Business Environment Report - UK Economic Systems and Policies

This report provides a comprehensive analysis of the UK business environment. It begins by defining various types of organizations, including public and private sectors, with case studies of Asda and the NHS, and assesses how these organizations meet stakeholder objectives. The report then delves into the UK's mixed economic system, comparing it with the US system, and examines the impact of competition policy and regulatory mechanisms, particularly the Competition Act of 1998, on businesses like Asda. It further explores market structures, market forces, and the business and cultural environment shaping the behavior of Virgin Atlantic. The report also investigates the influence of global factors and EU policies on UK businesses, concluding with a discussion of strategic decision-making and sustainable business practices. The report emphasizes the importance of ethical governance, effective communication, and adherence to standards like ISO 9000 for organizational success and competitive advantage in the dynamic business landscape.

Business Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Types of organisations...........................................................................................................3
1.2 Extent to which organisation meets objectives of stakeholders............................................4
1.3 Responsibilities and strategies (M1, D1)...............................................................................5
TASK 2............................................................................................................................................6
2.1 Economic systems of UK attempt to allocate resources effectively......................................6
2.2 Enclosed in ppt......................................................................................................................8
2.3 Impact of competition policy and regulatory mechanisms..................................................15
TASK 3..........................................................................................................................................15
3.1 Market structures.................................................................................................................15
3.2 Market forces shaping organisational responses.................................................................16
3.3 Business and cultural environment shaping behaviour of Virgin Atlantic (M3, D3)..........17
TASK 4..........................................................................................................................................19
4.1 Enclosed in ppt.....................................................................................................................19
4.2 Impact of global factors on UK business organisations......................................................25
4.3 Impact of EU policies..........................................................................................................26
CONCLUSION..............................................................................................................................26
REFERENCES..............................................................................................................................28
2

INTRODUCTION
Environment is considered as the group of elements which collectively form a
surrounding. Business environment is also a mixture of different components like employees,
stakeholders, shareholders, government policies, etc. Every organisation that operates in a
healthy and balanced environment has greater chances of earning profits and fame. In this report
a basic understanding about different types of organisation and their functioning is provided with
detailed description about Asda and NHS. Economic systems of UK and USA shall be
elaborated in this assessment which will help in understanding the business operations in
different environments. Before coming up on any conclusion, it is important to evaluate and
analyse the surroundings and influential factors which contribute to business functioning.
Description about policies like fiscal, monetary and competition is also provided with their
effects on Asda.
This report shall also provide information regarding factors which are affecting
organisational responses and behaviour in the market. Entire decision making of a company is
dependent on these factors and their contribution. Lastly, significance of international trade and
the impact of globalisation will be demonstrated for understanding the future capabilities of a
company to expand globally.
TASK 1
1.1 Types of organisations
Organisation is a group of people that function together for achieving certain goals and
objectives collectively. There are different types of organisations existing in UK which are
described as follows:
Public sector: The companies or enterprises which are settled by government of the
country are known as public sector undertakings (Kennerley and Neely, 2003) Entire operations
and management is in hands of governing bodies. Eg: TESCO plc, British Airways, BBC, etc.
Private sector: Owned and governed by an individual or more for earning profits and
monetary benefits through supplied products and services. Eg: Dell, Microsoft, EE Limited, etc.
3

Sole traders: Business ownership that is entirely a copyright of one particular individual
is considered as sole trading. Individual functioning of a person for earning money is known as
sole trader-ship. Eg: Electricians, plumbers, etc.
Non-profit or voluntary: Generally, these institutions aim to provide their services and
products without considering profits and being owned or governed by government or single
individual (Stalk, Evans and Shulman, 2001). These are set up with an aim of providing equal
services to everyone. Eg: Oxfam.
NHS
NHS is the leading public sector organisation in UK that has been providing its services
in health and social care. The purpose of this institution is to provide unhindered services to local
citizens as well as foreign immigrants without compromising quality of care (NHS Choices,
2017). This promising statement defines the purpose of giving selfless services without thinking
about profit.
Asda Stores Ltd.
Asda is one of the leading supermarket retailers of the country with private ownership.
The company has been listed amongst top supermarket holders recently (About Us, 2017).
Purpose of functioning for Asda is to make goods and services affordable for everyone in the
society. Despite of a profit earning approach, the company aims to provide its products with a
corporate social responsibility.
1.2 Extent to which organisation meets objectives of stakeholders
Stakeholders are entities that hold interest in functioning of a business organisation either
in the form of profits or in the form of products and services (Botha, Kourie and Snyman, 2014).
For instance, Asda Stores Ltd. is a retail sector company. Henceforth, the stakeholders of this
organisation shall be customers who require goods from the supermarket. Stakeholders are
basically divided into two categories: Internal: Employees, shareholders, suppliers
 External: Customers, government, partners.
Stakeholders share a collective objective of achieving great quality products and services
with high profits and monetary benefits. Although there may be certain fluctuations when it
comes to personal targets or goals. For instance, customers will have an objective of getting best
4

quality products in affordable price range. On the other hand, employees aim that respective
company shall achieve huge profits so that their salary and monetary benefits are increased.
NHS works with different voluntary organisations as its partners and shareholders.
Government takes serious measures and provides alternatives to patients and people who require
specific attention in terms of health and social care. Moreover, increasing opportunities for
doctors and other service providers (internal stakeholders) to achieve their objectives or earning
maximum through NHS. The organisation also takes appropriate steps in safeguarding
individuals or external stakeholders from exploitation and abuse in different forms.
Considering the case of Asda, external stakeholders are majorly customers and
government. Products or goods which are provided at the supermarkets are of great quality and
comparatively cheaper from other competitors. This has helped customers achieve their
objective. Government is getting benefits in the form of economic growth and effective
contributions to GDP (Reynolds and Rohlin, 2014). On the other hand, increasing number of
supermarkets has helped in generating employment for the company. Convenience and comfort
is the first and foremost important condition that a customer takes into consideration while
purchasing products and services. Asda has given this attribute to its external stakeholders by
providing online shopping options. In this way, it is quite clear that Asda and NHS are able to
meet the objectives and expectations of their stakeholders efficiently.
1.3 Responsibilities and strategies (M1, D1)
Every business organisation has certain roles and responsibilities towards the country and
the stakeholders. Often private sector industries are perceived as selfish and profit oriented. But
Asda has changed this perception and developed a purpose with a humane touch. It aims to
provide purchasing opportunity to everyone by giving goods at affordable pricing (Kim, Suresh
and Kocabasoglu-Hillmer, 2013). Following responsibilities are to be followed by the company:
1. To function with corporate social responsibility.
2. Providing equal opportunities to employees and other internal stakeholders.
3. Cultural and social balance must be created when business functions are executed by the
company.
4. Fair pricing and use of regulatory standards in the development of products and services
is the prime responsibility of Asda.
5

When company has a clear vision about the responsibilities it has to fulfil, then strategic
decision making process becomes efficient. If any of the aforementioned duties are neglected by
the organisation, then there are chances of declining customer share and as a result profit margins
are affected (Adam and Billi, 2014). Following strategies are devised by leaders of the company
for meeting set responsibilities and fulfilling respective duties efficiently.
1. Using ethical governance with corporate social responsibility: This strategy helps in
giving equal opportunities to employees as well as tackle suppliers with fair trade.
Company's corporate image is enhanced when ethical practises are initiated in every
functional aspect.
2. Communication channel: Effective communication channels help in transferring
information from one place to another without any discrepancies. In order to protect
credentials from misuse by rivals and competitors, Asda has worked out a secure
communication channel. Access to this channel is limited to internal members of the
organisation. Moreover, employees and customers can communicate their queries and
complaints easily to organisation chief for quick solutions (Baker, Bloom and Davis,
2016).
3. ISO 9000 standards are followed by Asda for creating good quality products and
delivering best in class services for the customers. These certificates are a mode of
quality assurance and standards which are not compromised by the company.
The responsibilities of Asda are eventually met when aforementioned strategies are
implemented appropriately. Use of ISO standards helps in achieving sustainability only when
time to time validation of certificates is done. Asda can gain the advantage of sustainable
competitive market when all the products and services are in accordance with these standards.
Moreover, communication channels have to be maintained for controlling and guiding human
resource so that production process is not hindered (Bianchi and Ilut, 2014).
TASK 2
2.1 Economic systems of UK attempt to allocate resources effectively
Economic system is basically a set up where goods are distributed and resources are
allocated for production. There are three basic types of economic systems, namely (Gemma,
2014):
6

 Command system: A centralised authority monitors entire production process by
knowing about whereabouts of resources and the processes which are initiated for this
use. Market system: In this type of system, businesses and consumers are the decision makers
regarding quantities and qualities of respective products and services. It is also
recognised as free markets and a healthy competition is instigated in such economic
systems (Bech, Gambacorta and Kharroubi, 2014).
 Mixed system: Also known as dual economy, this system is a combination of command
and free market economy systems. There are various cases which may be possible when
such systems are initiated; like entirely free market or government controlled system, etc.
Scarcity is a phenomenon that occurs when sufficient resources are not available for
production. On the other hand, resources are components that are utilised for producing certain
commodity or good (Borio, 2014). For instance, a person wants to purchase cake from Asda but
could not make his purchase. The reason is lack of availability in the market which implies
scarcity of resource. Company's resources include working staff, ingredients, machineries,
transportation facilities, etc.
UK's economic system can be termed as a mixed economic system because there are
areas where complete control of government has been established while certain industries have
free markets. Equal existence of private and public ownership in the country has led to formation
of such economic system (Palley, 2015). On the other hand, USA has a bit of command
economic system. Despite of existence of various private sector industries, there are rules and
regulations formulated by the government that controls all the attributes of production and
manufacturing of goods and services.
7

2.2 Enclosed in ppt.
8

9

10

11

12