Definition of Business Organization - Coursework Example

? Assessment Assignment Assignment front sheet Qualification Unit number and International Diploma Business Management Unit Business Environment Student name Assessor name Yu Zhaojian Sami Date issued Completion date Submitted on 06/12/2013 Assignment title Unit 1: Business Environments. Learning Outcome Learning outcome Assessment Criteria In this assessment you will have the opportunity to present evidence that shows you are able to: Task no. Evidence (Page no) LO1 Understand the organisational purposes of businesses. 1.1 Identify the purposes of different types of organisations 1 4,5 1.2 Describe the extent to which an organisation meets the objectives of different stakeholders. 1 5,6 1.3 Explain the responsibilities of an organisation and strategies employed to meet them. 1 6,7 LO2 Understandthe nature of the national environment in which businesses operate. 2.1 Explain how economic systems attempt to allocate resources effectively. 1 7,8,9,10 2.2 Assess the impact of fiscal and monetary policy on business organisations and their activities. 1 10,11 2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected organisation. 1 11 LO3 Understand the behaviour of organisations in their market environment. 3.1 Explain how market structures determine the pricing and output decisions of businesses. 1 12,13 3.2 Illustrate the way in which market forces shape organisational responses using a range of examples. 1 13 3.3 Judge how the business and cultural environments shape the behaviour of a selected organisation. 1 14 LO4 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 organisations. 2 15 4.2 Analyse the impact of global factors on UK business organisations 2 15,16, 4.3 Evaluate the impact of policies of the European Union on UK business organisations. 2 16,17 Learner declaration I certify that the work submitted for this assignment is my own and research sources are fully acknowledged. Student signature: ??? Date: 06/12/2013 Introduction  Business organisation refers to social organisation, which aims at pursuing collective objectives and goals, which controls the organisation's performance. A business organisation has a boundary, which separates it from its external environment. The main rationale of this assignment is to spot the purposes of business organisation, analyze the criterion used by different types of business organisations to meet the demand of stakeholders, and explain strategies and responsibilities of business organisations, which they use to meet their goals. LO1 Understand the organisational purposes of businesses. Purpose of business organisation    Businesses run to ensure they meet the needs of customers. Therefore, according to many businesses, customers are more essential to a business than stockholders, employees, and managers. Without consumers, entrepreneurs cannot operate businesses (Shorthose & Maycroft 2012, P.33). Therefore, the main principle of business organisation is to ensure that customers experience the best services and are fully satisfied. The organisations vision statement portrays the future state of the organisation. Having quality managers and leaders enable a business to create vision and strategy (Fleming 2004, P.4). However, under all business conditions, the purpose of a certain organisation is to ensure that the businesses survive. Business organisation should establish shared values and vision for the businesses (Shorthose & Maycroft 2012, P.35). Business organisation must create mission statement and some commitments to maintain the mission at all the organisational levels. The main purpose of this mission statement is to protect the organisation from being sidetracked and distracted. The mission and values focus on the resources and strategies of the business organisation (Fleming 2004, P.7). The major resources of a business organisation include employees, their experiences, and skills. This strategy makes a business organisation establish a healthy environment and makes the organisation remain strong and successful. In all business organsations, consumer's faith remains to be the highly valued property (Shukla 2006, p.41). Since customers are the most important partners of any business, it is the purpose of business organisations to focus on the following factors to ensure smooth running of the businesses.  Describe the extent to which an organisation meets the objectives of different stakeholders The extent to which an organisation meets the objectives of different stakeholders  Business organisations serve large groups of stakeholders who are key elements to any business. Business organisations try to maintain a quality relationship with their stakeholders to enable them meet the needs of the stakeholders (Zaccaro & Klimoski 2007, p.125). Business organisation's stakeholders include employees, customers, suppliers, government, local community, financiers, competitors, pressure groups, and shareholders. Organisations offer employees opportunities to express their experiences freely on the issues affecting their functioning and outcomes of the business. Organisations however ensure a strict communication to all its local and international governments to ensure quality services to all customers (Zaccaro & Klimoski 2007, p.118). Additionally, organisations establish effective communication system to feed owners and shareholders with essential information since it is vital to maintain good relationship with the shareholders (Fleming 2004, P.7). Suppliers are forms of companies that supply goods needed by the organization and they be either nationally, internationally, and local. Business organisations ensure that their suppliers enjoy secure fair prices and contracts (Zaccaro & Klimoski 2007, p.108). Explain the responsibilities of an organisation and strategies employed to meet them. 1. Responsiveness- Business organisations should have the ability to respond with immediate effect to customer's demands and rights. Organisations should minimize time lagging (minimizing management time). Since the needs of customers vary and changes as time passes and depending on the organisation's services, the business organisation has to develop accordingly to address these needs (Shukla 2006, p.45). 2. Reliability- Business organisations should be reliable enough to meet the commitments set for the consumers. Organizations should give these customers' commitments the first business priorities and should be at all times accomplished (Carsrud & Bra?Nnback 2012, p.7). 3. Design with Quality- All goods and services sold to the customers should be new and not expired or rejects and of high quality. Apart from change, all things in the world remain inconstant (Shukla 2006, p.47). Customers tend to forget about price changes with time passes, but quality of products remains to be a key factor to consumers. Business organisations should not consider a product as sold immediate after a customer buys it, it should consider a product as sold only if it satisfies the needs of that customer. The three factors describe (responsiveness, reliability, and design with quality), are just similar to the wheels of a three-wheel automobile. Each factor serves an equal importance to aid the success of a business. Business organisations should always listen to suggestions and comments of all customers. However, this helps the business organisation to follow the right business path. LO2 Understand the nature of the national environment in which businesses operate. Nature of the national environment in which businesses operate  All business organisations work within an environment. This environment in which businesses operates can either directly or indirectly affect the operations of the business, just similar to the way customers living in different cultural and economic backgrounds can determine the way they behave (Mann & Roberts 2013, p.904). Businesses cannot control environmental forces just the way they can control the marketing mix variables. However, business can control the way they deal with these uncontrollable environmental forces through determination and monitoring of the forces, which are relevant to their operations. Organisations forecast these environmental changes for developing effective marketing strategies and plans. All business organizations operate within national environments (Mann & Roberts 2013, p.907). This means that all for-profit and not-profit organisational ‘operations are controlled and affected by environmental forces, which they must contend. The main factors that affect the national environment of a business environment include economic status, fiscal and monetary policy and competition policy (Mann & Roberts 2013, p.910).  Firstly, economic system is the outcome of individuals, groups, and government interacting and coming together in a social and legal society. The main purpose of an economical system is to address to the economical problems affecting businesses' operations (Wijen, Zoeteman & Pieters 2012, p.5). These basic scarcity challenges entails that there is limited resources while there is there an infinite consumer wants. The distribution of resource comprises three dimensions; what the organisation is to produce, how to produce, and targeted customers.  Organisations use free market system and the planned system widely to effectively allocate resources. In a free market system, private individuals are the owners of production resources who rent them to business to enable them produce goods and services (Wijen, Zoeteman & Pieters 2012, p.8). However, in a free market economic system, everyone involved is purely motivated by self-interest, business organisations can sell anything they wish to customers, and the rate of completion is extremely high. On the other hand, command economy or planned economic system means that the government designs the process of allocating resources and determines the type of products the organisations should produce (Wijen, Zoeteman & Pieters 2012, p.10). This economic system limits the choices of consumer products hence avoiding them to recommend about the goods the manufactures should produce.  Secondly, a country's government can negatively affect economic status of business organisations through two major economic policies. One of the economic policies includes fiscal policy, which is instigated by either a country's president or business congress (Bansal & Hoffman 2012, p.53). Government spending and taxation rates are main factors, which influence effects of fiscal policy. By implementing new taxation laws this can positively modify consumer disposal income enjoyed by taxpayer organisations. For instance, an increase in tax rate will reduce consumer disposal income, which as a result, the consumers would have less income to spend on service and goods.  This income difference would benefit the government, which in turn passes the collected amounts to other organisations (Bansal & Hoffman 2012, p.55). Alternatively, government can decide to increase its expenditure rate through purchasing goods and services from private organisations. As a result, this increases the flow of currency to the country's economy hence increasing disposal income to consumers (Bansal & Hoffman 2012, p.63). However, this process requires time, since the money has to pave its way to the economy, resulting to a significant effect between fiscal ‘policy implementation and the effects it causes to the economy. The other way in which a country's government affects the economy is monetary policy. The central bank of a country has the responsibility to instigate this policy, which controls and regulate money supply within the country's economy (Bansal & Hoffman 2012, p.67). By influencing the monetary policy, the country's Federal Reserve can, negatively or positively affect the amount of money spent by both consumers and businesses.  Lastly, competition policy poses both positive land negative impacts to business organisations. The main of implementing competition policy is to promote and improve competition strategy and ensure that all markets work under better conditions hence contributing towards efficiency improvement. Competition policy is an essential regulator to business organisation activities in market (Harrison 2010, p.256). Assess the impact of fiscal and monetary policy on business organisations and their activities. Monitoring and regulating prices- Competition regulators ensure that business organisations does not over exploit their monopoly opportunities through setting higher prices on commodities (Needle 2010, p.80). They examine the pricing behavior evidence capital returns rate to determine whether there is any “profiteering” evidence. Currently, the Europe competition policy commission set a ruling on the growing cell phone operators to implement a maximum phone prices. Customer service standards- According to competition policy, business organisations that fails to adhere to the required consumer services standards are fined or their operation licenses taken. Competition policy may also insist that unprofitable services be maintained widely in the market such as booths in city centers and in rural regions. Post offices still operate to delivers parcels to postal addresses (Needle 2010, p.385).. Opening up markets- The aim of competition policy here is to do away with all barriers, which may hinder new businesses investing in a certain market. Competition policies can achieve this goal through requesting dormant industries in market to allow new organizations use their infrastructure networks (Needle 2010, p.83). Evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected organisation. The surrogate competitor- Competition policy can serve as type of surrogate competition on markets trying to ensure that profits, costs, and quality of service are equal to what a business can gain from a competitive market. The main aim of competition policy globally is to ensure protection of public interest, mainly against organizations abusing their forces (Needle 2010, p.80). LO3 Understand the behavior of organisations in their market environment How market structures determine the pricing and output decisions of a business  Business's pricing and decision making highly depend on challenges, barriers, and new competitors' behaviors. The actions of a business competitor can by far influence behaviors of another business. This is essential for an oligopolistic firm whereby, the industries show mutual interdependency (Markovic? 2012, p.45). Ollo is a sample firm used in this essay to explain how market structures determine the pricing and output decision of a business. This is an oligopolistic business organisation, which has a number of competitors. If the organisation set higher prices to its products, which are higher than of other organisations, the organisation can be ready to experience huge loses. Moreover, there are a numbers of entries, which the organisation has to consider before entering to a new market or expanding its operations. Entry barriers are factors, which prevent new businesses from entering a market to compete with the existing businesses (Markovic? 2012, p.30). These barriers give business organisations ma market power such that the existing firms can make decisions, which do not risk their market share. Ollo being a new business in the market cannot maximize its product prices in order to increase profits. Therefore, in order for new firms such as Ollo, for them to gain effective brand loyalty, they must offer products at relatively low prices (Markovic? 2012, p.18). For an electronic company, which is new to market, which is highly competitive may decide to offer a 3.5 GB volume at a price of 500$ and an existing company offer a 2GB at 600$. The way in which market forces shape business responses Business demand toward demand- Business cannot sell any product without demand from customers. Customer must show desire of the product and be financial stable to purchase the products. How customers will buy goods and services from a certain organization depends on the following factors: Price-For some individual customers, a fall in price of a certain product make it cheaper to buy than other products. A fall in the price of a certain product increases its demand and implies that customers with low incomes will be able to purchase such products hence increasing the entire market size for such items. For these reasons, new firms entering a competitive market tend to lower the prices of their goods and services (Gitman & Mcdaniel 2009, p.309). Substitute- Customers may change their decisions of buying a certain product to others just because of changes in price. Organizations in a competitive market reduce prices of their products to present substitute products of costly products from their competitors (Gitman & McDaniel 2009, p.25). Complementary- The increased demand of computers and laptops internationally, as well increased the demand for wireless services. With such information, many organizations in competitive markets plan to expand their operation to a wide range of market. How business and cultural environments shape the behavior of organization  There are six segments of business environment, which are political, social-cultural, technological, economic, environmental protection, and legal. Political environment- Any country's government is responsible of ensuring an effective framework to govern economic activities and, particularly, for improving and maintaining social, physical, and business infrastructure. Currently, the only political challenge Ollo company can face is governmental corruption that is existing in Bangladesh (Neuenburg 2010, p.87). Economic environment- The economic activities affect organisation at both international and national levels, both in economic activity levels and in some variables like interest rates, exchange rates, and inflation rate. Because of the GDP's shortage in Bangladesh, firms like Ollo are experiencing low demand for goods and services (Neuenburg 2010, p.87). Social-cultural environment- The cultural and social environmental factors characterizes both long-term customers' beliefs and social trends. Social and cultural environment can change demand pattern for many goods and services. Other environmental factors, which also affect business strategy, are technological environment, environmental protection, and legal environment (Kyriakopoulos 2009, p. 143) LO4 Be able to assess the significance of the global factors that shape national business activities Significance of international trade to UK business organisation International trade is the process of purchasing and selling of products from other countries. Global trade is the key factor to success for many business organisations since many manufacturers in many countries gain much of their profits from international trade rather selling their products within their own countries (Quack 2006, p.56). For an UK business organisation , involving in international trade, its goods, and service can be much attractive because; (i) International markets have new market sections. (ii) Saturation for its home market forces business organisations to seek markets from other countries. (iii) The nature of a certain organisation ’s goods and service may force it to seek market from other countries. (iv)Commercial customers operating from foreign countries may need their supplies to cater for their demands across country boundaries, (v) some products are more special, and the home markets seem to be too minimal to allow exploitation of economies of scale (Quack 2006, p.59). The impact of global factors on UK business organisations Political factors- The progress of global environment plans depends on the government’s stability, its responsibility in country’s economy, international and informal relations with business. The risks posed by government to business are also the risks posed by political unrest. In order to address these risks, business should employ local partners who have good contact, use leasing, and register to insurance bodies (Dunning 2004, p.123). Economic factors- These global factors affects both demand and ability to access products. Some of essential economic factors that highly benefit business include exchange rate, economic growth in currently developed nations, and general level of economic activities among others. Social issues- Varies of social trends affect the demand of goods and services of organisation as well as affecting the willingness and availability of people to work (Dunning 2004, p.127). In UK, for instance, most of people are ageing. This has highly increased firm’s costs since they are committed with payment of pension for their workers since most of their staff members are living longer (Edquist & Hommen 2008, p.67). This ageing population also affects demand for some goods. For example, there is increased demand for sheltering and accommodation in UK and less demand for toys. Other global factors, which affect business organisations in UK, are technological factors, environmental protection, and legal factors. Impacts of European Unions on UK business organisations The EU comprises of fifteen member nations, with a further expansion planned. EU is a free market, and customers’ union, which has a common external duty (Cooke, Parrilli & Curbelo 2012, p. 56). The EU has two sources of law, primary, and secondary sources. The primary sources include Treaty Provisions, while the secondary sources include EU institutions’ Legislation and ECJ’S interpretations of secondary and primary sources of the union. Regulations are direct EU laws, after their passage, they have been ensuring legal forces to every Member State in equivalent to states’ laws (Cooke, Parrilli & Curbelo 2012, p. 59). National governments have no responsibility to establish any EU law. EU laws have many impacts to UK business. In goods, there is termination of custom documents and there is no need of traders submitting taxation declarations. On internal markets, organisations learn on how make comparisons more effectively, the open trade feature enables member firms to match with the rest of the world, and internal market policies embody quality environmental protection (Barnes, Peck & Sheppard 2012, p.78). Elimination of marketing restrictions covers areas like European standards and regulations, which means that any goods and services produced by any EU state can experience free market, and shipping services within the Member States among other areas.   Bibliography Shorthose, J., & Maycroft, N 2012, Understanding creative business: values, networks, and innovation. Burlington, VT, Gower Pub. Fleming, L 2004, Excel HSC business studies. Glebe, N.S.W., Pascal Press. Shukla, M 2006, Understanding organisations: organisational theory and practice in India. New Delhi, Prentice-Hall of India. Zaccaro, S. J., & Klimoski, R. 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