How the Environment Affects the Success of a Business - Assignment Example

Business Environment Introduction Bentley automotive is a British based carmaker that manufacturers luxurious and expensive vehicles targeting the first class elites from across the world. Established in 1919, Bentley has grown to become a major automotive company based in Cricklewood but wholly owned by German vehicle manufacturer Volkswagen. Volkswagen acquired the brand and vehicle manufacturing unit from Roll-Royce, the legal owners of the company since 1930s. Business environment is the immediate surroundings of a business that is made of a number of parameters including the social, cultural, fiscal, legal and political factors that affects the operations of an environment. A number of government-developed factors within the business environment affects the operations of businesses and these include the economic demographics, government policies and activities, the availability of the resources and capital for the organization and the overall performance of the organization. The success of Bentley automotive depends on its ability to blend into this environment and develop strategic decisions that can create success. This paper will discuss the Bentley business environment and how strategic sanity and decision-making can be used to improve its chances of success. 1.1. The purpose of different types of organisations4 Businesses across the globe can be categorized into two different groups depending on the nature of ownership, the level of production and area of specialization. As a result, organizations can either belong to the private sector when owned by individuals and public sector or owned partly by the government and public shareholders. Individuals otherwise known as sole proprietorships or owned by two to 20 people through a partnership agreement can either own private business. Limited liability companies are owned through shareholding framework in which the shareholders do not have liability beyond the value of their shares in the company. Bentley motors is categorized as a private company with international operations after acquisition with Roll n Royce and Volkswagen in the recent past. The company has subsidiary and manufacturing units in different parts of the world including Germany, Britain and the United States. These units are managed by the subsidiary heads that are responsible for the development of an internal marketing and production approach based on the nature and dynamics of the market. The acquisitions and mergers that have occurred at Bentley are associated with the financial challenges that the company has experienced since the beginning of the 1930s. However, the financial position of the organization today is steady and this has been supported by nature of their products and the emergence of luxury motor vehicle shows across the globe. 1.2. How Bentley meets the objectives of different stakeholders Stakeholders in an organization have an important role to play in its development and success and they include the investors, the employees and the society within which the organization operates. Internal stakeholders in the organization who include the employees and the management have a role to ensure that the external stakeholders such as the investors, the customers, government agencies and financial institutions are fully satisfied with its operations. Through its annual financial reports, Bentley motors limited provide its performance and profitability to the stakeholders (Daspit and Errick 2012, p.669). This is essential in helping them decide on their commitment to the organization through their dividends and shareholding. A number of communication approaches and development programs have been developed to enables employees enjoy their time and commitment to the organization. These include the traineeships and the talent management programs that are meant to improve the performance of the company. 1.3. Responsibilities of Bentley and strategies employed to meet them All the approaches adopted by Bentley are meant to improve its performance and chances of succeeding in the highly competitive motor vehicle market. As a manufacturer of technology, Bentley is committed to the society and the immediate environment within which it operates. As a result, the company has adopted a number strategic measures meant to protect the environment and eliminate the waste. With global warming and greenhouse gas emission remaining of essence to manufacturing businesses, Bentley has adopted a number of strategies to ensure that environmental waste is eliminated. Apart from environmental management strategies, Bentley employee have been affected by the recent recession and financial meltdown and this has led to the need to reduce the number of employees in the organization to reduce the operational cost (Cao, Jeff and James 2012, p.566). 2.1. How economic systems attempt to allocate resources effectively Economic systems affect the process of resource allocation in organizations and this influences their performance in a highly competitive environment. Economic system is defined as the processes within the economic setup, which affects the process of production and distribution of goods and services and the allotment of resources within the society. In the United Kingdom, the economic system that affects the process of distribution of goods and services is a mixture of influences from government policies and strategic decisions made by businesses. As a result, Bentley motors limited has a chance to advance its market goals and plans within the domestic and international market with equal chances of success. In the 80s and the automotive sector witnessed a major decline and the government intervened through the adoption of policies that boosted the economic system. These included the adoption of a friendly taxation policies and the provision of subsidies to boost the development of home businesses such as Bentley motors limited (Cai and Zhilin 2014, p.141). 2.2. Impacts of fiscal and monetary policy on Bentley and its activities Monetary policies are economic actions taken by the central bank to control the size and growth of money supply in an economy, a decision that is reflected on the interest rates that banks charge on loans. Fiscal policies on the other hand are those decisions that hinge on government spending habits, which influences the microeconomic condition in the country. The government adopts fiscal policies in an effort to curtail the increase in unemployment, inflation and to influence the interest rates offered by banks. The two policies have tremendous impacts on the operations of Bentley motors limited and thus impacts on its financial and operational capabilities. Developing policies that discourage borrowing such as an increase in the interest rates affects the ability of Bentley motors limited to access credit and achieve its overall business goals and plans. This affects the research and development component of the business and ultimately the nature of products developed. However, the adoption of the monetary policies by the government has been countered by Bentley economic strength and international presence which enables it to acquire financial loans based on its strong economy of scale (Ābele et al 2012, p.1312). Fiscal policies, which increase the tax base, levied by the government influences the prices of the motor cars produced by Bentley. This reduces the demand for the same goods and affects the company’s operational viability and overall success. However, the fact that the company specializes in luxury vehicle manufacture enables it to retain customers who cannot forego their prestige and affluent life due to the high prices of the products. This enables the company to retain its market performance irrespective of the fiscal policies adopted by the government and motivated by the desire to increase the revenue base through taxation. 2.3. The impact of competition policy and other regulatory mechanism on the activities of canon The United Kingdom government adopts a number of policies, which dictates the competition within the domestic market, and this influences the activities of organizations. Competition is the process of firms within the same industry and producing substitute products struggling to control the same domestic or international market. Government policies, which influence the operation of businesses such as Bentley motors limited, include the adoption of tariffs, introduction of industry subsidies, the emergence of government owned corporations and the increase of monopolies in the industry (Miller 1988, p.292). Price and non-price competition are the main levels of competitions that different organizations across the United Kingdom engage in and are majorly as a result of policies adopted by the government. The luxurious nature of motor vehicles produced by Bentley exposes it to stiff price competition as other automobile manufacturers attempt to engage in price reduction as a way of wooing the customers. The design, quality and style of vehicles manufactured by Bentley motors limited cannot allow them to be sold to the customers at a cheaper price as evidence with others from the competitors (Mithas, Ali and Will 2013, p.532). However, Bentley uses non-price competition approaches to eliminate the exodus of customers and to ensure that the sales and performance of the company remains high. Due to its reputation for the manufacture of high quality, luxurious and durable automobiles, Bentley has continued to perform in different motor vehicle fashion shows across the United Kingdom. Through this platform, the company has managed to retain a high performance index by retaining its customer base and attracting more who value quality and luxury as opposed to affordability and quantity (Elliott 2014, p.6). 3.1. How Bentley market structure determines the pricing and output decisions Over five market structures exist across the globe and each affects the success and performance of a business due to the level of competition. The automobile industry in the United Kingdom is highly labor and capital intensive and this gives highly resourced companies a competitive edge over the others. The majority of cost incurred in this industry arises from the raw materials needed, the labor and the cost of advertising, a financial burden that is transferred to the prices of the products (Mithas, Ali and Will 2013, p.532). In the United Kingdom, the automobile industry is an oligopoly with over 15 fully operational competitors whose pricing and strategic approaches affect the decisions made by the business. A number of factors including the strategies of the competitors, the quality of their products and the brand loyalty thus influence the determination of the products for Bentley. The quality of vehicles manufactured by the company is high and this prevents it from charging lower prices as a way of beating competition and increasing the customer base. Based on the nature of the products and the reputation of the firm, Bentley products are inelastic and competition can only be beaten through continued production of high quality products and maintaining the loyal customer base (Elliott 2014, p.6). 3.2. Illustration of the way in which market forces shape organizational responses using a range of examples Market forces are those factors that inherently create changes in the demand and availability of products within an economy. These forces are reduced into the interaction of supply and demand factors which influences the ability of a business to meet the analysis of the forces of supply and demand provides a reflection of the willingness of the buyers and sellers to engage in the market. The decision of the United Kingdom market to acquire Bentley automobile is influenced by a number of factors that are visible within the products offered by company (Babatunde and Adebola 2012, p.27). Bentley on their part can identify such features that are attractive to the consumers and build on them to continue retaining the pool of loyal customers. By making such decision, Bentley will improve its market presence and retain its pool of loyal customers at a time when cheap motor vehicles are flooding the market (Elliott 2014, p.6). 3.3. How the business and cultural environments shape the behavior of Bentley Businesses operate in an environment that is made of different business and cultural factors, all of which affects the decision and willingness of customers to buy the products. The business environment include factors such as actions of the government, the presence of customers, cost of raw materials and the legal and environmental regulations adopted by the authorities. A combination of all these factors has an impact on the strategic decisions and behaviors of Bentley motors limited and its overall competitiveness and profitability (Segarra-Oña, Angel and Ana 2014, p.37). The government decision bordering on taxation can create tax holidays and waiver for one of the oldest automobile companies in Britain as a way of improving its competiveness and progress. Such a decision by the government may provide a chance for Bentley to improve different aspects of its production and business operation such as the benefits offered to the employees, the allocation to research and development department among other areas. Currently, most legal and environmental regulation within the business environment seeks to introduce strict regulatory measures aimed at reducing environmental destruction. Such measure may increase the operational costs incurred by Bentley but have a final goal of conserving the environment and eliminating climate change (Segarra-Oña, Angel and Ana 2014, p.37). In the United Kingdom, the culture of luxurious cars has existed for a long period of time and this is visible through the number of vehicle elegance shows in the country. In the country, it is not just a matter of owning a vehicle but belonging to a class of luxurious car owners. This has been the motivation behind the development luxurious vehicles in the country and this has provided a niche for the company to explore. Despite the high competition from low cost manufacturers such as Toyota, the European market has stuck with Bentley products due to their model and luxurious nature. Conclusion This assignment was modelled to provide an organizational purpose of business and how the environment affects the success of a business. The nature of the environment and the internal forces within influences the success of organizations and this has been demonstrated through the discussion of Bentley motors limited, a British based vehicle manufacturer. References Segarra-Oña, M, Angel, P., and Ana, P. 2014."Factors Influencing Automobile Firms Eco-Innovation Orientation." Engineering Management Journal 26.1: 31-38. Kurylko, Diana T. "High Prices Are No Hindrance to Bentley Sales." Automotive News 82.6271 (2007): 29. Elliott, H. 2014. "Bentley Head: Our SUV Will Be The First Real Luxury SUV On The Market." Forbes.Com: 6. Mithas, S., Ali, T., and Will, M. 2013. "How A Firms Competitive Environment And Digital Strategic Posture Influence Digital Business Strategy." MIS Quarterly 37.2: 511-536 Daspit, J.J., and Errick E. Dsouza. 2012. 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