Business Environment Project - Unit 1, Level 4, 2014

This project is a comprehensive analysis of the UK business environment, structured around four key tasks. Task 1 examines the organizational purposes of Visa and Oxfam, assessing stakeholder objectives and responsibilities. Task 2 explores the impact of economic systems (mixed and command) and monetary policies, analyzing their effects on Visa and MasterCard. Task 3 delves into market structures within the UK mobile telecom industry, examining pricing, market share, and organizational behavior in oligopolistic and monopolistic scenarios, focusing on EE. Task 4 investigates the influence of international trade, the EU Single Market, and global factors on Sainsbury's and M&S. The project demonstrates an understanding of various business concepts and their practical application within the UK context, drawing on provided resources and external websites.

Business Environment
Unit 1: Business Environment — Level 4
Learning
Outcome
Assessme
nt Criteria
(AC)
In this assessment you will have
the opportunity to present
evidence that shows you are able
Task
no.
Eviden
ce
(Page
LO1
Understand the
organisational
purposes of
businesses.
1.1 Identify the purposes of different types
of organisation.
11.2
Describe the extent to which an
organisation meets the objectives of
different stakeholders.
1.3
Explain the responsibilities of an
organisation and strategies employed to
meet them.
LO2
Understand the
nature of the
national
environment in
which businesses
operate.
2.1 Explain how economic systems attempt
to allocate resources effectively.
2
2.2
Assess the impact of fiscal and
monetary policy on business
organisations and their activities.
2.3
Evaluate the impact of competition
policy and other regulatory mechanisms
on the activities of a selected
organisation.
LO3
Understand the
behaviour of
organisations in
their market
environment.
3.1
Explain how market structures
determine the pricing and output
decisions of businesses.
33.2
Illustrate the way in which market
forces shape organisational responses
using a range of examples.
3.3
Judge how the business and cultural
environments shape the behaviour of a
selected organisation.
LO4
Be able to assess
the significance of
4.1 Discuss the significance of international
trade to UK business organisations.
4
4.2 Analyse the impact of global factors on
UK business organisations.
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the global factors
that shape national
business activities.
4.3
Evaluate the impact of policies of the
European Union on UK business
organisations.

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Project Brief
Unit number – title –
level Unit 1: Business Environment — Level 4
Project title Business Environment
Purpose of this project
This project allows you to demonstrate an understanding of the UK business
environment, and how the latter influences the behaviour of organisations.
Scenario
Your project is split into four tasks. You are required to base your answers on the
organisations specified in the questions. Some helpful web-links:
http://usa.visa.com/about-visa/index.jsp
http://www.oxfam.org.uk/what-we-do
http://www.bankofengland.co.uk/monetarypolicy/Pages/how.aspx
https://www.gov.uk/government/news/budget-2014-key-announcements
http://ee.co.uk/our-company/about-ee/our-vision
http://ec.europa.eu/internal_market/smact/index_en.htm
Source: http://taxreturnredcliffe.com.au/Business%20Advice.html
Task 1
This task offers you an opportunity to achieve L.O1: 1.1, 1.2 and 1.3
State the purpose of Visa and Oxfam in terms of mission, vision, values or objectives.
(1.1)
Investigate how well Visa is meeting the aspirations of customers, employees and
shareholders. Justify your answer. (1.2)
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Explain the responsibilities of Visa towards customers. Provide three strategies that
Visa uses to deliver on those responsibilities. (1.3)
Completion Dates
3rd October 2014
Relevant websites
http://usa.visa.com/about-visa/index.jsp
http://www.oxfam.org.uk/what-we-do
Task 2
This task offers you an opportunity to achieve L.O2: 2.1, 2.2 and 2.3
Explain how a mixed economy like the United Kingdom and a command economy like
China allocate resources. (2.1)
Analyse the impact of the Bank of England’s low interest rate, and increase in VAT and
corporate tax on Visa and MasterCard. (2.2)
Analyse the influence of the UK Competition Act 1998 and Consumer Credit
Regulations 2010 on how Visa operates its business. (2.3)
Completion Dates
17th October 2014
Relevant websites
http://usa.visa.com/about-visa/index.jsp
http://www.bankofengland.co.uk/monetarypolicy/Pages/how.aspx
https://www.gov.uk/government/news/budget-2014-key-announcements
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Task 3
This task offers you an opportunity to achieve L.O3: 3.1, 3.2 and 3.3
Using the UK mobile telecom industry, describe the behaviour of companies in an
oligopolistic market in terms of pricing and market share growth. Then, assuming EE
is the only mobile telecom provider in the UK, describe EE’s likely behaviour in a
monopoly market in terms of pricing, service quality and market share. (3.1)
Explain how Three Network could react in the event of prolonged weak demand for
mobile phones due to market saturation. Then, assuming US mobile carriers AT&T and
Verizon were to enter the UK telecom industry, how could Three Network react. (3.2)
In the UK, there is a cultural shift towards the use of smartphones and tablets,
creating a type of consumer who wants to stay connected and consume media
content anywhere, anyhow. Explain how EE is responding to this trend. (3.3)
Completion Dates
31st October 2014
Relevant websites
http://ee.co.uk/our-company/about-ee/our-vision
Task 4
This task offers you an opportunity to achieve L.O4: 4.1, 4.2 and 4.3
Analyse the benefits and threats of international trade and the EU Single Market Policy
to Sainsbury’s and M&S. (4.1 and 4.3)
Analyse the potential impact of cross-border migration and global rise in foods (e.g.
meat, corn, oil, wheat, rice, etc.) prices on Sainsbury’s and M&S. (4.2)
Completion Dates
15th November 2014
Relevant websites
http://ec.europa.eu/internal_market/smact/index_en.htm
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Answer Sheet
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Task 1 (L.O. 1: 1.1, 1.2, 1.3)
Please type your answer here
INTRODUCTION
Business environment includes both internal as well as external factors which influence the organization including
different stakeholders such as customers, government and competitors etc. Here, some of the factors affect the
business directly while some affects the business indirectly. This report splits into four different tasks and also different
organizations as specified. In the first task, Visa and Oxfam mission, vision and objectives has to be stated so that its
purpose can be identified (Cross and Miller, 2011). Moreover, discussion has to be made on mixed economy in UK and
command economy in China allocates resources effectively. Further, using the UK mobile telecom industry description
has to be done about the behavior of companies in an oligopolistic market in terms of pricing and market share. At the
end, analyzing benefits and threats of international trade and EU single market policy on Sainsbury’s and Marks and
Spencer.
TASK 1
1.1 Purpose of Visa and Oxfam
Oxfam is an international organization in order to find solutions to poverty and different consideration of
injustice around the world. Its main focus is towards poverty eradication, disaster relief and policy research and many
more (Whittington, 2012). Company’s mission is that it is working with thousands of local partner organizations so that
they can overcome people living in poverty and emphasize their dignity as full citizens and take proper control on their
lives. Its vision is to make the world without poverty. Company wants a world where people are valued and treated
equally as citizens and can influence decisions affecting their lives. Firm’s values and competencies are set to deal with
each other while working together. Business set acceptable standards so that individual can achieve organizational goals
and objectives (Beatty and Samuelson, 2012). Objective of business is to create a lasting solution to the injustice of
poverty and work with different partners locally and globally to achieve targets.
Visa is a premier payment technology company which has a global connect network with thousands of financial
institutions to pay millions of merchants and cardholders every day. Its vision is to become world’s top credit card
company and aims to rule all forms of electronic payments (Nandi, 2010). Organization’s mission is to handle
commercial purchase of up to $ 10 million but firstly it has to renovate its computers. Its objective is to improve
customer expectation by providing value added services through highly motivated people and delivering excellent
financial performance in all the markets where company operates.
1.2 Visa meets the objectives of various stakeholders
The major stakeholders of Visa are customers, employees and shareholders. Customers- Customer wants that Visa provides them better financial services at faster rate. Through
this there is an ease in the transaction for customers and they can withdraw the cash easily (Fernando, 2011).
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Customers are the king therefore their needs and preferences have to be fulfilled by business. Company tries to provide
its services with collaboration of bank. Visa is meeting the needs of customers through providing better financial service
whenever and wherever they need through using their debit and credit cards.  Employees- The workers of the company wants the job satisfaction as well as security of their job.
Therefore, company provides opportunity to their employees to enhance their life style through providing high salaries
and other benefits. Organization also provides them better working environment so that they feel satisfied while
working and do not leave the job (Gottheil, 2013). Company meets the objectives of their employees through providing
them better platform where they can provide innovative services so that organization can achieve success. Shareholders- Shareholders are an important part of business because they invest their capital in
business and in result receive dividend. Therefore, cited organization should provide timely information about the
current position of company so that they can invest more and increase the brand image of the company (Shaikh, 2010).
Further, firm should invite shareholders in the annual general meeting and inform them about the future strategies of
the company so that they can invest more in the shares of company.
Figure 1 Different stakeholders
1.3 Responsibilities of Visa towards customers
The following are the responsibilities of Visa towards the customers along with strategies employed by it to meet
them. They are as follows-  Responsibility of privacy policy- It is the responsibility of company to protect the information of their
clients and do not share it publically. It has to be maintained by the company because of certain privacy reasons of
customers and also because of financial reasons (Ahmad and et. al., 2010). Banks guides the Visa Company to protect
the user name, pin number and various other details so that they can be safeguarded from any harm like hacking the
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password any withdraw of money from the account.  Responsibility of operating within the boundaries of law- As the company is a premier payment
technology company which provides services to millions of merchants and cardholders every day. Therefore, it is the
duty of the business to operate its services within the legal boundaries (Dickinson, 2013). It has to follow all the rules
and regulations while carrying out its business operations.  Responsibility to serve worldwide clients- Being a premier payment company, it has the responsibility
to serve its customers with better and innovative services so that they can feel satisfied (Gani, 2011). They serve the
worldwide clients with ease so that they can withdraw their cash easily.
Task 2 (LO2: 2.1, 2.2, 2.3)
Please type your answer here
2.1 How economic systems attempt to allocate resources effectively
There are different types of economic system in UK and China to allocate resources-  Mixed economy- Under this economic system, it is the mix of capitalism and socialism. Here, both
public and private sector take parts and allocate the resources accordingly as per the requirement (Lindelöf, Dettwiler
and Löfsten, 2006). Under this economy, private sector is encouraged to make optimum allocation of resources so that
high profits can be attained. Further, government also plays a major part in order to manage the resource effectively
and efficiently. For instance, UK government lies under this economy so that they allocate the resources efficiently and
attain results. Command economy- In command or centrally planned economy, market mechanisms are replaced by a
centralized state authority which coordinates all economic activity through commands, directives or regulations in order
to achieve political objectives. Here, supply and price are regulated by government rather than market forces (Tokuoka,
2013). Further, there is no involvement of private enterprises in order to allocate resources. Moreover, the decision of
which goods and services have to be produced and what prices have to be set lies with the regulatory bodies therefore;
there is no problem of resource allocation. For example, China is considered to be a command economy and they
allocate the resources as per the requirement of their country and do not involve any other private forces in production
or distribution.
2.2 Impact of monetary policy on Visa and MasterCard
Bank of England’s low interest rate and high value added tax and corporate tax influence on the Visa and
MasterCard. As it comes under monetary policy therefore, monetary authority controls and regulates the supply of
money in the economy. This can be done through controlling or lowering down the interest rate so that people will be
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attracted to buy more Visa and MasterCard and increase their buying behavior (Kelliher and Henderson, 2006). This will
positively impact bank through increase in revenues and enable customer to purchase more service of debit and credit
cards. In contrast to this, if bank increases the interest rate than it creates difficulty for consumers to increase the
purchase of Visa card and thus, it affects the operations of bank.
Moreover, increase in value added tax and corporate tax by Bank of England on Visa and MasterCard will
negatively impact the bank because through such increase in tax rate people will proportionately decline their buying
behavior. This will lie on the amount of percentage increased by bank so that customers are getting advantages or
disadvantages from purchasing the Visa or MasterCard (Manning, 2013). Therefore, bank is required to lower its
interest rate so that it attracts more potential buyers to increase their borrowings and make more purchases through
using services of Visa and MasterCard cash service provider.
2.3 Influence of Competition policy and Consumer credit regulations on operations of
Visa
The Competition Act 1998 and consumer credit regulations 2010 have a great impact on the operations of Visa.
Such policies are formulated by government in order to improve the competitive environment for firms within which
they operate their businesses. Through such act government fixes the terms of business and restricts the firm to get
monopoly in the market (Kourteli, 2000). Through the effect of such policy, Visa cannot become monopolistic service
provider in such competitive world and they have to maintain its competitiveness and do not affect other existing firms.
Company is required to follow competition act 1998 as made by UK government so that they carry out its operations in
the market and serve customers effectively.
Also, Consumer Credit Regulations, 2010 also impacts the operations of Visa and is designed to harmonize the
regulation of consumer credit across UK an increase the consumer protection. UK Government regulates the businesses
through maintaining such policy and restricts them to not exceed the credit limit of particular consumers so that clients
can be protected (Haigh and Brubaker, 2010). Therefore, firms are required to follow different regulatory policies so
that organization can attain desired results. Both the policies formulated by UK authority impacts the operations of
company and set the credit limit of person so that it cannot be exceeded in any case.
Task 3 (LO3: 3.1, 3.2, 3.3)
Please type your answer here
3.1 EE’s behavior in a monopoly market
The UK mobile telecom industry operates in an oligopolistic market which means the market is dominated by
small number of sellers. Such market structure reduces competition and increases the prices of products for consumers.
UK mobile industry is small and therefore firms charge prices according to their interest which influences consumers
and they are bound to pay high prices (Kulmala and Uusi-Rauva, 2005). Being low competition, companies have high
potential market share growth and thus, due to increase in demand of customers they charges high prices. As the
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number of sellers under oligopoly market is few therefore, it means that customer cannot get products at high lower
prices because of lack of competition. Here, company is the price make and consumers are the price taker. The company
does not increase or decrease the price of product as per the demand of consumers. They kept the prices to be rigid and
also company has full control over the prices.
Assuming that EE is the only mobile telecom service provider in the UK is has a positive impact on setting prices,
service quality and market share. As the company has the monopoly market and there are no competitors available of
the product then company has the chance to set its own prices in order to have high market share (How does monetary
policy affect the U.S. economy? 2014). EE’s mission is to provide UK the best network and service so that customers trust
them and use the services of company. Moreover, operating in a monopoly market company cannot increase the prices
as per their choice and also they have to provide better service quality which fulfills the needs of clients.
3.2 How Three Network could react in the event of weak demand
Three Network company should positively react in the event of weak demand for mobile phones so that business
should plan various strategies to increase the market demand of mobile phones. At the time of market saturation,
company should increase its production and supply mobile phones at lower prices (Kemp and Vinke, 2012). Through
this, consumer will attract towards the products and services of company and thus, increase the sales of company.
Business can apply various cost effective strategies so that it can create its strong presence in the UK mobile phone
market. Further, company should create different product categories as per the market segment so that they can attract
different customers and satisfy their needs through serving best mobile phones.
The big US mobile carriers AT & T and Verizon are the big players of the telecom market and now they were
planning to enter into the UK telecom industry to give tough competition to Three Network. It affects the business
because of new entrants in the market and therefore firm should bring different competitive strategies so that they can
grab the attention of different users and provide them better services (Giovanni, 2012). Moreover, business has to bring
different loyalty programs and schemes so that it can have its loyal customers and help them to not switch over to other
competitors. Three Network should understand the strategy of AT & T and Verizon and then plan its own strategy so
that objectives can be achieved.
3.3 Cultural shift towards use of smart phones and tablets
There is a great shift in culture of UK people towards the use of smart phones and tablets and making the world
digitalized. Therefore, in this regard EE Company is launching its products in the market with the aim of providing best
network and service to its potential customers so that they can trust and experience excellent services to their clients
(Gottheil, 2013). As the culture of UK is changing and many people mainly young customers are preferring to buy smart
phones and tablets so that they can use the internet services at anywhere and anytime. Mainly young user’s wants to
stay connected with each other and also consumer various media types such as internet etc, so that they can make their
lives digitalized.
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Cultural factor includes values and beliefs of the society where the company is operating its business. Therefore,
EE is highly responding towards such change and thus they are planning various activities in order to fulfill the needs of
clients. The company has to take care of cultural aspects of people and then plan their strategies accordingly so that
more people use the products and services of company (Shaikh, 2010). Therefore, firm is trying to bring all such changes
like smart phones and tablets in its products range and attracting young customers in order to use the products and
increase brand image of company.
Task 4 (LO4: 4.1, 4.2 , 4.3)
Please type your answer here
4.1, 4.3 The benefits and threats of international trade and EU Single Market
Policy
Various benefits of international trade and EU single market policy on Sainsbury’s and M&S are as follows-  Expansion of business- International trade and EU single market policy is important for both the
companies because through this company can expand its operations in global market (Cross and Miller, 2011). It can
expand its product into new market. International trade can help companies to gain popularity in other countries as
well.  High market share- Through international trade and EU companies can rapidly increase its market
share. It benefits them to easily export their products to other countries and thus, it will help in increase the scope of
operations of business (Fernando, 2011). Thus, business can earn high profits in long run.  Attracting investment- Through practicing such policies in Sainsbury and M&S it attracts high
investment from various other foreign companies. Through such investment in business it creates more jobs and also
attracts various international investors to invest in the company and earn profits (Nandi, 2010).  Advantages of new technology- International trade and EU policies can promote new technology in the
business so that competitiveness and profitability. Through this, company can produce innovative products and bring
competitive advantage in business.  Employment policy- Change in employment policy of EU it impact the company policies and they have
to change their recruitment process so that they can select effective employees (Dickinson, 2013).
Further, various threats of international trade and EU single market policy on Sainsbury’s and M&S are as follows- Cultural identity issues- It states that both the companies faces challenges of cultural change because
the values and beliefs of consumers are different. Thus, it can be found that company carries different products with
varied cultural ideas and messages (Tokuoka, 2013). Hence, it affects the company because of change in cultural needs
of people and they do not use the product.  Social welfare issues- It includes safety standards, minimum wages and health benefits etc. so that
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