Global Business Environment: Pros and Cons of Legal Structures and Market Competitiveness

This report discusses the dynamic external environment of the global business environment, including the impact of COVID-19 on different business sectors. It also covers the pros and cons of different legal structures, such as sole proprietorship, partnership, and corporation. Additionally, it explains how to measure market competitiveness using techniques like the Herfindahl-Hirschman Index and Concentration Rate. Course code, course name, and college/university are not mentioned.

GLOBAL BUSINESS
ENVIRONMENT
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TABLE OF CONTENTS
INTRODUCTION.........................................................................................................................3
COURSEWORK 2A) NEWSPAPER ARTICLE ON CONSUMER CONFIDENCE............3
Business sectors will prosper over the next 12 months and which will struggle........................3
COURSEWORK 2B) E-MAIL MESSAGE REGARDING A BUSINESS START-UP.........5
Pros and cons of different legal structures...................................................................................5
The manner in which competitiveness of the market structure can be measured........................6
CONCLUSION..............................................................................................................................7
REFERENCES................................................................................................................................8
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INTRODUCTION
Global Business Environment can be defined as external environment which is dynamic
in nature or keep on changing such as taste and preference of customers, policies of government,
technology development and many more. This report is divided into two parts coursework 2 A
and B in which first on the basis of article pertaining to consumer confidence, suggestion need to
be provided to investors about business that will grow. While in second part has discussed about
pron and cons of different legal structure and the way competitiveness can be measured.
COURSEWORK 2A) NEWSPAPER ARTICLE ON CONSUMER
CONFIDENCE
Business sectors will prosper over the next 12 months and which will struggle
The year 2020 is bad for most of the industry as covid-19 has resulted in decreasing in
overall sales and profitability of the organisation. Companies have to terminate its employees
because of no sales during the pandemic situation that has adversely impacted on whole
economy of the country. On the basis of article, it can be stated that consumer are regaining
confidence or willing to spend their money on necessary items to effectively satisfy their desired
and wants. Likewise, retail is one of the sector that will prosper during 12 month because it
deals in all the necessary product that are required by customers that is clothe, healthy food and
other equipment. The statistics also represent that the overall trade in retail sector has been
increased by 9.8 and turnover has not at all affected as companies are even providing online
services to customers (Business and Consumer Confidence: Key Economic Indicators (57 KB ,
PDF)). Retail sector will grow as there are many organisations that have started providing
organic food products in its range that has motivated people to be part of firm for fulfilment of
their respective desire. At the same time, Healthcare industry or companies that are offering
medicines for curing the patient or health care organisation sector will expand as with increase in
number of diseases customers wants appropriate care. Furthermore, digital marketing and
Consultancy companies sales will also enhanced during the next 12 month as big companies are
hiring consultancy firm to get suggestion related to copying with covid-19 (Brenner, 2018).
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They are making partnership with digital marketing companies to effective promote the
reputation of firm in mind and hearts of number of people living within the society.
Customers also have confidence that organisation working in Information Technology
will grow as most of the companies with covid-19 planning to improve or adapt new technology
to attract and retained maximum number of individual in the firm. In addition to this, it can be
stated that transportation and storage industry will also grow at rapid stages as lot of material
need to be stored in order to deliver to customers. As with innovation in technology, customers
want to have products and services at their door steps that has yield in meeting their expectancy
(Bhagra and Sharma, 2018). The article has also helped in understanding that the customers have
confidence that Cyber Security industry will also grew as people are more concerned about
safety and security of their personal information. With use of online platform, social media,
people are more prone to loss of their personal detailed by other individual for their respective
advantages. Hence, it has lead in increase in demand of companies that provide cyber security
services to customers so that no disadvantage can be taken through using their information.
The major loss has to be bear by accommodation and food services industry as
maximum number of people are not interested to visit different place to avoid being infected.
Hence, the overall percentage of business has decreased which is trading at 58% so steps need to
be taken to support tourism sector (Kasemsap, 2018). At the same time, the education sector has
also decreased to maximum extend as there are many school in which parents are not ready to
send their children because of threat of covid-19. This has resulted in decreasing number of
student coming to school for learning and enhancing their knowledge.
Hence, it can be suggested that six businesses in which investor must invest to get
maximum return are transportation and storage industry, retail sector, health care industry, Cyber
Security industry, Cyber Security industry and digital marketing and Consultancy companies. As
it is assumed that consumer have more confidence in all these business and are ready to spend
their money to have desired products or services to meet their expectancy level. Investor’s need
to first set their priority to invest in health care as well as in digital marketing to get good return
of their investors (Mehta and Shah, 2019). As most of the customers are assuming that these
industry will have huge market share in coming years.
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COURSEWORK 2B) E-MAIL MESSAGE REGARDING A BUSINESS
START-UP
Pros and cons of different legal structures
Legal structure is key determination of activities that are being performed by the
company likewise; raising capital having ownership or decision making authority and much
more or overall tax that is being pay by the firm (Hamilton and Webster, 2018). The four type of
business structure are sole proprietorship, Limited Liability Company, partnership and
corporation that can be explained in detailed as follows:
Sole proprietorship: It is one of the simplest legal structure in which only single individual is
responsible for taking all decision related to day to day activities. The single person is only
responsible for enjoying all the profit as well as loss of the organisation and arrange sufficient
fund for its smooth operation (Tallman, Luo and Buckley, 2018).
PRONS CONS
 Owner receives all the profits and
responsible for taking all decision of
the company.
 Easy as well as less expensive form of
ownership to start and run
 Unlimited liability as the single person
is only responsible for all the risk.
 No separate legal status
 Limited in raising funds required to
start and operate the business.
Partnership: While it is form of legal structure in which two or more individual form
partnership in order to start and operate business successfully. In partnership, partner makes legal
agreement pertaining to the manner in which profit must be shared, dispute will be resolved and
decisions are being made.
PRONS CONS
 Easy to establish
 More access to resources
 Separate legal status to give liability
 Sharing of profit.
 Business suffers because of in adequate
partnership agreement.
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protection.
Corporate: It is the organisation which is considered by law as unique entity that is separate
from being owned by others. Furthermore, corporation has capability to enter into contract, sued
and taxed. Therefore, it is enterprises that have its own life, keep on going and do not dissolve as
the ownerships of the business, hence it continues for many years (Brenner, 2018).
PRONS CONS
 Limited liability
 Tax benefits
 Transfer of ownership, shareholders
can sell their shares
 Much easy step to raise capital
 Double taxation
 Is costly to form thus lead in increasing
overall cost of company.
 More administrative duties such as
holding annual meetings, maintaining
the minutes of meetings and many
more.
The manner in which competitiveness of the market structure can be measured
There are different ways that could be utilised by the organisation in order to measure the
competitiveness of market structure and find specific strategy that could be used by firm to stay
ahead. Herfindahl - Hirschman Index, Concentration Rate (CRn) and Rosenbluth index are
common techniques that are being used by enterprise to measure market structure such as:
Concentration rate: It is oldest among all the concentration measurements that explain n ”
number of the firm’s cumulative share. The first are selected competitive on the basis of
different factors likewise, sales, capacity, production, employment and value added. Hence, it
contributes in understanding the overall share of large organisation within the industry
(Kadagishvili, 2020).
Pi=Xi/T
T- The sales of in the firm
Xi- Total sales of the sector
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Pi - The market share of in the organisation’
Herfindahl-Hirschman Index (HHI): It is another index that has been used by firm to measure
market structure and planned effective strategy to grow and expand business operation. It is
distribution ranging from 0 to 1. The index is sum of square of relevant company share that helps
in determining the ratio of total volume of market. Formula that has been used to calculate HHI
is:
HHI= NPi2
N : Total number of firms in the industry
Pi : The market share of in the firm
Hence, if there are equal number of companies in specific industry then the index fall in smallest
value that is 1 / N [29].
CONCLUSION
From the above report it can be summarised that there different legal structure and
method of measuring market structure that could be used by firm to effectively plan its strategy
to achieve the set goals. The study has also helped in learning that there are range of business in
which investor may invest to get best return.
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REFERENCES
Books and Journals
Bhagra, A. and Sharma, D.K., 2018. Changing paradigm of employability skills in the global
business world: A review. IUP Journal of Soft Skills, 12(2). pp.7-24.
Brenner, B., 2018. Transformative sustainable business models in the light of the digital
imperative—A global business economics perspective. Sustainability, 10(12). p.4428.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Kadagishvili, L., 2020. Prospects of Cooperation between China and Georgia in Global Business
Environment. Ecoforum Journal, 9(2).
Kasemsap, K., 2018. Mastering business process management and business intelligence in global
business. In Global Business Expansion: Concepts, Methodologies, Tools, and
Applications (pp. 76-96). IGI Global.
Mehta, K. and Shah, V., 2019. Global business: Virtual workplaces and
collaborations. International Journal of Business, Humanities and Technology, 9(4).
Tallman, S., Luo, Y. and Buckley, P.J., 2018. Business models in global competition. Global
Strategy Journal, 8(4). pp.517-535.
Online
Business and Consumer Confidence: Key Economic Indicators (57 KB , PDF). [Online].
Available Through: <
https://commonslibrary.parliament.uk/research-briefings/sn02817/ >.
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