Impact of Business Environment on Product Pricing

The assignment delves into the relationship between various aspects of the business environment and their impact on product pricing. It examines how elements like demand and supply dynamics, as well as different market structures, contribute to price determination. The analysis draws upon economic theories and real-world examples to illustrate these concepts.

BUSINESS
ENVIRONMENT
Student name: RaduTeodorCristea

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
1.1 Identifying four different types of organizations in UK........................................................3
1.2 Identifying the stakeholders of the organization and their objectives in the company.........4
1.3 Explaining various responsibility of the organization...........................................................5
2.1 Identifying the different types of economic systems.............................................................5
2.2 The impact of fiscal and monetary policy on business organization and activities of that
country.........................................................................................................................................6
2.3 Impact of competition policy and analyzing the competition act..........................................8
3.1 Different market structure and how market structure determine the price............................9
3.2 Way in which organizational responses are affected by the demand and supply and their
elasticity.....................................................................................................................................10
3.3 Way in which cultural environment and cultural diversity shapes the behavior of apple and
Samsung.....................................................................................................................................10
4.1 Importance of international trade.........................................................................................11
4.2 Impact of global factors on business of UK........................................................................12
4.3 Impact of different economic, business, rules laws of European Union on UK business...12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment is basically where business operates its functions. In this report, it
talks about the effects of EU on the business of UK. Even it focuses on the factors which
determine the price of products. Further, it emphasizes on the factors which affects the
regulations and laws which are made by the government. Lastly, it stresses on the political,
economical and technological environment which impact the UK business.
1.1 Identifying four different types of organizations in UK
There are different types of organizations whose objective, mission and vision are
different from other organizations. The major 4 types of organizations are:
 Private organization- Main objective of private organization is to earn profit. They are
interested in creating competitive advantage in the industry in which they are operating
their business. For example, Apple and Samsung (Yew Wong and Aspinwall, 2004).
 Public organization- These organizations generally provide government services. This
includes military, police, etc. All the funding decisions are taken by the government and
they are responsible for the operations which are taken by these types of organizations.
 Charity organization- The main purpose of charity is to provide benefits to public
without seeing their interest. They generally work with the help of funds which are being
raised by the big organizations (Klapper, Laeven and Rajan, 2004).
Basis Apple Samsung
Vision The vision of Apple is to
become technologically
advanced as compared to its
competitors.
The vision of Samsung is to
be innovative in the product
and to inspire the world by
its technologies which it is
using in its products.
Mission Its mission is to design the
technologically upgraded
products. Besides this, it is
ranked at first in the iPods
and iTunes online store.
The mission of Samsung is to
become the leader in terms of
technology in the emerging
market and building a strong
brand in the eyes of
customers.
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Goals The goal of Apple is to
modify the commonly used
proxies and even being
accurate in achieving
accuracy in the software
projects.
The current goal of this
organization is to reduce the
gas emission by 50% to save
the environment.
objectives The main objective of
Apple is to improve the
accuracy of software
products.
The current objective is to
focus on ethics and
maintaining its standards
while operating its business
in the market (Mountford
and Uhlig, 2009).
1.2 Identifying the stakeholders of organization and their objectives in company
Stakeholders are the one who influence the decision making process of organization and
are affected by the mission and vision which is made by company. Every stakeholder has
different objective and interest in the business. The stakeholders are:
 Owners- In case of Apple, main objective of their owner is profit and growth of the firm.
They are interested in the profit which company makes by selling their product in the
market. Firm meets the interest by giving them profit and through working effectively so
that it can grow in the future (Schmitt-Grohé and Uribe, 2007).
 Employees- Their objective is job security and job satisfaction from Samsung. Their
interest is fulfilled when Samsung pays workers their salary which is deserved by them.
Even this organization provides timely benefits to keep the employees motivated.
 Government- Objective of government is to see whether both apple and Samsung is
paying full taxes or not. Company fulfils its interest by following all the taxes and
through paying taxes on time (Palmer and Hartley, 2008).
1.3 Explaining various responsibilities of organization
Organization is responsible for many things when it is operating in the business
environment. The major responsibility of Apple and Samsung is to meet the interest and
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objectives of stakeholders. As they are the important part of company so, the firm is responsible
for fulfilling the needs and demand of different stakeholders. Organizations are required to
operate their business ethically. Like in case of Samsung and Apple, they are big rivals. So, they
have to compete ethically without harming the public interest as well as without taking unethical
means for creating profit (Bitzenis and Nito, 2005.). Further, they are also responsible towards
the environment in which they are operating their business. Samsung goal is to reduce the
emission which is polluting the environment. This helps in creating a positive image in the minds
of public which further assist company to achieve profitability. Another responsibility of
organization is to build a strong relationship with the public. Apple has fulfilled this
responsibility as it created a strong relationship with the public and this has led to create loyalty
among its customers. Further, the economic responsibility for organization is to provide profit as
the profit of company assists in enhancing the economic condition of country. Even Apple and
Samsung also help in raising the standard of people which in turn also affect the economic
system positively. Economic responsibility of both the organizations is to entail technology in
people so that their standard of living can be enhanced. Very crucial responsibility of both the
organizations is to cater the social needs of public. It is very important for Samsung and Apple to
make the products according to the values and beliefs of consumers. Even it is the responsibility
of business to promote its products without harming the religious belief of any consumer. These
are the basic responsibility of Apple and Samsung which they have to fulfill while operating
their business in the economy (Björklund, 2011).
2.1 Identifying different types of economic systems
There are mainly four types of economic system which persist in the economy. They are
as follows:
 Traditional economic system- The products are produced according to the nature and
belief of human resources which are residing in that country. This economic system is
followed in that country whose major profession is farming. The resources are allocated
by the authority which is governing that particular economy.
 Command economy- The control is with the centralized government and all the resources
are allocated by them like in case of China. Market economic system- The government has no control on the important sources and
the power is in the hands of organization.
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 Mixed economic system- Some power is in the hands of people while the most important
resources are controlled by the government (Welford, 2013).
Resources Command economy(China) Mixed economy(UK)
Water In this economy, the
complete power is in the
hands of government. So,
government distributes the
water according to the nature
of organization. Their supply
is in the hands of
government.
In case of mixed economy,
this resource is not controlled
by the government as this is
under the hands of
organizations.
land No organization or the
people can buy land without
consent of the government.
The owners of land in China
are the government (Chi,
Kilduff and Gargeya, 2009).
It is not controlled by the
government as the public can
freely trade off the land with
other people.
Transportation The transport facilities which
are given to public is also in
the hands of government as
the profit which arises from
it is taken by the government.
In this case also,
transportation facility,
education, etc. are under the
hands of government. This is
under them because they can
equally distribute the
resources (Bartolini, 2005).
2.2 The impact of fiscal and monetary policy on business organization and activities of that
country
There is a huge impact of both monetary and fiscal policy on the economy of country. In
case of fiscal policy; the government changes taxes rates which affect the demand of public. Like
in UK, it increased VAT taxes to stabilize the purchasing of government. Change in fiscal policy
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directly affects the spending as well as the behavior of public. Monetary policy is basically
controlling the interest for maintaining the price stability in country. In case of UK, it has set the
basic rate which can control the inflation in country. These all directly impact the public which
further affects the activities of business (What's the difference between monetary policy and
fiscal policy?, 2015).
Policy type Advantages Disadvantages Conclusion
Taxation Fiscal It is advantageous
for the
organization like
Apple and
Samsung as the
people have more
money to spend on
the products made
by them.
Like in case of
VAT which is
charged by the
government, it
increases the
prices of
services which
are not good for
people. Lastly,
because of this,
company like
Apple and
Samsung has to
suffer the loss.
It can be said
that UK fiscal
policy is
advantageous
for companies.
Interest rates Monetary policy Even the interest
rate is low then it
can be said that
people saving is
more which is
beneficial for the
apple and Samsung
company. If their
saving is more,
then they can
highly spend on
It is not
disadvantageous
for the company
but the UK can
later suffer from
the case of
inflation (Hix,
and Høyland,
2011).
It is beneficial
for the apple
and Samsung
organization.
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their luxury goods
which will result in
profit for the
business.
Quantitative
easing
monetary It can be said that
increase in money
supply is
controlled by the
central bank. The
effect is positive as
if there is huge
money supply that
means purchasing
will also be more.
People will less
invest in the
shares of Apple
and Samsung as
the money is
supplied in the
economy in
large.
It can be
concluded that,
it is beneficial
for the growth
of business of
Apple and
Samsung.
Exchange rates monetary In case of UK, the
value of money is
more. So it is
beneficial for both
apple and the
Samsung
company. They
will enjoy more
profits as compare
to other countries.
If the customer
who is buying
the product is
price sensitive
then he will not
buy the product.
In case of these
companies, all
customers are
loyal so they
will buy the
product even if
exchange rate is
high or less
(Wallace,
Pollack and
Young, eds.,
2015).
 Taxation- It is advantageous for the organization like Apple and Samsung as the people
have more money to spend on the products made by them. Like in case of VAT, which is
charged by the government, it increases the prices of services which is not good for
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people. Lastly, because of this, company like Apple and Samsung has to suffer the loss. It
can be said that UK fiscal policy is advantageous for the firms.
 Interest rates- Even if the interest rate is low then it can be said that people’s saving is
more which is beneficial for Apple and Samsung. If their saving is more then, they can
spend on their luxury goods which will result in profit for the business. It is not
disadvantageous for company but UK can later suffer from the case of inflation (Hix and
Høyland, 2011). It is beneficial for Apple and Samsung.
 Quantitative easing- It can be stated in terms of increase in money supply. It is controlled
by the central bank. The effect is positive as if there is huge money supply that means
purchasing will also be more. People will invest less in the shares of Apple and Samsung
as the money is supplied in the economy in large. It can be concluded that it is beneficial
for the growth of business of Apple and Samsung.
 Exchange rates- In case of UK, value of money is more. So, it is beneficial for both
Apple and Samsung. They will enjoy more profits as compared to other countries. If the
customer who is buying the product is price sensitive then he will not buy the product. In
case of these companies, all the customers are loyal. So, they will buy the product even if
exchange rate is high or low (Wallace, Pollack and Young, eds., 2015).
2.3 Impact of competition policy and analyzing the competition act
Main aim of competition policy is to safeguard the interest of consumers and to
encourage company to make innovation in their product. Because of this competition policy,
Apple and Samsung are competing ethically and are improving the quality of product to attract
the customers. Several competition acts are made by the European Union for the welfare of
consumers. These are as follows:
 Competition act 1998- It states about not using the dominant position illegally and
restriction on unethical business practice. Like in case of apple, it safeguards other
competitors by controlling the abuse of dominant position of Apple. The firm can be safe
if it can prove that the actions which it has taken are in interest of public. It can be
concluded that Apple has to take the step carefully against its other competitors.
 Enterprise act 2002- This act has made several laws that are related with the functions as
well as mergers and even companies which are engaged in anti- competitive practices. In
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case of Samsung, it was wrong to file case against Apple and even it took the unethical
step. This act helps in overall safeguarding of the competitor’s interest. Even it helps in
protecting the interest of the consumers (Zielonka, 2006). It deals in many things, but
besides this law, there are several unethical practices which are going on in this country.
This act is perfect if it is regulated by the government effectively.
 Office of fair trading act- It states consumer protection and the competition law. It is very
important for both Apple and Samsung to follow this act as it is regulated by the
government of UK. It assists in safeguarding the interest of consumers by the fraudulent
practices of company (Baldwin, Wyplosz and Wyplosz, 2006). It has no opposing
arguments. It is very important for the consumers and it has proved to be very useful for
the citizens of UK.
3.1 Different market structure and the way in which market structure determines the price
The different types of market structures are as follows:
Monopoly, one company dominates the market. All the prices of goods are set according
to that of particular seller. One player is dominant. The best example is Apple in case of IOS
mobile. In oligopoly, there are small numbers of firms and all of them control the market. The
entire firm sells the same product. The organizations are more than 3 in this market. Examples
are UK Energy sector, Grocery retail, Broadband. In duopoly, there are 2 firms, that is, two
dominant players in the market. The examples are Boeing and Airbus in commercial Airlines. In
perfect competition, there is no barrier to entry. Many numbers of producers and customers are
present in this market structure (Palmer and Hartley, 2008). The best example is Private tuitions.
From this, it can be said that market structure determines the price of product. In case of
monopolistic market where there are many buyers and one seller, organization can quote high
price for the product. It is known that the consumer has no choice. In case of oligopoly where
there are few firms and they are responsible for quoting the price of the product, they will set the
price in which all of them are having profit. In duopoly, there are two firms, so, the price of
product will be high because they know that they are only the one who is selling this type of
product in the market. Market structure and supply and demand both are responsible for quoting
the price of product (Welford, 2013).
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3.2 Way in which organizational responses are affected by the demand and supply and their
elasticity
Figure 1: Demand and supply of complementary goods
(Source:Bitzenis, and Nito, 2005)
Figure 2: Demand and supply of substitute goods
(Source: Hix and Høyland, 2011).
Pricing, cost control and all other related factors depend upon the major forces which are
demand and supply of the product. In case of apple which is a huge brand, it has set its price high
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and the consumers are willing to buy the product. This is because; the individuals who are
willing to buy this product are more and the demand is high. In case of cost control, Samsung is
operating on the economies of scale as it is producing the products for the people of all sectors.
So, it is controlling its price by manufacturing the mobile phone which is needed by low income
group. Even the collaboration is also done because of the demand and supply in the market. Most
of the organization collaborates with its competitors because the demand is less and the supply is
more. The most famous example is of Cadbury and flake which was collaborated. The major
forces which govern the response are demand and supply in economy (Hix and Høyland, 2011).
3.3 Way in which cultural environment and cultural diversity shapes the behavior of apple and
Samsung
Companies always manufacture its products and services according to the needs and
requirements of customers. Like, individuals are becoming innovative and techno savvy; so both
the organizations are attracting customers on the basis of technology to increase their market
share. Because of the emerging issue of global warming, all companies are focusing on reducing
emission as this will help the environment as well as it will create a positive image in the minds
of users. This has recently planned by Samsung. As more and more gadgets are introduced in the
market, companies are using these technologies to make their product better. All these things
impact the behavior of organization (Zielonka, 2006). Cultural behavior and diversity also affects
the advertisement of company. Both the firms have made their advertisement by targeting
different markets. Apple has targeted high income class customers and Samsung has made its
products for all the target market customers. According to the culture of country, the
organization makes its advertisements. Further, in case of Samsung, if the mobile is made for
high income people then they will emphasize on the feature which is new in the product. But,
apple makes advertisement for the high income customers only.
4.1 Importance of international trade
Importance of international trade is as follows:
 Comparative advantage - There are many advantages because it is beneficial for the
organization as well as for the consumers who are buying the product. It has increased the
living standard and also helped the backward economy to grow. The disadvantage was
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because of the reason that international trade lost its own history and is now transformed
to the new one.
 Balance of trade and payment- It has benefited UK market a lot. Because of this trade, it
was beneficial for the retailer to trade outside the country. Even UK became famous by
the international trade (Yew Wong and Aspinwall, 2004). There is no disadvantage
related to balance of payment.
 Economic growth- The economy was benefitted and because of the international trade,
many traders’ sold their products in the UK market and this popularity gave a chance for
the Olympics to be happened in the nation as international trade allows all the major
events to be held in this country. International trade helped the economy to become
strong. Its impact was positive on the nation as well as on citizens but the fast changing
economic growth increased the spending of individuals who further gave rise to the
inflation situation (Palmer and Hartley, 2008).
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4.2 Impact of global factors on business of UK
There are several global factors which impact the UK business. Some of them are as
follows:
 Exchange rate- This is the major factor which affects the operations of business of UK.
The import and export business are mostly impacted by this factor. The profit of
company is affected by the exchange rate because the transaction which takes place
between consumers and organization are according to the exchange rate. In case of UK,
the exchange rate as compared to India is more so the goods which are sold in UK are
expensive for Indian consumers. In case of Waitrose, the products will fluctuate if there is
change in exchange rate of currency. The goods will become cheaper for the country in
which Waitrose is delivering its services. The economy of country is majorly affected by
the fluctuations in exchange rate (Björklund, 2011).
 Cultural differences- The global factors which affect the business are cultural differences.
In case of Waitrose, it has to make its products according to the culture in which it is
rendering its services. The tastes and preferences of consumers are different in every
country. Like in case of UK, the culture which is followed in western countries is
modern; on the other hand, in India, people follow traditional culture. Even in every
country, color has different meaning. In UK, white depicts good luck whereas in India, it
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is just opposite (Klapper, Laeven, and Rajan, 2004). So, the firm has to make its products
according to the demand and culture which is followed in the country.
4.3 Impact ofdifferent economic, business, rules laws of European Union on UK business
EU has made several policies which are related to fisheries as the policy aims at
providing healthy food to people. The organization which is doing business of fisheries should
use the technology which is environmentally and economically friendly. This will be beneficial
for the people as they will get the products at cheaper rates and the product will be healthy. Even
EU has given a certain limit to company. The organization should not catch the fish exceeding to
that limit. This will help in maintaining the population of fish (Bartolini, 2005).
Another policy which EU has made for the benefit of consumers is working time
directive. EU has restricted a limit for the workers as the working hours of employees are 48
hours. Even the workers who work in night shift can change their task to the day shift. Even the
employees who are performing duties at night should not do dangerous or heavy work (Baldwin,
Wyplosz and Wyplosz, 2006).
CONCLUSION
From this report, it can be concluded that it is very important for the organization to
evaluate the business environment of country. There are several political and legal factors which
affected the business of Apple and Samsung. But the laws which were made by EU supported
both companies to earn profit and to expand their business. From this report, it can be inferred
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that demand and supply affected the price of product and even the market structures are one
which have their impact on the price of product.
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REFERENCES
Books and Journals
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Bartolini, S., 2005. Restructuring Europe: centre formation, system building and political
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environment: the case of Albania. Journal of Small Business and Enterprise
Development. 12(4). pp.564-578.
Björklund, M., 2011. Influence from the business environment on environmental purchasing—
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Chi, T., Kilduff, P. P. and Gargeya, V. B., 2009.Alignment between business environment
characteristics, competitive priorities, supply chain structures, and firm business
performance.International Journal of productivity and performance management. 58(7).
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Hix, S. and Høyland, B., 2011.The political system of the European Union. Palgrave Macmillan.
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Palmer, A. and Hartley, B., 2008. The business environment.McGraw-Hill.
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Union.Oxford university press.
Welford, R., 2013. Hijacking environmentalism: Corporate responses to sustainable
development.Routledge.
Yew Wong, K. and Aspinwall, E., 2004. Characterizing knowledge management in the small
business environment.Journal of Knowledge management. 8(3). pp.44-61.
Zielonka, J., 2006. Europe as empire: the nature of the enlarged European Union. Central
European Review of International Affairs. 27. pp.135.
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