Business Environment Report

This report provides a detailed analysis of the business environment of Next PLC, a prominent UK retailer. It examines the purposes of diverse organizations, identifying Next PLC as a private sector company aiming for profit maximization. Key stakeholders, including owners, managers, employees, and the government, are analyzed, along with their respective expectations and the company's responsibilities towards them. The report explores the impact of various economic systems, fiscal and monetary policies, competition policies, and market structures on Next PLC's operations. A PESTLE analysis is conducted to assess the political, economic, social, technological, legal, and environmental factors influencing the company. The report also discusses market forces such as supply and demand, income elasticity, and substitution elasticity. Finally, the report concludes by summarizing the key findings and their implications for Next PLC's strategic decision-making.

Business Environment
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TABLE OF CONTENTS
INTRODUCTION................................................................................................................................3
SECTION 1..........................................................................................................................................3
Q1. Purposes of diverse organizations.............................................................................................3
Q2. Key stakeholders of Next PLC.................................................................................................4
Q3. Responsibilities of an organization...........................................................................................4
Q4. Impact of economic system......................................................................................................5
Q.5 Impact of fiscal and monetary policy........................................................................................5
Q6. Impact of competition policy....................................................................................................6
Q7. Impact of market structure........................................................................................................6
Q8. Market forces on organisation...................................................................................................7
Q9. Pestle analysis...........................................................................................................................7
CONCLUSION....................................................................................................................................8
REFERENCES.....................................................................................................................................9
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INTRODUCTION
Business environment is the combination of diverse factors which can influence the operational
activities. Classification of factors can be people, resources, media, governance regulation, economy,
culture and other social values that relates with the business. In support of this, it can be stated that
business operations can be influenced due to diverse internal and external factors (Binh, 2010). In
order to have better understanding regarding business environment concept, learning will focus on
work culture of Next PLC. It will explore the key motives of diverse business organizations that would
operate the activities with different nature. Learning will also focus on the strategies which can be
adopted by business firms in order to meet the objectives. Furthermore, it will also have spot light on
the impact of fiscal and monetary policies.
SECTION 1
Q1. Purposes of diverse organizations
It has been spotted that there are number of organizations that operate in the international
market and every business firm has different nature. Classification of organizations can be like private,
governmental and charity. In support of this, it can be said that all these kinds of organizations have
their own mission and vision.
 Public sector: Public sector firms are mostly considered as business firms that perform various
activities with respect to national security (Casile, 2012). Key motive of these kinds of
organization is to provide employment opportunities to citizens.
 Private sector: Key motive of private sector companies is to attain better profit and to
accomplish the growth opportunities within sector. They also focus on effective use of diverse
resources and activities which facilitates in meeting the expectations of stakeholders.
 Partnership organization: Partnership organization is considered as the firm which focuses on
collaborative working with two or more parties in order to overcome the issues and to explore
better opportunities within industry (Ho, 2012). It also provides ability to utilize limited
liability and to share skills with diverse individuals that belongs to different cultures.
 Charitable organizations: Moreover, it has been spotted that the charitable organizations are
referred as authority that works in order to promote social aspects within environment.
Next PLC is considered as a private organization by nature and its key motive is to earn more
profit. Company provides wide range of retail products to UK citizens and efforts to accomplish the
growth opportunities within sector (Malhotra, 2010). Company focuses on providing premium quality
of products. Production and other operational activities have effective consideration of all legal
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standards in order to meet the objectives.
Mission: Next PLC’s mission is to meet customers’ expectations in an appropriate manner and
to reflect the aspirations in products.
Vision: Next PLC’s vision is to become the leader in market and to have continuous
improvement in product line.
Q2. Key stakeholders of Next PLC
Stakeholders play a key role in the success of diverse operational activities and their perception
towards firm can influence the success ratio (Potter, 2008). It has been spotted that there are number of
stakeholders who play a key role in the operational activities of Next PLC. Classification can be like
business owners, managers, employees, governance, creditors, etc.
Owner: In support of the above statement, it can be said that business owner is considered as
one of the individuals for the organization and have activities regarding controlling and monitoring.
These kinds of activities facilitate in effective management of activities and expect more profit
(Creating an Organizational Structure. 2014).
Managers: It also play a significant role in diverse activities such as decision making process,
strategy formulation, etc. These kinds of people have great accountability in context of decision
making process (Pirraglia, 2013). Managers design diverse kinds of strategies which can run business
effectively in order to meet the common objectives of firm.
Employees: It also participate in diverse operational activities; they have day to day
involvement with various activities at the workplace. It is essential for Next PLC to provide them good
remuneration with respect to their work (Savolainen, 2012). If company will not meet employee’s
expectations, then firm can face number of issues that can impact the business operations in a negative
manner.
Government: It is also essential for the management of Next PLC to follow all the rules and
regulations which are designed by the government of UK.
Q3. Responsibilities of an organization
In order to have better accomplishment of organizational needs, it is necessary for business firm
to meet the standards of responsibilities towards stakeholders. In support of this, owner expects
continuous improvement in the profit margin ratio. In this respect, it is necessary for the management
to ensure that its strategies are well designed and it has a positive impact on the customer perception in
order to boost the sales and for earning higher profits (Luthans, 2002). Moreover, key expectation of
employee is to have a healthy work culture and structured incentive with respect to the work
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performed. In this support, it is essential for the management of Next PLC to design organization
policies as per the needs of employees (Densten, 2002). It will amend the effectiveness of work and
facilitate in meeting the industry standards. Company can also provide better opportunities by treating
all employees in an equal manner. It will also provide effective accomplishment of employee’s needs.
Other than this, government of UK expects that company pays taxes on time and in a correct
manner so that social aspects can be developed in a better way (Ahmad, 2009). Government also
expects that business firm follows all rules and regulations in an appropriate manner. In this respect,
management of Next PLC must design strategies and organizational policies as per the ethical
consideration so that expectations of governance can be accomplished in an effective manner.
Q4. Impact of economic system
There are number of economic systems in the market which impact the business operations in
diverse manner. Classification of economic system can be command system, free enterprise,
transactional and mixed economic system. In command economic system, decisions are taken by the
government and it is considered as a centralized economic system (Booth, 2004). In other aspect, it can
be stated that all the economical resources are in the hand of centralized power. It is necessary for Next
PLC to take permission of UK governance in order to have operations in command economy.
On the other side, free enterprise economic system is another sort of market economy in which
governance does not have any kind of involvement. All decisions are made by private organizations in
order to boost the operational activities (Worthington, 2006). In this economy, management of Next
PLC is free to take any kind of decision that can amend its business opportunities. But it is necessary
for the management to ensure that decisions must have consideration of supply and demand aspects.
Moreover, mixed economic system is considered as a combination of diverse economic
systems. In this, management of Next PLC can focus on the key aspects of command and free
economic system in order to have better business opportunities (Worthington, 2006). Here, government
has effective control on the economical resources but private organizations also have involvement in
the decision making process.
Q.5 Impact of fiscal and monetary policy
Policies of government like monetary and fiscal policy makes greater impact on the business
operations of Next PLC as change in regulations of this policies makes greater impact financial and
business planning. For example increase tax rates by government makes impact on profitability and as
well as prices of products of company (Pugh, 2007). On the other side if the spending of government is
towards the promotion of particular industry then it may make positive impact on business Next PLC.
Similarly increase or decrease in interest rates makes impact on the loans and borrowings of company
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as higher interests rates increases the interest expenses and decreases the profit margin o in case of low
interest it decrease the expenses and increases the profits. Next PLC also operates its business in other
countries of the world and fluctuation in value of pound affects the invest planning and revenue of the
company (Booth, 2004). It can be said that change in monetary and fiscal policy has both positive and
negative impact on the companies, it depends upon the type of fluctuation.
Q6. Impact of competition policy
It has been spotted that there are number of impacts of competition policy on operational
activities of Next PLC and it is necessary for business firm to understand these impacts for better
opportunities. UK government has introduced competition policy for better opportunities of retail
sector and it has key impacts on Next PLC (Ahmad, 2009). UK competition policy is based on four
key aspects that can be classified as antitrust and cartels, market liberalization, state aid control and
merger control. In this respect, it can be said that antitrust and cartels policy ensure that any business
firm is not having unethical business business practice with market. It also restrict unethical
competition and overcome barriers for new entries in market.
Moreover, competition policy also ensure that the pricing of products are decided in correct
manner and business organizations are not charging high as per standards of industry. It is necessary
for management of Next PLC to ensure that all these policies are properly followed in operations so
that issues can be avoid in effective manner (Densten, 2002). Market liberalization is also beneficial
and remove number of barrier for new entities and reduce the impact of monopoly conditions in the
market.
Q7. Impact of market structure
Classification of market structure can be as perfect, monopoly, duopoly. It has been identified
that all these factors have great level of influence on decisions of Next PLC. In support of perfect
competition market structure, it can be said that there are number of sellers are present in the market
who sell same products in the market (Luthans, 2002). Competition level in this kind of market is high
so it is necessary for management of Next PLC to focus on effective designing of policies and selection
of pricing strategies. Market conditions need to consider as critical aspect within environmental
conditions.
Moreover, monopoly market structure means the market condition in which only one company
is operating in market. In this market condition, the management of Next PLC can take decisions as per
their needs and perception. Management is free to take any decision as they want because there is no
any other business firm present in market (Savolainen, 2012). Company does not face any kind of
competition and hold dominance power in the market. Next PLC can also have advanced production
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level and they can sell its products and services at very high price. Other than this, in duopoly market
structure, only two sellers are present in market but high range of customers is available (Pirraglia,
2013). In this, it is necessary for Next PLC to make decisions as per activities of other competitor
present in the market. Moreover, the decisions and policies are formulate according to response
provided by the purchasers.
Q8. Market forces on organisation
In this aspect, it can be stated that there are number of market forces which can impact
operational activities of Next PLC. Supply and demand are key factors that must be concerned by
management while taking decisions regarding pricing of products (Binh, 2010). Changes in demand
and supply of products impacts greatly on the operations of business firm. If demand increases and
supply is low then it is necessary for management of Next PLC to increase the price of products as it
will provide better profit margin ratio.
Other than this,income elasticity of demand and elasticity of substitution also impacts the
operational activities of business firm. Changes in income level of customers also impacts the business
firm operations in diverse manner (Ho, 2012). For example, the income level of customers has
increased then it will motivate them to purchase goods in easy manner. During the advancement in
income level the management can also increase price of products.
Q9. Pestle analysis
To examine the different factors which shape the behaviour of Next PLC, PESTLE analysis is
used to examine the behaviour of company.
 Political: Factors such as legal laws and regulations of government, taxation policies, trade
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policies, etc. are to be planned in accordance with the criteria defined by the government. Next
PLC also operates its business in other countries of the world due to which company has to
frame its taxation and business trade activities in accordance with the legislation of UK
government (Malhotra, 2010). Economic: This factor makes an impact on the financial aspects of Next PLC as fluctuation in
rates of inflation; interest rates, etc. affect the financial planning and revenue of company. Social: It is one of the important factors which shape the behaviour of Next PLC while offering
its products and services in the market as social factor influence the firm to offer clothing and
accessories in accordance with the latest trends and culture of market (Ho, 2012). Technological: Technological factors are also concerned by Next PLC in its business as per the
current trend of online retail store. Company is effectively offering its products through its
online retail website. They have shaped their selling activities as per the advancement of
technology. Legal: Legal factors are related to employment policies, rights of customers, health and safety,
etc. Next PLC is following all these policies in its business operations to meet the legal
regulations of UK government.
 Environmental: Next PLC has shaped its business activities towards the corporate social
responsibility (Binh, 2010). It is essential for companies which are operating in UK to make
them socially responsible towards environment.
CONCLUSION
As per the above study, it can be concluded that business environment has number of impacts
due to internal and external aspects such as employees, governance, shareholders, customers, etc. It has
also been spotted that in every business firm, stakeholders plays key role so it is necessary for
management of Nect Plc to meet the expectations of all stakeholders. In order to have better
accomplishment of organisational needs it is necessary for business firm to meet the standards of
responsibilities towards stakeholders. It has been spotted that the classification of economic system can
be as command system, free enterprise, transactional and mixed economic system. Market structure
also have great level of impact on the operational activities of firm.
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REFERENCES
Books and Journals
Ahmad, K., 2009. Leadership and work motivation from the cross cultural perspective. International
Journal of Commerce and Management. 19(1). pp.72 – 84.
Binh, T., 2010. The Influence of Changes in the Market Environment on Economic Production
Characteristics of Pangasius Farming in the Mekong Delta (Vietnam). Marine Resource
Economics. 25(4). pp. 373-390.
Booth, J. 2004. Human Resource Management and Organization Behaviour: Selected Perspectives.
Leadership & Organization Development Journal. 25(1). pp.109 – 110.
Casile, M. 2002. When Accreditation Standards Change: Factors Affecting Differential Responsiveness
of Public and Private Organizations. The Academy of Management Journal. 45(1). pp. 180-195.
Densten, L. I., 2002. Clarifying inspirational motivation and its relationship to extra effort. Leadership
& Organization Development Journal. 23(1). pp.40–44.
Ho, N. F., 2012. A Global Analysis of Corporate Social Performance: The Effects of Cultural and
Geographic Environments. Journal of Business Ethics. 107(4). pp. 423-433.
Luthans, F., 2002. The need for and meaning of positive organizational behavior. Journal of
organizational behavior. 23(6). Pp. 695-706.
Malhotra, N., 2010. An Organizational Model for Understanding Internationalization Processes.
Journal of International Business Studies. 41(2). pp. 330-349.
Potter, K. B., 2008. Newborn Blood Spot Screening in Four Countries: Stakeholder Involvement.
Journal of Public Health Policy. 29(1). pp. 121-142.
Pugh, D. S., 2007. Organisation Theory. London, Penguin Books.
Savolainen, R. 2012. Expectancy-value beliefs and information needs as motivators for task-based
information seeking. Journal of Documentation. 68(4). pp.492 – 511.
Worthington, I., 2006, The Business Environment. 5th ed. De Monfort University, Leicester.
Online
Creating an Organizational Structure. 2014. [Online]. Available
through:<https://new.edu/resources/creating-an-organizational-structure> [Accessed on 19th
December 2015].
Pirraglia, W., 2013. The effects of leadership styles on organization. [Online]. Available
through:<http://smallbusiness.chron.com/effects-leadership-styles-organization-10387.html>.
[Accessed on 19th December 2015].
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