Business Environment: Analysis of UK Business and Global Factors

This report analyzes the business environment, focusing on organizational purposes, national and global factors impacting UK businesses. It begins by identifying various types of business organizations, including sole proprietorships, partnerships, private and public sectors, and then assesses how BT meets stakeholder objectives, including employees, shareholders, and customers, while also discussing BT's responsibilities and ways of fulfilling them. The report then examines the national environment, exploring how economic systems allocate resources, and assessing the impact of fiscal and monetary policies on businesses like British Airport Authorities (BAA). Furthermore, it evaluates the impact of competition policy and regulatory mechanisms on BAA's activities. The report also delves into market structures, organizational responses to market forces, and cultural environments, using McDonald's as a case study. Finally, it discusses the significance of international trade, analyzes the impact of global factors on UK business organizations, and evaluates the impact of European Union policies.

BUSINESS ENVIRONMENT
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Table of Contents
Introduction..........................................................................................................................................1
Task 1 Understand the organizational purposes of businesses.............................................................1
1.1 Identify the various types and purposes of different business organizations........................1
1.2 Describe the extent to which BT meets stakeholder's objectives..........................................2
1.3 Explain the various responsibilities of BT towards the stakeholders along with ways of
fulfilling them.............................................................................................................................2
Task 2 Understand the nature of the national environment in which businesses operate....................3
2.1 Explain how economic systems attempt to allocate resources effectively...........................3
2.2 Assess the impact of fiscal and monetary policy on business organization and their activities
.....................................................................................................................................................4
2.3 Evaluate the impact of competition policy and regulatory mechanisms on the activities of
BAA............................................................................................................................................5
Task 3 Understand the behavior of organizations in their market environment...................................6
3.1 Explain how market structure determine the pricing and output decisions of businesses....6
3.2 The ways in which market forces shape organizational responses.......................................7
3.3 Judge how business and cultural environment shape the behavior of McDonald's..............7
Task 4 Be able to assess the significance of the GLOBAL FACTORS that shape national business
activities................................................................................................................................................7
4.1 Discuss the significance of international trade to UK business organizations......................7
4.2 Analyze the impact of global factors on UK business organizations....................................8
4.3 Evaluate the impact of policies of the European Union on UK business organizations.......8
Conclusion............................................................................................................................................9
References..........................................................................................................................................10
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Illustration Index
Illustration 1: Types of economic system.............................................................................................4
Illustration 2: Types of market structure..............................................................................................6
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INTRODUCTION
Business environment is the study that includes internal and external forces which impacts
business practices and processes. It includes several components which changes business conditions
and along with this, it also analyzes suitable market place for the business entity (Mohamed and
Lashine, 2003). The present research study has been made on different organizations who work for
different purpose and for different objectives. In such context, researcher has discussed the ways
through which expectations and needs of stakeholders can be fulfilled. Further, in the study
researcher has also discussed impact of fiscal and monetary policies on business organizations. The
government of UK has framed strategies which business entities of UK are required to consider and
a few strategies are discussed in the present research study. Moreover, researcher has also discussed
categories of organizations along with their purpose of operating business in competitive market
place.
TASK 1 UNDERSTAND THE ORGANIZATIONAL PURPOSES OF BUSINESSES
1.1 Identify the various types and purposes of different business organizations
Types of business are always dependent on the purpose and sector and in the present
research study; several types of business organizations are discussed (Sampat, 2007). Private,
public, partnership and sole trade are the major categories of business organizations and each of the
organization follows different style of management. Sole trade: In sole trade, there is only one person that has the power to manage all business
practices in an adequate manner. Sole trade is the best form of enjoying all the profits and
achievements because owner does not have to share profits with anyone. Hence, the owner
can adopt whatever style of management he wishes to adopt. Partnership: In partnership, there are more than two to three people who manages business
processes and who are entitle to share profit and loss among each other as per the defined
ratio (Yannelis, 2004). Further, in partnership, there exist equal roles and responsibilities for
all the partners. The manager has to make sure that all the employees are getting adequate
treatment and respect which is further the best way of retaining them. Private sector: Private sector involves private ownership in which the business entities are
not entitled to involve public bodies in the ownership (Prasad, 2010). Private sector is the
one that comprises of different organizations and they do the business by including private
bodies.
 Public sector: Organizations that manage their business in public sector can also involve
public bodies by delivering them shares of the company. BT Group plc is a holding
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company that owns British Telecommunications plc and it provides telecommunications
services to the customers. BT controls a number of large subsidies and it also supplies
telecom services to corporate and government customers worldwide (Kennerley and Neely,
2003).
1.2 Describe the extent to which BT meets stakeholder's objectives
Needs and demands of stakeholders can be fulfilled if the company is able to consider the
interest of all the concerned entities. Vision, mission and objectives of the company are
communicated properly to all the respective stakeholders and this assists them to contribute in
organizational aims and objectives (Parkin, 2002). Employees are those important people that aid
BT to achieve all the objectives; hence the organization considers interest of employees in all areas
which also aids in maximizing employee retention aspects. Employee retention and motivation
strategies are developed at the business entity which helps the employees to feel valued while
working. In terms of retaining all the shareholders, BT makes sure that proper shares have been
allocated to all the members as per the defined ratio (Brooks and Weatherston, 2000).
Apart from this, customers are also crucial part of BT because that only increases the degree
of profitability and success aspects. It is also vital for the entity to make sure that customers are
getting quality and adequate products as per the determined standards (Kennerley and neely, 2003).
Other business owners are also involved in the business functions of BT and they are delivered
adequate information about the company which maximizes their value as well. Proper relationships
have been developed with all the suppliers so that adequate delivery of products can be made. At the
same time, these efforts assist BT to enhance the confidence level of employees and other
concerned people. Moreover, BT is also working prominently as per the legal rules and framework
and this aids the business to retain its position in the competitive market place (Krasner, 2003).
1.3 Explain the various responsibilities of BT towards the stakeholders along with ways of fulfilling
them
BT is responsible for all the stakeholders; hence there should be proper concern for all the
stakeholders. BT pays more attention towards all the employees because human resources are the
only entity that helps the business to enhance the level of productivity (Yu and Ramanathan, 2012).
Therefore, for such concern, employees are provided monetary and non monetary both the benefits
which encourages and boosts them to contribute in organizational development and prosperity.
Employees are also allowed to present their views and opinion in the decision making process. All
the human resources are delivered equal roles and responsibilities which assist in facilitating
equality and diversity aspects.
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It is vital for the business entity to protect interest of all the clients and for the same aspect,
quality concerned and prominent services should be delivered (Lucas, 2000). Hence, in such respect
BT make sure that only relevant and authentic information is provided to clients about the service
provision of BT. Further, to create competitive edge over the rivalries, BT manages all the business
processes in legal and in an ethical manner. The business seems to adopt customer orientation
approach in which chief emphasis has been given towards customer's needs and demands. Client
management is the major aspect which helps BT to protect interest of clients and it also aids in
retaining all customers for longer span. Further, sharing of profit and loss is appropriately done by
BT; similarly, for the same aspect all the shareholders are invited in decision making processes
(Mohamed and Lashine, 2003). The interest of all the shareholders and stakeholders should be
maintained because that aids in regulating proper flow of resources in the business entity.
TASK 2 UNDERSTAND THE NATURE OF THE NATIONAL ENVIRONMENT IN WHICH
BUSINESSES OPERATE
2.1 Explain how economic systems attempt to allocate resources effectively
Scarcity in resources is the fundamental challenge which all the nations have been facing;
hence for such purpose, every country needs to adopt suitable economic system for resource
allocation aspects. Command system: In terms of economic advancement, the command economic system is
the next set up from a traditional economy (Morrison, 2002). This is also called as planned
economy where in the government has the power to control the economy. Ruling bodies
decides how to use and distribute resources. The government also regulates price and wage
aspects and the major example of this system is Communist Soviet Union. British Airport
Authorities conducts the business in command system where the entire control is held under
government authorities. Free enterprise: Free enterprise economic system is a crucial component of capitalist
economic policy (Nandi, 2010). In this, economic system, government is not entitled to
interfere in the economic transactions; however the system is not completely free and it
comprise of several political debate to make resource allocation process more effective. Mixed economy: Mixed economic system is the combination of market and command
economy and most of the economic decisions are made in the market by the individual
entities (Paul, 2008). Here, in this economy government also plays major role in resource
allocation aspects and on that basis, distribution of resources take place.
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 Transitional system: A transitional economy is such economy which is a transformed
version of centrally planned economy to market economy (Polanyi, 2001). It undergoes a set
of structural transformations which intend to develop market- based institutions. This
includes economic liberalization where prices are determined by the market forces.
2.2 Assess the impact of fiscal and monetary policy on business organization and their activities
Policies Impacts
Fiscal policies Fiscal policy is a government decision regarding
spending and taxing and government is entitled
to raise the economic power by changing the
degree of spending in goods and services (Reed,
2001). Fiscal policy seems to be beneficial for
British Airport Authorities because as per the
policy, government of UK increases spending on
goods and services which further augments the
level of demand by the clients. When demand
increases, production level also increases and as
a result, it gives profit to the airline company
(Prasad, 2010). The other side of fiscal policy is
taxes and decreasing taxes tends to stimulate
economic growth.
Policies Impacts
Monetary policies Monetary policy consists of the decisions that
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Illustration 1: Types of economic system

government makes regarding the money supply
and interest rates (Sampat, 2007). The policy
ensures that there is proper supply in the
economy regarding money through undertaking
assistance from government securities. Supply
of money is controlled by the Federal and
Central Bank of UK; hence according to the
same, demand aspect for airlines gets impacted.
BAA has been acquiring great assistance from
the policy because it increases supply of money
in the economy and which further augments
purchasing ability of customers (Sevelli, 2009).
Thus, people spend more on traveling aspects
and as a result, it augments demand for airlines
services.
Hence, from the above discussion, it is clear that both the policies are vital for UK business
entities because it aids in managing all the business activities in adequate manner (Teranishi, 2005).
Both the policies work prominently for BAA as it influences economic capability of the
organization.
2.3 Evaluate the impact of competition policy and regulatory mechanisms on the activities of BAA
British Airport Authorities has affixed several legal challenges and the business is also trying
to keep the control so as to sell three of its seven UK airports. BAA operates the business in highly
competitive market; therefore it has to consider several legal rules and framework to create healthy
and effective competition over the other industry players (Yannelis, 2004). Competition
Commission is a regulatory body which is responsible for mergers, acquisitions and other market
aspects so as to regulate the industries under competition law in the UK. It is held responsible for
creating healthy competition between companies in the UK and this is beneficial for customers and
the economy. It was created by the Competition Act 1998 and is governed by the Enterprise Act
2002 (Yu and Ramanathan, 2012). Further, British Airport Authorities is also entitled to consider
Office of Fair Trading which chiefly emphasizes on both consumer protection and competition law.
The main aim of OFT is to make market work well for consumers by ensuring healthy and fair
competition among all the trading firms. BAA has several rivalries; thus the business entity has to
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emphasize on competition regulation and framework. The practices of BAA have been changing
because global factors are involving different policies and regulations for diverse aspects
(Kennerley and neely, 2003).
TASK 3 UNDERSTAND THE BEHAVIOR OF ORGANIZATIONS IN THEIR MARKET
ENVIRONMENT
3.1 Explain how market structure determine the pricing and output decisions of businesses Perfect Competition: Perfect competition describes market where in large number of sellers
are there for a single product or service (Krasner, 2003). The market is highly competitive
because large number of substitutes is there and customers can have variety of products in
the same market place. Large number of buyers are sellers are there in the market and there
are no barriers for entry and exist procedure. Monopoly: Monopoly market is the category where in a single seller is there to supply a
particular good or service and the seller can also charge whatever price it wants because
consumers do not have other alternatives. New entry is difficult in such market because the
conditions are stern and time consuming as well (Ling, 2000). Profit margin is high in such
market type because single entity sells all the products in a single range.
 Oligopoly: An oligopoly is a market structure in which a few firms dominate because of the
concentrated market type. Large and small business entities can operate at the market place
because the market is not confined a restricted to single segment (Lucas, 2000).
Illustration 2: Types of market structure
British Airport Authority is separated into upstream and downstream market type which
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changes the way of managing varied operations.
3.2 The ways in which market forces shape organizational responses
The market conditions of UK have been changing and this assists the business entities to
change the operations and activities. Demand and supply is the chief aspect that needs to be
considered while involving any new product or practice in the business. McDonald's have to make
several changes in the product categories because market trends have been changing and demand of
customers has been altering (Mohamed and Lashine, 2003). Among market forces, one of the chief
aspects is that economic situation of the country. The economic situation of McDonald's is feasible
and stable and people do have huge purchasing power; thus it helps the food chain to acquire huge
profits through such aspect.
Political scenario of UK leads the food chain to comply different legal rules and regulations
especially at the time of entering into market place (Morrison, 2002). Technology is another force
that aids McDonald's to adopt new techniques and methods and as a result, it helps in delivering
timely services to the customers. The level of competition has been increasing because there are
numerous entities that provide similar services to the clients (Nandi, 2010). This assists the
customers to get varied substitute products; however the situation affects existing work processes of
McDonald's. Hence, all such forces shape McDonald's response towards different business
activities.
3.3 Judge how business and cultural environment shape the behavior of McDonald's
It is an apparent fact that every business entity has to consider cultural and social aspects
while managing services. These factors shapes organizational behavior towards varied dimensions
and such factors also aids in customer retention (Parkin, 2002). It has been observed that needs and
demands of client’s changes frequently which leads the business entity to make frequent
transformations in product categories. McDonald's has been considering the preference and interest
of clients and according to the same, the business delivers products to them. McDonald's is highly
concerned about social and cultural facets and this is the reason, the food chain does not provide
beef meat in its products. It aids the business entity to operate properly at market place and
consideration towards cultural facets assists the food chain to acquire attention from potential
customers. Entire concern has been given towards social factors and McDonald's suppliers are also
dedicated to consider highest level of quality and safety dimensions (Paul, 2008).
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TASK 4 BE ABLE TO ASSESS THE SIGNIFICANCE OF THE GLOBAL FACTORS
THAT SHAPE NATIONAL BUSINESS ACTIVITIES
4.1 Discuss the significance of international trade to UK business organizations
International trade seems to be highly beneficial for organizations of UK because that assists
the entities to widen the scope of profits and growth. As compared to domestic trading, international
trading is extremely significant for firms as it covers huge market segment. Large number of
customers can be persuaded in the international market place and as a customer base of the
company could be encouraged (Polanyi, 2001). As far as market share is concerned, businesses
operating in domestic market of UK have fewer opportunities only to survive in competitive market
place. But, on the other side, international trade provides more scope to market and business
retention and as a result, suitable share and profits can be accomplished. Further, organizations
operating business in international market faces more issues related to cultural aspects because of
cultural and social beliefs of people which affects their purchase decisions (Prasad, 2010). The
degree of issues and constraints are high in international trade and this leads the businesses to
consider trade policies at higher extent. However, issues are fewer in domestic trade; thus from the
discussion, it is evident that though international trade has issues; but then also it is profitable for
UK business entities. In the realm of technology, international marketing aids the business entities
to acquire greater benefits from technological aspects; therefore it further accelerates the scope of
success (Reed, 2001). International trade is beneficial for retail sector because through that
customer base can be widened.
4.2 Analyze the impact of global factors on UK business organizations
Global factors enhance the scope of business and it also augments the growth and success
aspects. Political, social, legal and technological forces changes the way of managing business
aspects and sometimes it also increases the degree of issues and constants (Sampat, 2007). In terms
of impacts, political and social factors chiefly impacts business functions because they inference the
practices of business. When any business entity enters into different market place, it experiences
different constraints from political and legal aspects; therefore this arises issues in the same domain.
In such respect globalization also affects the business conditions because it involves certain new
things in business management. Cultural and social factors transforms business practices; hence the
overall environment of the organization changes. Long term sustainability and competitive
advantage are the benefits that can be acquired through global aspects; hence all the business
entities emphasize on international trade practices (Sevelli, 2009). Further, in terms of impacts
global forces leads the business to adopt new aspects for encouraging creativity and innovation
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aspects and retail sector of UK is the one that gets number of benefits from global factors.
4.3 Evaluate the impact of policies of the European Union on UK business organizations
European Union comprises different economic union and that includes several systems
which aids in operating the economy in proper manner. It has the authority to pose legal rules and
regulations for the business entities and it can also change economic facets of all the business
entities. It is also considered the governance body that lies under European Union because it follows
varied principles and regulations to manage business in common market place. In terms of impact,
the entity forms different proposals to the councils of ministers and these aids in adequate
regulation of business practices (Teranishi, 2005). European Union policies also direct the business
to spend resources properly in varied business activities.
At the same time, the framework determined by the European Union is mandatory for the
sectors to consider because that is considered with the trade aspects (Yannelis, 2004). As per the
regulation, it is imperative for the business entities to declare the documentation of taxes so as to
remain legal and ethical in the market place. The legislation involved in such aspects also creates
healthy and adequate competition and this promotes affirmative things in business activities.
Emphasis on such facets enhances capability of the business to survive in competitive market place
through deriving profits from exchange systems (Yu and Ramanathan, 2012).
CONCLUSION
Concluding the entire research study, it can be said that business environment changes the
overall scenario of an organization because it comprises of different factors that closely influence
business decisions. Researcher has clarified the use of economic systems in resource allocation
process; thus along with the same discussion evaluation has been made about work processes of
different cited organizations. Hence, from the entire research report, it is evident that every business
organization has to consider interest of stakeholders in terms of retaining them for longer span.
International trade is useful for UK business organizations because it assists organizations to
manage work processes in legal and in an adequate manner.
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