and it is usually done by Central Bank. The main objective of this policy is to
achieve low inflation rate which can help in promoting the economic growth of country. It also
influences value of national currency in international market as well. This policy has a huge
impact on Citybus limited, for example,
Inflation of Control: This control of inflation becomes one of the most dominant aim for
government in many countries.
 On Interest rates: This is most important impact of monetary policy on an organization.
This is amount which is borrowed from someone, for example, bank.
 On Business: This policy has a huge impact on businesses as it can affect their overall
function.
 On Employment: Giving someone a job is also an impact of this policy.
The role of government in very important in regulating effect of these fiscal and
monetary policy on business activity. From these two process, it helps in finding proper level of
taxation and spending and manages supply of money.
2.3 Impact of competition policy
To successfully manage their business activity it is very crucial for them to understand
the effect of competition policies and various regulatory performance which can affect their
business. It is a policy which is used to implement various policies which can be useful in
promoting their business in industry and make it more effective. This process helps in
contributing towards improvement of efficiency in individual markets and enhanced
competitiveness. This policy also helps in competing with the competitors and increase sale in
market. The main aim of this policy is to provide innovation which can be used by company to
increase their production. It will also help in providing better competition in the global market.
Being competitive also helps in encouraging business activity in order to improve their superior
of their goods and services they sell – which is to pull more consumers and helps in expanding
their market share (Jaeggi and et.al., 2016).
Further, there are other regulatory mechanisms which are not directly imposed on the
business activity. This mechanism in a free market system is known to be competition. High
level of competition is considered to be a natural factor for production costs from low to attract
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more buyers for buying a company’s products. The two factor which has a huge role in the
business activity is of supply and demand. These two factors can affect any business. The main
aim of these regulatory mechanism is to enhance overall performance of company so that they
can increase their customer as well as profitability rate.
TASK 3
3.1 Market structures determining the pricing and output decisions of business
The huge impact of market structure can be determined by pricing strategy and end
product decisions of business activity. There is great influence of other competitors as well in
setting the pricing strategies for their products. It has to be done very carefully which can attract
customers to buy their service. Market structure includes all buyer and seller that are present in
market. Based on their function, there are different types of market structure, such as, oligopoly,
monopoly, perfect competition, which is explained below:
Oligopoly Market Structure: In this market structure, there are various small and large
sellers available of same product who are selling their products on different prices which has
huge impact on overall pricing strategy of market. To deal with this situation, it is very important
to promote their services in attractive pattern in order to increase their customers to purchase
their products and work. In this market, it is very crucial to understand nature of their customers
which can be helpful for organization in setting prices of their products (Nugent, 2017).
Monopoly Market Structure: In this type of market structure, monopolist has a right to
change prices of their products according to its preference. As in this type of market structure,
there is shortage of similar type of products which gives advantage to the monopolist to set the
prices as per his requirement. There are disadvantage also of this process. If cost of product is
too high than it can decrease demand of that product in market. To deal with this situation,
monopolists has to take into consideration all the positive and negative impact in order to
increase its business.
Perfect Competition: This is ideal market structure in which organization has no choice
but to set their prices according to other firms that are operating in the same market. In this
structure, buyers has a right to decide prices of products to which the owner has to take
decisions. It all depend upon the demand of goods in market as every company tries to offer their
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products at low cost in order to attract more customers as increase their market share as well.
This whole process is known as perfect competition (Pollack, 2015).
3.2 Ways which market forces shape organizational responses
It is very important for Citybus limited to respond effectively to market demands as it
will help them to grow their business. Providing their services according to the current trends and
customers preferences will be very beneficial for them in increasing their revenue and overall
performance (Nugent, 2017). All market forces must be addressed concurrently according to
standards defined by the market. There is a huge pressure of market force on the business as it
can affect their sales and can also decrease their customer rate as well.
The main impact of market forces in shaping organizational responses in on pricing
policies of company. Based on demand of their supply in market it can affect their overall
performance. If there is an increase in their demand service than company has to gain their
employees as well to provide best services to their customers (Wetherly, 2014). Similarly, if
there is an increase in supply than there will be automatic decrease in demand and vice-a-versa.
Employees are another factors which is also responsible for shaping organizational responses. It
has to be maintained by the organization to have a good relation with their staff members, so that
they can give their best in company. Apart from all these factors, one most important component
is their customers. The main aim of Citybus limited is to satisfy their consumers from their
services. It should be according to their choices and preferences which will be very helpful in
enhancing their business.
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Illustration 2: Market Structures
Source: (Economic Types, 2017)

3.3 Business and cultural environments shape the behaviour of company
Country's business and cultural environment has a huge impact on shaping the behavior
of firm. A successful business runs in an environment which consist of various factors which can
affect its functions, such as political, economic, social culture, technological, environmental
factors etc. All these factors has to be understand carefully by Citybus limited to run smoothly
and effectively. These factors are explained in detail below:
 Political Factor: This is one of most important factors which has to be carefully
managed by company. These factors include government policies which has to be
followed by Citybus limited in order to operate business smoothly and effectively. For
organization, it is very important to follow all rules and regulation that are mandatory for
them, such as, licensing, etc.
 Economic Factor: Economic environment are not same in every country that is why it
has to be managed properly by company. There are so many policies which they have to
follow strictly to work effectively. There are different rules and regulation which are
compulsory for them to implement in their system, such as, safety policy of their
customers (Bourne, 2016).
 Social culture Factor: This is also one of the most important factor for Citybus limited.
Social culture factors includes various elements in it such as anticipation rate, attainment,
wealth, beliefs, values, custom, etc. which can have a huge impact on their business. This
is really important for them to realize the needs and taste of their consumers in order to
give best services to them. This will also help them in increasing their sale.
 Technological Factor: Operating as a travel company, it becomes very important for
Citybus limited to have all the latest tools and technology in their system. The variable
technical advancement of various nation has also affected the design of their services as it
has increased the expectation of their customers.
TASK 4
4.1 International trade's Significance
For company, it is very significant to have international trade as this will help in
increasing their business worldwide. This will also give them benefit in exporting and importing
products for their organization witch also helps in generating a good revenue from it. For
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example, there are various products and services which are available in different country at low
cost, so by doing international trade it can be possible for the company to get those services
(Jaeggi and et.al., 2016). As Citybus limited is operating their business in Hong Kong, it is very
easy for them to do international trading with UK business organizations. This process will give
them a huge benefit. Some benefits of this process is explained below:
 Production Costs: By doing international trading it will be very useful for them to get
products and services at lower cost as compared to their present country. This will help
them in generating a good revenue from this process which will eventually enhance their
business (Ghisellini, Cialani and Ulgiati, 2016).
 Availability of Materials: From this process, it becomes very easy for the company to
have variety of material which they can use for their business. This will give them a huge
benefit to get the best products and services for their enterprise.
 Broad Market Exposure: By international trading, it gives a broad experience to
explore market. This can be very useful for them as well as it will help them in
understanding their industry more precisely in different nations. Influence to global
contest, it promotes enterprise to become more competitive in the trading operations. It
will also give rise to competition in industry as well.
4.2 Impact of global factors on business
Impact on the United Kingdom's business of global factors very high. These factors can
include elements like economic, political, cultural, etc. which can affect any business activity.
Various impact of global factors are explained below:
 Global Growth: From the impact of global factor, it gives opportunity in expanding
business worldwide which can be beneficial for any organization.
 BRIC Economies: It includes countries like, Britain, Russia, India and China. All these
countries have improved and growing economies which can be a huge threat to UK
economy in operating their businesses (Stucke and Grunes, 2016).
 Impact of Government: Incorporation of different regulation and concepts as per these
worldwide component will be very beneficial for UK system.
 Transatlantic Trade and Investment Partnership (TTIP): It is an agreement between
European Union and United State with a purpose of promoting trade and economic
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growth. This can be very useful and beneficial for UK organizations for doing
international trading.
 Market Opportunity: United Kingdom has a good reputation in terms of technological
advancement which can help them in having huge opportunity. This will help them in
conducting business worldwide.
 World Trade Organization (WTO): This organization generally deals with trading
between nations and operates its rules and regulations. The main objective of WTO is to
maintain a good relationship and make sure that every process is going smoothly between
different countries (Pollack, 2015).
 UK Economy and International Trade: Global factor helps in providing the
opportunity to enhance international trade in helping in economy of UK. Many UK
companies are conducting in different countries where they can get cheaper working class
and raw materials.
4.3 Impact of policies of the European Union
Economic and political union of 28 different countries constitute the European Union
(EU) which are located in Europe only. There various policies in EU which can have a huge
impact on UK business organizations, for example, European Union's competitive policies,
common agricultural policy (CAP), enterprise policies, CE marking, etc. which is explained
below:
 EU Competition Policy: This policy helps to maintain a competition within the
European Union. This has a huge impact on UK business organization. The main
objective of this policy is to maintain market environment better. Some policies that are
included in this are deregulation (reduces monopoly), privatization (transferring
ownership).
 Common Agricultural Policy (CAP): This policy is associated with agricultural policy
that exists in EU. It helps in regulating system of agricultural subsidies and other
programs (European Union, 2017).
 Enterprise Policy: EU enterprise policy helps in providing an environment which
contributes to business creation and development and especially for SMEs. This policy
can be very useful for UK business organizations.
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It has both advantage and disadvantage on UK business organization, such as,
Advantages Disadvantages
 EU has free trade policy which helps in
increasing competitions between
different organizations.
 The EU free trading policy enables UK
firms to market their goods at a wider
market. This policy helps in increasing
the international trading as well
(Carson, 2017).
 As UK is a member of EU it has so
much political influence on it which
can be very helpful for them in doing
their business.
 It will become difficult for the United
Kingdom to compete with the European
firm due to increased competition
(Jaeggi and et.al., 2016).
 Due to free trading policy, it can
increase the immigration of labour to
different nations, which can affect their
business.
 With free trade policy, it can increase
the level of imports which can lead to
an outflow of money from the UK
economy which has a huge impact on
them.
CONCLUSION
It can be concluded from the above report that, it is really crucial for any company to
have a good knowledge of their business environment as this will help them to understand it
wells and can work more effectively. By evaluating all the related factors it becomes easier for
company to recognize their strength and weakness. This report has explained about different
types of organization and it purposes. It also discussed about the economic systems, various
policies like fiscal and monetary which has a huge impact on Citybus limited. For better
understanding of their business, factors like political, economic, social and technological is also
studied in this report. Apart from this, topic like international trade, impact of worldwide
component and policies of the EU on UK business organizations is also discussed in this study.
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