Business Environment and Firms Performance

This assignment delves into the crucial relationship between the business environment and a firm's performance. It requires students to critically analyze various research papers and case studies, examining how factors like taxation, regulations, innovation, and corruption impact business success. The analysis should shed light on the complex interplay between these elements and their overall effect on organizational performance.

Business Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Different types of organizations and their legal structure................................................1
1.2 Different stakeholders of organization.............................................................................2
1.3 Responsibilities of the organization towards stakeholders...............................................2
TASK 2............................................................................................................................................4
2.1 Different economic systems.............................................................................................4
2.2 Impact of fiscal and monetary policy...............................................................................4
2.3 Impact of competition policy and other regulatory bodies on the organizations.............5
TASK 3............................................................................................................................................5
3.1 Different market structures...............................................................................................5
3.2 Impact of the market forces on the working of the organization.....................................6
3.3 Impact of business and cultural environment...................................................................6
TASK 4............................................................................................................................................7
4.1 Significance of International trade...................................................................................7
4.2 Impact of Global factors...................................................................................................8
4.3 Impact of European union policies...................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
To build the long lasting sustainability in existing fierce and aggressive market
conditions, business organizations adopt impact-full strategies. Functioning of organization gets
impacted by the number of factors including external and internal. Internal factors include the
consumer's perception and choices, relational constructs with the suppliers and employees,
efficiency of the strategies framed by organization and operational management while the
external factors include market trends, government's policies and regulations, competition
scenario and other related (Czinkota and et.al., 2009). The organization functions under the
influence of all these factors. In a comprehensive way, it is known as the Business environment
(Kovacic, 2004). Report elucidates the working of business organization with the determined
mission, vision, short term, long term objectives and the strategies prepared to fulfill them under
the impact of different factors. For that purpose, Burberry group plc is taken into account. This is
the fashion house distributing apparels and also runs the philanthropic organization which helps
the young people by realizing them their dreams through the power of creativity.
TASK 1
1.1 Different types of organizations and their legal structure
On the basis of ownership and legal structure, organizations are categorized in the
following manner: Sole trader: The organization with single owner is the sole trader. In this type of
organization, the owner is entitled to have complete profit sharing. There are unlimited
liabilities in this type of ownership. Such organizations are the group of 20-35 employees
under the sole manager. Public: In this type of ownership, shares are distributed publicly. The board of directors
is formed which is accountable for the entire proceedings and the distribution of profits.
This functions in the interest of public with the specified goals and targets. The selected
organization falls under this category (Kovacic, 2004). Private: It is an organization with few numbers of owners who have invested in it. A
memorandum of understanding is signed among the partners where the respective
responsibilities and share of profits are described.
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 Voluntary: These are the non-profit organizations which are run by the government
funding with fulfilling the responsibility towards social activity.
1.2 Different stakeholders of organization
Burberry's fashion house is a large family with the number of stakeholders such as
customers, employees and colleagues, suppliers and government agencies. The impact of
different stakeholders and the attempts of organization to fulfill these responsibilities are
explained as below: Customers: The organization has vision to become the first choice of customers for the
fashion apparels. Fashion has the dynamic nature; it changes frequently with the change
in time. Company uses the product and distribution expertise to provide the best products
(Wei, Chien and Wang, 2005). Further, the fabrics and materials are sourced from the
sustainable suppliers. It is recognized for the understanding, engaging and for serving its
customers online and offline both. Colleagues and employees: Realizing the employees fulfill their aim to come up with the
authentic and innovative products, the company builds stronger connectivity with
employees and drives better results. It also supports general well being of employees and
creates opportunities for upliftment. Through apprenticeship, training programs and
development sessions, organization encourages creative talent. Leadership council and
Burberry's design scholarship helps significantly.
 Suppliers: Predominantly located in Europe, Burberry's products are available globally at
its stores and Burberry.com. It is a huge family of 10,600 employees and suppliers. To
provide the better products to the customers the organization induces better mobility and
the collaboration with the employees. Further, the Burberry runs the philanthropic
foundation in which it enhances the creativity talents through collaboration with
charitable trusts and institutes.
1.3 Responsibilities of the organization towards stakeholders.
 Burberry foster the creativity and authenticity among the employees and provides
the products of the optimum level. In order to achieve the aspirations and desires it
fulfills the responsibilities towards all the stakeholders. The various responsibilities met
by the organization i9s depicted in the form of Carroll's pyramid. Carroll's states that the
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organization fulfills the corporate responsibility in the form of economic profitability, law
abiding, social support and ethical responsibilities (Ayyagari, Beck, and Demirguc-Kunt,
2007).
 Economic responsibility: There are various shareholders of the organization Burberry
such as the financial creditors, they expect the optimum returns against their investments.
Further, the organization's aim is to earn the maximum profitability and generate
revenues. Burberry fulfill its economic responsibility by providing their shareholders the
optimum returns.
 Social responsibility: Organization is working in so many countries with the diversity in
the regions of their employees. Realizing the importance and responsibility towards the
diversity, organization is committed to embrace this and it makes sincere effort towards
the upliftment of the society and conducts many impact community projects. It works for
improving the health and educational status of children of underprivileged section.
 Ethical responsibilities: The organization is working to deliver the authentic and
innovative products to their customers and match up with the dynamic fashion world. The
apparels and accessories are made up of different raw materials (Blocher, Chen and Lin,
2008). The organization realizes its responsibilities towards the environment and has
imbibed certain ethical norms in the manufacturing and sourcing. For instance, the leather
and other raw materials are strictly sourced from the licensed suppliers. Further, the
energy used in the plants are generated by solar panels, the farming in Peru is done
through sustainable methods and also encourages sustainable supply chain and supports
labor rights. Adopting these methods has enlisted the organization in the Dow Jones
Sustainability Index.
 Legal responsibilities: The organization also abides the laws and regulations laid by the
Government and other legislative bodies with respect to the consumer protection,
employees issues, non discriminatory matters, environmental impacts and other related.
Such as it abides the laws like equality act (Klapper., 2010), companies act, non
discriminatory age act etc.
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TASK 2
2.1 Different economic systems
On the basis of allocation of resources, the economic system is categorized in the
following ways: Command Economy: It is the economic system in country which has the full control of
factors of productions such as labor and capital. The organization working in this system
has the minimum right over pricing and output decisions (Lambsdorff, 2007). Free market Economy: In this type of system, prices are decided by the market forces in
economy that is the demand and supply of products. The organizations functioning in this
type of economy are empowered to decide their prices to earn profitability. Further, the
control of factors of production lies in the hands of management of organization itself.
 Mixed Economy: The economic system with the characteristics and traits of both
command and free market economy is termed as the mixed economy. The organizations
working in the mixed economy has the rights to decide pricing and output of their
offerings but they are regulated under the norms laid by government and the legislative
bodies. The organizations are required to abide by all these laws and regulations.
2.2 Impact of fiscal and monetary policy
An economy functions under the influence of many external and internal factors. In order
to stabilize the conditions of economy and to prevent it from the volatility, government and other
legislative bodies adopt certain measures (Craig and Campbell, 2012). Two of the most effectual
tools used in economy are fiscal and monetary policy. Fiscal policy: This is the method that is adopted by government to stabilize the economy
by bringing changes in revenue generation and expenditures. This affects the functioning
of organizations in significant way. For instance, the increment in taxes and tariffs
imposed on apparels and accessories has the direct impact on prices of Burberry's
product's prices which further influences the customer base and profitability.
 Monetary policy: Apart from the Government, the bodies also functions to improve the
condition and economy of the nation. One such important organization is the nation's
central bank. To regulate the money supply and its circulation in economy, central bank
adopts some measures such as making changes in the interest rates, bank rates, buying
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and selling of government securities and other related (Dong and Hou, 2009). These
changes made by central bank trickles downward and affect the strategies made by
organizations such as changes in interest rates affects the quantum of investment done in
Burberry by creditors. Also, the changes in bank rates affect the profitability and revenue
generation as it has the direct impact on finance.
2.3 Impact of competition policy and other regulatory bodies on the organizations
There are certain organizations that work to check the functioning and the working of the
business and traders. These organizations check and prevent the unfair trading practices. These
organizations and the steps adopted by them imparts the significant impact on the working and
the strategies framed by the organization (Lall and Mengistae, 2005). Some organization and the
impact of the steps adopted by them on the organization Buberry is explained below:
 Competition policy: The succeeding organization of the Competition and management
authority, functions to watch the trade practices of the organization operating in the
economy. They check and prevent the dominance of the single trade unit.
 Office of fair trading: The organization works to check if the organizations follow the
norms laid down by the government and legislative bodies with respect to the trade
agreements, mergers, acquisitions and other business deals.
 BIS: The organization BIS functions to bring innovation and creativity among the process
adopted in the trade agreements (Xue, Shen and Ren, 2010).
TASK 3
3.1 Different market structures
Depending upon the number of sellers and buyers and other characteristics, the market
structures are categorized in the following manner:
 Perfect competition: The market structure with the large number of sellers and buyer is
called as the perfect competition. In this the price is decided by the market forces such as
the demand and supply of the products. The organizations operating in this market
structures has the limited rights to decide the price and the outputs and they experience
the high degree of competition in this (Chi, Kilduff and Gargeya, 2009).
 Monopoly Competition: The market structure with the single seller and the large number
of buyers. In this structure, the seller has the full rights to decide the price and outputs.
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 Monopolistic competition: The market structure with few numbers of sellers and the large
number of buyers is termed as the monopolistic competition. The seller decides its
independent price structure including the advertisements and the promotion prices.
Providing the distinguished products and services, organizations keeps themselves
upright. Burberry falls in this category of the market structure. It always aims to provide
the distinguished, authentic and innovative apparels with the best fabrics to their
customers (Iskanius and Anbuudayasankar., 2010).
3.2 Impact of the market forces on the working of the organization
The working of the organization get influenced with the large number of the factors. The
strategies of the business organization taken with respect to the economic scenario get largely
affected by the market forces of the economy. It includes various components such as the
demand and supply of the products and services, interest rates, elasticity of demand and
customer's perception.
Demand and supply of the product: The fundamental factor that affect the pricing structure of the
organization is the demand and supply of the products. The changing demand and supply also
brings fluctuations in the profitability of the organization. For instance at the time of boom, the
demand is high so the organization Burberry's fashion house keeps the prices high and try to earn
more profitability on the contrary, at recession when the demands sweeps down, the prices are
kept competitive to retain their customers. It also brings changes in the schemes and methods to
attract customers (Hajkova and et.al., 2006).
Customer's Perception: Burberry's fashion house is running in the industry with the dynamic
customer's demand. The perception and the choices of the customers changes with the fast pace.
To fit in the volatile market place and establish the prominent position, Burberry introduces
products with the continuous innovation in manufacturing and selling.
3.3 Impact of business and cultural environment
The environment under which the organization functions encompasses the various
components such as the business environment and the cultural environment. This inculcates in it
the economic situation, cultural diversity and the lifestyle of the customers.
 Burberry offers the range of the products such as different varieties of the apparels,
fashion accessories, fragrances, sunglasses and cosmetics to satiate the desires of the
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customers. The dynamic nature demands the continuous innovation. For that purpose the
organization conducts the intimate research to know the current rends and fashion.
 It also conducts the intimate surveys to seek the feedback from the customers about their
needs and demand. This helps them to come up with the most effective products and
consolidate the larger stream of clients (Welford, 2013).
 The organization is working in the number of sections with the large number of suppliers.
Burberry realizes the diversity and makes strategies according to integrate with them. For
instance Burberry is working in 34 countries each having different cultural backgrounds.
Hence, to satiate the needs of each kind of customers with the different lifestyles,
Burberry comes up with the products of the respective choices.
TASK 4
4.1 Significance of International trade
The organization Burberry's fashion house is providing their products globally in 34
countries. It has brought various advantages to the organization benefiting it in different aspects.
 Market expansion: Introducing the products in different countries widen the customer
base of the organization with the increment in the market share which leads to the market
expansion. It further leads to the sales maximization as well (Klapper, Lewin and
Delgado, 2009).
 Balance of payments: The expansion of business in terms of sales and profit margins
leads to the improvement of the balance of payment of the country in the comprehensive
manner. The introduction of the products and its worldwide establishment encourages
more investments which improves the status of capital and current account.
 Competitiveness: The introduction of products in different countries reduces the risk of
business failure to the large extent.
 Networking: The introduction of the products in the different countries enhances the
connectivity and the networking with the suppliers and the traders with the better
technology and advancements (Brown, Earle and Lup, 2005).
 Economic growth: The organization functions and operates in the industry and along with
this it also runs certain community programs which indirectly contributes in the economic
growth of the nation,
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4.2 Impact of Global factors
Operating on the international platform various global factors affects the functioning of
the organization. Some of them are enlisted below:
 Economic factors: There are many economic factors affect the pricing and the outputs of
the organization such (Ruff, 2006) as the different economic conditions that inculcates
the stock exchange fluctuations, exchange rates, interest rates and other related.
Introducing the product in the market these factors are to be kept in consideration.
 Political: There are many international organization working to improve the trade
conditions and check the trade practices. The rules and regulations laid down by them
affects the strategies and policies framed by them (Suder, 2004).
 Technological factors: One of the crucial factor that affect the working of the
organization is the technological conditions prevailing in the country in which the
organization is operating. Known as the era of information technology, the world is
pacing out fast in all the fields. The better communication, connectivity, new and
innovative methods adopted in the process enhances the productivity of the organization.
4.3 Impact of European union policies
European union functions for the upliftment of the member countries in the different
aspects such as the economic, social, environmental and legal aspects. For that purpose it has laid
certain rules and regulations in all the areas. Two of them are explained below which are to be
abide by the organization.
 Consumer Protection: EU has laid rules with respect to the consumer protection such as
to keep the prices as the offerings (Czinkota and et.al, 2009).
 Environmental aspects: There are certain laws with respect to the use of the Eco friendly
raw material. The leather used in the accessories is to be sourced from the licensed
suppliers.
CONCLUSION
The report prepared analyzes the business environment of the organization, Burberry's
fashion house. It provides the range of products such as apparels, cosmetics, fashion accessories,
fragrances and sunglasses. Under the influence of the internal and external factors the
organization makes strategies and policies accordingly. Organization abides all the laws and
regulations laid down my the Government and other legislative bodies.
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REFERENCES
BOOKS AND JOURNAL
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globe. Small Business Economics. 29(4). pp.415-434.
Blocher, E., Chen, K.H. and Lin, T.W., 2008. Cost management: A strategic emphasis.
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capital, technical assistance, and the business environment in Romania. Economic
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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
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Craig, T. and Campbell, D., 2012. Organisations and the business environment. Routledge.
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