Business Environment


The aims of this assignment are to measure the outcome of students’ learning in terms of knowledge acquired, understanding developed and skills or abilities gained in relation to achieve the learning outcomes.
A case study has been provided to provide a general contextual framework to the assignment.
The assignment comprise of an essay to be written under several broad topics as the main requirements of the assignment. Relevant areas for discussion have also been identified under each broad topic.

The beginning of each section should outline a general introduction to the broad topic with the objective of providing a contextual background to the areas of discussion to follow.
Relevant references and academic quotes and the use of case examples are required as evidence of broader reading and research.

Specification of Assessment
Case Study

Social and other opportunities and constraints
Opportunities in the business environment are those factors that provide possibilities for a business to expand so as to make more sales and profits. Constraints are those factors that limit the ability to grow, and reduce sales and profit potential.

A useful way of assessing opportunities and constraints is to carry out what is known as a SWOT analysis. Strengths and weaknesses are internal to an organisation. Typically they relate to the resources of the organisation, and its structure and leadership, as well as the extent of its marketing.

Market focused organisations are strong because they know what their customers want. Opportunities and threats (constraints) exist in the external environment. Opportunities relate to the market, to the development of new technologies, and external factors such as government policies. Threats relate to what the competition is doing as well as legal and other constraints.

A good example of external opportunities and constraints is that of the building industry in the UK today. The government is encouraging developers to build on ‘brownfield’ as opposed to ‘greenfield’ sites. The constraint therefore is not being able to develop on greenfield sites while the opportunity is that of developing on brown field land.

The best way of thinking about constraints and opportunities is to realise that good businesses will seek to turn constraint into opportunities, while at the same time building on existing opportunities. Organisations should use their strengths such as having a good reputation, and experience in a particular field or segment of the market coupled with good marketing and resources, to build competitive advantage.

Planned, Market and Mixed economies

Three main sets of decisions need to be made by the economic system – what to produce, how to produce, and how to share out the product of the economy. A planned economy is one in which a central planning agency such as the government determines the 3 economic decisions outlined above. A market economy is one in which these decisions are determined by buyers and sellers interacting with each other without government interference.

A mixed economy includes elements of both the planned and the market economies. Those (and there are few of these left today) that favour the centrally planned economy argue that the government (central planners) are best placed to meet the needs of all the people of a particular society. Those in favour of the free market argue that central planning wastes resources and that the market makes sure that consumers get what they want producing, while producers supply it at a profit.

The reality is that most societies operate some form of mixed economy. In this country we have a mixed economy. Most decisions are made by the market – e.g. when you buy goods in supermarket you vote with your money for the goods that you want to buy. However, some decisions are made by the government e.g. those relating to road building, school and hospital construction, the supply of medicines in hospital etc. In the UK the emphasis is on letting the market make most decisions because of its high level of efficiency in responding to customer preferences. However, some decisions must be made by the government on behalf of society e.g. decisions about military spending, and public education. The market economy refers to the system whereby what is produced and how is determined by buyers and sellers engaging in free exchanges for the sale and purchase of goods.

How businesses are affected by government policy

A key area of government economic policy is the role that the government gives to the state in the economy. Between 1945 and 1979 the government increasingly interfered in the economy by creating state run industries which usually took the form of public corporations. However, from 1979 onwards we saw an era of privatisation in which industries were sold off to private shareholders to create a more competitive business environment.

Taxation policy affects business costs. For example, a rise in corporation tax (on business profits) has the same effect as an increase in costs. Businesses can pass some of this tax on to consumers in higher prices, but it will also affect the bottom line. Other business taxes are environmental taxes (e.g. landfill tax), and VAT (value added tax). VAT is actually passed down the line to the final consumer but the administration of the VAT system is a cost for business.

Another area of economic policy relates to interest rates. In this country the level of interest rates is determined by a government appointed group – the Monetary Policy Committee which meets every month. A rise in interest rates raises the costs to business of borrowing money, and also causes consumers to reduce expenditure (leading to a fall in business sales).

Government spending policy also affects business. For example, if the government spends more on schools, this will increase the income of businesses that supply schools with books, equipment etc.
Government also provides subsidies for some business activity – e.g. an employment subsidy to take on the long-term unemployed.

Legal changes

The government of the day regularly changes laws in line with its political policies. As a result businesses are continually having to respond to changes in the legal framework.

Examples of legal changes include:
i. The creation of a National Minimum Wage which has recently been extended to under-18’s.

ii. The requirement for businesses to cater for disabled people, by building ramps into offices, shops etc.

iii. Providing increasingly tighter protection for consumers to protect them against unscrupulous business practice.

iv. Creating tighter rules on what constitutes fair competition between businesses.

Today British business is increasingly affected by European Union (EU) regulations and directives as well as national laws and requirements

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Using the case study above and relevant theories and literature, write an essay comprised of the following broad topics/sub-sections:

Understand the organisational purposes of businesses

1.1) Identify the purposes of the following different types of organization; Public company, private company, voluntary organization, cooperatives and charitable organsations. (P1)

1.2) Describe the extent to which an organisation meets the objectives of different stakeholders (P2)

1.3) Explain the responsibilities of an organisation and strategies employed to meet them (P3)

1.4) As a business analyst apply strategies and incorporate in your response in P1/P2/P3 application of the concept using real business organization in all the criteria Follow P1/P2/P3

Understand the nature of the national environment in which businesses operate

2.1) Explain how economic systems attempt to allocate resources effectively (P4)

2.2) Assess the impact of fiscal and monetary policy on business organisations and their activities (P5)

2.3) Evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected organization. (P6)

2.4) Apply any appropriate methods/techniques Government policy for the organization Follow P6

Understand the behaviour of organisations in their market environment

3.1) Explain how market structures determine the pricing and output decisions of businesses. (P7)

3.2) Illustrate the way in which market forces shape organisational responses using a range of examples

3.3) Judge how the business and cultural environments shape the behaviour of a selected organization (P9)

3.4) Explain UK’s Present and communicate appropriate market situation and determine which structure could be help . Follow P7

3.5) As you are an Business analyst considering the alternatives; appropriateness; feasibility; desirability take responsibility for managing and organizing activities Follow P9

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 organizations (P10)

4.2) Analyse the impact of global factors on UK business organizations (P11)

4.3) Evaluate the impact of policies of the European Union on UK business organizations (P12)
4.4) Recommends from your position to Demonstrate convergent/lateral/creative thinking for UK Follow P10

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4.5)Use critical reflection to evaluate own work and justify valid conclusions in terms of the case on UK Business Economy(D1)