This study firmly focuses on analyzing the different types of organizations in UK. However, the study also describes the nature of national business in terms of operating throughout the world. Moreover, through analysis, analyst represents the understanding of organizational behavior from the point of view market environment. However, global factors that helps in shaping the national business at UK also explains here.
An organization has an administration structure that establishes relationships among a variety of activities as well as associates and assigns roles and responsibilities to transmit various tasks (Crosby 2012). The four different types of organizations that are relevant to businesses in the UK are as follows:
Sole trader: There is no legal difference between the proprietor as well as the business but the proprietor of the business uses trading name instead of his own.
Partnership: There is a legal contract planed up for them in identifying the rights as well as responsibilities. There is no legal difference between the proprietor as well as business.
Private limited company: The legal responsibilities of the companies are restricted to the resources invested (Arosa, Richie and Schuhmann 2014). The shares are not operated on the stock exchange. When the business goes ruin, then the owner is individually legally responsible for debts acquired.
Public Limited Company: There should be two shareholders and directors and the shares are accessible to the community through the exchange of stock. There is a trading certificate to do the trading and borrow capital.
Vodafone Group Plc is a public limited company and the purpose is to provide a wide range of services such as voice, message as well as data across the mobile and fixed networks. The board is accountable for the shareholders for conducting the business (Begg 2009). The shares of the company are traded publicly on the market such as it is listed in the London Stock Exchange.
Twitter is a social networking tool and its primary purpose is to network online. It is a media partnership company across the world and across the strategic verticals such as sports, news, music and television (Elegido 2014). The company pays business tax based on its revenue, but later the shareholders pay the tax on the identical profits during capital gain tax on the trading of their shares and income tax on their bonus.
The stakeholders of Vodafone are as follows:
Customers: In terms of meeting customers objectives, Vodafone make new plans everyday such as decreasing price of call rate, special bonus scheme, lifetime validity, free caller tune, etc. Communicate with the customer via taking feedback through online as well as offline manner (Mercurio 2012). In addition, the company pays more attention and listens with their customers.
Employees: Vodafone treats all the employees equally and by offering benefits such as medical insurance, share plans they are able to meet their objectives. In addition, Vodafone monitor their employee’s performance through 360 degree monitoring method.
Community: Vodafone works with different charities and welfare. For example, employees at Vodafone raised £940,000 for charity. In addition, Vodafone also allows 24hours paid leave to their employees for volunteering (Vodafone.co.uk 2015).
The stakeholders of Twitter are as follows:
Communities: Twitter uses website to support their departmental goals. The company launches campaigns on the websites to meet the objectives.
Non-government organizations: Twitter meets regularly with the organizations in order to raise issues that concern how the business affects the economy and its required solutions.
There are several responsibilities played by the Vodafone such as –
Government Responsibility: The Company always maintains their governmental rules as well as paid taxes on time. Vodafone is always aware about the order of government of UK and helps to build nation.
Employee Responsibility: The senior management of the company always focuses on developing the human resource department as well as focus on improving the mental ability of the employee (Mercurio 2012). Clearly discuss about the conflicts in any situations between the organizations and employee.
Social Responsibility: Always try to satisfy their customer via taking feedback and providing service according to the same. In terms of developing the local community, Vodafone makes lots of charity to the society.
Environment Responsibility: The company uses only paper and more focuses on avoiding the usage of plastic (Mercurio 2012). Focus on plantation within the premises of Vodafone Company.
In terms of meeting the responsibilities of their stakeholders, Vodafone maintain business ethics properly. Provide equal opportunities and diversity for their employees. Make charity for the social welfare.
Figure 1: Strategies employed for meeting stakeholder responsibilities
(Source: Hayibor 2013, pp- 386).
An economic system is a set of regulations that a country involves in order to systematize its rights and allocation of economic resources (Sawyer 2004). There are three types of economic system such as planed economy, mixed economy and market economy.
The country is United Kingdom that operates on the varied economic system. In UK, the decisions are to be taken through the free market but at the same time, the administration maintains a least wage, policy and regulations for protecting the environment and also gives health facilities. It also operates on market economy where all the decisions are based on customer’s needs (Mearman and Plumridge 2012). The vital economic problem within society provides a process for allocating the resources and expenditure that are not able to meet the customer’s expectations given by limited resources. In the market economy, the government intervention is kept to a smallest amount while supply as well as demand has the capability to pay influence decision making. In planed economy, resources are planned centrally and the government controls the allocating of resources such as capital, labor etc. In the mixed economy, it consists of elements both private enterprises as well as interventions by the state.
The government concludes fiscal policies, as the sum of tax organization has to pay the administration. If they increase the level of tax, then the firms have fewer amounts to money to spend (Crosby 2012). If the government compels low taxes, then the firms desire to invest in numerous sectors. Monetary policy has a consequence on not only the trade organization, but also overall financial system. The long run average GDP growth is 2.5 percent.
Due to decrease in the tax rate to 26 percent, it gives an impact on the yearend tax balances. The shareholder of Vodafone who is the individual resident of the UK tax purposes is entitled in order to calculate their liability to the UK income tax (Mercurio 2012). The tax-free allowances and all income earners are allowed in order to earn an amount of income before they start to pay the tax. As per the annual report of Vodafone, 45.9bn revenue achieves and its expansion is around 3.2 percent. It is because the government of UK expands the monitory policy by buying bonds to spend on the Vodafone services as well as the products are there for the demand of the customers are increased by 14.5 percent to 370.9 m.
Monitory policy of UK gives an impact on Twitter to control its financial variables within an economy by interest rates. Fiscal policy attempts to control the level of economic activity throughout changing the taxation as well as administration spending (BBC News, 2015). Due to these policies, Twitter has strong economic growth but not inflationary growth.
The government of UK makes various monetary as well as fiscal policies in order to control the economic business of Vodafone such as follows:
Change in the rate of interest: Vodafone faces financing difficulties as the cost of capital increases while the customers reduce the level of consumption, which will reduce the sales volume of Vodafone.
Change in exchange rate: If the rate of exchange changes, then it will have a vital effect on the business activities of Vodafone (Crosby 2012). If pound appreciates, then the business operations of Vodafone, which is operated in other countries, face problems while the sale of home country increases.
Change in the rate of tax: If it changes through fiscal policy, then it benefits the business of Vodafone by increasing the quality of their services without change in the price.
Vodafone invests lot of money on their products and service growth. Competition policy improves the efficiency of the organization (Mokushev 2013). It ensures consumer choice, technological innovation that supports efficient competition of price with the suppliers. Competition policies of Vodafone are based on four policies such as antitrust, liberalization of marketplace, state aid and merger control. It splits the monopolistic market and creates certain that each entrance is on new competitors. The policies are based on fair-trading as well as environmental policies. Change in the policy of the competitors has made a change within the activities of Vodafone, as the business has to adjust with the existing market in order to cope up with the competitions (Mercurio 2012). Vodafone makes its competition policy based on its cost as well as diversification in their services.
The two of the market structures are monopolistic competition as well as oligopoly. In the monopolistic structure, both Vodafone and Twitter has little segmented of market share those have not greatly influenced both price and output. They are supplying goods in the market. Within this market structure, both the company impose the price what they want to maximize their profit (Sawyer 2004). They are not caring if the customers are willing to pay for their services. In oligopoly structure, the firm controls the market share; even they are determining both price as well as supply (Payne and Ireland 2015). Price clients are the buyers or sellers those are relative to the market and affect the transactions for the market values. Within this market structure, the organization sets the price low to the potential entrants as the company considers the demand of the customers. It is identified that both willingness as well as capability to defend the share of the market.
Market forces illustrate the relation among supply and demand. Organizational reaction to marketplace forces has an enormous impact on the position and earnings of both Vodafone and Twitter. The profit of Vodafone increases as they critic their margin perfectly to be able to offer and sell goods without bringing extra finances to the business (Sawyer 2004). The marketers use five market forces: competitive rivalry, bargaining power of the customers, bargaining power of the suppliers, threat of substitutes and threat of entry.
As virgin, t-mobile are working in the market, therefore there is a high level of rivalry for Vodafone. As the customers can buy same services from the rivalry of Vodafone, there is strong bargaining power (Begg 2009). Due to geographical existence, Vodafone has a good control over their suppliers. Vodafone faces threat due to launching same substitute at lower rate.
Twitter has high risk of competition due to its competitor’s economics of scale as well as financial capital (Mercurio 2012). As users are giving the option to make, Twitter accounts private and turns the social network sites into antisocial ones. As the customers have high bargaining power, therefore they can switch to Facbook, Google AdWords. It reduces the revenue of Twitter. By depending on suppliers, twitter gains revenue.
Virgin Atlantic offers commercial airline services. Its service is based on customer focused with an importance on value for money, innovation, quality and fun. The organizational structure of Virgin Group is group de-centralized, as it encourages the silo behavior. The customers enter in Virgin services under a solo portal (Rivlin 2015). Based on organizational culture, the cultural factors such as cultural values, customs and traditions have been known to have an effect on the attitudes of the customers towards airport transport with the performance of employees. The business environment of Virgin Atlantic is analyzed as follows using the below factors:
Political factors: In UK, the political situation is stable while the government uses various supportive regulations. Virgin Atlantic considers the inductive political circumstances.
Economic factors: The factors are rate of interest, rate of employment and rate of inflation. It makes the activities of Virgin Atlantic easier (Begg 2009).
Social factors: The customer behavior, expectations as well as actions are determined by the social norms.
Technological factors: With change in technology, Virgin Atlantics increase the quality of their services as well as reduce the price of their airline tickets (Payne and Ireland 2015).
International trade is essential for each nation, as it is not probable for each of the organization to grow as well as produce goods and services in a country (Merrison 2006). It is both cost-effective as well as economic. Benefits of the international trading on the trade organizations of UK are as follows:
Cost of production: By trading in other countries, the company tries to lower its cost of production (Sigalas 2012). As for example, Vodafone has opening in different countries, but sometimes the workers of UK go to other countries to labor for that facilitate them to earn allowance.
Materials: For most of the manufacture, UK is dependent on other countries. The raw resources such as banana, mangos are coming from other countries, as it is not growing in UK (Begg 2009). Further, many countries need luxurious materials and goods such as cars, engines that are imported from UK.
The risks of the international trading on the business organizations of UK are:
Misunderstanding the local legal framework: Due to difference in the law in other countries, it creates misunderstanding in understanding the legal framework of each of the country.
Unstable profits: At the time of dealing at the international level, it is simple to leave exchange of currency at final moment (Gov.uk 2014). In doing this, there is a threat of not receiving the best exchange rate that has a negative impact on the commerce profit.
International trade and the UK economy: Global factors provide an opportunity to create international trade that is raising the financial system of UK (Sawyer 2004). The associations are operated in other nations where they get cheap labor with rare materials.
Market Opportunity: UK has a better reputation in the market due to its progression in the technology as well as worldwide factors that provides opportunity in the UK market in order to conduct business in the entire world.
Advantages and Disadvantages of Globalization
Globalization gives a larger market; therefore for selling more goods and money create new jobs. The products are becoming cheaper; therefore, the goods are becoming more popular in the market.
Globalization causes unemployment in the industrialized countries, as the firms are moving their business to places where they can able to acquire cheaper workers (Zhang 2011). Globalization leads to monetary problems, the companies are not working; therefore, the companies have to close down and investors pulled out the money.
After joining the European Union (EU), the businesses of UK must follow the rules and regulations. The countries have to track the legislation of union. The policies of European Union are that if any EU countries wish to perform business, then it requires contacting with the European Money Union as well as requires transecting in Euro (Begg 2009). The policies of EU have control on the UK business throughout spending as well as taxation law. All the UK companies are exchanging their goods with other EU countries exclusive of any type of barrier. If the companies of UK have license, they can export their goods to other EU countries. The policies have a direct impact on the business operations of the member country. The organization has to consider if there is any regulation as well as policy that will limit the operations of the business. If the business organization will not follow the European laws, then the company will face under the law of violating the agreement of EU member countries. The climate change act set target for the EU to reduce the emissions of carbon (Mokushev 2013). It has an impact on the productivity of the business. Social policy requires the organization to implement health and safety and employment opportunities whereas non-compliance causes the organization to suffer.
This study analyzes the economic factors such as speed of economic development, fiscal and credit policies, rate of currency and inflations shape the business of Virgin Atlantic by having an effect on income and demand. The competitive buyers distinguish the supply curve and the aggressive sellers distinguish the demand curve that is flexible at the marketplace price. Due to threat of entry, Vodafone always keep their eye on market behavior as well as reduces cost as comparison to their rivalry.
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Morrison, J., 2006. International Business Environment: Global and Local Marketplaces in a Changing World. Palgrave Macmillan.
Sawyer, M., 2004. The UK Economy: A Manual of Applied Economics. 16th ed. OUP Oxford.
Arosa, C., Richie, N. and Schuhmann, P., 2014. The impact of culture on market timing in capital structure choices. Research in International Business and Finance, 31, pp.178-192.
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Hayibor, S., 2013. Just Business: Arguments in Business Ethics, by M. E. Sandbu. Journal of Business Ethics Education, 10, pp.379-387.
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BBC News, 2015. Fitch downgrades UK credit rating to AA+ - BBC News. [online] Available at: https://www.bbc.com/news/business-22219382 [Accessed 29 Dec. 2015].
Gov.uk, 2014. Office of Fair Trading and Competition Commission: final annual reports published - News stories - GOV.UK. [online] Available at: https://www.gov.uk/government/news/office-of-fair-trading-and-competition-commission-final-annual-reports-published [Accessed 29 Dec. 2015].
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