MGMT1201 Business Environment Assignment
The purpose of this report is to examine the business environment of a real organization and provide recommendations for the business based on the analysis. The analysis of the environment in which any business operates is vital for the marketers due to the fact that it helps them determine the strengths, weaknesses and opportunities. The strategic decisions for the business can only be taken when a marketer is well-versed with the strengths and weaknesses. The report takes into consideration different cases to explain the significance of the business environment.
1.1 Identify what type of organization is Primark and discuss its purpose. Also, identify and discuss the purpose of one organization within the following categories;
Primark is a cloth retailer operating in many countries around the globe. The company has for a long time contributed to the contemporary fashion trend with irresistible offers of fabulous trending clothes at desirable prices. At a glance, the company appears to be a charitable organization considering it has ventured into many charity deeds. The company joined the ethical trading initiative in 2006, which is an organization uniting businesses, trade unions, and NGOs to work on the issues of labor rights in their supply strategies. Primark is known for its purpose of offering support to the charitable organization, community projects, and other welfare groups across the United Kingdom and Ireland. The organization receives requests that they contribute every day and they are seen to be doing their best especially in supporting the cases involving children, education, disabled persons, the elderly and health issues (Wolf, Issa&Thiel,2015).
When it comes to organization, it is the workforce and the size that determines the design of an organization, or in other words the nature, size and the type of service of the organization is adapted to sell, is what fundamentally establishes an organization type. Primark as an organization, which primarily focuses on providing quality service and fashion items to its customers have adapted to a line organization design. As one of the traditional type of organization, Primark as a line organization has several departments and each department has a manager to lead and manage that particular department. The workforce or the employees under each department take orders from their immediate boss.
As an organization who considers all its stakeholders as a part of their success and growth, signifies the equality they serve to every employee based on their merits of performance; all the suppliers are considered as pivotal for the organization; local communities and their activities are respected and finally taking adequate measure to serve the environment as well. Thorough these the organization emphasizes its overall purpose.
United Nations Children's Fund (UNICEF) is a charity organization under the United Nations. It is an organization that promotes the well-being children across the world, in all its deeds. The organization works with partners translating the commitment is stands for into action while much of the focus is directed to the vulnerable and excluded children to benefits children worldwide. In all the work it represents, UNICEF takes a life cycle approach taking keynote of the significance of early childhood development and their adolescence stage. The programs of the organization aim at reaching out to the most disadvantaged children across the world; living under fragile conditions. The purpose of the organization is to work with other partners in efforts to come over the obstacles that have been placed in the paths from poverty, diseases, violence and discrimination against children. The charity firm advocates for the strategies to give children the best start in life considering that a child with proper care from the tender age always have a strong foundation for the future (Bratton, 2015).
1.2 Describe the extent to which Primark meets the objectives of its different stakeholders
Different stakeholders have different goals and needs. Primark acknowledges the aims and needs of its various interested parties and works to the best interest to meet them all. Some of the stakeholders within Primark include;
Investors – Primark needs to have investors who provide the organization with risk capital. The advisors of the investors are concerned with having information that will help them determine why they should invest in the organization. As such, Primark is always available to issue the investors with any required information that will allow them to enable them to assess the ability of the firm to pay the dividends (Primark.com, 2016).
Employees are also stakeholders in the company. The employees are always interested in the information about the sustainability and profitability of the employer. Primark has been well aware of the needs of the employees and it has been more reliable in offering all the staff with a desirable remuneration (Primark.com, 2016).
Suppliers are also other stakeholders at Primark. The organization has been making efforts to meet the objectives of providers through paying off all the amounts for the raw materials and other debts owed to the vendors. As such, the provider as a stakeholder will be able to meet the objectives and make its mission a success (Primark.com, 2016).
The ethical trading initiative is another stakeholder at Primark. The union has to be sure of a continued relation with the enterprise considering they have a long term relationship. In its case, Primark has stood to show its commitment and has thus been able to prove to the union that it will be meeting its objectives (Primark.com, 2016).
1.3 Explain the responsibilities of Primark as an organization and the strategies employed to meet them
Primark is seen to be involved in many responsibilities. In its operations, the organization has the responsibility to ensure that all the people participating in the structure, and all the parties it is meant to serve are comfortable with all the company’s operations. The primary tasks the organization has are;
Making its employees part of its success by providing equal opportunities- Primark offers the employees with the best and desirable remuneration and benefits. The employees are working in the company with all standards being considered, from health to safety measures.
Ensuring that the suppliers are treated fair- Primark provides that all the suppliers are treated fairly. The organization has rules and regulations governing all the activities involving the suppliers making sure that no vendor is discriminated (Werther& Chandler, 2011).
Supporting the local communities and respecting them- in its membership with the ethical trading initiative, the organization ensures that the local communities are supported. In the union, Primark has been seen to contribute to the disadvantaged communities around the world.
In its environmental responsibilities, Primark has been on the forefront to make sure that the environment is well taken care of and is safe. The organization has ensured that it reports its supplier’s discharge of the hazardous chemicals
The strategies synthesized to implement the above responsibilities towards the stakeholders are;
Worker Empowerment: Primark have embarked many beneficiary schemes for the families and children of the workforce.
Go Green: This strategy primarily focus on the reducing the negative environmental impact. For this 95% their stores have a separate energy management system that controls the energy consumption.
Educational Resources: The organization has also initiated many social schemes to educate children in underdeveloped as well as developing countries.
Code of Conduct: The principles synthesized affirm the quality of goods and services to all the stakeholders.
2.1 Research and explain the type of system performed in the following countries and reasons why you think they follow these systems.
Cuba is a state that has been known to function in a planned economy where the state is the body running enterprises across the country. The majority of the industries in Cuba is state-owned and is as well operated by the government where the major labor forces are employed by the state. After the fall of the Soviet Union, the communist party was seen to call for the formation of cooperatives and self-employments. One reason behind the country operating in a state controlled economy is because it has been a patron of crisis after being hit by an economic crisis in its primary partners, Venezuela and Russia. The economy of Venezuela has been deepening and contributing more to its status of being unable to afford its subsidy of Cuba. Another reason behind the type of economy is because of the many debts the country owed to neighboring countries. The economy of Cuba has been described as a basket economy as it has enormous debt (Mukherjee, 2010).
b) United Kingdom
The economic system in the United Kingdom is known to be an open capitalist economy. It has further been described as a mixture of the socially oriented European system, and an American market-oriented economy. In a philosophical context, the UK has a history of a long-standing culture of classical liberalism that has been manifested in the “let it be” attitude to the economic affairs. The economy of the United Kingdom is mostly private aside from the health and education sectors. The main reason behind the king of the economy is the geographical division that is an active player in the economy of the country. The North and Midland of the country were previously the industrialized areas in the world and where industrial revolution was begun. The case was changed with globalization that has been associated with a steady economic fall and deindustrialization (Baumol& Blinder, 2009).
The economic system in China is seen to be a blend of socialism and capitalism. The communist party in the country has been using the financial system as the country is subject to the market forces involving the capitalists and communism never believe in the capitalists running the economy. The reason behind the type of economy is because the communist party in China knew that the country would benefit from being part of the rest of the world regarding economy. The country invited investments from abroad into the Chinese industries. The ownership of the industries in China is between the government, individual citizens and foreigners (Chai, 2014).
2.2 You are required to assess the impact of fiscal and monetary policy on the following type of businesses
Fiscal policy is where the government revises its spending level so as to be able to monitor and influence the economy of the country especially the gross domestic product. Monetary policy is when the central bank increases or reduces the interest rates to boost economy.
If the agricultural sector is facing a recession or a weak consumer demand, the government can decide to increase the GDP by lowering taxes for agriculture products and equipment. In this way, the customers in the sector can have money to spend. The government can as well embark on increasing investment in the industry that wills in return increase the spending in the area due to high consumer demands. The main limitation associated with the policy is that there will be a rise in deficits and inflation in the industry. The monetary policy can either boost or promote the failure of the farming sector. When the interest rates and increased for farm produce, there will be no consumers buying them, and as such, the agriculture industry will face low revenue generation. When the interest rates are reduced, there will be high demand and the sector will have a significant flow of income (Langdana, 2007).
In the housing sector, when the commercial law is applied, there also will be both active and negative influences. When the interest rates for housing are increased, it will mean that the rental charges will as well be increased. There will be few constructions taking place, and people will not invest in the sector. As a result, there will be a little revenue generation. When the rates are lowered, many people will invest in the housing sector, and many people will go for rentals as the rates would be lower. In return, the industry will be generating more income than when the interest rates are high (Langdana, 2007).
It is also important that many of the economic news media sources and analysts have interpreted the new fiscal and monetary policies would not directly impact the housing sector as well as the rise in price of the housing sector. This significantly indicates that the price for properties in UK could climb 3.7% in the next five years. As Chris Martin, professor of economics in the University of Cambridge stated, there would not be any major change in the housing sector with the changing policies (Cadman, 2016).”
2.3 You are required to identify at least five competition policy and other regulatory mechanisms in the UK and evaluate their impact on the activities of a selected organization(s).
Competition policies in the government of the United Kingdom critically affect the dominant companies like the Anglo-American. The competition policies in the UK and the European Union have four pillars;
The antitrust and cartels are the first pillar that is seen to involve the elimination of the agreements that seek to pose barriers to the competition. The barriers might be price-fixing strategies or the cartels that will reduce the power of the market giants. Liberalization is another pillar, and it entails the introduction of new competition in past monopolistic markets to help reduce the barriers to the newbies in the market. Anglo-Americans may not see this as a major issue as it I a well-established company operating in a high capital industry. The third pillar is the state aid control policy where state funding is analyzed to ensure they do not distort the competition level in the single market. The last component is the merger control that involves examining of the mergers and take over among companies (Arup, 2002).
The first pillar as discussed would eliminate the barrier to the competition for the Primark. This would give the company a tremendous opportunity to acquire market share and also would allow reaching them to a larger customer segment, instead of one organization that almost carries monopolistic tendencies. The liberalization as the next pillar would help Primark to reach to new markets across the country, even niche market if required, by bringing down the barrier to entry mode. The control policy at place would ensure that Primark would not distort the competition in the single market as discussed before, but this also largely limits the company’s urge to maximize the profit.
3.1 Explain how pricing and output decisions of businesses are determined in the following market structures
The population of buyers and sellers in a market forms the market structures.
a) Perfect Competition
In a market where there exist different investors with same products and services, the price of the product or service and the output decision will depend on the demand for these goods. Competitive markets see the buyers determining the price and company engages in the production decision comparing how demanding the product is in the market and every firm makes attempts to lower the costs to the customer. The main reason behind these moves is to make a significant increase in the market share (Baumol& Blinder, 2009).
Monopoly is a market design where an organization might be having exclusive control over the market, and it deemed to be the only provider. In such cases, the prices of goods and services in the market are determined by the company, and it also has the rule over the output decision as it will be in a monopolistic market. The organization will be in a position to charge the prices they feel, and the customers will have to pay as they will have no alternatives. These firms produce products and offer services with full capacity as they will be bound to fulfil the demands as a whole for their products. Most of the businesses operating in such structures are the international organizations (Cohen et al, 2009).
Here we have a market structure with many large sellers of the same commodity, and they all have the control over the prices as they all set an on-going rate for their products in the market. All the companies charge the same prices for their products and the customer as an option of choosing whom to buy from. These businesses can alter the same prices, but they will differ in their manner of advertisement to attract their loyal customers. In this structure, the companies take the decisions of output depending on the demand from their clients for their goods (Cohen et al, 2009).
Duopoly is a market structure where two enterprises or countries are in control of all or close to all the market for their products and services. The two companies will compete on the prices, and they will always adjust their prices to attract more customers. The price of their products is dependent on the quality of their goods, and these structures always end up with a zero-profits price. The output decision is made by the companies as they decide how much to produce compared to their rivals (Dabbah, 2004).
3.2 Illustrate the way in which market forces (demand and supply) shape organizational responses using a range of examples (diagrams are essential)
The market forces are the elements that affect the pricing, demand, and supply of a product or delivery if services. Among these factors is supply and demand of the goods in the market. Demand is the rate at which the customers are in need of the service or product a company is offering in the market (Bartlett &Ghoshal, 2002). Supply is the amount of the goods or services the company offers to the market. The two have been seen to have a relationship where if the demand of the product will be high in the market, the supply will also have to be great to meet these requirements, if the demand reduces, the company will have to cut its supply to balance with the needs of the customers. Many organizations would wish to reach the points of equilibrium where the amount of their demands will be equal to the demand in the market. Supply and demand are as well measured by the price of the product in the market (Keynes, 2007).
In the market, two things are bound to happen to the demand for a commodity. In this case, the company has to offer responses, and this can be where the need for the service or product goes down or increases. Where the demand for a product is seen to increase, the response of the company for the growth in the demand will be hiring more workers, and they will produce with full capacity. Where the need will be seen to go down, the company will experience a low cash inflow and the costs incurred will exceed the profits made. The response of the organization in such a situation will be cutting off their costs by laying off the workers.
Just as in the case of the demand, two things can happen to the supply of goods and services. Where a company supplies more products in the market, the demand is bound to go down as they will have exceeded the demand rates of the product. Similarly, if a company supplies f few products in the market, the demand will be higher than the product as the company will have provided less the amount needed by the customers. The response of an organization for such scenario is that they can choose to manufacture whatever the demand of the commodity they have in stock aiming at supplying not more that the demand in the market and also measure not to provide a shortage of products (Haberberg&Rieple, 2007).
3.3 Judge how the business and cultural environments shape the behaviour of Sainsbury
Business has to clearly understand the environment it is operating on to be able to run efficiently. The environments entailed of key factors that are internal and external factors. The cultural environment is the uncontrollable atmosphere by the business. It defines the production, pricing, and promotion of the business like Sainsbury. The consumers’ perceptions, behaviours, and attitude are the external elements of the cultural environment of the firm that affect the business and its production choices. The employees of an organization and their demands and behaviours are the part forming the internal factors in the environment (Bhattacharyya, 2010). If the employees are guarded by important ethical values and codes of conduct, they will be work ensuring the ethical awareness of Sainsbury as a company. Similarly, the employees can appear to be morally weak. In such cases, they might be engaged in activities such as theft or misusing the resources of the company, and they will be noticed. As such, the cultural environment will have shaped the behaviour of Sainsbury. There can also be political factors where the government policies might go as far as deciding the types of goods and services to be offered in a state, and what company to subsidize. These decisions affect the business in the sense that if it were to regulate the activities by Sainsbury, the company would either not exist or the services it offers would not be the same as the ones being offered now (Mills, 2007)
4.1 Discuss the significance of international trade to UK business organizations
The economic system of the United Kingdom has widely been referred to as the world’s third most open economy. International trade is known as the transfer of capital, products and services across territories. The advantages of multi-national trade are many, but just to mention a few; greater utilization of resources, imports that products not produced locally, and it also leads to an increase in the choices to the end users. The advantages of the international trade can be evaluated by the concept of the comparative advantage. According to the idea of business transactions between two countries, a business can be done in a mutually beneficial manner, in the case where both countries have similar benefits to manufacturing the products to be traded. The international trade has been most recommended for the organizations in the United Kingdom to boost the economy of the country. The significance of the trade in the economy has been identifiable as it has a lot of impacts to the businesses around the states. There have been the benefits of the minimum costs of communication and transportation for many business institutions. The international trade and the opportunities make the business processes of many organizations to become more innovative and technologically advanced (Dincer and Kandil, 2016).
The concept has also helped most companies to build secure networks around the world by engaging with suppliers, customers, and employees with different nationalities. There have also been an outstanding opportunity of moving capitals at the minimum costs that have been enhanced due to the international trade. The latter has led to a sustainable expansion of the business in the end. There has been an enhancement of the transfer of the intangible assets like knowledge and skills that have facilitated a lot of organizations making their strategies easier with the help of the knowledge. There have been more employment opportunities as a result of the international trade where various cultural values are combined to make the services better aiming at increased customer satisfaction. There have been investment opportunities that have risen due to the impact of the international trade that is essential for many organizations. The brands and images of many companies have also attained their best due to the international trade (Dincer and Kandil, 2016).
4.2 Analyse the impact of global factors on UK business organizations
The business activities of an organization are always affected by the global environment because of the existence of competitors in the environment. The global factors that are bound to impact of the business organizations in the United Kingdom may include; social, political, legal, economic and technological factors (Doole& Lowe, 2008).
Under the social factors, the business organizations in the UK operating globally are recommended to have their business strategies designed in the context of the social and cultural differentiations that differs from region to another. In this field, there is the language, life patterns, and religion among other factors that are necessary to be acknowledged to have a successful business management. These elements promote a deeper understanding of the attitude, behaviour and the tastes of any populations (Dincer and Kandil, 2016)..
The legal factors include the government laws and regulations that can affect the business strategies of the UK based companies. A business process that wishes to record increasing profits, the management of the particular business has to acknowledge the legal aspects that influence the performance under certain circumstances and find the means to react to them where the change in law will be impactful. The company has to be up to date and with clear knowledge of the environmental legislations and other international business laws (Dincer and Kandil, 2016).
Technological factors are also found to impact globally on the UK businesses. These are seen to affect the strategies extremely as they give a chance for the organization to make some interventions and adopting new starters. Being part of the competitive global business environment demands that the companies should follow the relevant technological upgrades in their operations of activities. Having the most recent technology concepts is believed to be the drive towards globalization(Dincer and Kandil, 2016).
With the political factors, this is about the change in government as well as the change in the government itself. Political factors have significantly influenced the operational business activities of various companies around the UK and have come to capture much attention in the current business environment. The organizations based in the United Kingdom, and are open to the European Union are instructed and regulated by the laws created by the European unions. The political factors can be seen to influence the spending nature of the customers and for other investments. As such, organizations need to consider the stability and political environment as well as the government legislature affecting the economy(Dincer and Kandil, 2016).
4.3 Evaluate the impact of policies of the European Union on UK business organizations
The EU is known to be the largest sole market around the globe. With this, it implies that the parties to the union have the freedom to do business and transact with all the other member states. The agenda of business processes in the UK has been increasing critically by 1Ks membership in the United Kingdom. There have been associated benefits like reduced and abolished selling tax, and the members of the union have also enjoyed the freedom from other fiscal policies. With this, it is to mean that the business in the UK is enjoying higher profits operating more freely without having to face the intervention of the government over time. There is also the fact that the EU members in the UK and other party states are not restricted by the laws and policies of the respective European National unlike the other companies from other parts of the world. As a result, these member companies have enjoyed higher profit margins and success rates within the EU policies. These policies have as well been seen to usher a liberalization of the policies, and as such, most of the products prohibited from being transacted could now be freely traded across the different nations. The businesses that do not fall under the membership of the European Union do not have the opportunities to transact freely with other member states, and as such, they might not be sustainable in the competitive global market (Dransfield, 2004).
It can be said that the analysis of business environment helps the marketing team to get idea about the strengths and weaknesses of a business. Hence, it is crucial for small, medium and large size organizations to conduct strategic analysis before taking any major decisions. This report has discussed the importance of analyzing the business environment in an effective way through various tasks, including identifying type and purpose of an organization and the distant to which an organization meets different objective for its various stakeholders and finally the responsibilities a company have towards its various stakeholders and the way in which they strategize it to implement that responsibilities to action. The report evaluated and determined the types of economic system operated in countries like Cuba, UK and China; also assessed the impact of fiscal and monitory policies in two sectors, farming and housing. In the same task the report identified the five competitive policies and its impact on the selected organization. Under task 3 the report elaborates on the market structures and market forces. Finally, the task 4 explains the significance of international trade and UK organization.
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