Understanding The Business Environment - Term Paper Example

? UNDERSTANDING THE BUSINESS ENVIRONMENT Types of organizations and their purposes There are various types of business organizations. This includes public limited companies, private limited companies, voluntary organizations and co-operatives. The country as a whole owns the public limited companies. The local authority and the government control these companies. The capital comes from the treasury or the local rates. The public limited aim at providing services to the nation, and in case of profit generation, it has handed hack to the government or the local authority. The government appoints a minister to take responsibility. The minister then appoints a chairperson and the board of directors who respond to daily activities in running the industry. The chairperson and board of directors then give an annual report to the minister who presents it to the parliament for public debate. The information then published for public. The private limited companies are businesses owned by private people. The owners do control and management. They are the directors and managers. The private people raise capital, and their aim is to generate profit. The profit or losses made equally distributed according to the number of shares one own in the company. The voluntary group is an organization consisting of people who offer unpaid services to the organization. Its resources (cash, labor and services) obtained through voluntary means. The co-operatives form when a group works together to accomplish a common need. They are significant status in the tax law in most countries. The co-operatives assist members with their primary business e.g. selling of milk or other farm products. Type of organization Examples- Name of organization and why it exist What sector does this organization operate within Public limited company CDC – A centre for Disease Control ministry of Public health Private limited company Fly Emirates Transport industry Voluntary DISABLED AMERICAN VETERANS AUXILLARY- facilitate medical treatment of veterans Medical industry Co-operatives BONGARDS’ CREAMERIES CO-OPERATIVE Milk processing industry US CDC; CENTRE FOR DISEASE CONTROL CDC is a division of the public health systems and workforce development based in Atlanta, Georgia USA. Its strategy is to work with partners with the aim of strengthening public health systems and the public health workforce. It applies public health sciences and practices to demonstrate health impact. Vision, mission and goals Its vision is to enable countries worldwide have efficient and equitable public health systems to protect communities. It also visualizes the enablement of persons to live productive and healthy lives. It has a mission of working with Ministries of Health (MOH), and various health partners to strengthen public health systems. They collaborate to develop the workforce using innovative programs and science. The aim at building sustainable capacity maintaining strong public health systems and responding to the changing and increasing health challenges. They have a mission of coming together with public health partners to diversify global health problems, practices experiences and resources. (Allison, M & Kaye J 2001) Their main goal is to use system development programs to help the Ministry Of Health worldwide build strong, effective and sustainable programs. The system development programs include; FETP, Field Epidemiology Training Programs, Field Epidemiology, Laboratory and Training Programs (FELTP), Global Public Health information program (GPHIP),Sustainable Management Development Program (SMDP) and the Integrated Disease Surveillance and Response (IDSR). They thus help the MOH to improve public health systems locally, regionally and nationally. The internal and external stakeholders of the CDC Stakeholders include persons or organizations invested in a program. They are interest in the results and evaluation of the program where their interests and requirements considered and budgeted for in the planning process. These stakeholders form four groups as follows: Implements: they are internal stakeholders. They are directly involved in operating the program. For instance, the director, program manager, staff, volunteers and consultants directly involve themselves in the organization work. The CDC identifies and involves these stakeholders in planning, implementing and evaluation activities. Decision makers: Are internal stakeholders. They decide on what to do or not, i.e. the director, program manager and the health department director. The participants: they form the external stakeholders. They are those who served or affected by the CDC program. They include the patients, community members, health facilities and health service providers. Partners: these are external stakeholders. They are those that support and have invested in the program. They include funders (government), academic organizations, coalition partners, US AID, WHO, Ellison Medical Foundation, the World Bank, professional organization and advocacy groups. How the CDC organization meets objectives of these stakeholders The CDC organization involves the stakeholders in the program evaluation process. All stakeholders invited in a series of meetings, depending on their availability. They give their views, and stating their objectives concerning the program. This meeting aims at understanding the interests, concerns and perceptions of the stakeholders on the program. Each stakeholder involved in decision-making then gives views based on the following: i) What their objectives are ii) How do they perceive the purpose of the program iii) What concerns do they have about the program iv) What they have heard about the program v) What expectations they have on the program vi) What roles and responsibilities do they feel comfortable with? The organization involves shareholders in key activities throughout the planning and implementation process. This enabled where: i) allowing the implementers (directors and program managers) to identify and prioritize program activities that need evaluation ii) developing questions grounded in the interests, experience and perception of stake holders iii) Reviewing findings for program improvement, the participants e.g. the patients examined to determine if the products are effective. iv) An annual report of the expenditures read to the stakeholders, more especially involving the partners involved in the funding. Interests of stakeholders; using stakeholders map power Level of interest low high low A Minimal effort B Keep informed high C Keep satisfied D Keep players Stakeholders in A require minimal effort and monitoring. They include the participants. Stakeholders in B get regularly informed. They could influence powerful stakeholders. They are the participants and the funders. Stakeholders C are powerful, but they have little interest in the business. They are the partners and the funders. Stakeholders D are powerful and interested in business strategies. They are the implements and decision makers. Formal report to the CEO of US, CDC (Centre for Disease Control) We recognized the organizations hard work in the Controlling of Diseases. These are the US CDC’s Organizational legal and social responsibilities as per the report generated: The US CDC works to strengthen the world’s public health together with partners. It does this by insisting on the application of public health science. Goal establishment is the duty of the following: Public health systems strengthening in fragile states: the CDC supports countries especially those emerging from the civil war and natural disasters. This enables such countries rebuild and strengthen their critical public health system. Such efforts stabilize and reconstruct such countries and strengthen the relationship with the US government. Field epidemiology: the CDC works to strengthen the epidemiology workforce with the Ministry of Health. Training programs as FETP, Field Epidemiology Training Programs, Field Epidemiology, Laboratory and Training Programs (FELTP), work hand in hand in achieving this. This helps in outbreak investigation, and laboratory management. The classroom lessons combined with practices enable learners to receive multi disciplinary training. Therefore, the practices and lessons address country requirements. Public health leadership and management are possible through the CDC’s partnership with the public health training institutions. Partnerships with the Sustainable Management Development Program (SMDP) enable are to work with partner’s countries in the development of leadership and management programs for publish health professionals. With the experimental training and management improvement projects, public health professionals acquire knowledge and skills needed to improve organizational performance. Integrated disease Surveillance and Response (IDSR) The CDC has the role of identifying African countries to build the detection and response requirements in the International Health regulations. It improves use of laboratory and survey data in controlling infectious diseases. These infectious diseases are the leading cause of disability, death and illness in the African region. Building sustainable capacity, to meet partners' national priorities The CDC ensures provision strong public health systems to improve and protect the public health. They ensure such nations are able to diversify and meet the ever-changing health challenges. The CDC responsibilities are possible if and only if partnership maintains. The collaboration with the Global disease Program especially enables correlation between national and international organizations. It ensures that countries worldwide get effective public health programs that enable their people live healthily. The strategies to meet these responsibilities relates to employees, customers, suppliers and the environment. The CDC staff consists of physicians, epidemiologists, and instructional designers, health communication specialists, training consultants, public health advisors, health communication specialists and other support staff. To achieve its responsibilities, the CDC incorporates this. The training consultants, for example, provide training to the medical students who carry out researches at the CDC. The epidemiologists work with the ministry of public health and other ministries to strengthen their epidemiology workforce. The customers of the CDC include patients, community members, health facilities and health service providers. The patients get relevant information of the tests to carry, and see the effectiveness of the drug on them. The community members get information of outbreaks, and learn how to prevent themselves from infections. The health service providers work hand in hand in providing relevant information required in carrying out a study or an experiment. The students learning form part of the customers. They need necessary information to produce the next staff, either of the CDC or other health facilities. The supplies of CDC involve those that bring in drugs, machinery and the partners involved in funding the organization. The CDC ensures beneficial relationship with these stakeholders to run smoothly. It should deliver payments of all deliveries within the stipulated time and avoid fraudulent debts. It should provide a detailed report to the partners who fund it to ensure trust built. Developing trust is a crucial element of establishment, support and sustenance of the program’s daily activities. The natural environment is another factor to consider in carrying out the daily activities. Disposing of waste products in the correct manner conserves the aesthetic value of the surrounding. This contributes to the long life of the CDC centre and the people living around by avoiding them to exposure to health risks as chemicals. Allocation of scarce resources in the business environment Allocation of scarce resources among the unlimited wants is a function of the economy. This functions aim at solving various economic problems. Three economic systems used to allocate resources effectively. These include: 1. Central planned economy: the government makes all the decisions. It decides what to produce and how it allocated to consumers. Planning takes place where the production of goods and services happens to satisfy needs of all citizens, not only for those with cash to pay for the goods. 2. Market economy: decisions made through the market mechanism. Level of profitability influences what to produce. The government does not interfere in the decision on how resources allocated, but the forces of demand and supply do. Producers decide what to produce according to the level of productivity of a given product. Organization of production determined by what is most profitable. Firms get encouraged to adopt the most efficient production method by the market. Product allocated to those who can afford to pay for the quality or service where consumers without money cannot afford to purchase anything. Traditional or subsistence Economics: this is where little specialization and trade. People live in groups of families, grow their own food, gather their own fuel and provide their own leisure activities. History influences and determines decision-making process. If the community existed for long, then belief that past decisions were right may be necessary. It is impossible to describe economic mechanisms since no two traditional economies are equivalent. Factors of production contribution towards scarcity of resources Land includes the ground, hills, seas, ocean and the air. Building, roads and all essentials of production are either build or takes place on land. The value of land appreciates from time to time. Labor is the human effort employed in production. It involves the managers and workers with everyone having different levels of knowledge, skills, qualifications and capabilities. There is no production that without the involvement of labor. Capital is the initial amount of money or goods and services required to produce other goods and services. It obtained from personal savings, loans from banks, from family relatives or grants. The governments provide capital for public limited companies. Enterprise is a business venture. The entrepreneur comes up with ideas and risks his/her resources by investing in it. It is through this enterprise that production achieves. These enterprises could be private or public. The public enterprises aim at serving the community while the private enterprises aim at making a profit. Of the three economic systems, the most appropriate is the market economy. It enhances production where everyone works hard to produce what he/she can best. Fiscal policy and monetary policy Monetary policy employs the fact that there could be change in the monetary supply influencing the interest rate. The change in interest rate further influences the investment and other interest sensitive activities in the overall expenditure. When there is an increase in money supply, the interest rate decreases depending on the sensitivity of demand for money on the interest rate. When the interest rate decreases, there is an increase in expenditure, which depends on the sensitivity of investments and the aggregate expenditure compared to the level of interest rate. The monetary policy is predictable in that for a given change in money supply the interest rate and the demand for money predicted. Again, for given change in interest rate in that it affects investment and expenditure, then the investment demand is predictable. The predictability of the investment demand and the demand of money influences the predictability of the effect of the monetary policy. However, the predictions do not have a high level of accuracy since the effects occur at different speeds. This also depends on the economic conditions and the expectations of the economic future. The fiscal policy has it that an increase in the government purchase increases the expenditure and increases the demand of the product. Then a change in the GPD (Gross Domestic Product) changes the demand for money thus changing the interest rates. Lastly, a change in the interest rate affects investments and expenditure bringing in a crowding-out effect. If a change, in money demand, affects the interest rate, which further affects the aggregate expenditure the crowding out effect is small. Then the fiscal policy affects demand. If the monetary policy is powerful than the fiscal policy, then there are extreme conditions occur. Here, the quality of money depends, not on the interest rates, (the money or demand curve is vertical). The demand for money depends on the GPD and expenditure. In this case, an increase in supply of money increases expenditure. An increase on government purchases, on the other hand, changes the interest rate, triggering the overall crowding-out. If fiscal policy is powerful and monetary policy ineffective, another extreme occurs. The quality of money is sensitive to the interest rate thus; the money or demand curve is a straight line. Here, increased money supply does not lower interest rate and people hold money at that interest rate. Thus, only fiscal policy can change expenditure bringing in the issue of liquid trap. Impacts of fiscal and monetary policy on businesses in the UK Because of the imbalance of the fiscal policy and the monetary policy in the UK, there has been a financial crisis. This crisis has had impacts on the small businesses in the UK. An estimated number of 120 businesses closed daily when the crisis was at its peak. His was due to decrease in trade, increased late payments inaccessibility to finance. Memo to the CEO describing how the organization should respond to changing monetary and fiscal policy: FROM: Manager, TO: Chief Executive Officer RE: RESPONSE TO CHANGING FISCAL AND MONETARY POLICY I have identified various ways of how this company should respond to the changing monetary and fiscal policies. It should: Forecast the future and state of the economy, to act smartly to unwanted inflation, It should have affixed rule policy that specifies the action needed independently on the state of economy There should be interest rate cuts when GDP falls below potential GDP and interest hikes when GDP exceeds potential GDP, Ensure the quality of money grows at a constant rate in all years regardless of the state of economy Setting discount rates and determining the open market operations based on the experts opinions of the members of the FOMC and their advisors. Dealing with normal fluctuations and ensuring stabilization of the monetary policy. Thank you for all the assistance you will give in establishing these policies. Best regards, Manager. Evaluation of the success of these policies in controlling business in the UK These policies successively employed in the UK government in the 2002, and they have positively raised the SME’s that had fallen altogether. The businesses have blossomed from their earlier failures and are slowly growing to sustain the owners. Impact of competition policy and two other regulatory mechanisms on the activeness of an organization Competition is a scenario in a market place where entities and sellers strive to attract customers. This enables them to achieve certain goals as to maximize profits, increase sales and improve their market share. The prices of goods tend to be lower while the quality is still high. Because of competition, businesses forced to be innovative, invest in technology and improve their managerial services to increase productivity. This leads to resource allocation efficiencies, sustainable economic growth, dynamism and the alleviation of poverty. Competition requires promotion, protection and nurturing. This made possible when market restrictions and distortions made minimal. In addition, there has to be provision of productive inputs, financial inputs, labor inputs and development of infrastructural facilities. The competition policies are government regulations and the competition law that aim at promoting competitiveness in the market structure. This in return affects the behavior of business entities in the market economy. The WHO (World Trade Organization) defines the competition policy as a combination of measures that promote competitiveness in the market structure, including comprehensive competition law that deals with ant- competitive practices in enterprises. The World Bank defines it as; a competition policy directly affecting behavior of enterprises and structure of industry with two policies; i) policies enhancing competition in local and national markets and ii) competition law or the antimonopoly law. Competition reduces and discourages monopoly. The competition law is a regulatory mechanism just kike competition policy; however competition law is a statue with a predefined mandate of adjudicating violations of the law. The competition law prohibits and can penalize any anti-competitive practices by businesses in the market place. It aims at building competitive forces and policies in the market. Joseph Stieglitz, 2001 Nobel piece prizewinner, asserted that the strong competition policy is not a luxury enjoyed by rich countries but a necessity for strive to achieve a democratic market economy. Competitive policy encourages a positive association between the GDP growth and degree of competition. Empirical studies show that increased competition enables increases productivity while reducing the prices of goods to advantage the customer. The enhanced output associated with higher productivity increases employment opportunities. Some countries have recorded increased savings to public treasures due to increased competition. The public sector then invests in improving the infrastructure which in one way or another influences growth of the business sector. Good governance and competition been proved to have a correlation in some studies. Competition leads to greater transparency in organizations while it lowers corruption. This in return enables the creation of friendly business environments for a blossoming economy. M. Potter outlines the catalytic role of the government in encouraging companies to increase competition that in turn improves performance. The acts of legislation (Competition Act of 1998) and the Enterprise Act 2002) have brought light into business in the UK. The old Monopolies and Merger Commission brought down. Prize fixing becomes criminalized and a new specialist appealed and eliminating the old “public interest test” replacing it with the “substantial lessening of competition”. SMEs (Small Business Enterprises) blossom once again after h adopting the competition policies among other policies. References Allison, M & Kaye, J (2001). Strategic planning for nonprofit organizations: A practical guide and workbook, John Wiley& Sons, New York. Centers for Disease Control and Prevention. (2002). Physical activity evaluation handbook. Retrieved April 15, 2012, from http://www.cdc.gov/nccdphp/dnpa/physical/handbook/index.htm. Read More