Business Environment Portfolio: Unit 2 Analysis of UK Business

This portfolio analyzes the UK business environment, covering various aspects such as the differentiation between public and private sector organizations, stakeholder objectives, and the impact of fiscal and monetary policies. It also explores resource allocation in different economic systems (capitalist, mixed, and socialist), the dynamics of supply and demand, and Michael Porter's Five Forces. Furthermore, the portfolio examines the effects of market decisions (product, price, place, promotion) on business policies, global factors impacting UK businesses, and the influence of EU policies. The content includes tables, mind maps, and diagrams to illustrate key concepts, and it is supported by references to relevant sources. This project provides a comprehensive overview of the business environment and its complexities.

Unit 02: Business Environment
Contents
Task 1 – Portfolio..................................................................................................................................2
a. A table differentiating the purpose of public and private sector organisations...........................2
b. A mind map showing the main stakeholders of an organisation and their objectives, including
government, regulatory bodies, competition, etc...............................................................................3
c. A table showing the impact of fiscal policies and monetary policies on businesses..................4
d. A table showing how resources are allocated in a Capitalist, a Mixed and a Socialist economy5
e. A diagram showing the impact of supply and demand on the market........................................7
f. A diagram explaining Michael Porter’s forces...........................................................................8
g. A table explaining the effect of market decision (Good/service, cost, distribution, promotion)
on business policies...........................................................................................................................9
j. A diagram showing the global factors on UK business............................................................12
k. A diagram showing the impact of EU policies on UK business...............................................13
References...........................................................................................................................................14
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Unit 02: Business Environment
Task 1 – Portfolio
a. A table differentiating the purpose of public and private sector organisations
The private sector comprises of business which is owned, managed and controlled by individuals. On
the contrary, public sector comprises of various business enterprises owned and managed by
Government.
BASIS FOR
COMPARISON PUBLIC SECTOR PRIVATE SECTOR
Meaning The section of a nation's economy,
which is under the control of
government, whether it is central, state
or local, is known as the Public Sector.
The section of a nation's economy,
which owned and controlled by private
individuals or companies is known as
Private Sector.
Basic objective To serve the citizens of the country. Earning Profit
Raises money from Public Revenue like tax, duty, penalty
etc.
Issuing shares and debentures or by
taking loan
Areas Police, Army, Mining, Health,
Manufacturing, Electricity, Education,
Transport, Telecommunication,
Agriculture, Banking, Insurance, etc.
Finance, Information Technology,
Mining, Transport, Education,
Telecommunication, Manufacturing,
Banking, Construction, Pharmaceuticals
etc.
Benefits of
working
Job security, Retirement benefits,
Allowances, Perquisites etc.
Good salary package, Competitive
environment, Incentives etc.
Basis of Promotion Seniority Merit
Job Stability Yes No
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Unit 02: Business Environment
b. A mind map showing the main stakeholders of an organisation and their objectives, including government, regulatory bodies, competition, etc.
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Unit 02: Business Environment
c. A table showing the impact of fiscal policies and monetary policies on businesses
The economic position of a country can be monitored, controlled and regulated by the sound
economic policies. The fiscal and monetary policies of the nation are the two measures, which can
help in bringing stability and developing smoothly. Fiscal policy is the policy relating to government
revenues from taxes and expenditure on various projects. Monetary Policy, on the other hand, is
mainly concerned with the flow of money in the economy.
ASIS FOR
COMPARISON FISCAL POLICY MONETARY POLICY
Meaning The tool used by the government in which
it uses its tax revenue and expenditure
policies to affect the economy is known as
Fiscal Policy.
The tool used by the central bank to
regulate the money supply in the
economy is known as Monetary
Policy.
Administered by Ministry of Finance Central Bank
Nature The fiscal policy changes every year. The change in monetary policy
depends on the economic status of
the nation.
Related to Government Revenue & Expenditure Banks & Credit Control
Focuses on Economic Growth Economic Stability
Policy instruments Tax rates and government spending Interest rates and credit ratios
Political influence Yes No
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Unit 02: Business Environment
d. A table showing how resources are allocated in a Capitalist, a Mixed and a Socialist
economy
The capitalist or free enterprise economy is the oldest form of economy. Earlier economists supported
the policy of "laissez fair" meaning leave free. They advocated minimum government intervention in
the economic activities.
In the socialist or centrally planned economies all the productive resources are owned and controlled
by the government in the overall interest of the society. A central planning authority takes the
decisions.
A mixed economy combines the best features of capitalism and socialism. Thus mixed economy has
some elements of both free enterprise or capitalist economy as well as a government controlled
socialist economy. The public and private sectors co-exist in mixed economies.
BASIS FOR
COMPARISON CAPITALISM SOCIALISM
Meaning Capitalism refers to the economic
system prevalent in the country, where
there is private or corporate ownership
on the trade and industry.
The economic structure in which the
government has ownership and control
over the economic activities of the
country is known as Socialism.
Basis Principle of Individual Rights Principle of Equality
Advocates Innovation and individual goals Equality and fairness in society
Means of Production Privately owned Socially owned
Prices Determined by the market forces Determined by the Government
Competition Very High No competition exists between firms
Degree of distinction
in the class of people
High Low
Wealth Each individual works for the creation Equally shared by all the people of the
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Unit 02: Business Environment
BASIS FOR
COMPARISON CAPITALISM SOCIALISM
of his own wealth country
Religion Freedom to follow any religion Freedom to follow any religion but it
encourages secularism
Efficiency Much Less
Government
Interference
No or marginal Government decides everything
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Unit 02: Business Environment
e. A diagram showing the impact of supply and demand on the market
A market is said to be in equilibrium when where is a balance between demand and supply. If
something happens to disrupt that equilibrium (e.g. an increase in demand or a decrease in supply)
then the forces of demand and supply respond (and price changes) until a new equilibrium is
established.
Supply shifts to the left Supply & Demand shift right
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Unit 02: Business Environment
f. A diagram explaining Michael Porter’s forces
Porter's Five Forces is a simple but powerful tool for understanding the competitiveness of your
business environment, and for identifying your strategy's potential profitability.
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Unit 02: Business Environment
g. A table explaining the effect of market decision (Good/service, cost, distribution, promotion)
on business policies
Market Decisions Effects
Product
Market studies show what the members of the
target market value in a product, but some things
may be too difficult or too expensive to include.
Business has to give priority to features and
characteristics that add value for the customers
but don't cost much for the company to produce.
Especially important are features that can add at a
lower cost than the competitors, giving a
competitive advantage.
Price
Companies set a price based on cost, value and
competition. Company wants to set a competitive
price for a product that the target market values
more highly than the products of competitors.
The price has to cover the costs and generate a
profit or, if strategy is to gain market share, leave
room for future price increases and profits.
Finally, have to decide on a price that members
of target market can afford or they will not be
able to buy the product.
Place
Once company has decided on product
characteristics and price, have to think about how
customers can buy it. Distribution decisions rely
heavily on how best can reach the target market.
If the potential customers spend a lot of time
online, a website might be an appropriate sales
channel. If they are concentrated in a particular
area, a local store might be the best approach.
Driving these decisions are customer convenience
and the cost of using a particular distribution
channel.
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Unit 02: Business Environment
Promotion
Have to decide how to inform people in the target
market that a product they need is available at a
price they can afford and at a convenient location.
Advertising is a traditional means of promotion,
but it is expensive, especially for smaller
companies. Public relations the issuing of press
releases and publicly promoting the initiative is
one alternative. Direct marketing, approaching
the potential customers directly, is effective.
Personal selling salespeople interacting with
consumers work well but don’t lend it to high
sales volumes. Deciding to use several means of
promotion increases the likelihood of success.
h. A table showing the impact of various element of culture on business
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Unit 02: Business Environment
i. A graph showing the value of international market to UK business over the last 70 years
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Unit 02: Business Environment
j. A diagram showing the global factors on UK business
Global forces impacting UK businesses include, but not limited to increasing scale of international
trade, increasing levels of multiculturalism in UK organisations, increasing levels of inter-
dependency of national economies and others.
Political
The level of global political stability
 The level of bureaucracy in international affairs
 The extent of freedom of media
 Global trade control initiatives
 Threat of international terrorism
 Tariffs between the UK and other countries
 Global copyright, patent and intellectual property disputes
Economical
 Impacts of intensifying economic globalisation
 Global economic crisis
 Sock market fluctuations
 Cost advantages possessed by emerging superpowers
such as China, India etc.
 Impact of The World Bank and The World Trade
Organisation
 Increasing importance of outsourcing and offshoring
initiatives
Social
 Changes in family values in global scale
 Changes in family patterns (same-sex marriages, single
parents etc.)
 Increasing popularity of immigration and migration
practices
 Increasing mobility between social classes
 Greater concern for minorities in society
Technological
 Level of global technological infrastructure
 Industry-specific technological breakthroughs
 Regular emergence of innovative communication
technologies
 Adoption of technology as competitive edge by
increasing numbers of businesses
Ecological
 Impacts of global warming tendencies
 Increasing levels of air and pollution
 Increasing level of sensitivity towards “green” problems
among business stakeholders
 Activities and initiatives of global environmental
organisations
Legal
 Laws and regulations related to data protection
 Global data protection rules and regulations
 Increasing levels of “legal globalisation”
 Changes in cross-country employment and health and
safety laws
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Unit 02: Business Environment
k. A diagram showing the impact of EU policies on UK business
The European Union is the single largest market in the world and this means that all members of
EU can freely conduct business and trade practices throughout other member states. Naturally,
the scope for business activities for UK businesses has increased significantly by IKs
membership in the UK. Benefits like reduced or abolished selling tax and freedom from other
restrictive fiscal measures and policies means that the businesses can enjoy higher profits and
operate more freely without having to deal with frequent government intervention. Another
important aspect of EU membership is that while companies from other areas of the world are
still bound by the regulations and policies of respective European nations, businesses belong to
UK and other member states are not. Thus they have a decidedly higher profit margin and
success rate within the EU. EU policies have also ushered a liberalization of policies and hence
many products which were prohibited from being traded can now be freely traded across
different EU nations.
The EU’s competition policy ensures that the market competition remains free and that
companies work to provide the best products to customers at the best prices. This ensures that
no company is able to create a market situation wherein it profits at the expense of other
companies. Thus, the chances of surviving and doing well, particularly for small scale or
emerging companies, is enhanced. The policy for violation being rather stiff, this rule is
followed to the letter and monitored zealously by concerned agencies. On the flipside, these
policies can be somewhat restrictive for large businesses which can potentially reduce or inhibit
expansion. EU’s trade policies with other parts of the world are binding on all members and
while this gives certain advantages in bargaining to EU member states it can also be a problem
as this restricted individual members from freely stating their preferences and forming
agreements accordingly.
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Unit 02: Business Environment
References
Markgraf, B. (2018). What Are the Key Marketing Decisions?.Available:
https://yourbusiness.azcentral.com/key-marketing-decisions-9338.html. Last accessed 25th Jan 2020.
Peterson, S., Jaret, P. and Schenck, B. (2019). Business Marketing Plan: Distribution, Pricing, and
Promotion Strategies. Available:
https://www.dummies.com/business/start-a-business/business-plans/business-marketing-plan-
distribution-pricing-and-promotion-strategies/. Last accessed 25th Jan 2020.
UKEssays. November 2018. Impact Of Policies Of The European Union on UK Business. [online].
Available from: https://www.ukessays.com/essays/economics/the-impact-of-policies-of-the-european-
union.php?vref=1 [Accessed 26 January 2020].
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