Analyzing Market Conditions for Airlines

This assignment requires students to analyze various research papers focusing on the influence of diverse market conditions on European low-cost carriers. The provided list of references includes studies on fiscal and monetary policies, international trade, innovation strategies, and the business environment's impact on performance. Students are expected to critically evaluate these academic sources and synthesize their findings to understand the challenges and opportunities faced by European low-cost airlines in fluctuating market conditions.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION......................................................................................................................1
TASK 1......................................................................................................................................1
AC 1.1 Identify the purpose of organization....................................................................1
AC 1.2 Meeting objectives of different stakeholders of the organization........................2
AC 1.3 Organization responsibilities and strategies to meet shareholders objectives......3
TASK 2......................................................................................................................................4
AC 2.1 Allocation of resources under different economic system...................................4
AC 2.2 Impact of fiscal and monetary policy on the organization and their activities.....4
AC 2.3 Impact of competition policy and other regulatory mechanism...........................5
CONCLUSION .........................................................................................................................5
REFERENCES...........................................................................................................................7

INTRODUCTION
Every business organization is greatly influenced by its environment. It consists of
both the internal and external factors that affect company's operations, its stakeholders and
regulations. Global Tech is a private limited company and international manufacturer of
electronic products which operates in UK, America, Russia and China. Headquarter of
company was established in America and UK. It provides wide range of products such as
mobile handsets, tablet devices etc. and competes with Apple, Samsung and Sony. Moreover,
it owns a subsidiary telecommunication and ICT company providing consultancy and service
contracts to large charities and government departments. Recently, company has diversified
its business operations through acquiring popular fast food outlets which are facing fierce
competition from McDonalds and KFC. Present project report will help to analyse the market
in which company is operating. It will also discuss about all the internal as well as external
factors such as market forces, fiscal and monetary policies, regulatory policies and other
which affect the business operations of organization.
TASK 1
AC 1.1 Identify the purpose of organization
Global tech's competitor: GT is facing fierce competition from Hewlett Packard (HP).
It is an American global IT company established in 1939, headquartered in Palo Alto,
California, US. It provides wide range of hardware and software products to consumers,
SMBs, large organizations and government. HP's vision statement is to produce innovative
products as well as services and find out the best solution to meet customer’s needs.
However, its mission is to deliver qualitative products, services and solutions in order to gain
high customer loyalty (Patel, 2012). On the other hand, its corporate objectives are related
with maximizing profitability, creating shareholder value, enhancing organization growth,
leading market position, promoting and rewarding employees, improving leadership
capabilities at all the levels, acquiring global citizenship etc.
Government organization: They are non-profit organizations. So, their main purpose
is to promote public welfare rather than earning high profits. For instance, transparency
international organization has been established with the mission to stop corruption in the
society as well as maintain integrity, transparency and accountability (Mellahi and Frynas,
2015). On contrary, its vision is to eliminate corruption at all the levels such as government,
politics, corporation and society. Henceforth, its core values are to enhance transparency,
integrity, justice, democracy, courage and accountability.
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Charity: Shaw Trust is a charitable organization established with the purpose to assist
people who are facing consequences of unemployment. Its vision is to build a society in
which every citizen has opportunity to employment, independence and inclusion (Prajogo,
2016). However, its mission is to educate and improve employability skills so that all the
people will be employed and lived independently. Thus, they will be able to survive better
life and secure their jobs.
AC 1.2 Meeting objectives of different stakeholders of the organization
Stakeholders: HP has different types of internal as well as external stakeholders such
as owners, customers, lenders, directors, investors and employees. Internal stakeholders are
the internal part of organization while external stakeholders lie in the market. HP regularly
focuses on meeting the objectives of stakeholders through various ways. These are described
hereunder:
Shareholders: Person who invests their own funds in the way of equity is known as
shareholder. HP is focused on satisfying their shareholders through providing regular return
in the form of dividend. Further, company regularly tries to maximize shareholder’s wealth
and create value through enhancing their profitability and share prices.
Lenders: They are the persons who provide funds at an interest rate. HP pays attention
to accomplish lender’s objectives through making regular interest payment. Moreover,
company maintains its solvency position and interest bearing ability to secure lender money.
In addition to it, growth in revenue, profitability and better cash earning capacity satisfy
lenders in terms of getting timely interest payment. Furthermore, good credit rating,
improved financial performance and collateral security help to satisfy lender’s objectives to a
great extent.
Employees: They are crucial part of organizational success as they provide company's
services to the customers. They have objectives to get better monetary payments, increment
in salary, promotion, job security, good working conditions, incentives, bonus and other kind
of non-monetary payments such as reward, performance appraisal and leave entitlement. HP
contributes the development of human capital and maintains collaborative workplace relation
to satisfy their workers. Company focuses on providing better salary, promoting employees,
eliminating their working barriers, rendering freedom in their work, assisting them in
difficulties and giving extra benefits such as appraisal, bonuses and salary increment.
Customers: HP delivers its services to large number of customers and maximizes its
revenues as well as profits. They are the important external stakeholders who use company's
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products and services. HP satisfies customer’s objectives through providing the best quality
of products, services and solutions. Moreover, company regularly focuses on providing
innovated products to satisfy customers in a great manner. This in turn, HP achieves brand
loyalty, good reputation and repeated purchase.
Directors: Board of Directors (BOD) are responsible for managing HP's operations.
Their objectives are mitigating through providing good managerial remuneration and
recognition of their position.
Suppliers: They provide credit services to HP; henceforth their objectives are
compiled through maintaining credit worthiness of business. Another, growth in revenues,
profits and cash generating abilities provide satisfaction to the creditors.
Public: HP affects public in numerous ways. For instance, it provide employment
opportunity to the people and make contribution to the local economy. Thus, their
information need can be satisfied by HP's financial statements which assist users to identify
recent developments and product ranges in the organization.
Government: It is responsible for resource allocation and regulate operations to make
economic development. Thus, they need information about HP's taxation obligations and
their activities in order to regulate taxation policies to improve national income.
AC 1.3 Organization responsibilities and strategies to meet shareholders objectives
HP has adopted various strategies to meet their stakeholders’ objectives to a great
extent. These have been described as under:
Shareholders: As discussed earlier, investors are very important part as they provide
funds to support HP's operations. Therefore, it becomes very necessary for HP to meet their
objectives. HP adopts dividend growth strategy for the purpose of improving shareholder's
wealth as well as its stock prices. Further, HP announces interim dividend from time to time
and maintains good relationship with the shareholders.
Lenders: HP follows all the legal obligations and provides security against loans
(Hamilton and Webster, 2015). Moreover, it maintains solvency position, pays off its
financial obligations on time, improves its profits, generates high cash flow and sustains its
interest bearing capacity.
Employees: Training and development programme helps to increase employee’s skills
(García-Nieto and et.al, 2015). Further, performance based promotion, incentive policies and
rewarding system improve worker’s satisfaction level.
Customers: Wide range of qualitative and innovated products, services and solutions
mitigate customer’s demands. Moreover, its recent diversification in fast food outlets
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increases its product portfolio and also satisfies different consumer’s needs to a great extent.
In addition, HP reviews its customer complaints and feedbacks timely in order to eliminate
the chances of conflict.
Suppliers: HP's cash flow management strategy helps to satisfy their suppliers.
Company manages its cash inflow and outflow to ensure better cash availability which
contributes in having good liquid position. Thus, HP is able to meet creditor’s obligations
timely and satisfy them about their funds security.
Public: HP is providing technological and innovated products and provide
employment to large number of people across the world. Furthermore, they are fulfilling their
social and environmental responsibility through providing safe and hazard free environment
and reducing waste.
Government: HP is making regular payments of their tax liabilities as per the
government taxation policies. Furthermore, it is doing operations legally and prohibit illegal
practices in the corporation. The organization is contributing to economic growth through
business development and improving their performance.
TASK 2
AC 2.1 Allocation of resources under different economic system
Economic system refers to the production, resource allocation, distribution and
exchange of produced goods and services in the nation. Different types of economic system
are explained hereunder:
Command economic system: Government plays a major role in command economy.
They control all the economic operations and allocate resources according to their own
decisions. Socialism and communism are the examples of this economic system (Groza and
Ragland, 2016). Henceforth, all the production, pricing and output decisions are taken by
government. What to produce, how to produce and for whom to produce, all the decisions are
made by government officials.
Free economic system: Under this economic system, production, prices and output
decisions are based on consumer’s desires. Intervention of government is neglected
henceforth; resources are allocated by organizations themselves to produce desired quantity
of goods. However, prices are decided at the equilibrium point of demand and supply
(Jeannerat and Kebir, 2016). Capitalism is the example of free economic system because
under this system, resources are allocated on the basis of capital contribution of enterprises.
Under this economic system, all the decisions regarding what to produce, how to produce and
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for whom to produce are determined by individuals. UK follows a free market economy in
which major proportion of economy is privatized with having strong government
intervention. Government manage the economy through various laws such as market
liberalization, price lowering, fluctuating interest rates and law taxation.
Mixed economic system: It is the combination of both the free and command
economic system. Under this market, some resources are allocated according to the individual
market behaviour while some resources are allocated by the government (Uehara, Nagase and
Wakeland, 2015). Both the public and private sectors work together in this economic system.
Traditions, customs and beliefs are the basis for what to produce, how to produce and for
whom to produce decisions. For instance, US follows mixed economic system.
AC 2.2 Impact of fiscal and monetary policy on the organization and their activities
Fiscal policies cover government spending and taxation policies that affect HP and
Dell's operations to a great extent. In context to Global Tech, its diversified food outlets are
facing competition from KFC and McDonald. Both the competitors are very much affected
by UK fiscal policies.
There are various components of fiscal policy which illustrated below:
 Tax rates
 Government spending
 Borrowings and repayment of debt
For instance, rise in tax rates will affect competitor’s operation adversely. The reason
behind this is that it will impose higher tax obligations to KFC and McDonald. Further, it will
lead to increase product’s prices which in turn affects consumer demand in an adverse
manner (Fazzari, Morley and Panovska, 2015). Therefore, KFC and McDonald’s sales
revenue and profitability will be decreased. However, when government improves its amount
of spending then high money will be available. Thus, it will impact company's operation
favourably.
Monetary policy is designed by the central bank of country to make control over the
nation's money supply. They control money supply through varying the interest rate, Cash
Reserve Ratio (CRR) and Statutory Liquid Ratio (SLR) that also helps to control economic
inflation (Dosi and et.al, 2015).
Monetary policy combines following elements that are given below:
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 Interest rates
 Foreign exchange rates
 Controlling money supply through CRR, SLR and open market operations
 Control over lending and credit facilities provided by banks
For instance, with rising in such rates, less money will be available to consumers for
spending. Henceforth, it will lead to reduce consumer’s demand and provide lower revenue
and profits to KFC and McDonald. Moreover, it directly impacts the business operations as
increase in interest rate will impose high financial cost to KFC and McDonald. Thus, loan
becomes costlier and business has to pay higher interest to banks. It will lead to increase
business payments and lower the profits.
AC 2.3 Impact of competition policy and other regulatory mechanism
Competition Act, 1998: UK parliament constructed a competition law 1998 which
primarily aims at restricting business practices which contribute to enhance unfair
competition in the market. Provisions of the act deal with prohibiting unfair practises. oIt
affects the operations of Global Tech's competitors like KFC in a great manner. It impose
penalties, fines and other kind of law suits for unfair practices which helps KFC to get
competitive advantage. Unfair practices involves price discrimination, excessive prices,
refusal to product supply and continuous fall in price to occupy large market share.
Benefits from competition policy: Low product price is the most important benefits
of competition policy. Another, it encourage companies to improve the quality of offered
products so as to attract more customer and expand market share. Furthermore, EU
Competitive commission conducts in-depth-inquiries of business mergers and acquisitions.
Enterprises Act, 2002: This act formulated to make some improvement over the UK
competition law that came into force on June, 2003. It includes a wide range of provisions for
ensuring anti-competitive behaviour, office of fair trading (OFT), bankruptcy and consumer
protection. In context to KFC, it is strictly abided by all the provisions of act. As per the act,
KFC needs to follow a standard code of practices and principles of effective services along
with promoting consumer rights as well as their interest (Hovenkamp, 2015). KFC is legally
obliged to provide better quality of products that do not cause harm to the consumer health.
On contrary, other unfair practises such as continuous decline in prices to grab large market
share and maximize profitability will be penalised.
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CONCLUSION
The present report has been concluded that Global Tech is very much affected by its
internal and external environment. The report described that under the external environment,
UK laws, regulations, competitive pressure, cultural diversity, technological factors and
political factors influence the organization’s operations in a great manner. Furthermore,
market forces and market structure impact the pricing and output decisions of business entity
in both the directions. Thus, it has become necessary for the organizations to consider market
changes and manage its operations accordingly.
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REFERENCES
Books and Journals
Allais, O., Etilé, F. and Lecocq, S., 2015. Mandatory labels, taxes and market forces: An
empirical evaluation of fat policies. Journal of health economics. 43. pp. 27-44.
Bata, M. and Bergesen, A.J., 2015. Global inequality: An introduction. journal of world-
systems research. 8(1). pp. 2-7.
Bilotkach, V., Gaggero, A.A. and Piga, C.A., 2015. Airline pricing under different market
conditions: Evidence from European Low-Cost Carriers. Tourism Management. 47. pp.
152-163.
Dosi, G. And et.al., 2015. Fiscal and monetary policies in complex evolving economies.
Journal of Economic Dynamics and Control. 52. pp. 166-189.
Fazzari, S.M., Morley, J. and Panovska, I., 2015. State-dependent effects of fiscal policy.
Studies in Nonlinear Dynamics & Econometrics. 19(3). pp. 285-315.
Feenstra, R.C., 2015. Advanced international trade: theory and evidence. Princeton
university press.
García-Nieto, A.P., and et.al., 2015. Collaborative mapping of ecosystem services: The role
of stakeholders׳ profiles. Ecosystem Services. 13. pp. 141-152.
Groza, M.D. and Ragland, C.B., 2016. Marketing Challenges in a Turbulent Business
Environment: Proceedings of the 2014 Academy of Marketing Science (AMS) World
Marketing Congress. Springer.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford
University Press, USA.
Hovenkamp, H., 2015. Federal Antitrust Policy, The Law of Competition and Its Practice.
West Academic.
Jeannerat, H. and Kebir, L., 2016. Knowledge, resources and markets: what economic system
of valuation?. Regional Studies. 50(2). pp. 274-288.
Jennings, C., 2015. Business, Environment and Society: Themes and Cases. Journal of
Energy & Natural Resources Law. 33(2), pp.178-183.
Krempel, L. and Plumper, T., 2015. INTER NATIONAL DIVISION OF LA BOR AND
GLOBAL ECONOMIC PROCESSES; AN ANALYSIS OF THE INTERNATIONAL
TRADE IN AUTOMOBILES. Journal of World-Systems Research. 5(3). pp. 486-499.
Mellahi, K. and Frynas, G., 2015. Global strategic management. Oxford University Press.
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Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment
in delivering business performance. International Journal of Production Economics.
171. pp. 241-249.
Uehara, T., Nagase, Y. and Wakeland, W., 2015. Integrating Economics and System
Dynamics Approaches for Modelling an Ecological–Economic System. Systems
Research and Behavioral Science.
Wallace, H., Pollack, M.A. and Young, A.R. eds., 2015. Policy-making in the European
Union. Oxford University Press. USA.
Online
Patel, N., 2012. HP-Company study. [Pdf]. Available through:
<http://www.slideshare.net/NakulPatel/hp-quick-facts>. [Accessed on 19th February, 2016].
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