Business Environment Report

This report provides a comprehensive analysis of the business environment, focusing on the impact of various factors on business operations. It begins with an introduction to the concept of business environment and its influence on organizational performance. The report then delves into Task 1, which involves identifying the purposes of different organizations (private limited company, public limited company, non-profit organization, partnership firms, and sole traders), describing the extent to which an organization meets the objectives of its different stakeholders (owners/directors, shareholders, lenders, employees, customers, suppliers, and government), and explaining the responsibilities of Samsung and the strategies it employs to meet them. Task 2 explores free enterprise and mixed economy models, assessing the impact of fiscal and monetary policy on business activities, and evaluating the impact of competition policy and other regulatory mechanisms on McDonald's business activities. The report concludes by summarizing the importance of understanding the business environment and the need for organizations to monitor their responsibilities and plan strategies accordingly.

Business Environment
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TABLE OF CONTENTS
INTRODUCTION................................................................................................................................3
TASK 1.................................................................................................................................................3
(a) Identification of the purpose of different organization...............................................................3
(b) Description of the extent to which organization meets the objectives of its different stakeholders
.........................................................................................................................................................4
(c) Explanation of the responsibilities of Samsung and the strategies it employs to meet them ....5
TASK 2.................................................................................................................................................6
(a) Explanation of free enterprise and mixed economy models by which economic systems attempt
to allocate scarce resources effectively............................................................................................6
(b) Assessment of the impact of fiscal and monetary policy on the UK activities..........................6
(c) Evaluation of the impact of competition policy and other regulatory mechanisms on the UK
activities of McDonald's..................................................................................................................7
CONCLUSION....................................................................................................................................8
REFERENCES.....................................................................................................................................9
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INTRODUCTION
Business environment is the combination of all the internal and external factors that can
influence various business operations of the organization. External and internal factors of business
environment are corelated to each other and direct impact on performance have an effect on
organization (Business Environment, 2016). Global Tech is a global manufacturer of consumer
electronic products which is a private limited company. Headquarters of the organization are situated in
the America and United Kingdom. However, there are some significant operations which are conducted
in Russia and China. The progressively competitive economic and their business environment has
reduced Global Tech sales revenue and profits. The current report is focused on indicating various
aspects of business environment such as competition policy, fiscal policy and monetary policy in
context of the competitors of Global Tech. Further, it also comprises the objectives of stakeholders
along with describing the responsibilities and strategies of organization.
TASK 1
(a) Identification of the purpose of different organization
There are different types of organizations whose purposes are also differed from one another.
Various organizations include private limited company, public limited company and non-profit
organization. Business enterprise has different purposes to meet the objectives of business
(Feigenbaum, 2016). Therefore, purpose of different organizations is as follows:
1. One of Global Tech's competitors: The main competitor of Global Tech in the market of
mobile handsets and tablet devices is Samsung. It is one of the private limited companies which
deals in the consumer electronics. Samsung’s main purpose is to satisfy its customers and
increase its market share. Customers want low cost products with high quality (Covrig and
McConaughy, 2015). Therefore, company fulfils the needs and requirements of customers by
rendering them products at affordable price in order to provide proper satisfaction to them.
Further, another purpose of the organization is to produce goods and services with a motive of
gaining profitability.
2. A government organization: A government organisation which runs its business in the United
Kingdom is Tesco. It is one of the largest retailer companies of UK and a public limited
company which deals in the grocery store and general merchandise maket. The purpose of
Tesco is to gain customer satisfaction by providing products at low cost. For the public limited
company, profit doesn't matter (Kamnikar and et.al., 2012). Therefore, Tesco is also focusing on
various CSR activities to uplift the customer satisfaction. Tesco is increasing their sales
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performance by fulfilling the needs and requirements of consumers. However, company is
taking care of customer’s tastes as well as preferences and accordingly making changes to it.
3. A charity organization: It is also known as non-profit organization which doesn't do business to
gain profits. A charity organization here chosen is Bond which is a UK based non- profit
organization. Bond is working for international development through supporting in funding,
research, training and other services (Stamp, 2013). The purpose of such company is to set up
business for the welfare of society. Organization doesn't need any profit and market share in
the marketplace. The main motive is to work for the development of the society.
4. Partnership firms- It can be termed as an association of two or more individuals or parties
which has agreed to share profit and losses. The benefits of such kind of business is that it helps
in generating adequate among of capital required. Further each and every partner is required to
contribute his/her set of capital and have a specific ratio in profit sharing and distribution of
salary.
5. Sole traders- These are the businesses which are owned, managed and taken care by a single
individual. All the power of decision making and developing strategies are concentrated in one
hands. Along with this, it can be also explained that entire profit is enjoyed by single owner
only. Such kind of businesses have difficulty at the time of raising finances for expansion or
growth.
(b) Description of the extent to which organization meets the objectives of its different stakeholders
The extent to which Samsung meets the objectives of its different stakeholder is described here.
Individuals, groups, government and all other members who are interested in the organization are
called stakeholders (Xiong and et.al., 2015). Power and interest of different stakeholders are different.
Interest stakeholder is determined by his desire to influence the organization. Different types of the
stakeholders of Samsung are as follows: Owners/ Directors: Owner is the person who owns company and is a main stakeholder in the
organization. Directors are interested in their salaries, bonuses and prizes. . Occupying a high
position, owner takes responsibilities for accomplishment of goals and objectives of
organization (Davis, 2014). In addition, any owner should care about his responsibility area.
Further, owner plays an important role in Samsung. Shareholders: Providers of risk capital and their advisers are concerned with the risk provided
by their investments. Shareholders of the Samsung need information to help them to determine
whether they should buy, hold or sell the shares. Shareholders are also interested in information
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which enables them to evaluate the ability of enterprise in terms of paying dividends. Lenders: Lenders are interested in gaining information which enables them to determine
whether their loans are interested in timely refunds or not (Stakeholders and their objectives,
2016). Samsung can keep track of the lenders whether it is effective using their funds which
have received from the lenders. Lenders of the Samsung are banks, financial institutions and
corporations, insurance company etc. Employees: Employees and their representative groups are interested in getting information
about the stability and profitability of Samsung. They are also interested in the information
which enables them to assess the ability of enterprise in terms of providing remuneration,
retirement benefits and employment opportunities. Customers: Customer is the most important stakeholder in the organization. It is because they
create demand in the market. Customers want to get the right products at reasonable prices and
with good quality. They are also interested to get the product as quickly as possible. Guarantees
of security and healthy items also are important for them.
 Suppliers: It includes those firms which supply raw materials or semi-finished products for
companies along with providing some other services. They are interested in getting information
regarding the orders made by company regularly and availability of timely payment for the
same. (Goetsch and Davis, 2014). Also any provider interested in closer contact with the chosen
company, for example, entering into an exclusive contract with other company will ensure their
debt has been paid.
 Government: Governments are interested in the allocation of resources and the activities of
their chosen enterprises. They also require information in the respect of regulating the activities
of enterprises which determine practices related to follow taxation and other policies on the
basis of national income and similar statistics. Government are also interested in the tax
revenue when formation of the city budget takes place.
(c) Explanation of the responsibilities of Samsung and the strategies it employs to meet them
Responsibilities of Samsung and strategies it employs to meet them are as explained. The main
purpose of company is to provide good service or product to its clients. Samsung is surely giving
guarantee about what they are producing and serving. Marketing also plays an effective role because
many organizations usually spend too much on advertisements (Braga and Panteghini, 2014).
However, in reality, goods are not as they were described. All these points are written in legislation
and Samsung must follow them. However, company should also fulfil its responsibilities towards their
workforce. Organization must provide their employees safety and good condition where they can work
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effectively. Health and Safety at Work is a law which ensures and protects all these above mentioned
points. Further, business entity should meet its legal responsibilities of the Samsung (Campbell, 2012).
According to Health and Safety at Work Act 1974, "All employers have a duty to ensure the health,
safety and welfare of their employees in the workplace. They also have a duty to protect non-
employees from risks arising out of their work activities".
Strategies which Samsung employs to meet these responsibilities are as followed. Company
must provide honest financial report every year or quarterly to their shareholders. It is a statement in
which financial performance and other operations are written. For example, Samsung top managers
over stated their profits in the financial report which can lead to the scandal among their stakeholder.
As a result, company can become bankrupt. So, company should meet and satisfy the objectives of
stakeholders (Eden and Ackermann, 2013). Business enterprise is also responsible to provide safety
goods not only for consumers but it has also to be no dangerous for environment. The company's goal
is to reduce their deficiency within the law.
TASK 2
(a) Explanation of free enterprise and mixed economy models by which economic systems attempt to
allocate scarce resources effectively
Free enterprise and mixed economy models by which economic systems attempt to allocate
scarce resources effectively are explained here. After reviewing the Samsung progress till date and
identifying their strategy for growth, their existing business plans are formed. Economic system is a
complex of socio-economic and institutional relations between producers and consumers of goods and
services in the country (Seth, 2015). There are different types of economy models and they are free
enterprise, planned, mixed, and traditional economic models. However, the most important models are
free enterprise and mixed economy. These are as followed:
 Free enterprise economy model
In free enterprise, goods and services are produced for personal reasons which bring profit from
them and in this, companies are owned by private individuals. In free market, main rule is demand and
supply. The scarcity problem in free enterprise economy is also less but raw materials are used
vigorously (Xue and et.al., 2015). When, resources are in shortage, price can increased and the demand
gradually goes down in this way resources are used effectively. In such economy, resources are
allocated through the interaction of free and self-directed market forces.
 Mixed economy model
It is the economic system in which both the private enterprise and public sector company work
together. All modern economies are mixed where means of production are shared between the private
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and public sector. This model allows a level of private economic freedom in the use of capital, but also
allows for governments to interfere in economic activities in order to achieve social aims (Lambin,
2014). Mixed economy may have a distinct private sector, where resources are allocated primarily by
market forces. It may also have a distinct public sector, where resources are allocated mainly by
government such as in defence, police, and fire services.
(b) Assessment of the impact of fiscal and monetary policy on the business activities
Impacts of fiscal and monetary policy on the UK activities of Samsung and McDonald's are
assessed here. Policies created by the government impact businesses as these directly influence their
operations. Monetary policies impact money supply and thereby affect interest rate, cash reserve ratio
requirements of banks etc. and perform the role of being a regulator for inflation. Fiscal policies refer
to the collection of revenue and spending by the government. These influence tax rates that exist
throughout the economy. Both of these types of policies have a deep impact on the functioning of
businesses. The impact of fiscal and monetary policy on the UK activities of Samsung and McDonald's
are both used to pursue policies of higher economic growth and to control the inflation rates of the
organization.. Impact of these two policies are as following: Fiscal Policy: This policy involves government changing tax rates and level of government
spending to influence aggregate demand in the economy. In case of Samsung, if government
will increase their tax rates then company will have to spend more. To reduce demand and
reduce inflation, government can increase tax rates and cut their spending which lead to lower
the profitability of organization (Arrow and Kruz, 2013). In context of McDonald's, to increase
demand and economic growth, government will cut tax and increase their spending which will
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lead to the higher budget deficit. The major components of fiscal policy are taxation,
government spendings along with borrowing and repayment of debts. Bank of England have
control over making any kind of changes in interest rates. Low interest rates helps organization
in saving money and enhance their profit margin. On the other hand, the government of UK can
also lower down its overall spending in order to maintain flow of money.
 Monetary Policy: This policy involves changing the interest rate and influencing the money
supply. Monetary policy in the UK is usually carried out by the Central Bank or by the
monetary authorities. It involves setting base interest rate and influencing the supply of money.
In Samsung, management starts its business in new market by taking loans from the UK banks
which provide them finance with low interest rate (Borio and Zhu, 2012). By this approach, the
economy will earned large some of money from the Samsung. If, the inflation rate target rises,
due to economic growth, then Central Bank will increase the level of interest rate. Moreover, in
case of McDonald's, this will decrease the supply of money which will increase borrowing cost
and reduce consumer investment. This in turn will lead to lower aggregate demand and lower
inflation.
(c) Evaluation of the impact of competition policy and other regulatory mechanisms on the business
activities of McDonald's
Two main benefit of competition policy includes low prices and better quality of products.
Companies such as McDonald's are able to gain higher market share with the help of offering better
prices to people in market. Along with this, competition policy also encourages all companies to
deliver better and quality products in the market. On the other side of this, the major drawback of
competition policy is that it provides companies with more power to protest against monopoly.
Impacts of competition policy and other regulatory mechanisms on the business activities of
McDonald's in UK are evaluated here. One of the major competitors of Global Tech is McDonald's and
here, the company has described the competition policy. McDonald’s is the top most fast-food
restaurant in the world. Fast food industry is very challenging and every company invests lot of money
on product and service development compete with each other in order to get competitive advantage
(Moutinho and et.al., 2014). Competition policy encourages competition, makes markets better and
improves the efficiency of various organizations. It ensures wider customer choice and technical
innovation which produced dynamic efficiency and effective price competition between supplies.
Competition policies are based on four policies: antitrust & cartels, market liberalization, state aid
control and merger control. All those policies restrict practices including price fixing and other
mistreatment.
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Competition policy breaks the monopolistic market and ensures easy entry of new competitors.
On the other hand, regulations are implemented by government to forecast how a market works and the
outcomes which result for both customers and manufacturers. Some regulations are related with fair
trading, standard customer services and environmental policies. Regulatory committee monitors prices,
ensures standards of customer services, alternates competitors and new markets. McDonald’s is facing
challenges from other competitors like Burger King, KFC and Subways for price, quality of food and
services etc. All the product’s price of those companies are almost same. Competition policies aim to
keep the market fair and open to all by ensuring that unfair activities are not undertaken by dominant
participants of the market (Hovenkamp, 2015). Other regulatory mechanisms are Enterprise Act,
Competition Commission etc. regulatory mechanism such as Office of fair trading forces businesses to
make the market work well for all its customers. This is done by bringing various kind of policies and
practises into action. The policies force all organizations in market to compete with each other in very
fair terms.
CONCLUSION
It is very important for every organization to understand its business environment. For
analysing the business environment, Samsung will monitor its responsibilities and plan strategies
according to the situation. Samsung will also try to meet the objectives of different stakeholders.
Allocation and utilization of the resources are done through flexibility, security and political stability.
Government also manages the overall pace of economic activities, seeks to maintain various levels of
employment and focuses to stable the prices of businesses through fiscal and monetary policy.
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REFERENCES
Journals and Books
Arrow, K. J. and Kruz, M., 2013. Public investment, the rate of return, and optimal fiscal policy.
Routledge.
Borio, C. and Zhu, H., 2012. Capital regulation, risk-taking and monetary policy: a missing link in the
transmission mechanism?. Journal of Financial Stability. 8(4). pp.236-251.
Braga, F. and Panteghini, M., 2014. Verification of in vitro medical diagnostics (IVD) metrological
traceability: responsibilities and strategies. Clinica Chimica Acta. 432. pp.55-61.
Campbell, B., 2012. Corporate Social Responsibility and development in Africa: Redefining the roles
and responsibilities of public and private actors in the mining sector. Resources Policy. 37(2).
pp.138-143.
Covrig, V. and McConaughy, D. L., 2015. Public versus Private Market Participants and the Prices
Paid for Private Companies. Journal of Business Valuation and Economic Loss Analysis. 10(1).
pp.77-97.
Davis, K., 2014. Different stakeholder groups and their perceptions of project success. International
Journal of Project Management. 32(2). pp.189-201.
Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage.
Goetsch, D. L. and Davis, S. B., 2014. Quality management for organizational excellence. Pearson.
Hovenkamp, H., 2015. Federal Antitrust Policy, The Law of Competition and Its Practice. West
Academic.
Kamnikar, J. A. and et.al., 2012. One size does not fit all: A look at private company financial reporting
in the US and tiered GAAP alternatives being considered abroad. Journal of Accountancy.
213(1). p.46.
Lambin, J. J., 2014. Toward a Societal Market Economy. In Rethinking the Market Economy. Palgrave
Macmillan.
Moutinho, V. and et.al., 2014. Do regulatory mechanisms promote competition and mitigate market
power? Evidence from Spanish electricity market. Energy Policy. 68. pp.403-412.
Stamp, M., 2013. Practice Notes on Private Company Law. Routledge.
Xiong, W. and et.al., 2015. Performance objective-based dynamic adjustment model to balance the
stakeholders’ satisfaction in PPP projects. Journal of Civil Engineering and Management. 21(5).
pp.539-547.
Xue, W. and et.al., 2015. Analysis of the profit model of enterprise experience marketing based on
customer experience. In Logistics, Informatics and Service Sciences (LISS). pp. 1-5.
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Online
Business Environment. 2016. [Online]. Available through:
<http://www.businessdictionary.com/definition/business-environment.html>. [Accessed on 19
February 2016].
Feigenbaum, E., 2016. Purpose of Organizational Structure. [Online]. Available through:
<http://smallbusiness.chron.com/purpose-organizational-structure-3812.html>. [Accessed on 19
February 2016].
Seth, T., 2015. Mixed Economy: Meaning, Features and Types of Mixed Economy. [Online]. Available
through: <http://www.economicsdiscussion.net/economy/mixed-economy-meaning-features-and-
types-of-mixed-economy/2064>. [Accessed on 19 February 2016].
Stakeholders and their objectives. 2016. [Online]. Available through: <http://dineshbakshi.com/igcse-
business-studies/business-activity/revision-notes/1257-stakeholders-and-their-objectives>.
[Accessed on 19 February 2016].
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