Impact of Global Forces on UK Business Organisations - Assignment Example

Business Environment Table of Contents Introduction 3 Discussion 3 Task 3 (a). Purpose and Ownership of Selected Organisations and the Contrasts between These Two Businesses 3 (b). The Different Stakeholders Influencing the Purpose of the Two Businesses and the Extent to Which an Organisation Meets the Objectives of Different Stakeholders 5 (c). Role & Responsibilities of the Selected Organisations and Related Strategies to Meet Them 6 Task 2 7 (b).The Impact of Fiscal and Monetary Policy on Business Organisations and Their Activities 7 (c). Impact of Competition Policy and Other Regulatory Mechanisms on the Activities of A Selected Organisation 8 (d). Role Market Structures in Determining the Pricing and Output Decisions of Businesses 9 (e). Role of Market Forces in Shaping Organisational Responses supported with Examples 9 (f) Role of Business and Cultural Environments in Shaping the Behaviour of a Tesco PLC 10 Task 3 11 (a). Significance of International Trade to UK Business Organisations 11 (b). Analysis of the Impact of Global Factors on UK Business Organisations 11 Conclusion 13 13 References 14 Introduction This essay intends to achieve the goals of three different tasks. In order to achieve the broad goals of this essay, the purposes of different types of organisation, the nature of the national environment in which the business operates behaviour of organisation in their market environment and the global factors that shape national business activities will be critically discussed. Discussion Task 1 In order to accomplish the goals of task one, two effective selections have been made. The first one is the ‘St Michaels Fellowship’ which is a local charitable organization of United Kingdom. The second one is ‘Tesco PLC’ which is a private limited company currently operational within the UK markets based upon which the essay structure will be framed. (a). Purpose and Ownership of Selected Organisations and the Contrasts between These Two Businesses Before determining the purpose and the ownerships, it would be vital to consider that there generally lays two types of organisations based on the criteria of purpose which include non-profit organisation also known as charity organisation and profit driven organisations. Taking into consideration of the purpose of non-profit organizations such as St Michaels Fellowship, it can be stated that these organizations generally aim towards uplifting the underdeveloped and the over exploited sections of the society. For instance, helping the poverty stricken people within a specific location in terms of making them capable enough for self-earning and bring them to mainstream of society. St Michaels Fellowship also provides parents with adequate training and guidelines for making them employment worthy and capable of being responsible parents to their children (St Michaels Fellowship, n.d.). Thus, the primary purpose of non-profit organisations like St Michaels Fellowship is to achieve social welfare. Similarly, the owners of the non-profit organizations like St Michaels Fellowship are generally trustees or large business organizations who want to project their concerns towards the societal development and wellbeing. They invest significant amount of funds with the prime intention of getting indulged into CSR activities through which they attain significant amount of market reputation and customer preference. In terms of size and scale of the organizations, it can be stated that the non-profit organizations are generally of small scale type and are generally meant for providing their services to confined localities or geographic areas. On the other hand, the profit organizations can be of multiple types for instance, private limited corporation, or entrepreneurial, or proprietorial. However for this report, only the private limited corporations have been taken into the consideration. One common example of such a company is Tesco PLC. These types of companies are generally formed through the collaborative efforts and investments of multiple stakeholders which might be other business bodies or common public. These organizations are generally profit driven organizations and tend towards safeguarding the interests and the investments of all its stakeholders (Tesco, 2014). The primary purpose of profit driven organisations such as Tesco PLC is the profit maximisation for its investors. The owners of the profit based business like Tesco PLC are generally individual investors or public who invest in the organizations in terms of purchasing of company shares with the sole motive of earning substantial profit. However on the contrary, the profit-oriented organizations generally occur to be of large size and often extend their reach towards international markets as well. Based on the above discussion clear distinction between the two businesses can be asserted. (b). The Different Stakeholders Influencing the Purpose of the Two Businesses and the Extent to Which an Organisation Meets the Objectives of Different Stakeholders As already describes above, the stakeholders of a non-profit based organization can be of various types. Taking an example of the St Michaels Fellowship organization which has stakeholders in the form of individual trustees such as ‘Penny Alford’, ‘Richard Barron’, ‘Bernard Bindman’, ‘Corina Forman’, ‘Mary Gibson’, ‘Stephen Hair’, ‘Helen Jones’, ‘Crawford Lindsay’, ‘Clare Roskill’ and ‘Sylvia Smith’. Speaking from a generalised point of view, apart from just the individual trustees, non-profit organizations might attain investment contribution from other small or large business bodies. The government and the surrounding community also play a significant role as stakeholders for the non-profit organizations. In order to meet the objectives of the different stakeholders, the non-profit organisation often engage in social activities that ensures the highest social welfare. In a similar manner, the major stakeholders of large profit oriented ‘Private Limited Corporation (PLC)’ may include financial organizations such as ‘Norges Bank’ and other incorporated organizations such as ‘Berkshire Hathaway Inc.’. Apart from these, several other forms of investors such as individual investors, partnered investors, and investments through purchase of company’s share by the common public can also contribute towards the financial structure of a profit oriented PLC. The government also plays a significant role in the operations of the PLC. Tesco PLC in order to meet the objectives of its investors performs activities involving buying and selling of products and services so the adequate return on their investments are provided to them. Similarly, customers are offered with the quality products and services for meeting their objectives. (c). Role & Responsibilities of the Selected Organisations and Related Strategies to Meet Them As for the non-profit organizations such as St Michaels Fellowship are concerned, their roles and responsibilities generally includes providing support to each and every sections of the society and the inhabitants who seek help both from financial and moral perspective. Moreover, for promoting themselves, a non-profitable organization implicates multiple types of promotional strategies such as event sponsorship, social media promotion, themed campaigns, word of mouth and many more. Through this way, non-profit organization can spread their awareness and message among large sized population. Profit based organizations such as Tesco PLC generally remain focussed towards attaining large percentage of profits and thus structure their strategies in accordance to that. For instance, large PLCs generally attain profits in terms of exchanging their products and services with the common customers for funds. Moreover, their role includes attaining a specific set profit figure which might be either short termed or long termed that would ultimately meet the profit maximisation objectives of the investors. However the responsibilities include carrying out each and every step of the set objectives in a specific, ethical and legal manner. Strategies for carrying out the specific roles and responsibilities along with target attainment may be in terms of promotional strategies, product and service development strategies, customer relationship development strategies and so forth. Task 2 Tesco PLC has been taken into consideration for addressing the requirements of task 2 (a). Role Of Economic Systems Attempt to Allocate Resources Effectively The Economic stance within a specific geographic area does play a significant role in terms of effective allocation of resources for PLC like Tesco. Now if seen from an economic perspective, multiple factors might influence resources allocation for Tesco. For instance, an economy with high inflation rate might cause issues with the resource availability as the prices of the raw materials will gradually go up. To the organizations, their customers can also be considered as one form of resource for attaining revenue (Lee & et. al., 2007). Thus, high inflation rate may lead the expense level from the customer’s side to fall gradually as they will prefer saving instead of spending. This might hinder the profit earning capabilities and the sales figures of Tesco, thus may upset the investors with poor ROIs. However on the contrary side, a geographic area having a stable economic stance might appear as an advantage for PLCs such as Tesco in terms of cost effective availability of resources and appreciable sales figures. Adding to that, the level of trade barriers, political and legal aspects also depends on the economic growth within a nation. For instance, a nation with experiencing high rate of economic growth will gradually decrease its trade barriers, political and legal obligations for promoting healthy trade practises. (b).The Impact of Fiscal and Monetary Policy on Business Organisations and Their Activities The impact of monetary and fiscal policies on the activities of the business organizations can be considered to be noteworthy. This is mainly due to the reason that through the manipulation of the monetary and the fiscal policies, the government regulates the flow of money within the economy. For instance, with the increase in the money flow within an economy, the inflation rate gradually goes up and thus helps the government in sucking excessive funds from the economy. However with the fiscal policies the government can pump in or out money from the economy by regulating the tax ratios. All these measures or policy gradually effects business in multiple aspects such as resource availability, price rise, customer availability, sales figures and expansion among others (Chronis & Strantzalou, 2008). (c). Impact of Competition Policy and Other Regulatory Mechanisms on the Activities of A Selected Organisation The effectiveness of the competition policy and other regulatory mechanisms on the business activities of large PLCs such as Tesco can be explained in terms of prevention of unethical and illegal business practises. Regulatory mechanisms such as competition law are generally implemented by the government with the prime intention of keeping a check on the business processes of various PLCs belonging to a similar industry within a specific geographic location in terms of maintaining homogeneousness a between them. The homogeneousness can be in terms of product price, quality, quantity and availability. In simple words it helps in promoting healthy competition between PLCs. The impact of competition policy and other regulatory mechanisms on the activities of Tesco can be quantified in terms of ethical business operations as well as fair and transparent involvement in competition (Crown, 2004). (d). Role Market Structures in Determining the Pricing and Output Decisions of Businesses As can be understood from a generalised point of view, market structure can be described as a collection of business organizations which projects homogeneousness within their product manufacturing and service rendering. It does affects the pricing and the decision-making process of the businesses depending on the fact that whether they exist in a monopolistic market or an oligopolistic market. For instance, in a monopolistic market since each organization produces similar type of products but differs in terms of branding or price. Similarly in an oligopolistic market, the entire market will be dominated by the group of organizations manufacturing homogeneous products. Thus in both types of market structures and without any type of competition regulatory laws from the government side, the pricing and output decisions will completely depend on the PLCs (Peck, 2006). (e). Role of Market Forces in Shaping Organisational Responses supported with Examples Market forces such as threat from new entrants, bargaining power of the suppliers and customers, threat from the substitutes and threat from existing players does play a significant role in terms of shaping the organizational responses of PLCs such as Tesco. For instance, if the threat from new entrants is high, then the organisational response should be regarding the establishment of patent rights for preventing new players from imitating product types. Similarly if the competition within the existing players seems to be high then the organizational response should be regarding structuring of innovative product types and effective communicational techniques for attaining higher level of customer preference (LUXINNOVATION G.I.E., 2008). (f) Role of Business and Cultural Environments in Shaping the Behaviour of a Tesco PLC For business organizations such as Tesco PLC to effectively carry out its business process within a specific geographic location it is an utmost necessity that the organizations should blend in with the business and the cultural environment which is preferred within that location. Respecting the cultural environment of a specific location gradually helps in terms of attaining high level of customer which might prove as significantly beneficial for the organizations. This will also help in terms of attaining an edge over the competitors along with greater share of the market (G4HA, 2007). Task 3 (a). Significance of International Trade to UK Business Organisations The continuous expansion in the international trade can be seen to benefit the business organisations in the UK. In this regard, the growth in the international trade will facilitate in attracting substantial foreign direct investments as well as it will positively influence in addressing the problems faced by the economy such as issue related with unemployment. It will also offer the local business with the platform for expanding their business operations and acquire substantial profit which in turn benefits the growth of the national economy (Dudovskiya, 2013). (b). Analysis of the Impact of Global Factors on UK Business Organisations The impact of global factors on the business organizations within UK can be effectively determined based on the demand and supply analysis within the local markets of UK as well as the global markets. From a generalised point of view it can be stated that if the demand remains high then impact on the UK business organizations will be positive due to the fact that the supply from the business organizations will also remain high or low depending on the market structure. Apart from the demand and supply analysis, the PESTLE analysis also plays significant role in terms of understanding the impact of global factor on the UK business organizations, the details of which has been provided below. Political Factor: - this factor generally refers to the political pressure that UK based PLCs such as Tesco might face from the governments of other nations where it plan of expanding its business to. These pressures might be in terms of low subsidy, high taxation, high trade barriers and multiple more. Economic Factors: The economic factors such as inflation, unemployment rate, and demand and supply of the products and services might cause the PLC to incorporate certain specific strategies that are different from other geographic locations. Socio-Cultural Factor: - this factor will help in describing the social and the cultural aspects within a specific geographic location where Tesco will establish its business. For instance, aspects such as cultural diversification, customer’s likeliness and reaction towards Tesco products, brand preference may force the PLC to alter its strategies in order to attain long-term sustainability within the specific geographic location. Environmental Factors: - this factor will generally help Tesco in terms of structuring its products manufacturing and service provision strategies based on the environmental conditions within a specific geographic location. Technological Factors: - this factor will gradually describe the level of technological advancement which Tesco might witness within a specific geographic area or nation based on which it can frame its manufacturing and communication strategies. Legal Factors: - this factor will help in evaluating the types of legal barriers and obligations which Tesco might address from the government of multiple nations in context of establishment and carrying out of its trade practises within those specific areas. For instance, competition law, legal obligations regarding domestic business takeover by large scale international business may also impose the PLC to change its operational structure Source (Dudovskiyb, 2013) (c). Evaluation of the Impact of Policies of the European Union on UK Business Organisations If seen from a legal perspective, the policies of the EU do lay significant amount of impact on the UK based business organizations. This is mainly due to the fact that majority of the laws within UK which are currently in active state are been established with the collaborative efforts UK with EU. This also includes multiple laws regarding business practises of both the domestic as well as international industries. Thus any sort of detachment from EU will gradually result in failure of both the Treaty on European Union (TEU) and the Treaty on the Functioning of the Union (TFEU) treaties that might hamper the functionality of UK based businesses such as Tesco (EEAC Working Group Governance, 2006). Conclusion From the above discussion, it can be stated that the business organizations within UK can be manipulated by multiple external as well as internal forces. These forces include the pressure from investors, impact of external environmental, market demand and supply. Thus it is vital for the non-profit as well as profit based organizations to safeguard the interests and the satisfaction levels of the investors and other marketing factors for ensuring survival in the current marketing trend. References Crown, 2004. Understanding Competition Law. Agreements and Concerted Practices, pp. 1-34. Chronis, P. & Strantzalou, A., 2008. Monetary And Fiscal Policy Interaction: What Is The Role Of The Transaction Cost Of The Tax System In Stabilisation Policies? Working Paper, pp. 1-48. Dudovskiya, J., 2013. Significance of International Trade to UK Business Organisations. Research Methodology. [Online] Available at: http://research-methodology.net/significance-of-international-trade-to-uk-business-organisations/ [Accessed Jun 8, 2014]. Dudovskiyb, J., 2013. Impact of Global Forces on UK Business Organisations. Research Methodology. [Online] Available at: http://research-methodology.net/impact-of-global-forces-on-uk-business-organisations/ [Accessed Jun 8, 2014]. EEAC Working Group Governance, 2006. Impact Assessment of European Commission Policies: Achievements and Prospects. Network of European Environment and Sustainable Development Advisory Councils (EEAC), pp. 1-24. G4HA, 2007. The Cultural Environment of International Business. Learning Objectives, pp. 124-175. LUXINNOVATION G.I.E., 2008. Porter’s 5 Forces Analysis = Suppliers, Customers, New Entrants, Substitute Products, Competitors. The National Agency for Innovation and Research, pp. 1-2. Lee, Z. W. & et. al., 2007. Effects of Resource Allocation Policies for Reducing Project Durations: A Systems Modelling Approach. Systems Research and Behavioural Science, 551-566. Peck, J., 2006. Oligopoly. Oligopoly Is A Market Structure In Which The Number Of Sellers Is Small, pp. 1-23. St Michaels Fellowship, No Date. Trustees. About Us. [Online] Available at: http://www.stmichaelsfellowship.org.uk/content.aspx?CategoryID=2209 [Accessed Jun 8, 2014]. Tesco, 2014. About Us. TESCO PLC. [Online] Available at: http://www.tescoplc.com/index.asp?pageid=6 [Accessed Jun 8, 2014]. Read More