Business Environment Report: Analyzing UK Business and Global Impacts

This report provides a comprehensive analysis of the business environment, focusing on organizational purposes, national and market dynamics, and global factors impacting UK businesses. It begins by examining the diverse purposes of different organization types, including public, private, governmental, and voluntary sectors, and explores the role of stakeholders such as customers and employees. The report then delves into the national and market environment, analyzing economic systems, fiscal and monetary policies, competition policies, and market structures, including how market forces shape organizational responses. Finally, it investigates the influence of international trade and global factors, including EU policies, on UK business activities. The report covers topics such as stakeholder management, economic systems, the impact of fiscal and monetary policy, competition policy, and global factors affecting UK businesses. Overall, the report provides a detailed overview of the business environment and its impact on organizations.

Business Environment
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TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
TASK 1- ORGANIZATIONAL PURPOSES ................................................................................3
1.1 Purposes of different types of organizations (LO 1.1)...........................................................3
1.2 Variety of stakeholders organizations have and extent they manage to meet the objectives
(LO 1.2).......................................................................................................................................4
1.3 Responsibilities those organizations have and strategies they employ to meet those
responsibilities (LO 1.3)..............................................................................................................5
TASK 2- NATIONAL AND MARKET ENVIRONMENT ..........................................................5
2.1 Economic systems attempt to allocate resource effectively (LO 2.1)...................................5
2.2 The impact of fiscal and monetary policy on business organization and their activities (LO
2.2)...............................................................................................................................................6
2.3 The impact of competition policy and other regulatory mechanism on the activities of an
organization (LO 2.3)..................................................................................................................7
2.4 How market structures determine the pricing and output decisions of different businesses
(LO 3.1).......................................................................................................................................8
2.5 Ways in which market forces shape organizational responses (LO 3.2)...............................9
2.6 Business environment and cultural environments shapes behaviour of an organization (LO
3.3)...............................................................................................................................................9
TASK 3- GLOBAL FACTORS AFFECTING NATIONAL BUSINESS ACTIVITIES ............11
3.1 The significance of international trade to UK business organization (LO 4.1)...................11
3.2 The impact of global factors on UK business organizations (LO 4.2)................................11
3.3 The impact of policies of European Union on UK business organization (LO 4.3)............12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14
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INTRODUCTION
Business environment consists of different internal and external factors that directly
impact the operations performed by the organization. It is also defined as the environment under
which businesses operate their activities to accomplish their certain objectives and goals.
However, business environment is classified under two environment that is micro and macro.
Micro environment consists of different internal elements that directly impact the organization. It
mainly includes customers, suppliers, government, public etc. However, macro environment
includes the external forces that indirectly affect the practices of organization (Understanding the
Business Environment, 2013).
The present report has been prepared to understand the main purposes and goals of an
organization so that they can easily sustain in the competitive market. Therefore, it can be
understood by measuring the nature of market environment in which business are operating their
business. The report will also understand the major consequence of monetary and fiscal policy of
the UK government on the internal situation of the business as well it will also measures the
consequence of competitive policy and different governing mechanism on the operations
businesses. Lastly, report will evaluate the striking impact of global components on the activities
of UK business organization.
TASK 1- ORGANIZATIONAL PURPOSES
1.1 Purposes of different types of organizations (LO 1.1)
There are different purposes and aims of the organization that they want to accomplish by
setting up a new business in the market. Organizations mainly operate for earning or generating
profit, while some other organizations direct their functions to serve the requirement of
individuals without preceding the objectives of earning profit. However, there are different types
of organization working in the market mainly include public, private, governmental and
voluntary organization (Grier, 2006). Purposes and aims of all the organizations are not exactly
same. For instance; public organization is primarily owned and run by the governmental
authorities whose main objective is to render public services and utilize resources in an effective
way that will benefit the community. These organizations do not exist to earn or generate large
volume of profit. Another type of organization includes private sector organizations that are
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closely-held and directed by the individuals through forming partnership, an entrepreneurship or
a sole proprietorship. Main goal of private organization is to increase their profit ratio along with
enhancing their market share by expanding their business. For instance, Tesco PLC is a private
sector organization that operates in the retail sector whose main aim is to earn profit by targeting
large number of customers and providing quality of goods to them. Third type of organization
includes voluntary sector organizations. These are mainly operated to attempt and initiate
different social activity and it does not include the objective of earning profit. These
organizations can be governmental or non-governmental. Lastly, it includes government sector
organization (Greenwood, 2010). They are solely owned by the governmental agencies or by the
government itself for the purpose of improving and developing the society.
1.2 Variety of stakeholders organizations have and extent they manage to meet the objectives
(LO 1.2)
There are different type of stakeholder existing within the organizations. Management of
company needs to focus on the requirements of stakeholders and manage different strategies to
meet the goals and objective of different stakeholders. Stakeholders are consider as the key
people or individuals that have mutual interest in the operations of business and they may affect
the different activities of the organization. Different stakeholders are: Customers- Customers are the key stakeholders for the private sector organization as they
mainly aim to satisfy their customers by rendering different type of services and
exchanging variety of products within the marketplace. Main objective of private sector
organization is to generate high profit, meet the requirement and demand of customers
and increase their market area (Frischtak, 2001). Therefore, for attaining the aim related
to meet the demand of customers, organization must determine the requirement of
customers through conducting market research. Thus, it will assist private sector
organization to find out the ever-changing requisite of customers and thus, it will result in
providing services according to their requirement.
 Employees- Employees are also considered as an important stakeholder of that
organization who are focused on rendering services within the organization in order to
meet the organizational requirements (Fernando, 2011). Main objective of employees
who are working in the organization is to acquire fair remuneration and better working
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condition within the workplace as well as get healthy working environment. However,
another objective and expectation of employees is that they must be treated with honour
and respect at workplace. Therefore, to meet the interest and expectation of their
employees, manager should get engaged with the staff members in order to boost their
morale and motivate them to render effective services to the customers.
1.3 Responsibilities those organizations have and strategies they employ to meet those
responsibilities (LO 1.3)
With the respect of above identified key stakeholders, there are different responsibilities
of the organization as well as certain strategies to meet those responsibilities. For instance, aim
of customers is to get superior quality of products and services by the organization that assist
them in fulfilling their requirement. For achieving this objective of customers, organization must
focus on different strategies. TQM is one of the best techniques to improve the quality of their
products and services that they are providing to their customers (Densten, 2002).
Organization also has responsibility towards their employees. One of the major
responsibilities is that employees must be treated in an effective manner. Therefore, manager
must focus on employee engagement strategies so that they can gain staff value within the
internal environment. With the help of employee engagement strategies, they can easily enhance
the commitment level of employees towards the organization.
Responsibility of public organization is to deliver quality of services within the
community that assists in developing and amending the society under which public organization
operates their business (Doving, 2010). However, to meet these responsibility of the organization
they must focuses on adopting strategies that would support community. For instance, manager
of public organization must devise strategy to reduce the significant amount regarding packing of
the products as using plastic coating product might harm the environment thus, organization
must adopt paper bags for their products.
TASK 2- NATIONAL AND MARKET ENVIRONMENT
2.1 Economic systems attempt to allocate resource effectively (LO 2.1)
Working for an organization that provide different supports to new business start-ups
within the UK regions they must identify different economic systems so that they can effectively
allocate resources in the new business. Different economic systems include free market
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economy, centrally planned economy and mixed economy. Within free market economy, all the
resources are privately owned by the entrepreneur as well as decisions regarding the industry is
being taken by itself (Economic System, 2013). The key motive of organizations operating in free
market economy is to gain maximum wealth as well as net profit that assist the organization to
expand their business in the different region. Under this economy, resources mainly allocated
and assigned with the help of market forces that is demand and supply of the products.
 What to produce: Observed by preferences of customers.
 How to produce: Determined by the maker seeking for profits.
 For Whom to produce: Customers
Another economic system include centrally planned economy under which government
plays a cardinal character that takes all the decisions regarding allocation of different resources
that include human, finance and technical resources. According to the demography and needs
within the market, governmental authorities distributes and allot resources for the organization.
 What to produce: Identified by government preferences
 How to produce: Determined by government and their workforce
 For Whom to produce: Determined by government and their workforce
Last economy is mixed economy under which individual and government collectively
takes the decisions regarding the allocation of resources within the organizations. This economy
has distinct private sector where resources are allocated by market forces according to the
demand of customers (Carter, 2007). For instance, grocery sector of UK economy. While, in
public sector resources are allocated by government.
 What to produce: Partially by customers preferences and government
 How to produce: Partly by producers looking for profits and to a certain extent by
government
 For Whom to produce: Partly to customers and government
2.2 The impact of fiscal and monetary policy on business organization and their activities (LO
2.2)
Starting new business that is restaurant in the UK region is quite effective as hospitality
services within the UK are constantly growing at the fast pace. Therefore, governmental policy
that is fiscal and monetary policy have a great impact on organization as well as their activities.
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Fiscal policy mainly focuses on the certain amount of tax that business need to pay to the UK
government. For instance, if UK government increases the tax level then the restaurant need to
invest or divest less fund in the market. Therefore, in this situation restaurant may impact in
charging high amount for their food products and services that they render to their customers.
However, if UK government decreases the tax ratio than it impact the restaurant to invest in the
market and results in increasing the jobs within the market (Cloud, 2010).
In addition to this monetary policy also impact the business organization as well as their
different activities. Monetary policy under which UK government takes decisions regarding the
money supply and interest rates. For instance, lower interest charge by the government will
impact the organization in increasing the profits of business as well as it also controls inflation.
On the other hand if policy higher the interest ratio then it results in increasing the expenses as
well as it will also result in increasing the prices of products and services that are rendered by the
newly set up business.
2.3 The impact of competition policy and other regulatory mechanism on the activities of an
organization (LO 2.3)
The competition policy mainly focuses on persuading the interaction as well as it also
seeks to assure fair and equal competition among rival companies (Besbes, 2009). This policy
help the organization in encouraging competition level and even make the markets better thus,
results in performing effective activities within the market. The impact of competition policy on
the activities of organization include:
 Low prices products- The impact of competition policy on the activities of business is
that it results in reducing the prices of products. However, in the competitive scenario
there are large number of organization that are rendering same products and services in
the market. Therefore, competitive policy help the companies in maintaining similar
prices for the products and services. As, customers mainly prefer to purchase the products
that features low prices (Camacho, 2012).
 More choices- Another impact of competitive policy on the activities of an organization
is that it focuses on providing more variety and choices to their customers. As, in the
contemporary market organization will focuses on making different products for their
customers thus, they will get wide range of products to choose from.
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However, there are other regulatory mechanism that has been formulated and enforced by
UK government for different organization. These regulatory mechanism are essential and
mandatory for organization that assist in managing standard at the workplace. For instance, fair
trade policy; with the help of implementing this policy in the organization it lead to change their
activities and systems within the organization.
2.4 How market structures determine the pricing and output decisions of different businesses
(LO 3.1)
In the contemporary environment, decisions regarding the pricing and outputs is being
determined by the different market structure. The market structure mainly include perfect
competition, monopoly and oligopoly. Under perfect competition market structure there are are
large number of buyers and sellers existing in the market. However, under this market structure
sellers basically deals in selling identical and standardized products to their consumers.
Furthermore, in this type of market structure sellers have no power over selecting or deciding the
prices of products (Bansal, 2012). Pricing decisions under perfect competition are determined by
measuring the demand and supply of the products in the market. For instance, the private
organization that is Sainsbury have perfect competition market structure as because of large of
number of rivalries existing in the retail sector. In case of Sainsbury pricing of products are
determined by measuring the aggregate demand of the customers.
Another type of market structure include monopoly market that possess single buyer in
the market and solely responsible for determining the prices of their products. For instance in the
monopoly market if demand of product rises then organization might raise the prices of their
output but rise in the prices of products will result in decrease the demand of products.
Therefore, in monopoly market the individual determines the pricing and output decisions of
different business. In the oligopoly market there are large amount of sellers existing in the
market structure with the limited buyers. Therefore, in the oligopoly market the pricing and
output decisions are mainly determine by the sellers those are existing in the market.
2.5 Ways in which market forces shape organizational responses (LO 3.2)
In the competitive market there are assorted market forces that act as driving force in
shaping the organizational responses. These are also termed as the external environment factors
that mainly influences the behaviour of organization (Paul, 2008). Taking example of UK retail
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sector which is considered as growing industry is mainly shaped by the market forces. There is
positive relationship between market forces and organizational responses that it results in gaining
business success as well as it also outcome in satisfying their customers. The different ways in
which market forces shape structure responses include:
 Market research- The foremost and essential way to shape organizational response
include conducting market research. Market research support the organization in
determining the demand and preferences of the customers that assist organization in
selling and producing those products that are required by the customers (Adler, 2007).
With the help of market research organization can easily determine the current market
forces that help the business to react correctly so they can support organization in
accomplishing their objectives.
 Supply and demand- Another market force include supply and demand factors,
determining demand and supply help the organization in delivering and rendering
services according to their requirement (Ahmed, 2012). For example, if there is increase
in the demand of products then organization must focuses on increasing the level of
output so that they can supply in the market to satisfy their customers. Therefore, it will
result in affecting the prices of products.
2.6 Business environment and cultural environments shapes behaviour of an organization (LO
3.3)
There are different business environment factors as well as cultural environment that
often shapes the behaviour of the organization (Parkin, 2002). All these environmental factors
primarily impact the operations of organization that results in shaping their behaviour so that
they can successfully exists in the environment. For example, Sainsbury start-up their new
business in the UK need to measures certain business environment and cultural environment it
include:
 Political factor- At the time of formulating and devising strategies for Sainsbury they
need to consider political factors. As, UK government has initiated different regulations
and legislation for the different organization that need to be followed to succeed in the
environment (Nimwegen and et al., 2008).
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 Economic factor- Economic factor include export and import policy, fiscal policy,
monetary policy etc. that drastically affect or impact the operation of organization. As,
the economic condition of UK is quite good thus, it will positively support the Sainsbury
in setting up their business.
 Social factor- Another business environment factor that shapes the behaviour of
organization include social factors (Parkin, 2002). It include change in customers
lifestyle, customers preferences and tastes etc. thus, change in the social factor will assist
Sainsbury in producing and selling the products according to the requirement of their
customers.
 Technological factor- It is considered as an essential factor that shapes the behaviour of
organization (Matthews, 2005). For instance, in the contemporary environment
promotion activity has become easier for the organization due to high technological
factors. Thus, it result in amending or changing the traditional marketing strategies.
 Legal factor- Legal factor should also be taken into consideration while establishing new
business. With the help of implementing legal factor in the organization it influences the
organization as well as their operations. Legal factor shapes the systems as well as
policies of the organization that support them in rendering ethical practices in the market
(Learning, 2005).
 Environmental factor- Last factor include environmental factor that mainly focuses on
preserving the resources as well as environment under which organization operates their
functions (Kennerley and Neely, 2003). For instance, if organizational actions as well as
their products are affecting environmental conditions thus, result in modifying or shaping
the behaviour so that management can develop effective strategy to minimize the
environmental issues.
TASK 3- GLOBAL FACTORS AFFECTING NATIONAL BUSINESS
ACTIVITIES
3.1 The significance of international trade to UK business organization (LO 4.1)
With the increasing globalization the concept of international trade is also gaining that
promote trade across the national boundaries. With the help of international trade business
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organization can easily exchange goods from other nation (Gani, 2011). As, Primark is planning
to expand their activities in the global activities will support the in promoting their services as
well variety of products in the global markets. However, trading across the national and
international is profitable for the business organization as well as to the economy. It results in
increasing the growth of economy. The significance of international trade to Primark
organization include:
 With the increasing international trade it will benefit the Primark organization to sell heir
products across the global market that would assist the company in enhancing their
market share and generating large profit ratio.
 However, another significance of international trade is that Primark can buys quality and
different raw material across the country and at the lower prices that will reduces their
overall production costs (Fernando, 2011).
 The significance of international trade to the Primark is that it broaden the market areas.
By selling products in the different countries it will help the Primark in attaining steady
growth as well as it also enhances their brand image across the nation. Customers get to
know about their products and services (Gabriel, 2004).
 Another significance of international trade is that it support the UK organization in
encouraging or enhancing their business areas that help ion targeting different customers.
However, international trade also help the Primark in determining the requirement of
different customers that result in providing large variety of products to them so they can
select the required product according to their requirement (Kennerley, and Neely, 2003).
3.2 The impact of global factors on UK business organizations (LO 4.2)
With the increasing international trade, there are different global factors that primarily
impact the UK business organization that is Primark. As, Primark mainly focuses on expanding
their services and selling of their product in the global market. There are different impact of
global factors on the Primark company that directly boost the economic condition of UK. The
global factors mainly include emerging countries, technological advancement, cost of labour etc.
all these global factors have positively affect the business Primark (Erixon, 2011).
With the increasing emerging markets Primark will focus on expanding their business in
the BRIC countries (Brazil, China, India and Russia) as these economies are constantly growing
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at the fast pace. Therefore, in the future scenario emerging markets will lead the international
market. Thus, increasing emerging market may act as the major threat for the UK economy.
3.3 The impact of policies of European Union on UK business organization (LO 4.3)
The European Union has laid many important policies that impact the working of
Primark. One such policy is competition policy that states that company should indulge in fair
and healthy competition. Therefore, organization should not be found indulged in wrong trade
practices like, negative publicity about rivals, deliberately selling below the market price in order
to decrease the demand of rivals product (Elsevier, 2013). Thereafter, there is Anti
discrimination policy which states that while appointing the staff members company should
ensure it give equal employment opportunities to both the genders. Thereafter, company should
not be biased and discriminate on the basis of caste, creed, gender, religion etc. For this aspect,
company strictly monitors its recruitment and staffing process to avoid legal actions from
government. Therefore, these policies control the business operations of company at domestic
and international level. Further, these policies ensures that company is does not breach the trust
of government.
CONCLUSION
Conclusively, it can be stated that it is essential for the organizational manager to analyse
or measure different environmental factors that directly and indirectly affect the operations of
business organization. However, the report has also provide a clear perceptive about the direct
and indirect consequence of different component on the activities of business organization. In
accordant to this, it is also essential for business organization to heighten their knowledge about
different environmental factors so that business can design effective strategies. Furthermore, the
report also measures key responsibility of organization for increasing the employees satisfaction
level of their staff by rendering them proper motivation. Other than this, it is also necessary for
business organizations to consider the policies of European Union in order to meet the standards
and better accomplishment of organizational goals.
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