Business Environment Analysis and Strategy

This assignment delves into the complexities of the international business environment. Students will analyze real-world case studies, drawing upon economic theories, cultural influences, and policy frameworks. The focus lies in understanding how businesses adapt to globalization's challenges and opportunities, formulating effective strategies for success in a interconnected world.

Business Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Types of organisations...........................................................................................................3
1.2 Extent to which organisation meets objectives of stakeholders............................................4
1.3 Responsibilities and strategies (M1, D1)...............................................................................5
TASK 2............................................................................................................................................6
2.1 Economic systems of UK attempt to allocate resources effectively......................................6
2.2 Enclosed in ppt......................................................................................................................8
2.3 Impact of competition policy and regulatory mechanisms..................................................15
TASK 3..........................................................................................................................................15
3.1 Market structures.................................................................................................................15
3.2 Market forces shaping organisational responses.................................................................16
3.3 Business and cultural environment shaping behaviour of Virgin Atlantic (M3, D3)..........17
TASK 4..........................................................................................................................................19
4.1 Enclosed in ppt.....................................................................................................................19
4.2 Impact of global factors on UK business organisations......................................................25
4.3 Impact of EU policies..........................................................................................................26
CONCLUSION..............................................................................................................................26
REFERENCES..............................................................................................................................28
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INTRODUCTION
Environment is considered as the group of elements which collectively form a
surrounding. Business environment is also a mixture of different components like employees,
stakeholders, shareholders, government policies, etc. Every organisation that operates in a
healthy and balanced environment has greater chances of earning profits and fame. In this report
a basic understanding about different types of organisation and their functioning is provided with
detailed description about Asda and NHS. Economic systems of UK and USA shall be
elaborated in this assessment which will help in understanding the business operations in
different environments. Before coming up on any conclusion, it is important to evaluate and
analyse the surroundings and influential factors which contribute to business functioning.
Description about policies like fiscal, monetary and competition is also provided with their
effects on Asda.
This report shall also provide information regarding factors which are affecting
organisational responses and behaviour in the market. Entire decision making of a company is
dependent on these factors and their contribution. Lastly, significance of international trade and
the impact of globalisation will be demonstrated for understanding the future capabilities of a
company to expand globally.
TASK 1
1.1 Types of organisations
Organisation is a group of people that function together for achieving certain goals and
objectives collectively. There are different types of organisations existing in UK which are
described as follows:
Public sector: The companies or enterprises which are settled by government of the
country are known as public sector undertakings (Kennerley and Neely, 2003) Entire operations
and management is in hands of governing bodies. Eg: TESCO plc, British Airways, BBC, etc.
Private sector: Owned and governed by an individual or more for earning profits and
monetary benefits through supplied products and services. Eg: Dell, Microsoft, EE Limited, etc.
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Sole traders: Business ownership that is entirely a copyright of one particular individual
is considered as sole trading. Individual functioning of a person for earning money is known as
sole trader-ship. Eg: Electricians, plumbers, etc.
Non-profit or voluntary: Generally, these institutions aim to provide their services and
products without considering profits and being owned or governed by government or single
individual (Stalk, Evans and Shulman, 2001). These are set up with an aim of providing equal
services to everyone. Eg: Oxfam.
NHS
NHS is the leading public sector organisation in UK that has been providing its services
in health and social care. The purpose of this institution is to provide unhindered services to local
citizens as well as foreign immigrants without compromising quality of care (NHS Choices,
2017). This promising statement defines the purpose of giving selfless services without thinking
about profit.
Asda Stores Ltd.
Asda is one of the leading supermarket retailers of the country with private ownership.
The company has been listed amongst top supermarket holders recently (About Us, 2017).
Purpose of functioning for Asda is to make goods and services affordable for everyone in the
society. Despite of a profit earning approach, the company aims to provide its products with a
corporate social responsibility.
1.2 Extent to which organisation meets objectives of stakeholders
Stakeholders are entities that hold interest in functioning of a business organisation either
in the form of profits or in the form of products and services (Botha, Kourie and Snyman, 2014).
For instance, Asda Stores Ltd. is a retail sector company. Henceforth, the stakeholders of this
organisation shall be customers who require goods from the supermarket. Stakeholders are
basically divided into two categories: Internal: Employees, shareholders, suppliers
 External: Customers, government, partners.
Stakeholders share a collective objective of achieving great quality products and services
with high profits and monetary benefits. Although there may be certain fluctuations when it
comes to personal targets or goals. For instance, customers will have an objective of getting best
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quality products in affordable price range. On the other hand, employees aim that respective
company shall achieve huge profits so that their salary and monetary benefits are increased.
NHS works with different voluntary organisations as its partners and shareholders.
Government takes serious measures and provides alternatives to patients and people who require
specific attention in terms of health and social care. Moreover, increasing opportunities for
doctors and other service providers (internal stakeholders) to achieve their objectives or earning
maximum through NHS. The organisation also takes appropriate steps in safeguarding
individuals or external stakeholders from exploitation and abuse in different forms.
Considering the case of Asda, external stakeholders are majorly customers and
government. Products or goods which are provided at the supermarkets are of great quality and
comparatively cheaper from other competitors. This has helped customers achieve their
objective. Government is getting benefits in the form of economic growth and effective
contributions to GDP (Reynolds and Rohlin, 2014). On the other hand, increasing number of
supermarkets has helped in generating employment for the company. Convenience and comfort
is the first and foremost important condition that a customer takes into consideration while
purchasing products and services. Asda has given this attribute to its external stakeholders by
providing online shopping options. In this way, it is quite clear that Asda and NHS are able to
meet the objectives and expectations of their stakeholders efficiently.
1.3 Responsibilities and strategies (M1, D1)
Every business organisation has certain roles and responsibilities towards the country and
the stakeholders. Often private sector industries are perceived as selfish and profit oriented. But
Asda has changed this perception and developed a purpose with a humane touch. It aims to
provide purchasing opportunity to everyone by giving goods at affordable pricing (Kim, Suresh
and Kocabasoglu-Hillmer, 2013). Following responsibilities are to be followed by the company:
1. To function with corporate social responsibility.
2. Providing equal opportunities to employees and other internal stakeholders.
3. Cultural and social balance must be created when business functions are executed by the
company.
4. Fair pricing and use of regulatory standards in the development of products and services
is the prime responsibility of Asda.
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When company has a clear vision about the responsibilities it has to fulfil, then strategic
decision making process becomes efficient. If any of the aforementioned duties are neglected by
the organisation, then there are chances of declining customer share and as a result profit margins
are affected (Adam and Billi, 2014). Following strategies are devised by leaders of the company
for meeting set responsibilities and fulfilling respective duties efficiently.
1. Using ethical governance with corporate social responsibility: This strategy helps in
giving equal opportunities to employees as well as tackle suppliers with fair trade.
Company's corporate image is enhanced when ethical practises are initiated in every
functional aspect.
2. Communication channel: Effective communication channels help in transferring
information from one place to another without any discrepancies. In order to protect
credentials from misuse by rivals and competitors, Asda has worked out a secure
communication channel. Access to this channel is limited to internal members of the
organisation. Moreover, employees and customers can communicate their queries and
complaints easily to organisation chief for quick solutions (Baker, Bloom and Davis,
2016).
3. ISO 9000 standards are followed by Asda for creating good quality products and
delivering best in class services for the customers. These certificates are a mode of
quality assurance and standards which are not compromised by the company.
The responsibilities of Asda are eventually met when aforementioned strategies are
implemented appropriately. Use of ISO standards helps in achieving sustainability only when
time to time validation of certificates is done. Asda can gain the advantage of sustainable
competitive market when all the products and services are in accordance with these standards.
Moreover, communication channels have to be maintained for controlling and guiding human
resource so that production process is not hindered (Bianchi and Ilut, 2014).
TASK 2
2.1 Economic systems of UK attempt to allocate resources effectively
Economic system is basically a set up where goods are distributed and resources are
allocated for production. There are three basic types of economic systems, namely (Gemma,
2014):
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 Command system: A centralised authority monitors entire production process by
knowing about whereabouts of resources and the processes which are initiated for this
use. Market system: In this type of system, businesses and consumers are the decision makers
regarding quantities and qualities of respective products and services. It is also
recognised as free markets and a healthy competition is instigated in such economic
systems (Bech, Gambacorta and Kharroubi, 2014).
 Mixed system: Also known as dual economy, this system is a combination of command
and free market economy systems. There are various cases which may be possible when
such systems are initiated; like entirely free market or government controlled system, etc.
Scarcity is a phenomenon that occurs when sufficient resources are not available for
production. On the other hand, resources are components that are utilised for producing certain
commodity or good (Borio, 2014). For instance, a person wants to purchase cake from Asda but
could not make his purchase. The reason is lack of availability in the market which implies
scarcity of resource. Company's resources include working staff, ingredients, machineries,
transportation facilities, etc.
UK's economic system can be termed as a mixed economic system because there are
areas where complete control of government has been established while certain industries have
free markets. Equal existence of private and public ownership in the country has led to formation
of such economic system (Palley, 2015). On the other hand, USA has a bit of command
economic system. Despite of existence of various private sector industries, there are rules and
regulations formulated by the government that controls all the attributes of production and
manufacturing of goods and services.
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2.2 Enclosed in ppt.
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2.3 Impact of competition policy and regulatory mechanisms
Competition policy was formulated by the government of UK for stabilising trade
conditions in the country. It helps in preventing exploitation of customers and suppliers from
business organisations. As a result a culture of fair trade with equal opportunities is set through
this policy (Puga and Trefler, 2014). Main aim of this policy is to demolish monopoly markets
and abuses caused due to the same. Competition Act of 1998 is one of the most powerful
legislations that was devised under competition policy. The advantages and disadvantages of this
policy are given below:
 Low prices and better quality products and services are gathered when such safeguarding
policies are present in the market.
 Consumers are given more choices when considering single type of product or service.
 A healthy competition is established within domestic and global markets.
 In global competitive markets, special privileges cannot be given to native companies and
business organisations because of no unfair trade aspect of competition policy.
Asda's business functioning is interrupted when competition policy is launched or
amended. Regulatory mechanism that exists in UK which is categorised under competition
policy is the Competition Act, 1998. Strategies and decisions now are taken in accordance to
current market structure and demands of consumers. Unlike older days, Asda has to formulate
certain precautionary steps which will help in fighting competition and acquiring maximum
customer share (Wild, J., Wild and Han, 2014).
The major impact of this regulation which was experienced by Asda is inclusion of
ethical practises and development of innovative strategies. Repeat production has been
minimised and organisation now focuses on innovative practises which shall reap better results
in the form of profits and monetary benefits.
TASK 3
3.1 Market structures
Market structure is made up of the number of buyers and sellers with a degree of
collusion, level of competition and other business attributes. It is important for every
organisation to study their operational market structure so that efficient strategies are devised and
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implemented accordingly. There four basic types of market structure which are defined as
follows:
1. Perfect competition: This type of market structure includes a large number of enterprises
with equal opportunities and normal profits. All of these firms produce same type of
commodities.
2. Monopoly: Only one company is present that earns enormous profits due to lack of
competition in the functioning sector. Monopoly markets do not have controlled pricing
and supply (Hirst, Thompson and Bromley, 2015).
3. Oligopoly: The entire industry is running on functioning of few enterprises. These
companies are dependent on each other's resources and components in some form or the
other.
4. Monopolistic competition: Differentiation of enterprises on the basis of commodities is
performed in this type of market. A sense of freedom to enter or exit the given market is
experienced by companies operating in this structure (Cavusgil and et. al., 2014).
Asda functions in a market with perfect competition because equal opportunities are
experienced in the retail sector with competition from Tesco, Sainsburry, etc. On the other hand,
NHS has been addressing Oligopoly market structure. The decisions regarding pricing and
output of commodities are entirely based on market structure attributes because of the following
reasons:
 Presence of competition helps in understanding where the power lies.
 Market structure helps in determining current trends and demands of consumers.
 The amount of sharing customer base and strategies required for acquiring these is also
decided when clear idea about market structure is present (Van Bergeijk, 2014).
3.2 Market forces shaping organisational responses
Buyers or consumers being the most important part of business functioning can influence
certain decisions and strategies of business organisations depending on the type of force they
have generated. Asda deals in commodities while NHS deals by providing services. Following
instances depict the different types of market forces and their influence on functioning of the two
companies.
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1. Demand: Consumers when require certain commodities for fulfilling their needs then a
demand originates. Asda requires to recognise this demand then take decisions over
manufacturing and production. Fluctuations are constant, hence, prices also vary
depending on the demand.
2. Supply: There are two situations related with supply of products and services.
Considering NHS, health and social care services if not provided to people can result in
declining health status of the company (Felbermayr, Hauptmann and Schmerer, 2014).
3. International transactions: International trade brings in a lot of exchange currency
which needs to be managed for strengthening nation's economy. Increasing exports will
lead to positive impact while increasing exports results in weakening of national
currency. Asda's basic functioning must be focused on providing exports than
accumulating imports. This market force helps in determining contribution to economic
growth of the country.
4. Speculation and expectations: Financial systems are dependent on speculations and
expectations of consumers, investors and politicians. There are several indicators which
are applied for measuring current financial strategies so that future plans can be
strengthened (Pieterse, 2015). Both Asda and NHS have to develop their action plans in
accordance with this market force.
5. Governments: The government of the country regulates fiscal and monetary policies
which decide the interest rates, expenditure statistics and certain other economic
attributes. These two policies have a deep routed impact over functioning and responses
of both these organisations (Beck, 2015).
3.3 Business and cultural environment shaping behaviour of Virgin Atlantic (M3, D3)
Company Background
Virgin Atlantic is one of the leading organisation in the airlines industry. It is based in
UK and has been functioning since 1984. Running a business from such a long time brings in
experience and efficient approaches to strategic decisions.
Culture and its impact
Culture is formed from the set of beliefs and attributes which are gathered due to human
intellectual. Community or societies follow a set of customs and ideologies which determines
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their social behaviour. Business organisations can experience wide impact of cultural
environment on their internal and external functioning. Human resource is the source of origin
for culture (Leih, Linden and Teece, 2014). If working atmosphere is supportive enough to
develop strategies that help in combating with socio-cultural environment then a positive impact
is experienced. On the other hand, discrimination on the basis of culturally differentiable subjects
like religion, caste, etc. creates a negative impact over functioning of business.
Business environment
Virgin Atlantic's business environment consists of various factors like political,
economical, technological, legal and ecological, internal premises, etc. A balance has to be
created between these in a strategic manner which can be possible when analytical view is
gathered (Cultural diversity research helps Virgin deliver on passenger service pledge, 2017).
The company develops its strategies in such a way that any sort of changes in the economic or
political policies doesn't hinder its activities. Business plans are formed by Virgin Atlantic in
such a way that culture of the community and diverse set of people are not disrespected.
Behaviour of the company is largely dependent on all these factors depending on the type of
changes they experience.
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TASK 4
4.1 Enclosed in ppt.
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 A global network of supply chain is developed with help of this process.
 Local businesses can flourish with more access to capital flows.
 Diversity in products is gained which helps in reducing monotonicity.
 An easy access to new technologies and inventions with foreign direct investment is
provided to local businesses when international trade takes place.
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 Banking and currency crisis can occur anytime due to volatility of capital.
 Cultural inequality causes disagreement over various goods and services that are not
acceptable worldwide but quite popular in the native country.
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4.2 Impact of global factors on UK business organisations
Globalisation
Continuous changes that are taking place due to increasing interaction amongst people
from different parts of the world has decreased distances between various countries virtually.
Development in modes of transportation and communication have helped in a uniform
integration of the world. This process is globalisation.
Drivers of globalisation:
There are four major drivers of globalisation which are described ahead:1. Technology: The developments in science and technology has helped in establishment of
trade and communication channels. Hence, technology is a prime factor in driving
globalisation.2. Culture: Technological advancements has led to increasing interactions which has lead to
growth of cultural influence over people of different countries. People exchange their
traditions and try to adapt new culture and religious practises across the globe.3. Politics: Government policies and flexibility in trade restrictions has helped business
organisations to develop their branches and operational centres in different parts of the
world.4. Economics: Taxation and interests rates are dependent on exchange of currency and
establishment of financial policies. Henceforth, economy is the driver of globalisation.
Factors that can affect UK businesses:
The major factor that can affect UK businesses is growth of trends in the market structure
and shifts in demands and preferences of customers. When companies based in other countries
provide their services and products in UK, competition increases. Customers are attracted
towards new brands and their products which causes a threatening situation for existing
businesses (Our Functions, 2017). Moreover, increase in migration can create a loss of
employment opportunities for local citizens. Hence, the government needs to control these
factors.
Advantages and disadvantages of globalisation:
 Flow of goods and capital becomes free of restrictions or reduction in trade barriers is
experienced due to globalisation.
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 Technology is transferred from one country to another which results in global
developments.
 Unfair working conditions are experienced by global industries.
 Environmental degradation takes place on a large scale which quite threatening for all the
countries of the world.
4.3 Impact of EU policies
EU or European Union is a body that has collaborated economic and political values
between its 28 member states. The purpose behind formation of EU was to regulate trade flow
and maintain harmony amongst other European countries so that war like conditions do not occur
once again. Two major policies that can affect Asda's functioning in accordance with EU are
described as follows:
Common Competition Policy: The basic objective of Common competition policy is to
prevent abuse or distortion that is caused due to unethical competition. Asda has to abide by the
rules and regulations which will support in developing fair competition while trading with
different member states (Competition policy, 2017). This policy has a positive impact over the
functioning of businesses because it provides fair chance for every organisation to portray their
products and services freely.
EU Environment Policy: This policy devised by European Union consists of extensive
rules and regulations which need to be followed by every business organisation that functions in
the borders of EU. Asda's production and marketing strategies are affected due to this policy. No
goods and commodities can be manufactured or marketed in the country if they are hindering
sustainable development objective of these countries (Environment policy: general principles
and basic framework, 2017). Moreover, the company has to take care that different types of
pollutions like water, noise, air, etc. are not initiated due to business activities.
CONCLUSION
This report is helpful in understanding the different components of business environment.
From the findings of this assessment, it can be inferred that every business organisation
irrespective of its types has to formulate strategies that are in favour of different factors or
consequential conditions. The report contains information about fiscal and monetary policies
with a brief description about international trade and its effects. Globalisation is also discussed
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and the aftermaths that comes up with this process is also clearly understood. The functioning of
Asda, NHS and Virgin Atlantic has been considered as a context for deeper understanding
regarding different business environments.
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REFERENCES
Books and Journals
Adam, K. and Billi, R.M., 2014. Distortionary fiscal policy and monetary policy
goals. Economics Letters, 122(1), pp.1-6.
Baker, S.R., Bloom, N. and Davis, S.J., 2016. Measuring economic policy uncertainty. The
Quarterly Journal of Economics, 131(4), pp.1593-1636.
Bech, M.L., Gambacorta, L. and Kharroubi, E., 2014. Monetary policy in a downturn: are
financial crises special?. International Finance, 17(1), pp.99-119.
Beck, U., 2015. What is globalization?. John Wiley & Sons.
Bianchi, F. and Ilut, C., 2014. Monetary/fiscal policy mix and agents' beliefs(No. w20194).
National Bureau of Economic Research.
Borio, C.E., 2014. Monetary policy and financial stability: what role in prevention and
recovery?.
Botha, A., Kourie, D. and Snyman, R., 2014. Coping with continuous change in the business
environment: Knowledge management and knowledge management technology. Elsevier.
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L.,
2014. International business. Pearson Australia.
Felbermayr, G., Hauptmann, A. and Schmerer, H.J., 2014. International trade and collective
bargaining outcomes: Evidence from German employer–employee data. The Scandinavian
Journal of Economics, 116(3), pp.820-837.
Hirst, P., Thompson, G. and Bromley, S., 2015. Globalization in question. John Wiley & Sons.
Kennerley, M. and Neely, A., 2003. Measuring performance in a changing business
environment. International Journal of Operations & Production Management, 23(2),
pp.213-229.
Kim, M., Suresh, N.C. and Kocabasoglu-Hillmer, C., 2013. An impact of manufacturing
flexibility and technological dimensions of manufacturing strategy on improving supply
chain responsiveness: Business environment perspective. International Journal of
Production Research, 51(18), pp.5597-5611.
Leih, S., Linden, G. and Teece, D., 2014. Business model innovation and organizational design:
a dynamic capabilities perspective.
Palley, T.I., 2015. Money, fiscal policy, and interest rates: A critique of Modern Monetary
Theory. Review of Political Economy, 27(1), pp.1-23.
Pieterse, J.N., 2015. Globalization and culture: Global mélange. Rowman & Littlefield.
Puga, D. and Trefler, D., 2014. International trade and institutional change: Medieval Venice’s
response to globalization. The Quarterly Journal of Economics, p.qju006.
Reynolds, C.L. and Rohlin, S., 2014. Do location‐based tax incentives improve quality of life
and quality of business environment?. Journal of Regional Science, 54(1), pp.1-32.
Stalk, G., Evans, P. and Shulman, L.E., 1991. Competing on capabilities: The new rules of
corporate strategy. Harvard business review, 70(2), pp.57-69.
Van Bergeijk, P.A., 2014. Economic diplomacy and the geography of international trade.
Edward Elgar Publishing.
Wild, J., Wild, K.L. and Han, J.C., 2014. International business. Pearson Education Limited.
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About Us. 2017. [Online]. Available
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