Business Environment s

Guildhall College Programme: BTEC Higher National Diploma (HND) in Business

Unit No and Title: Unit 4, Business Environment Unite Level: H1 Module Tutor: Arif Punjani

Submitted By: Md Sultan Mahmud Student ID: 11127

Date: 28th May 2010

Content:

Page

3 Introduction Identify the mission, values and key objectives of Edexcel and assess the influence of  stakeholders: [P1] Evaluate the extent to which Edexcel achieves the objectives of these stakeholders: [P2] Evaluate the extent to which Edexcel achieves the objectives of these stakeholders: [P3] Explain how economic system attempt to allocate and make effective use of resources: [P4] Discuss the impact of social welfare and industrial policy initiatives on organization and the wider community: [P5] Evaluate the impact of macro economic policy measures and the influence of global economy on UK based organizations and stakeholders: [P6] Explain how the market structures in practice deviate from the model of perfect competition: [P7] Use a range of examples to illustrate the relationship between market forces and organizational responses: [P8] Explain the behaviour and competitive strategies employed by Ryanair and discuss the role of competitive commission and regulatory bodies: [P9] Discuss the importance of international trade, economic integration and global markets to business Organisation: [P10] Analyse the impact of two policies of the European Union on UK business organisation: [P11] Explain the economic implications for the UK of entry into EMU: [P12]

Identify and apply strategies to find appropriate solutions M1] Select/design and apply appropriate methods/techniques [M2] Present and communicate appropriate findings [M3] Conclusion and recommendation: Reference:

Introduction The importance of Business Environment studies in a dynamic business environment is now more fully appreciated. Those organisations that have not been prepared to look to both internal and external environment of the organization, have found it increasingly difficult to survive in today’s competitive business climate. Our current study has been developed focusing on Business Environment of the organization through which it can practices and survive their business under nearly perfect competition market. Assessment task 1 Identify the mission, values and key objectives of Edexcel and assess the influence of  stakeholders: Mission, values and key objectives: Edexcel mission is to delivers opportunities to help people achieve their potential and our advance learning and change lives. Edexcel recognises the value of having a diverse workforce, Edexcel, believes and committed to  providing customers with outstanding value for money with their qualifications. In particular, they wish to do everything they can to support schools, colleges and other centres in addressing the challenges presented by the prevailing economic climate.The key objectives are to make their  mission, vission and Values happen. Definition of stakeholder: Individuals and group with an interest in an organization and the decisions it makes. Identification and types of stakeholders of Edexcel: Internal 1. Owner/ Shareholder 3. Employees/ Staff

External 2.Education Establishments 4. Students 5. Supplier  6. Government. 7. Qualifications and curriculum Authority Asses the influences of those stakeholders by putting them on Matrix-

Matrix 1.Owner/ Shareholder  6. Government. 7.Qualifications and curriculum Authority 2. Education Establishments 4. Students 3. Employees/ Staff  5.Supplier 

High

Power 

Low Interest

Evaluate the extent to which Edexcel achieves the objectives of these stakeholders: Objectives of these stakeholders: Owner/ Shareholder: Maximise profit, Establishing and spreading good Reputation, Increasing Share etc. Government: To have better quality education, good method of serving educations for the people from Edexcel, easy access to the education for the people of the Govt, More taxation etc. Students: Better quality education, better value of that and overall very good services. Employees: Good wages/ salaries, job security, many more good facilities etc. Education Establishments: Better quality education, better value of that, good reputation, good method and good services etc. Supplier: Good relationship, Long time agreement of supplying and so on. Qualifications and curriculum Authority: To increase and maintain the standard or the quality of the education that Edexcel proving to people, the value of the qualifications Edexcel awarding and so on.  Now if we analyse the history of Edexcl that where it was and where it is now (the business groth) then we may understand easily that Edexcel achieves a long extent of objectives of its stakeholders. Edexcel has the right approach to maintain good relationships, listen to their  stakeholders and respond to their concerns. Explain the responsibilities of Edexcel and strategies employed to meet them: Every business must has (legal) responsibilities mean ‘business ethics’ to the social and natural environment in which it operates and survives besides the responsibilities on its own. The Ethics of Edexcel’s  business are discussed belowEthics of accounting and financial resources:  The financial dealings are the minimization of financial suffering of the most of the stakeholders and maximizing their benefits in both short and long terms.  Accounting ethics is part of financial ethics, deals especially with accounting practice like Creative accounting, earnings management, misleading financial analysis and so on. Ethics of human resource management:  Issues could be:  Discrimination  Occupational health & safety and many more. Ethics of sales and marketing: Issues could be:  Pricing: price fixing, price discrimination, price skimming.  Anti-competitive practices: these include but go beyond pricing tactics to cover  issues such as manipulation of loyalty and supply chains. Ethics of production: 

Issues could be:  Ethical relations between the company and the environment: pollution, environmental ethics, carbon emissions trading and so on.

Ethics of intellectual property, knowledge and skill:  Potential issues  Patent infringement, copyright infringement, trademark infringement.

Ethics of CSR(corporate social responsibilities):  CSR demands that businesses manage the economic, social and environmental impacts of  their operations to maximise the benefits and minimise the downsides.  Key CSR issues include governance, environmental management, stakeholder engagement, labour standards, employee and community relations, social equity, responsible sourcing and human rights The strategies employed by Edexcel to meet its responsibilities: • •

•

Engage with stakeholders to understand their expectations. Respond to stakeholders with their evolving some targets and programmes like awarding  programmes for education establishnents. Report progress back to their stakeholders, awarding ceremonies and many more. Assessment task-2

Explain how economic system attempt to allocate and make effective use of resources: Here we need discuss a bit about the economic problem first then we will discuss the about economic systems because to solve the economic problem the economic systems are designed by allocating and make effective use of resources and so on. Economic problem- usually there is three types of economic problem.These areWants are unlimited : Naturally human’s wants are unlimited (more often one assumption made in economics is that humans are greedy.) That’s why economist must classify the nature and different wants of consumers as well as prioritise wants like basic needs of human survivals. Resources are scarce or limited: The resources are limited in this world otherwise it can say that society has insufficient productive resources to fulfil all human wants and needs. Problem of choice: This is also one of the basic problems of economic. That’s why the  businesses must determine first what to produce to satisfy the demand. Due to the economic problem all the economies have to allocate its resources in such way through which it can make sure, its maximum utilization or effective usages. To tackle economic problem three main model or systems have emergedThe command economy: where the most or all major economic decisions are taken by the government. ( e.g North Korea ) . Only by contructing a cohesive plan that takes the good of  everyone into account, The idea in this system states that , the best allocation of resources can be achieved. The market economy: where all decisions are taken by individuals and firms.(price, demand and supply) The mixed economy: where economic decisions are made partly by the government and partly through the market. In this system the resources are automatically allocated toward the things that society collectively values the most.

To make sure the best alternative usages of resources into the production process the four basic questions of economics are always considered . These are ;1.What to produce ? 2. How to  produce ? 3. Where to produce ? and 4. For whom to produce? Decisions of the economic system differ considerably , depend on the degree of government intervention in the economy.

Discuss the impact of social welfare and industrial policy initiatives on organization and the wider community:

Industrial policy impels immense influence on organizations and wider community. If a Govt. applies the industrial policy, (concern on deindustrialization or industrialization). Then the Govt. will encourage import or export. (It will depend on countries potentialities.) Then these things will  be strongly implemented by the Govt. tax, tariff, trade laws to protect from dumping or benefits from foreign investment such as the transfer of technology, skills and managerial techniques that could help infant industries and these will ultimately impact on organizations and the wider  community. E.g 1.The successfulness of Industrial Policy greatly impacted on the industrial sectors (organizations) and on the living standards (like- Japan, Korea, Taiwan). Some authors argue that such policies reflect an attempt of states to catch up with technologically and economically more advanced ones, for example, United States and Europe are believed to have tried to catch up with Great Britain during the 18th and 19th century . Social policy primarily refers to guidelines and interventions for the changing, maintenance or  creation of living conditions that are conducive to human welfare. Thus, social policy is that part of  public policy. Social issues like- health care, human services, criminal justice, inequality, education, and labour and so on. It has also many more impact on organization and the wider  community. The externality created by any industrial exit put pressure on the wider community as well as the organization itself. If the industrial policy consider the external effects on the organization as well as the wider community than the social welfare will be maximized. The long run effects of the policy must be examined carefully rather than short run influence as the fruits or  the threats reveal in the long run and must be communicate with the need of the wider community.

Evaluate the impact of macro economic policy measures and the influence of global economy on UK based organizations and stakeholders:

Macro economic policy includes: Fiscal policy, monetary policy, Competitiveness policy and Exchange rate policy. Fiscal policy: Fiscal policy refers to the process of use of taxation and govt. spending to influence

the economy to decrease the level of unemployment. By lowering the taxation, consumers can have more money on hand and it increase the demand of product and service and to do so Government’s expenditure also be increased in this policy.(it is not suitable for short term management.)

Monetary policy: Monetary policy refers to the use by the government or controls on the

monetary supply in term of inflation and influence the economy. The tools that are used to stabilize the economy are-

Business

Consumers

Banks

● Bank rate: The rate at which the central Bank gives loan to the commercial bank. ● Reserve ratio: The amount of money of the total deposit that the commercial banks have to deposit to the central bank as security. ● Purchase and sell of security or bonds by commercial bank or the generals ● Selective credit control: any specific incentive to promote the growth of selective sectors like decreasing the rate of interest to increase the credit flow to promote the small and cottage industries.[But monetary policy is being criticized in terms of technological change like credit card ] Competitive policy: Rate of NAIRU(Non acceleration inflation rate of unemployment ), inflation, unemployment.

The present global recession put big pressure on the economy even on developed one like UK. Efficient used of macro economics roles with other supportive steps may effectively reduce the negative impact of the recession. The maintaining the value of pound and the same time to keep  pace with the import and export of the country, the macro economic roles may be used. Again in order to money supply in the economy by controlling the credit flow in the economy, the bank rate or reserve ratio can be used. Besides in the case of the thrust sector of the economy, selective credit control measures can be taken.

Assessment task-3 Explain how the market structures in practice deviate from the model of perfect competition:

“Perfect competition is the state of affairs existing in a market totally free from imperfections in the communication and interaction of the economy forces of supply and demand”. There are many condition of perfect competition such as- Goods must be homogeneous, perfect transport and communications, perfect information, price established only by the market forces and so on. There also advantages and disadvantages. The assumption that has been considered in perfect competition (PC); deviancy from the situation in reality, perfectly mobile information almost the price and demand is not so practical concept. Again the price of quantity revenue at equilibrium is not so easy. The efficient costing structure determination is also constant. Sometimes monopoly is more efficient than PC as from the respective of the formative stage of an economy, monopoly may be more effective for the formation capital. So the free entry or exist may not be efficient in all the respect. Perfect mobility of labour is not practice any where in reality. The determination of marginal consumption, marginal revenue and the marginality principal of profit maximization is also troublesome. In  practice, that’s why the model of perfect competition can hardly be practiced in real market structure.

Use a range of examples to illustrate the relationship between market forces and organizational responses:

In order to capture the market opportunities and to increase the market share, any organization must keep pace with the market forces which reflect the market demand. The demand depends on income, price, choice or taste and such many other factors. All these vary with time. As for  instance, # In order to reduce the emission of carbon, if the consciousness increased, then the demand for  environment friendly car or the use of bicycle may be increased in response of which the company may be more careful about that and change their production style. # In order to capture any new consumer group, the efficient use of advertisement and many other   promotional activities may effectively increase the competence of the firm.,

Explain the behaviour and competitive strategies employed by Ryanair and discuss the role of competitive commission and regulatory bodies:

In order to capture the European low cost market and to increase the market share, different strategies (specially competitive marketing strategies) are taken by the Ryanair, against only the main competitor Easyjet in by mainly providing no –frill service at low cost. The main strategy of   price war between Ryanair and Easy jet was deterring new entrants to the industry. The behaviour  of Ryanair is so competitive, remarkable and like aggressive. In order to motivate the employees, the organizational behaviour is contial. In term of competition Ryanair has taken different  promotional strategies like fare back, lower fares even free flights etc Top to bottom, in horn-top, autocratic, democratic what ever may be the strategy must be selected based on the need in venality. The incentives, motivational strategies all are needed for the efficiency or organization competition increases the quality of products or services. There can be different types of market structure in the economy. The competitive commission have  power and stand for to decide that which type of market is perfect for the economy of a country or  economic welfare. When the competitive commission come up with the issues then the office of  fair trading (OFT) take the final decision. The regularity bodies in this may play a vital role by regulating the quality as well as price of the product.

Assessment Task – 4 Discuss the importance of international trade, economic integration and global markets to business Organisation:

Industrial sector play the key role on the development of any economy and trade promotes the sector to be more efficient and qualitifull. Trading relationship increases the cohesion of the region and strengthening the economy. From the perspective of the present competitive world, integration of the economy may effectively reduce the competition; increase the capacity of negotiation as well as the strength of the regional economy. Though various instruction trade relations, the market opportunities can be enhanced. Side by side the growth of the industrial sector can be facilitated. Economic integration in this respect play the key role to have larger share of the global market if   proper back ward and forward linkage can be developed within the country as well as the reason may lead to gain super power in international trade arena the formation of different trade blocks, free trade areas and such other bilateral and multilateral trading arrangement may effectively increase the market share of UK global market.

Analyse the impact of two policies of the European Union on UK business organisation:

The European Union may be one of the richest parts of the world, but there are big internal disparities of income and opportunity between its regions. Through its regional policy, the EU transfers resources

from affluent to poorer areas. The aim of these is to modernize backward regions so that they can catch up with the rest of the Union..Here only discussing energy policy and immigration policy of EU and its impact on UK economy Energy policy and its impact on UK economy:

Energy policy is an element of infrastructure policy and thus is important for competitiveness and growth. Moreover, for an open economy the changing incentives to import energy and to export energy-intensive products will have effects on the trade balance.

However Europe's citizens and companies need a secure supply of energy at affordable prices in order maintaining their standards of living. At the same time, the negative effects of energy use,  particularly fossil fuels, on the environment must be reduced. That is why EU policy focuses on 1.Gas suppliers and transmission system operators to deal with the disruption for as long as  possible before any State intervention is taken; 2.Sufficient infrastructure to transport the gas and market transparency . 3. Ensuring the right measures are taken by the competent authorities of the Member States, in a coordinated way at regional and EU levels. EU energy policies affect UK investment decisions specially in the power sectors due to lower  than expected CO2 allowance. Moreover current very high energy prices have created a situation in which there is severe political and economic uncertainty and a severe supply-demand imbalance as well. Immigration policy and its impact on UK economy :

Immigration is a major challenge for Europe and in general a priority in governmental agendas and international organizations. It is important to establish commitments in this areas such as work, social, security, housing, health, education and justice in a transversal perspective on one hand, and on the other regarding discrimination, gender equity, equal opportunities, citizenship rights. Therefore, they have agreed to develop a common immigration policy at EU level. These are-

A comprehensive approach to the management of migratory flows so as to find a balance  between humanitarian and economic admission; 2. It include fair treatment for third-country nationals aiming as far as possible to give them comparable rights and obligations to those of nationals of the Member State in which they live; 3. A key element in management strategies must be the development of partnerships with countries of origin including policies of co-development; 1.

Record levels of immigration have had "little or no impact" on the economic well-being of UK. Sometime it has had a negative impact on the low paid and training for young UK workers, and has contributed to high house prices.

Minister Liam Byrne says migration has added £6 bn to the economy and a points system is  preferable to a cap. In the report, The Economic Impact of Immigration, claims that if net immigration of 190,000  people per year continued over the next 20 years, it would contribute to a 10% increase in house  prices. Explain the economic implications for the UK of entry into EMU:

The European Economic and Monetary Union (EMU) consists of three stages coordinating economic policy, achieving economic convergence and culminating with the adoption of the euro the EU's single currency. There could be many more economic implications for the UK by entering into EMU either positively or negatively, such as1. The business cycles and economic structures which will reduce transactions cost and increases in competitiveness through greater price transparency which ultimately lead to slow growth. 2.Another concerns market flexibility. Employment strategies are designed to produce a more flexible workforce and a more flexible economy. If the UK joins , the institutions will be changing and they are slowly converging on a more market based model. 3.The fourth one focuses on the importance of EMU for financial services .If the UK joins then it will get access to larger and more competitive market. In addition it can get financial market, large and liquid EMU equity market. 4. No guarantee of EMU success: There is no guarantee that EMU will be success. The EMU step in a process that will cut Europe off from the rest of the world. It is bureaucratically motivated- a further advancement for European policy makers. 5. single currency will make EU more powerful player in the Global economy: When UK join with EMU, then it will ultimately strengthen the EURO. 6. No devaluating by any country of EU: This would be a nagetive impact for thee UK because the history demonstrate that well Chosen devaluations can help an economy out of difficulties- the UK  should retain this option. IN a recesssion, a country can no longer stimulate its economy by devaluing its currencyand increasing exports. 7. No individual monetery policy of any country: There would not be any more central bank for  any individual country by which may apply the monetery policy . Only there would be ECB by which this policy can be applied.

Conclusion and Recommendation: To make business successful we need an intensive knowledge regarding all sorts of business information and business related other information including both external and internal business environmental information as well as practical knowledge. In this assignment we have discussed some information regarding business and its environment. If any one has at l east this primary knowledge of   business environment then he/she may run a business in better way . Referrences: Source – Cited by Arif punjani . 2010. Class Lecture. London guildhall College .

(Source-R.Y Ruffin and P.R. Goregry, Principles of Economics, Scott, Foreman and company, Illionois,1983 Blicy, 2 nd edition, AITBS, Delhi,1997 ) (Source- F.S. Mishkin .1998 .The Economy of money, Banking and financial markets, 2 nd edition,

Scot, Forceman company). (Source –Shpiro.1999. Macro Economic Analysis, 5 th edition Galgotia Publications, (P)Ltd, New Delhi.& Dornbusch, S.Fischer and R.Startz, 1998 Mars Economics 7 th edition, Mcgrawttill inc, Illionis) (Source- O. Steiner and R.G. Lipshey, 1993 Economics, Hamper Collins college publications, ) ( Source- F.S. Mishkin .1998. The Economy of money, Banking and financial markets, 2

nd

edition,

nd

edition,

Scot, Forceman company,) (Source - F.S. Mishkin. 1998. The Economy of money, Banking and financial markets, 2

Scot, Forceman company,&.R.W. Grifin, 2003. Management 7 th edition, Hongnton Miffin, USA) (Source-9 B.H. Higgins, 1992 .Economic Development , 5 th edition, McGill-Queen University  press, Montreal.)

1. R.Y Ruffin and P.R. Goregry, 1983. Principles of Economics, Scott, Foreman and company, Illionois. 2.

Blicy, 1997 . AITBS,2 nd Edition , Delhi.

3. W.H. Branson, macro Economic theory and 4. O. Steiner and R.G. Lipshey, 1993. Economics, Hamper Collins college publications. 5.

Shpiro, 1999 .Macro Economic Analysis, 5 th edition Galgotia Publications, (P)Ltd, New Delhi.

6.

Dornbusch, S.Fischer and R.Startz, 1998 .Mars Economics 7 th edition, Mcgrawttill inc, Illionis.

7.

F.S. Mishkin 1998 The Economy of money, Banking and financial markets, 2 nd edition, Scot, Forceman company.

8.

R.W. Grifin, management.2003

7th

Avaibable at [on line] http://www.edexcel.com http://books.google.co.uk/books?hl=en&lr=&id=-

edition, Hongnton Miffin, USA

5QuZxsL9FkC&oi=fnd&pg=PT5&dq=mission+of+edexcel&ots=MmAo54NWMe&sig=_F2F8gCbrfe6a5a93U0Y8D grE6s#v=onepage&q&f=false http://en.wikipedia.org/wiki/Energy_policy_of_the_European_Union

http://ec.europa.eu/justice_home/fsj/immigration/fsj_immigration_intro_en.htm http://ec.europa.eu/external_relations/migration/index_en.htm

the aim of the Ryanair is to be the Europe leading low cost airline, to achieve this aim there are a number of supporting objectives set by ryanair  to undercut the fares of rival, to take over other airlines, to increase sales each year.