Business Environment: Types of Organisations, Stakeholder Objectives, and Economic Systems

This article provides an overview of the business environment, including the types of organisations and their purposes. It also discusses the responsibilities of Primark as an organisation and the strategies employed to meet them. Furthermore, it explores the economic systems operated in Cuba, the United Kingdom, and China.

Business Environment

Introduction:
Business environment includes all the surrounding of the business that affect their functioning
and behaviour. This unit focuses on the study of various factors of the business environment that
leads to change in the behaviour of the business accordingly. This unit focuses on discussion of
the type and purpose of the organisations in UK. Further, it discusses about various stakeholders
that are associated with the organisations and the responsibilities of the organisations towards
them. It also discusses about market forces like demand and supply and how they affect the
decisions of the organisation. This unit also throws light on the perspective of change in demand
and supply on pricing. Business environment of the organisation is formed by global factors that
will be discussed in this unit briefly. The last part of this unit discusses about the impact of EU
legislation on UK based businesses.

Task 1
1.1 Identify the purposes of different types of organisation.
Not all the organisations in the country work similarly. They have the categories according to
various factors. One of the factors is the ownership of the organisation. According to ownership,
organisations have been divided into various categories. Some of them are discussed below:
1. Limited company: Limited companies are owned by shareholders. Private limited
companies do not offer their shares to public while public limited company offer the
share to the public also. For example: Brakes group it’s a UK based food company and it
provides food to the local people.
2. Sole traders: Sole refers to single. This suggests that sole traders are the organisation run
by single owner. These organisations function generally at small scale. For example:
Portlock and company which provides it’s customer accounts related advice and helps to
achieve business and financial goals and objectives.
3. Co-operatives: The people from the public associate and form the company for serving
the public only. (Adekola and Sergi, 2007)
4. Franchise: It is the type of organisation in which, owner company grant permission to the
local company to run their business in that area.
5. Partnership: It is the form of organisation where two or more than two people share the
liability and profits of the organisation and act as partners.
For example: John lewis partenership PLC provides happiness to all their members and
satisfy their daily needs.
This case is about a private limited company known as, Primark. Primark is a retailer company
that serves its customers by acting as the mediator between the manufacturer and the customers.
Purpose: Primark is a retailer in fashion business that does not produces the products with
themselves but depends on manufacturers for that. The core values of the company believe in
ethical framework of the business. These core values are

1. It is a people oriented organisation
2. Focuses on maintaining the ethical work environment for the employees.
3. They are not only responsible for their employees but focuses on educating the workers
working with their manufacturers.
These ethical practices by the company defines it pure objectives. Corporate Social
Responsibility is the area of work that has also been focussed by the company. (Aras and
Crowther, 2011)
Type of organisation Company name Purpose
Public limited company NHS NHS is incorporated for identify
excellent high school students. This
organisation identify those brilliant
students who are perfect in different
sectors are like scholarship, leadership
and services. Worldwide more than one
million students can participate in NHS
for improve their activities in school
time. It provides healthcare services to
every person it can reach. Services like:
emergency and infectious diseases
treatment which is available free of costs
including visitors. In this organization
amount contributed by national
insurance and it’s major is funded from
general texation
Charity The British Red Cross This charity firm is purely into provision
of health and support to the population
of Britain. The company aims at
providing help to the people in
emergency. The values of the company
suggest that they are courageous,
dynamic and compassionate towards
helping others.
Co-operatives Clydebank co-
operative society
Clydebank cooperative society
registered in Scotland. The main purpose
of it is provide food to consumer. It
operates six food store. Clydebank
develop all their stores to attain its
objective. It attracts more consumer
towards their food. They want to
enhance and promote their food product

in a worldwide. Its official
unemployment rate is 6 % however 20%
of the population are employment
deprived. Clydebank owes its origin as
wel as mushrooms to ship.
1.2 Describe the extent to which Primark meets the objectives of its different stakeholders.
Stakeholders: Stakeholders are the supporters who support the business to exist. They are
associated with the organisation in one or the other form. The practices of the organisation affect
its stakeholders and vice versa. This is the reason they are very important for the functioning and
existence of the organisation. Primark for their stakeholders takes the responsibility of it’s
workers. To keep working with their stakeholders they maintain the financial condition.
Types of stakeholders:
As far as Primark is considered, this organisation has internal as well as external stakeholders.
Internal stakeholders are the one who are closely associated with the organisation like
shareholders and the employees. The external stakeholders are associated relatively less closely
to the organisation. These consist of customers, suppliers and workers in the case of Primark.
These stakeholders have the give and take relationship with the organisation. Stakeholders like
shareholders provide funds to the organisation and organisation provides the profit in return.
Therefore, both the parties remain in benefits. All the stakeholders have different needs and
Primark has different responsibilities towards them. (Avadhani, 2010)
Stakeholder’s objectives that needs to be met:
1. Shareholders: Shareholders are the stakeholders that are most closely associated with
the organisation. Shareholders of Primark have some of the shares of the company with
them. They are the internal stakeholders.
Objectives: Shareholders are the one who invest capital in the organisation and the
organisation needs to return appropriate amount to them. (Cherunilam, 2010)

2. Employees: The people who work in different department of the organisation are known
as employees. The company owners and Board of Directors recruit these employees.
Every process of the organisation requires the man force to be conducted.
Objectives: Employees work for the organisation and want job satisfaction in return. It is
the responsibility of the Primark to provide proper working environment and job
satisfaction to the employees.
3. Suppliers: Primark is the organisation that depends on manufacturers for the products.
They do not manufacture the products themselves. These manufacturers act as the
suppliers for Primark.
Objectives: Primark is responsible for making fair deals with the suppliers. The contract
should be signed with the suppliers and the processes should be conducted accordingly.
4. Customers: Primark is the retail organisation and focuses on customer’s satisfaction.
Customers are the end users of the products sold by Primark. They are the one who drives
the revenue of the organisation.
Objectives: Customer needs satisfaction from the product. They expect from the
organisation to provide them with the products that are worth for the amount they are
paying. Primark have to satisfy the customers with their product specifications and the
value. (Ditlev-Simonsen and Wenstop, 2013)
5. Workers: Workers are the people who work with the manufacturing companies that
supply the product s to Primark.
Objectives: Primark is responsible for the safety of those workers.
To conclude, it has been observed that various stakeholders give their inputs in different ways in
the organisation. Therefore, they expect different returns from the organisation. Both of the
parties are important for each other.

1.3 Explain the responsibilities of Primark as an organisation and the strategies employed
to meet them.
Every organisation has some of the responsibilities associated with them. The organisation is a
single entity that is made by efforts of so many people. These are known as stakeholders of the
organisation. The organisation is not only responsible for those stakeholders but they need to
consider some of the factors of society in their functioning. The major responsibilities of the
organisation involve management of conflicts, stakeholder’s interest and satisfying the objectives
of the stakeholders associated with the organisation.
There major types of responsibilities are:
Some of the legal factors are also associated with the responsibilities of the organisation.
Organisations need to make the policies considering all the legislations that include
discriminatory Act, environmental Act etc. Ethical considerations are also important for the
organisations to perform their responsibility tasks. (Friedman and Miles, 2006)
Responsibilities of Primark:
1. Towards stakeholders: All the stakeholders like shareholders, employees, customers,
suppliers etc have different objectives to be associated with the organisation. Primark has
the responsibility to fulfil those objectives in return.
2. Legislations: Organisations in UK are bound to make the policies according to the legal
legislations framed by the government. It is the responsibility of Primark to frame all the
policies considering the legislations of the country.
3. Towards society: Society is major part to be considered. All the organisations have the
main responsibility towards the organisations. CSR is the most important practice that
focuses on returning something to the society by the organisations. Primark engaged in
many CSR activities to return to the society. (Hill, 2008)
Strategies of Primark:
Primark is the company that sticks to its values and beliefs in order to be responsible. The first
strategy of Primark to be responsible towards its employees is determined by its values. The

value of the company suggests providing fair and equal treatment to all the employees. Another
strategy of the company is to be ethical in practices and behaviour. The company is engaged with
many CSR activities in order to fulfil their responsibilities towards the society. The HER project
of the company focuses on educating the women workers of the company about the important of
maintenance of health and hygiene. This education can be transferred to the families of these
workers and in turn benefits the society. (Businesscasestudies.co.uk, 2016)

Task 2:
2.1 Different countries operate different economic systems to attempt to allocate resources
effectively. Research and explain the type of system operated in the following
countries and reasons why you think they follow these systems.
 Cuba
 United Kingdom
 China
Every country adopts a pattern of economic system in order to allocate the resources. Economic
system of the country is the framework that determines the pattern of the resource allocation and
many of the decision making process of the organisations. There are majorly there types of
economic system that have been discussed below by the reference of different countries:
1. Cuba: Planned economic system
Planned economic system is also known as command economic system as it based on the
command of the central power of the country. All the decisions regarding the production
of an organisation is taken by the government agency. Cuba is the country with this type
of economic system because the central union of the country controls most of the
organisations in Cuba (Rosefielde, 2013). It is the country with communist society. 71%
of the business of the country is owned by the public sector and private sector contributes
much less in the business economy. It’s housing and transportation costs are cheaper than
other countries and it have some subsidies in education, healthcare and food stuff. It plays
a important role in exports and imports of goods. It engage in importing goods like

petroleum, goods and machinery and in exporting sugar, coffee and medical products.
There are several advantages and disadvantages of this economic system:
Advantages Disadvantages
 Equal distribution of resources
without duplication.
 Economic power can be used to
achieve the social and political
objectives of the country.
 Data collection and planning
process is difficult.
 Limited profit leads to limited
improvement.
2. United Kingdom: Mixed economy
It is the economic system that deals with involvement of business as well as the
government. The system is partially commanded by the government with limited
interference. M&S is the company that is partially affected by the government in framing
the general policies of the industry while the organisation like NHS are government
owned organisations but coordinate with many private companies to achieve the
objectives. The British pound is one off the largest reserve currency. The economic
system of UK is a big private other than a few key sectors like health care and education.
In united kingdom taxes and social security rates are medium in of other countries. In
other countries these rates are quite high. its advantages and disadvantages associated
with the system have been discussed below: (Kwan, 2013)
Advantages Disadvantages
 Allow the business to take their
decisions.
 Limited interference of the
government ensures that companies
are considering the societal benefits
also.
 Customer demands and efficient
allocation of resources can be
concentrated.
 Consideration of government
policies may limits the innovation in
the organisations.
3. China: Free or transitional economic system
Free market is the economic system that supports the deals between the customers and
the producer without any interference of the government. The factor that only affects the
deals would be demand and supply of the product. In this case, all the resources are

controlled by the private organisations. China is the largest manufacturing economy it
engage in the business of manufacture lots of products like mobile phones and products
made by plastic. It is also a world’s largest exporter and importer of goods. The economy
of china also plays important role in a international trade. In 2001 it became a member of
world trade organization. it has a huge purchasing power in comparison to other
countries. It has It has been identified that 70% of the GDP of China is due to the
contribution of the private owned companies. (Liu, 2009) The market of China is not very
free but it is moving towards it and that is why it is said to be under transitional economic
system that is moving from command to free economy.
Advantages Disadvantages
 More chances of innovation in
products.
 Producers with high quality
products earn more.
 More prone to monopolistic
situations in the industry
 Unequal distribution of resources.
2.2 In the UK the Chancellor of the Exchequer and the Bank of England plays a significant
role in regulating the economy. The tools used by them are referred to as Fiscal and
Monetary policies respectively.
You are required to assess the impact of fiscal and monetary policy on the following type of
businesses
a) Farming
b) Housing
Political environment and change in UK government policies have their impact on the businesses
in UK. Different policies affect the business in different ways.
 Chancellor of the Exchequer: Chancellor of Exchequer is the head of the treasury in UK.
He is responsible for all the financial and economic matters of the country.
 Bank of England: It is the central bank of UK that is responsible for maintaining the
stability in economy of the country.

 Fiscal policy: Fiscal policy deals with the tax rates and the government spending of the
country. It is the policy that provides tools to the government to make the balance
between the spending and earning of the government in the country. The variation in the
intake and expenses of the money by the government affects the functioning of the
organisations in that particular country. (McSmith, 2016)
 Monetary policy: Monetary policy is the framework that determines the situation of flow
of money in the country. It is related to the change in interest rates that affect the
borrowing and lending of money. (Peng, 2009)
Impact of these policies on businesses:
Farming:
Farming is the business of agricultural products. Most of the farming business takes place on
rural areas of the country. In UK, 69% of the total land of the country is used for agriculture
purposes and engage 1.5% of the country’s workforce.
Impact of monetary and fiscal policy on farming:
Expansion of the fiscal policy means fewer intakes of the taxes by the government than the
spending by the same. This affects the businesses like farming in positive way. as the
government spending increases, it leads to reduction of tax rates and higher income of the
people. It also helps in increasing the profit after tax of farming business.
As far as the monetary policy is concerned, relaxation in the policy reduces the interest rates and
increases the liquidity of the money in market. Low interest rates results in easier credit facilities
to the farmers as most of the corporate banks also reduces their interest rates. Easy availability of
loans facilitates the farmers to invest more in business. (Morgan, 2005)
Housing:
Contraction in the fiscal policy by the government results in increase tax rates and low
government spending. This somehow affect the housing purchasing power of the people and
affect the housing industry in negative way. Increase in interest rates results in tightening of

monetary policy in the country. This leads to decrease in money flow in the market and makes it
difficult for the people to take mortgage loans. Since, the housing industry depends on mortgage
loans, as buyers cannot afford to pay such big amount without taking loans. Increase in interest
rates indirectly reduces the housing business.
(Phillips and Freeman, 2010)
2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the
activities of a selected organization.
Every organisation needs a motivation to innovate and perform better. Competition is one of the
factors that force the organisations to compete with each other. Competition allows the
companies to come up with improved products. Competition in any industry raises the
attractiveness of the industry. Competition policies in UK stimulate the organisations to conduct
fair practices in the business with improvement in the products simultaneously. The main aim of
this policy is UK is to create health competition environment among the organisations. Some of
the competition polices have been discussed below:
1. Privatisation: It refers to the policy related to transfer of ownership.
2. Abuse of market monopoly power: This is the type of competition policy that focuses on
reduction of the monopoly power from the country, restricting the merger and acquisition
of the organisations. (Rosefielde, 2013)
3. Regulation of anti-competitive behaviour: Anti-competitive behaviour refers to the
activities of the organisation that limits the competition in the industry. These activities
have been penalised by the government.
4. Reduction in import tariff: This practice results in reduction of the tariff on important that
supports import of the product by the organisations at cheaper rates.
5. Market liberalisation: Liberalisation in the market refers to the introduction of policies in
the industry that are facing the monopolistic competition.

6. Collusive behaviour: This occurs when firms mutually fix the prices of the products. This
helps the companies to make higher profits by exploiting customers. This is illegal
practice under law and needs to be checked by OFT.
Competition policy regulators in UK:
The competitive policies need to be regulated by some of the regulatory authorities in UK. These
authorities have the responsibility to investigate about any of the illegal practices related to
competition. Some of the regulatory authorities have been discussed below:
 Office of fair-trading: OFT helps in investing the conditions of monopoly in the
industries and take the corrective actions to them.
 Competition commission: This regulates all the policies of the competition in the country.
Other main regulators are:
 OFTEL for the telecommunications market, and especially BT-- It defines the policies of
telecommunications market.
 OFGAS for the gas industry-- This regulator provide guidelines of gas to industry. Which
define limits and scope of it.
 OFWAT for water-- It provide guidelines for water.
 OFFER for electricity-- The OFFER regulator states the policies for electricity.
 OFCOM for TV, radio and video-- It is published in 11 december, 2011. It set and define
regulatory rules for using TV, radio and video.
Examples:
The industry that is facing monopoly in UK is the industry of supermarket. It has been observed
that few of the firms like Tesco, ASDA and Sainsbury were dominating the industry. This
monopoly was restricted by OFT decision of stopping Tesco from purchasing Safeway. This

practice supported so many small retailers like Aldi and Lidl to raise their businesses in the
industry. (Worthington and Britton, 2006)
Task 3:
3.1 Explain how pricing and output decisions of businesses is determined in the following
market structures.
Market structure is the term that determines the structure of the market according to the level of
competition existing. This structure has a great impact on the pricing and output decisions of the
organisation. The structure of the market differs from difference in the industry because it is not
necessary that all the industries in a country have equal level of competition in them. The level of
competition can be identified by the number of existing firms and the barriers to the entry of the
new firms in the industry. (Adekola and Sergi, 2007) These are the factors that determines the
attractiveness of the industries and hence the level of competition in them. Some of the market
structures have been discussed below with the examples of various industries from UK:
Perfect competition:
Description Example of industry Impact on pricing and
output
It is the situation, where many
number of buyers and sellers deal
with each other in the market. In
this situation, products are
homogenous in nature and are not
In UK, the major industry that
falls under this category is
agricultural industry. This is
because the industry has
homogenous products. The
Firms are price takers in
this case because they do
not have any control over
the price. Due to
homogeneity in the

much differentiated. This is the
reason why one of the sellers
cannot dominate over others for
long period. The entry and exit of
the new firms is also not much
difficult and thus this industry has
a fierce competition among the
organisations.
brand value and the image of
the organisation have no great
effects on the choice of the
buyer.
product, buyers do not
have preferences for the
firms.
Monopoly:
Description Example of industry Impact on pricing and
output
It is the situation where a
single firm rules over the
whole industry. The
competition is nil under this
condition. As far as the entry
and exit barriers are
concerned, they are very tight
in this case.
Network Rail is the only one
that is responsible for
upgrading and maintenance of
UK rail network.
In this situation, almost all of
the products supplied in the
industry are formed and
produced by one or two of the
big companies. They act as the
price makers as they can
control the supply in the
market. The product formed
by them is so much
differentiated that other
products cannot be the
substitutes for them.
Oligopoly:
Description Example of industry Impact on pricing and
output
It is the situation where small
number of large firms
dominates the market. The
firms that are leading in the
industry generally produce
either similar or identical
products. There are significant
barriers in the industry.
In UK, the industry, which is
largely affected by this
situation, is supermarket. The
firms like Tesco, ASDA and
Sainsbury are leading the
industry with the variety of
products. There are lot of
other small retailers that
contributes in the industry but
some of the big firms
dominate the industry.
Price of the products remains
stable. Some of the price
making power remains in the
hand of the leading firms.
Attaining competitive
advantage by brand loyalty is
very essential to compete with
the competitors.
Duopoly:

Description Example of industry Impact on pricing and
output
Duopoly is the condition
where exactly two firms lead
the market. Even when all the
small businesses are present
but both the leading business
fights amongst themselves.
Airline industry in UK is
facing the same challenge.
Airbus and Boeing are two of
the aircrafts that are
competing with each other.
The businesses that are
dominating the market act as
the price makers and control
the supply as well.
3.2 Illustrate the way in which market forces (demand and supply) shape organisational
responses using a range of examples.
Market forces are those factors of the market that affect the organisation’s decision of output and
pricing. Demand and supply are the two main forces that affect the organisational decisions.
Study of both these factors let the organisation know about the situation and positioning of the
product in the market. (Aras and Crowther, 2011)
Supply: Supply is the amount of product or services that a producer is willing to sell in the
market. It is related to the willingness, and ability of the producer as well as some of the other
factors like production rate, logistics etc. As far as the law of supply is concerned, it argues about
the relationship between supply and demand as well as about the relationship between supply
and price.
Supply curve: It is the curve that identifies the change in supply with the change in price and
quantity of the product.

(Investopedia, 2016)
The above curve suggests that as the price and quantity of the product is increasing, there is a
simultaneous increase in the supply. There is a direct relationship between the price and supply
of the product. As the price of the product increases, producers start supplying more of the
product in the market to generate more revenues. They decrease the supply of the products with
declining prices to increase the availability of the high price products in the market. (Avadhani,
2010)
Supply demand curve:
(Investopedia, 2016)
Schedule states the price, demand and supply of coca cola.
Price (PU) Demand Supply
10 100 10
20 50 50
30 10 100
The above diagram has been made following the schedule. It states that as the price of coca cola
rises, it leads to decrease in the demand of the product. It has been observed that price and supply
have similar increase.
This curve suggests the relationship between the supply and the demand of the product. It is
identified that both are in inverse relationship with each other. The equilibrium is the state where

company earns the maximum profits as the demand and supply complements each other at this
point. (Cherunilam, 2010)
Demand: Demand is the willingness of the people to buy the product. It is the amount of product
that is required by the buyers in the market. Demand of the product can be varied by many
factors. Some of the factors are:
 Choice of the customer
 Change in the culture
 Technological change
 Change in the price
 Purchasing power of the customers
The law of demand suggests that as the price of the product increase. The demand of the product
decreases. This results in decline in the purchase of the product.
Demand curve:
It is the curve that shoes the relationship between the demand and the price of the product.
(Investopedia, 2016)
The slanting line in the curve shows the inverse relationship of the demand and the price of the
product.

This suggests that it is very necessary for the organisations to research out the effect of demand
and supply of the products. The study of demand and supply affect the pricing of the products.
Organisations like McDonalds earn profits because of the market research they do. They are one
of the businesses that supply the products according to the demand to restrict overstocking and
its cost. (Mcdonaldsindia.com, 2016)
3.3Judge how the business and cultural environments shape the behaviour of a selected
organisation.
Culture in an organisation: Culture of the organisation involves the beliefs and values of the
organisation as well as the changes made according to the external cultural environment of the
business.
Any organisation or business changes its behaviour according to the circumstances. This is
because the behaviour of the business organisation is majorly affected by the change in the
internal and external environment. Organisations need to behave accordingly to compete with the
competitors in the market. Restriction to change in the organisation can affect the business in
negative way.
Business environment of the organisation consists of many factors.
These factors include:
 Political environment
 Technological environment
 Social environment
 Economical environment
This can be explained by studying the effect of the environment on the organisation like Marks
and Spencer’s. The company is chosen because it serves the customers in UK as well as in whole
of the world. It is a retailer organisation that has its businesses in food and clothing. As far as the
political condition of UK is considered, it is very stable and hence supports the businesses like
M&S to grow. EU legislations also have some of the effects as UK falls under European Union.
It facilitates the company to trade freely between the countries that are the part of EU.

Economical condition of the country is also stable and people have very high purchasing power.
This also affects the company in positive way. M&S is the company that generally absorbs the
new technologies. As the competitors like Tesco and ASDA came up with the online business,
M&S also started the business online. This suggests that technological advancement in the
environment affect the company business and behaviour pattern.
(Corporate.marksandspencer.com, 2016)
Cultural factors or environment also plays a very important role in affecting the behaviour of the
business. Cultural factors involve:
Internal factors:
 Values
 Beliefs
 Organisational structure
External factors:
 Social behaviour
 Lifestyle of people
M&S is the company that have changed its collection of clothing from formal to designer just for
the sake of the cultural changes among the customers. As there was a change in the need of the
customer, company behaves accordingly.
Task 4:
4.1 Discuss the significance of international trade to UK business organizations.
International trade refers to the business across the borders. It is the factor that supports the
organisation to provide a broader platform for the business. International trade is important in
order to import and export the products. This contributes a lot in the country’s economy. More of
the exports from the country increase the revenue of the country. Every organisation want to
reduce the production cost of their product and thus this is important for them to extract the raw

materials from the cheapest possible place. This requires the organisations to do international
trade and building relations with the foreign countries. Some of the significance of international
trade for UK companies has been discussed below:
1. Large audience to serve: International trade allow the companies of UK for larger
exposure of the market of international countries. This enhances the business of the
company as well as its revenue and image. (Hill, 2008)
2. Reduction of production cost: Most of the UK companies try to import the raw materials
from the countries where it is cheaply and easily available. This in turn helps the
companies to decrease their production cost. McDonalds is the organisation that depends
on US for its onions and on Turkey for the dill pickles they use in their hamburgers. They
need to maintain the quality and standard of the product so; it is not possible for them to
make any modifications in the import deals of the raw materials. (Mcdonaldsindia.com,
2016)
3. World unity: International trade not only enhances the revenue of the businesses but also
supports the countries to make good relations with each other. Building of relations
results in unity of the world market. EU market is the single market that consists of 28
countries. UK is one of them. These countries are allowed to trade freely among
themselves with standard policies framed by EU legislations.
4. Financial business: If UK business organisation trade in the international market it may
increase its financial performance. At the time of ression in international trade which
reduce economic condition. At this stage UK business needs to develop freign trade for
stable the situation.
4.2 Analyze the impact of global factors on UK business organisations
The global factors are those factors that are related to the changes in the world environment that
affects the business. Many UK based companies are functioning outside the country and have
international trade relations with foreign countries. Any change in the policies and business
environment of the countries has great impact on the functioning of many of the multinational
firms of UK.

 International trade and UK economy: UK economy is very much dependent on the
companies that trade internationally. It is because UK has the mixed economic system.
Therefore, the economy of the country gets affected according to the change in the
environment of other countries that are involved in international trade with UK.
 Multiculturalism in workforce: Increase in international trade results in multicultural
workforce in the UK organisations. This has its advantages as well as disadvantages to
the country businesses. Multiculturalism supports diversity but somehow became the
reason of conflicts as well. (Kwan, 2013)
 Global growth: There are many global factors that affect the business such as,
competition, demand of product in other countries, imports and export duties etc. This
develops the risk in international trading. Protectionism is the policy that supports the
organisation who wants to do international trade by regulating the activities of fair trade
and competition between the two companies based at different location. World Trade
Organisation is the one that is responsible for ensuring that all the activities related to
international trade are conducting fairly and smoothly.
 Climate change: Business of companies that produce seasonal products get affected by
the change in climate of the place.
 Immigration: Immigration refers to the migration of people to live in foreign country.
Immigration of people in UK affects the businesses there. It increases the range of
customers for the companies as well as companies need to make innovation in the
products and their strategies to serve the diverse population.
 Technology: Modern technologies which are used by organisations are cost effective.
These upgraded technologies are improve production performance of the company and
reduce its cost as well. If companies are used these modern technology it assit then to
improve its performance in the market, also attract more costumer towars their product.
It has been observed that large number of imports and less number of exports in UK affects the
businesses and the economy of the country in negative way. This issue is because of the

competitive advantage of China and India having low labour cost. The import from these two
countries suppressing the international trade benefits of UK businesses. (Morgan, 2005)
4.3 Evaluate the impact of policies of the European Union on UK business organisations
European unions involve 28 countries in the union along with UK. It is the union having
legislations that is same for all the countries that are the part of this union. This facilitates these
countries to trade freely among themselves. The policies of this legislation have great impact on
UK businesses either in negative or positive way. They need to transect the currency in Euro by
contacting European money union before trading with any other country of EU. There are no
trade barriers between these 28 countries. Various policies affect the UK business and somehow
lead to BREXIT. (Peng, 2009)
The environmental policy: This policy suggests that there is similar trading environment for all
the countries under EU. This result in presence of standard environment for the countries to
trade with each other, this makes the competition fair.
Free movement labour legislation: This is one of the biggest reasons that most of the people
voted for BREXIT. According to this policy, UK government is not at all involved in the practice
of migration of people in UK work.
Child benefit for migrant workers: According to EU legislations, all the migrant workers have
the right to claim for child benefits even they are not living in that country.
EU liberalisation policies: This policy supported the UK businesses by import tariffs. According
to the policy, there is no custom tariffs charge for the local producers on the imports that are
coming from the countries of European Union. (Rosefielde, 2013)
According to one of the policies of EU, the merger of the two companies can only be possible if
the turnover remains below the certain amount.
Some of the policies of EU legislations supported the UK businesses while some were restricting
their growth. This is the reason most of the people have voted for BREXIT. BREXIT is the term
made from two words. These words are Britain and Exit. It refers to the withdrawal of UK from
the European Union.

Conclusion:
Business environment is very important subject to be understood in order to adapt the changes
and taking many business decisions. It is not the national but international environment of
business also affect the functioning and behaviour of the companies in UK. International trade is
a very important factor to enhance the businesses of the UK organisations. This is because most
of the multinational companies depend on import and export relationships. Many global factors
also affect the functioning of the businesses. UK is the part of EU, thus all the policies of EU
should be followed by the UK businesses. Some of the EU policies affect the UK businesses in
positive way while other became the reason for BREXIT.