Business Environment: Types of Organizations, Legal Structures, Competition Policy, Government Interventions, and Globalization

This report discusses the impacts and changes on business organizations in different sectors, the impact of government on business operations, different types of legal structures of businesses, competition policy and legislative framework of UK, macroeconomic objectives, government interventions and its impacts, and globalization and its effects.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
PART 2............................................................................................................................................3
Different types of organizations in different sectors....................................................................3
Different type of legal structures of businesses...........................................................................4
Differences between public and private ownership.....................................................................6
The competition policy and legislative framework of UK..........................................................7
Competition and Markets Authority(CMA)................................................................................8
Macroeconomic Objectives, Government interventions and its impacts.....................................8
Globalization and its effects.........................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES................................................................................................................................1

INTRODUCTION
Business Environment is a collection of all the external and internal factors that affects
the functioning of a company. There are two types of business environment including macro
environment and micro environment which helps in identifying opportunities for business,
effective planning, improving the growth and profitability of the businesses. Sainsbury plc which
is currently the third largest supermarket chain in the United Kingdom. It started by selling fresh
food items then expanded to packaged food products as well. This report will demonstrate the
impacts and changes on business organizations in different sectors and the impact of government
on business operations.
PART 1
Covered in PPT
PART 2
Different types of organizations in different sectors
There are different types of sectors and various organizations under them are discussed
below:
Private Sector
The private sector is the is run by companies and individuals for profit and is not
controlled by the government.
Sainsbury's
 Aim : To provide people with the best quality food at a decent price, be fair to the
environment and the suppliers (Adams and et.al., 2019).
 Structure : Sainsbury's has adopted Matrix structure as its structure style because it is
flexible and helps the company in competing against its competitors.
Public Sector
The private sector is controlled by local, state, national governments.
National Health Service
 Aim : To help in creating the safest and highest quality health and care services and
regularly improve the care quality.
 Structure : NHS is formed of multiple organizations where each individual organization
has its own structure.

 Impact of Covid 19 : Covid 19 had a massive impact on the public sector as the
government companies suffered losses and were forced to release a lot of employees.
Non-Profit Sector
Under the non profit sector, organizations are exempted from tax and works in the benefit
of public interest.
Amnesty International
 Aim : The main aim of this organization is to prevent the abuse of human rights and help
the deprived section of the community to gain justice.
 Structure : Amnesty has a complex bureaucratic corporate structure with many
international organizations (Akpoviroro and Owotutu, 2018).
 Impact of Covid 19 : The non-profit sector has played a very important role during
Covid 19 and it impacted in the loss of resources and personnel due the pandemic.
Different type of legal structures of businesses
There are four main types of legal structures which are sole proprietorship, partnership,
corporation and limited liability company. The explanation of these structures is as follows :
Sole Proprietorship
A sole proprietorship is the easiest type of legal structure to set up and a sole proprietor
is someone who has the full ownership of the business and it does not require an approval from
the government.
Advantages
 It is cheap and simple to set up a sole proprietorship business.
 The full control and flexibility is enjoyed by the proprietor (Niemimaa and et.al., 2019).
 For eg. It is easier to set up a grocery shop than a mall.
Disadvantages
 The proprietor has unlimited liability for all the business debt.
 The owner is personally liable if the business is sued.

Partnership
A partnership firm is created by two or more individuals and is considered as a separate
legal entity.
Advantages
 Partnerships do not have to pay corporate taxes (Bohn, Brakman and Dietzenbacher,
2018).
 The profits and losses are divided among the partners according to their share of interest.
Disadvantages
 Partners may have unlimited liability.
 There could be a situation of disputes between partners which can lead to legal action.
Limited Liability Company
A limited liability company is apart from its owners and is a combination of a partnership
and a corporation.
Advantages
 Owner have limited liability.
 LLC can be created with a single member or with multiple members.
Disadvantages
 In some cases, members may be held liable for obligations of the company (Bratianu,
Stanescu and Mocanu, 2021).
 Some professional groups may not be permitted to run a LLC.
Corporation
Corporation is considered as the most formal business entity and is treated as a legal
person in the eyes of law.
Advantages
 Owners do not have personal liability for company's obligations and debts.
 Corporations have a lot of options to raise capital (Çera and et.al., 2019).
Disadvantages
 Less flexibility due to regulations.
 Managing and setting up corporations is difficult and expensive.

Differences between public and private ownership
Public Ownership
A public ownership can also be termed as a publicly- traded company and it can sell its
own registered securities to the public. The stocks of as public company are traded on different
stock exchanges (Gao and Li, 2020). A public company sources its funds from shares and bonds.
Private Ownership
A private ownership cannot trade its share to the general public and their shares are
traded privately by the willing investors. The number of share that are traded in a private
company is relatively smaller and they are owned by limited individuals.
Similarities and Differences between Public and Private Ownership
Similarities
 Public and Private ownership are similar as they are legally distinct entities with their
own profits, liabilities and assets (Nashiruddin, 2019).
 Both are registered under the Companies Act.
 Both are controlled by the board of directors.
Differences
 Public Ownership can sell its registered shares to public while Private ownership can sell
its privately held shares to the willing investors.
 The source of funds for private ownership is by selling its shares or bonds and for a
public ownership is private investors or venture capitalists.
Impact of Covid 19 on the public sector
Covid 19 has deeply impacted the public sector and the reason the downfall of many
companies under the public sector (Gogokhia and Berulava, 2021). It has led to the increase in
the demand for healthcare services, the reduction in the productivity of the employees, there was
a problem in maintaining the cash flow, interventions from the government resulted to be
effective, government bodies experienced a fall in their revenue.

The competition policy and legislative framework of UK
Different types of market structures
Market consists of a variety of structures that shows the character of the economy. These
market structures bring up the competition in the market. Different types of market structures are
as follows :
Perfect Competition : In this type of structure there are many buyers and sellers. The
perfect competition market consists of small sellers, with no significant influence of any large
seller on the market (Hudakova, M. and et.al., 2018). Market consists of homogeneous products
and all the firms aim at profit maximization.
Monopoly : In monopoly, there is only one seller and one firm control the entire market.
The seller can ask for any piece according to his wishes and the consumers do not have any
alternatives.
Oligopoly : There are few firms in the market under an oligopoly. There very few
dominant firms in the market and the buyers enjoy more power than the sellers.
UK competition policy in comparison with EU competition policy
Policy of the government to reduce and prevent the misuse of monopoly power is known
as the competition policy. The misuse of monopoly power can lead to market failure and result
against the interest of public. So the governments intervene with the motive of preventing the
interests of consumers (Khajeheian, Friedrichsen and Mödinger, 2018). The Competition Act
1998 brought a significant change to line with the EU Competition policy .
A policy which was made to defend the position of sellers in the market in relation to the
investigations conducted for the European community establishment. The policy consists of
various factors like collusive behaviour and the misuse of market power.
Competition and Markets Authority(CMA)
The Competition and Markets Authority (CMA) is an independent part of the UK
government. It focuses on to ensure that the markets work in the interest of the consumers. The
authority aims art consumer protection and fair conduct of the business practices (Kira, Sinha
and Srinivasan, 2021).

The CMA operates in the economy by investigating phase 1 and 2 mergers, regulating
market studies, arranging criminal proceeding against cartel offences, by considering the appeals
and references of the regulatory etc. The CMA is responsible to strengthen business competition
and prevent anti-competitive practices which has a great impact on the consumers as they get fair
trade practices and an opportunity to choose from the best suppliers in the market.
Macroeconomic Objectives, Government interventions and its impacts
Macroeconomic Objectives
The main goal of macroeconomics is to achieve a stable growth in the economy and
maximize the standards of living of the people (Segal, 2019). Some major objectives include
sustainability, stability in the price of products, full employment to different sections of the
society and increasing the overall productivity.
Government interventions in then economy
Government intervenes in the economy to prevent the market failure and to improve the
distribution of various resources. The different interventions are in the form of fiscal, monetary
and supply side policies.
The Fiscal policy focuses on the taxing and spending of the government and stimulates
growth in the economy (Mariotti and Marzano, 2021). The reduction in taxes from the
government, creates a crowding out effect and an increase in the interest rates discourages
businesses from borrowing money for investment. Monetary policies are the activities conducted
by the central bank which influence the credit in the economy. All these policies are related in
the regulation of the economic activities over time.
Impact of government intervention on important factors
Government interventions have a huge impact on the economy like increasing the
employment opportunities for people, providing subsidized tax rates to the general people and
businesses, economical interest and exchange rates. The fiscal and monetary policies is major
reason for the accelerated growth in the economy and stability of the inflation.
Globalization and its effects
Globalization is a term which is used to explain the growing interdependence of the
economies, populations and cultures of the world. Countries have developed partnerships to
increase the cross-border trades in technology, cultures, economies and flow of investment.

The globalization process affects businesses through increase in the competition. As the
market opens up for businesses around the world it creates difficulties for companies through
increased competition (Miftari, 2018). Customers often find various options to explore and
businesses suffer losses. Globalization causes fluctuations in the prices of products which
has a negative impact on the economy.
Offshoring manufacture is known as relocating the production of goods to other
countries. The offshoring manufacture affects the domestic policy by reducing labour costs, due
to the low amount of wages in the foreign country. Time zone differences for companies in
different countries creates difficulties in coordinating with the clients globally.
CONCLUSION
This report concludes the factors that have an influence on the companies in the business
environment, the impacts of government interventions and policies on organizations and the
economy. The factors of globalization were briefly discussed and the comparison of the different
competition policies was critically assessed.

REFERENCES
Books and journals
Adams, D. and et.al., 2019. Globalisation, governance, accountability and the natural resource
‘curse’: Implications for socio-economic growth of oil-rich developing countries.
Resources Policy. 61. pp.128-140.
Akpoviroro, K. S. and Owotutu, S. O., 2018. Impact of external business environment on
organizational performance. International Journal of Advance Research and Innovative
Ideas in Education. 4(3). pp.498-505.
Bohn, T., Brakman, S. and Dietzenbacher, E., 2018. The role of services in globalisation. The
World Economy. 41(10). pp.2732-2749.
Bratianu, C., Stanescu, D. F. and Mocanu, R., 2021. Exploring the knowledge management
impact on business education. Sustainability. 13(4). p.2313.
Çera, G. and et.al., 2019. The effect of business enabling policies, tax treatment, corruption and
political connections on business climate. Acta Polytechnica Hungarica. 16(4). pp.113-
132.
Gao, P. and Li, J., 2020. Understanding sustainable business model: A framework and a case
study of the bike-sharing industry. Journal of cleaner production. 267, p.122229.
Gogokhia, T. and Berulava, G., 2021. Business environment reforms, innovation and firm
productivity in transition economies. Eurasian Business Review. 11(2). pp.221-245.
Hudakova, M. and et.al., 2018. The dependence of perceived business risks on the size of SMEs.
Journal of Competitiveness. 10(4). pp.54-69.
Khajeheian, D., Friedrichsen, M. and Mödinger, W., 2018. An introduction to competitiveness in
fast changing business environment. In Competitiveness in emerging markets (pp. 3-11).
Springer, Cham.
Kira, B., Sinha, V. and Srinivasan, S., 2021. Regulating digital ecosystems: bridging the gap
between competition policy and data protection. Industrial and Corporate Change.
30(5). pp.1337-1360.
Mariotti, S. and Marzano, R., 2021. The effects of competition policy, regulatory quality and
trust on inward FDI in host countries. International Business Review. 30(6). p.101887.
Miftari, V., 2018. Transformational leadership communication in developing countries’ business
environment. Journal of History Culture and Art Research. 7(2). pp.259-264.
Nashiruddin, M. I., 2019. Creating competitive advantage in the turbulent business environment:
Lesson learned from Indonesia telecommunication industry. Buletin Pos Dan
Telekomunikasi. 17(1). pp.31-46.
Niemimaa, M. and et.al., 2019. Business continuity of business models: Evaluating the resilience
of business models for contingencies. International Journal of Information
Management. 49. pp.208-216.
Segal, U. A., 2019. Globalization, migration, and ethnicity. Public health. 172. pp.135-142.
1