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BUSINESS ENVIRONMENT

Sample About Business Environment

Table of Contents INTRODUCTION .................................................................................................................................... 4 TASK 1...................................................................................................................................................... 4 1.1 Purpose of different types of organisations ..................................................................................... 4 1.2 Describing the extent to which an organisation meets the objectives of different stakeholders ..... 5 TASK 2...................................................................................................................................................... 7 2.1 Role of economic systems in allocation of resources...................................................................... 7 2.2 Impact of fiscal and monetary policy on business organizations and their activities ..................... 8 2.3 Impact of competition policy and other regulatory mechanism on the activities of BAA .............. 9 task 3 ....................................................................................................................................................... 10 3.1 Explaining how market structures determine the pricing and output decisions of British Airways ....................................................................................................................................................... 10 3.2 Illustrate the way in which market forces shape organisational responses ................................... 10 3.3 Judge how business and cultural environments shape the behaviour of British Airways .............11 TASK 4.................................................................................................................................................... 12 4.1 Discuss the significance of international trade to UK business organisations .............................. 12 4.2 Analyse the impact of global factors on UK business organisations ............................................ 12 4.3 Evaluate the impact of policies of the European Union (EU) on UK business organisations....... 12 REFERENCES........................................................................................................................................ 14

Sample About Business Environment

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Sample About Business Environment

INTRODUCTION Business environment refers to the whole external and internal factors which help in making operations of the business to run in a smooth and effective manner. Overall business environment influences the activities of company in both positive and negative way (Welford, 2013). All internal factors that affect the functioning of organization are policies, management, employees and culture.

Similarly, external factors which affect company from the outside are political pressures, customers, competitors and so on (Rehman, 2012). The current report is based on business environment of British Airways (BA). It focuses on analysing the internal and external factors of the business environment which will help in fulfilling the organizational goals of company. Furthermore, it will discuss structure and position of BA in the UK market and also evaluate the effectiveness of existing structure of company. Finally, the study will pay attention on different policies and regulations prevailing in the UK that can affect the operations of cited company.

TASK 1 1.1 Purpose of different types of organisations There are basically three types of organizations which are continuously involved in fulfilling the needs and wants of customers: 

Private sector



Public Sector



Voluntary organisations

There are certain purposes present because of which an organisation is established. These are: Organisation Form

Definition

Aim

Public sector

Organizations which are owned The

aim

of

public

sector

and run with the help of companies is to fulfil the needs government interferences are and wants of society and utilize known

as

public

sector public resources in an efficient

companies (Leitner, Meissner manner in order to benefit the and Martyna-David, 2015). For society (Craig and Campbell, Example, Next Plc. Sample About Business Environment

2012).

Private sector

Private sector organisations are The purpose of these companies the one which are directly are: owned and run by the private



Earn maximum profits.

bodies. Some of the form of



Enhance market share.

private organisations are sole



Increase sales (Hamilton

proprietors and franchises.

For

example:

Palmer

and Webster, 2015). and

Harvey in the UK. Voluntary sector

Voluntary

companies

are Main aim of the formation of

formed and established by the these types of organizations is to government and these are not serve

the

community

by

run by the private individuals. fulfilling the specific type of All the NGO's and charity need of people. institutes come under this type Hospitals and orphanage can be of category.

the example which can come

For Example: WHO

under this type of category (Björklund, 2011).

Table 1: Types of companies and their purposes

1.2 Describing the extent to which an organisation meets the objectives of different stakeholders Major stakeholders of British Airways are users, employees, government, suppliers, shareholders and investors are different stakeholders of the company. 

Service users: Customers or service users are the one who help company to make huge profits by using services which are provided by BA. Customers are considered as the main stakeholders of company as they are the one who will purchase the tickets which will help business to increase its profits. However, this makes business entity to work responsibly towards the customers so that they can achieve the goals in the most effective manner (Lunenburg, 2012). Providing easy accessibility of services at a cheaper price to the customers Sample About Business Environment

will impact the behavior of BA to make alterations in their functioning and pricing policies. 

Suppliers: These stakeholders play important role in supplying raw materials. In case of BA Suppliers, there are some businesses such as Boeing companies, food and beverage restaurants and fuel suppliers like Shale petroleum. Factor that can affect the suppliers of BA is that company may switch to other suppliers in order to purchase the parts of machinery or other items. This is the challenge which can impact the business of suppliers (Welford, 2013).



Workers: Workforce at BA is continuously involved in dealing with passengers and always trying to make them avail the better and improved services as compare to other competitors in the airline industry. However, the main challenge that has impacted the behavior of employees at BA is recession period in which company has to terminate some inefficient workers or reduce their salary due to company's financial crises (Craig and Campbell, 2012).



Government: Government of the nation focuses on the tax payment and financial performance of BA. So, for meeting this objective, BA considers all the rules and regulations while developing its organizational policy. Along with this, company follows appropriate process of making financial statement which helps government in analyzing financial performance of the organization.



Investors: Getting appropriate return is one of the major objective of investors and shareholders of BA. For meeting this objective, British airways has developed appropriate policy of dividend (Craig and Campbell, 2012). It helps in providing suitable dividend to each investor as per their investment amount.

1.3 Explaining responsibilities of British Airways towards its stakeholders and strategies employed to meet them BA has some specific responsibilities towards each and every stakeholder and for fulfilling these, company has applied appropriate strategies. As per the objectives of customers, British Airways is responsible to provide qualitative services to them for rendering purchase value to all of them (McCormick, Mont and Neij, 2014). For fulfilling this responsibility, BA offers customized services to its customers and focuses on understanding the actual needs and requirements of them. Along wit h this, providing appropriate working environment and equal opportunities is included in the major responsibility of BA towards its employees. Organization considers all the rules and regulations of employment law at the time of developing organizational policy. It helps in fulfilling the responsibility Sample About Business Environment

of BA towards employees. Business is also responsible to communicate appropriate information about the financial performance to the government and shareholders. BA has used financial statements and annual reports for communicating financial position of business to the stakeholders. Therefore, this strategy has helped in fulfilling the responsibility of company towards government in an effective manner (El-Masri, Orozco and Tarhini, 2015). Suppliers are the important stakeholders of company so, British Airways is accountable to provide suitable data about the

needs and requirements of raw materials. BA uses appropriate formal communication methods as well as provides payment of all materials on the timely basis (Leitner, Meissner and Martyna-David, 2015).

Along with this, responsibility of BA towards investors is providing suitable dividend for their investment amount. So, for fulfilling this responsibility, organization has developed appropriate policy of dividend which helps in rendering appropriate return to each and every investor. Overall, British Airways uses suitable strategies for accomplishing its responsibilities towards different stakeholders.

TASK 2 2.1 Role of economic systems in allocation of resources Economic system can be defined as a structure of production, allocation of resources, exchange and distribution of goods and services in a whole society. There are different types of economic systems such as traditional, market, socialist, planned and mixed economic system. Roles of each economic system in resources allocation are described as under: 

Traditional economic system: It is one of the oldest economic system which focuses on culture, beliefs and values, etc. There is not specific process of resource allocation, so at the time of allocating resources this economic system takes lots of time. So, it is less profitable for an organization as compare to other economic system (Wang, Mora, and Raisinghani, 2015).



Market economic system: It is based on demand and supply of goods and services of the organization. In this system resources are allocated on the basis of demand and supply and price of goods and services. There is not intervention of government so, each and every decisions are taken by private owner of organizations.



Socialist economic system: It is social economic system which focuses on society and its needs Sample About Business Environment

and requirements. So, all decisions regarding resource allocation, investment and production are based on social welfare, employee benefits, etc. This system is based on centralized planning system of production. 

Planned/ command economic system: In this economic system all decisions can be taken by both central authority and government bodies. It focuses on the optimum allocation of resources as well as tries to reduce the unnecessary wastage of all resources (Lunenburg, 2012). But, on the other hand it does not focus on demand and supply of the finished goods.



Mixed economic system: Combination of market and command economy is known as mixed economy. In this system resources are allocated on the basis of decentralization process and pricing decisions are based on customer’s satisfaction. Therefore, it helps in generating appropriate amount of profit as well as satisfying needs and requirements of customers also (Kutlu, Ekmekçioğlu and Kahraman, 2013).

As per the above analysis, BA has used mixed economic system for allocating resources and

deciding pricing. It has helped in making appropriate allocation of resources as well as also beneficial for generating profitability.

2.2 Impact of fiscal and monetary policy on business organizations and their activities Fiscal and monetary policies have introduced by the government for maintaining financial performance of different organization. Fiscal policy includes different regulations about tax rates, interest rates and government spending. Therefore, this policy can affect the interest payment and tax payment of British Airways. Expansionary fiscal policies helps in reducing the tax rates and provide appropriate reliefs at the time of recessions. Therefore, it helps in improving the financial performance of the organization. But on the other hand contracting fiscal policy augments government income, it means it can raise the interest and tax payment of the organization (El-Masri, Orozco and Tarhini, 2015). Overall, Fiscal policy can affect the profitability and overall financial performance of BA in positive and negative manner.

Similarly, monetary policy focuses on money supply in national and international market. So, it can affect the exchange rates of different countries. Therefore, monetary policy can affect the important and export activities of British airways (Craig and Campbell, 2012). Favourable monetary policy has positive impact on international trade of the organization and unfavourable monetary policy has negatively affect the international trade of the company. Therefore, fiscal and monetary policy can Sample About Business Environment

influence different business activities of BA.

2.3 Impact of competition policy and other regulatory mechanism on the activities of BAA Competition policy have introduced by the regulatory authorities for maintaining fair competition in the market. Different rules and regulation has positive impact on organization and existing competition in the market. According to this policy every BA needs to maintain fair competition with its competitors. As per this policy every organization needs to maintain their quality of products and services. So, it improves the quality standards of services of British Airways.

According to the competition policy, every organization needs to decide priced of products as per the cost (Pitts, Marvel and Fernandez, 2011). They cannot increase and decrease the price of products and services for increasing number of customers. So, competition policy helps in developing appropriate policy for making pricing decisions. Due to the fair competition in the marker every organization tries to increase their existing product line. It helps British Airways in increasing the product rage and attracting number of customers due to the available choices. This policy focuses on increasing research and development which is beneficial for increasing innovation in existing services of British Airways.

Therefore, competition policy positively affects quality of goods, customer’s satisfaction and performance of BA. Similarly, regulatory authorities of oligopoly market can affect the competitive position of British Airways. So, organization needs to focus on all rules and regulat ions of all regulatory authorities.

Sample About Business Environment

TASK 3 3.1 Explaining how market structures determine the pricing and output decisions of British Airways

Figure 1: Price and output decisions in oligopoly market (Source: Pricing Determination under Oligopoly Market; 2016) A system which can be developed by combination of seller, customers and competitors is known as market structure. Each and every unit of market structure can affect the input and output decisions of an organization. British airways is an airline organization which is operating its business in oligopoly market. There is only few sellers in the market so, these organizations can take advantages of cost (El-Masri, Orozco and Tarhini, 2015). Latest technology plays important role in improving quality and managing cost of the organization. In this market structure output decisions of an organization are based on strategies of competitors and needs and requirements of customers. So, British airways can also determine the level of output as per the existing competitors’ activity and customer’s demand (Leitner, Meissner and Martyna-David, 2015). Along with this, in this market structure price of products and services are generally rigid at specific level. British Airways cannot raise the price of products and services because its competitor’s services are close substitute. So, it can affect the total sales and profitability of the firm. Along with this, low priced can increase the threat of new entry into the market.

3.2 Illustrate the way in which market forces shape organisational responses 

Market forces can be defined as all those factors which can affect the price, demand and supply of products and services of British Airways. These factors have positive as well as negative Sample About Business Environment

impact on organization’s activities. Analysis of the market of BA has reflected that there are number of factors such as number of buyers and sellers, market entry, substitutes and price of products and services. These factors affect the organization’s response. Oligopoly market consists only few sellers so, it reduce the level of competition for BA. But on the other hand organization needs to focus on quality of products and services (Lunenburg, 2012). Similarly, there is minor different between products and services of BA and available substitutes. So, it can affect the sales and number of customers of the company. So, due to this force organization provides services as per the needs and requirements of customers as well as also focuses on pricing and output decisions of the firm. Including this, BA is one of the leading organization of UK and uses different technologies for improving its services and providing better services to its customers (Craig and Campbell, 2012).

So, in this market there is some technological restriction for new entrant. It reduces the level of external threat from any new competitor. Overall, above discussed market forces shape organisational responses in positive as well as negative manner.

3.3 Judge how business and cultural environments shape the behaviour of British Airways 

Business and cultural environment have direct and indirect impact on organizational behaviour of British Airways. Business environment is divided in two type economic and non-economic environment. Economic environment comprises different policies, systems and economic position of the nation. In which, economic policy influences fiscal and monetary policy of the nation which may affect financial performance of BA because of changes in tax and interest payment and money supply. Along with this, there are number of economic systems which has positive and negative impact on pricing decision and allocation of resources. BA has followed mixed economic system which is favourable for increasing financial performance as well as allocating resources in optimum manner. Including this, economic condition of UK market can influence the purchasing power of customers. High purchasing power leads increment in overall sales and customers and low purchasing power declines total sales and profitability of the organization (Craig and Campbell, 2012). . Along with this, organization culture includes different attributes such as values, beliefs,

literacy rates, traditions and customs, etc. Facilities and working environment are also considered as important part of organization culture. Therefore, organization culture can affect individual Sample About Business Environment

performance of every employee which can affect the overall performance of BA.

TASK 4 4.1 Discuss the significance of international trade to UK business organisations International trade means exchanging goods and services between more than two countries.

These types of trades are very significant for global expansion of British Airways. Along with this, global trade helps in reducing the overall cost of the organization and improving the profitability of the firm. Market opportunity is one of the major benefit of international trade (Rehman, 2012). By which BA can target national and international customers. Sometimes it helps in reducing the production cost of the firm because of the low cost of raw materials and labour in international market. For example, British Airways can develop its production unit of Aircraft in a developing nation such as India because it will help in reducing the total cost of production because of the low cost of labour. Therefore, it will help in reducing the total cost and improving profitability of the firm (Leitner, Meissner and MartynaDavid, 2015).

4.2 Analyse the impact of global factors on UK business organisations There are number of global factors which have positive and negative impact on overall business performance. Political, environmental, social, technological, economic and technological and legal factors. All these factors may affect different operations of British airways. For example, political factors affects the organization’s policy of BA. Environmental factors can delay the flights of British Airways which can affect the total targets of the organization (El-Masri, Orozco and Tarhini, 2015).

Social factors influence tastes and preferences of every customers which can influence the production process of the organization. Technological factors may differentiate products and services of BA from its competitors so, for maintaining appropriate quality organization should invest huge amount of money. So, overall technological factor can increase the cost of the organization (Lunenburg, 2012). As per the legal factors Ba needs to develop all policies as per the rules and regulations of government. So, these factors have positive impact on organizational policy of British Airways.

4.3 Evaluate the impact of policies of the European Union (EU) on UK business organisations EU has introduced number of policies, rules and regulations for all organizations which are operating its business in UK. EU policy focuses on reducing the emission of greenhouse gases. So, as per this policy EU charges appropriate penalty to all those airline organization which are releasing Sample About Business Environment

more greenhouse gases that may affect the environment. Therefore, it has positive impact on sustainable development of British Airways (Rehman, 2012). Including this, EU has also developed some specific policies regarding safety of the passengers which is required to be adhered by British airways.

CONCLUSION From the above report, it can be concluded that the business environmental conditions that have been faced by British airways is a fluctuating one. In this context, the need on part of airlines is to concentrate on all the factors that are likely to impact there overall operations. This is a necessity so as to maintain overall future sustainability of the company in long run.

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REFERENCES Journal and Books Welford, R., 2013. Hijacking environmentalism: Corporate responses to sustainable development.

Routledge.

Craig, T. and Campbell, D., 2012. Organisations and the business environment. Routledge.

Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University Press.

BjÜrklund, M., 2011. Influence from the business environment on environmental purchasing—Drivers and hinders of purchasing green transportation services. Journal of Purchasing and Supply Management. 17(1). pp.11-22.

Wetherly, P. and Otter, D., 2014. The Business Environment: Themes and Issues in a Globalizing World.

Oxford University Press.

Lainema, T. and Lehtinen, E., 2012. Learning leadership skills in a simulated business environment. Computers & Education. 58(1). pp.121-135.

Pricing

Determination

under

Oligopoly

Market;

2016.

[Online]. Available

Through:

<

http://www.yourarticlelibrary.com/economics/pricing-determination-under-oligopoly-marketeconomics/28916/>. [Accessed on 10th March 2016].

Leitner, J., Meissner, H. and Martyna-David, E., 2015. The Debate About Political Risk: How Corruption, Favoritism and Institutional Ambiguity Shape Business Strategies in Ukraine. In EU Crisis and the Role of the Periphery. Springer International Publishing. pp. 3-19.

McCormick, K., Mont, O. and Neij, L., 2014. Strategies for sustainable solutions: an interdisciplinary and collaborative research agenda. Journal of Cleaner Production. 30. pp.1e2.

El-Masri, M., Orozco, J. and Tarhini, T., 2015. The Impact of IS-Busines s Alignment Practices on Organizational Choice of IS-Business Alignmen t Strategies. In The 19th Pacific Asia Conference on Information Systems (PACI S 2015), Singapore.

Sample About Business Environment