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The Oxford Handbook Of Business And The Natural Environment Add in library

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Question:

Describe about The Oxford Handbook of Business and the Natural Environment?
 
 

Answer:

Identification of purposes of different types of organization

An organization is a group of social individuals working in a comprehensive manner under a controlled performance in order to achieve the fulfillment of combined goals. As per the legal structuring organizations can be broadly of four major types namely Public limited companies, Private limited companies, trusts and partnership companies (Daniel, Wang and Weber, 2013).

As per the legal structure of the organizations the following organizations of UK are selected :

Tesco Plc – Public Limited Company

Oreo- Cadbury Diary Milk – partnership business

British Red Cross society – Trust

Iceland Ltd – Private limited company (Griffin and Pustay, 2013)

Tesco Plc is a public limited company, which gives Tesco the opportunity to make its shares available for public purchase. Tesco is thus able to procure finance through sell of shares to the public and sell of shares through stock exchange. Moreover, the public limited companies get the options of getting cheaper loans from the commercial banks. The major purpose of Tesco is to expand its stores and product line base thus becoming a Plc company has helped Tesco to successfully finance its ventures (Gil Aluja and Terceño, 2012).

British Red Cross Society is a registered charity in UK with around 32000 volunteers and 3500 staffs providing financial, material and mental support to the crisis affected people of UK. The registration as a charity has given the society an opportunity to gain public recognition and consequently funds for management of the activities. Moreover operating as a nonprofit organization also gives the society 100% tax relief.

 

Evaluation of the organizations functions in meeting stakeholders needs

A stakeholder is an individual or group of persons who are affected by the activities of the organization and are thus interested in the daily working within the organizations. They may o may not have shares or rights within the company functions however they are affected by the company decisions and are thus interested in company affairs. For the purpose of analysis of organizational functions involving the stakeholders two UK companies are chosen namely the British Airways and the retail company Marks and Spencer.

Major stakeholders of British Airways

Stakeholders

Objectives

Ways of meeting stakeholder needs

Shareholders

High dividends, corporate image

CSR reports and annual reports

 Employees (Crew members, ground staffs, pilots, air hostesses, engineers and administrative staffs)

Job security, salary hikes, training opportunities, free flight passes (Daniel, Wang and Weber, 2013)

Annual reports, financial statements, incentives and reward systems

Customers (business men, corporate personnel, local flight travelers)

Interest about good quality flights, good food services and high quality service

Prompt services, good flight experience, positive media publicity

Competitors (United Airlines, Japan Airlines, Deutsche Lufthansa AG)

Ticket prices, percentage of travel bookings, revenue

Annual reports(Griffin and Pustay, 2013)

Government  (Secretary of State transport and Civil Aviation Authority)

Compliance of airspace rules

Legal guidance record

 

Major stakeholders of Marks and Spencer

Stakeholders

Objectives

Ways of meeting stakeholder needs

Shareholders

Investment returns

Perks, AGM information, electronic communication about returns

Employees (shop manager, sales persons, administrative employees)

Workplace health and safety, remuneration and productive growth within retail store

Health and safety policy, remuneration policy, equality policy

                                    

Customers

High quality products, new designs and competitive pricing

Pricing policies, CSR reports

Competitors (Tesco , ASDA and NEXT)

Pricing strategies, monthly sales revenue

Annual reports

Suppliers

Ethical trading, best price (Gil Aluja and Terceño, 2012)

Sustainable SCM

 

Responsibilities and strategies of an organization

In case of Mark and Spencer, it is seen that the retail company uses the stakeholder mapping in order to prioritize the stakeholders before employing the strategies (Daniel, Wang and Weber, 2013).

Responsibilities and strategies of an organization

Thus, M&S prioritizes the responsibilities towards the employees and the customers. For managing the employees the company provides incentives, employee discounts, has introduced policies like workplace health and safety, anti bribery policy and mental well being policy (Jacob, 2013). Moreover, the company also provides pension schemes for the retired employees. In order to manage customers M&S has introduced 24 hours customer care services, uses organic chemicals in textile production, natural resources in food production etc. In monitoring of the competitors, the company focuses on the price levels of the other retail companies and prices the products accordingly. Finally, for effective management of the suppliers and stakeholders, M&S presents CSR reports concerning animal welfare activities and ethical trading. The company also gives shareholders discounts, high dividends, financial statements and electronic information about returns (Griffin and Pustay, 2013).

 

LO 2: Understand the nature of the national environment in which business operate

Allocation of economic resources by different countries

The economic system is the appropriate system of production, exchange and distribution of goods and resources between different countries and individuals (Jacob, 2013). Three major types of economic systems operating in different countries are capitalism, socialism and mixed economy. Resources allocation is the major problem faced by various countries. Since the demand for the resources re high hence the lack in the supply creates a scarcity of the resources.  Thus keeping in mind the scarcity of resources, in an economic system the participatory are required to make decision related to economic choice and bear the opportunity costs for the alternatives made (Gil Aluja and Terceño, 2012).

Allocation of economic resources

UK and Germany are the two countries displaying two diverse economic systems. UK adopts the mixed economic system involving both state ownership and government regulation. On the contrary, Germany adopts the capitalism economy where the participants for distribution of resources follow a two-class hierarchy system (Jacob, 2013). In the capitalist economy, the responsibility of allocation of resources rests upon the high class of individuals and they take the decision for allocation of the same to the working class giving rise of unequal distribution. However, in UK, prevalence of mixed economy helps in equal distribution of the resources by both government and public sector individuals (Gupta, 2013).

Impact of fiscal and monetary policy on business activities

UK has the fifth largest economy as per its current GDP of £ 3.002 trillion and £ 2.547 trillion in terms of PPP. The country has recorded around 2.70% annual GDP growth rate with the service sector recording the highest GDP rate of around 78.4%. Bank of England regulates the monetary policy of UK and has currently set an inflation target of 2%, which is favorable for economic growth (Daniel, Wang and Weber, 2013).

Impact of fiscal and monetary policy on business activities

The Monetary Policy Committee (MPC) sets the monetary policy. The major target of the monetary policy of UK is to keep the inflation rate between CPI 2% with an increment of decrease by 1%. Moreover, in 2008-2009 Bank of England used Quantitative Easing that included creation of money electronically to purchase assets.

The changes in the interest rates and Inflation rates affect the business functions of Sainsbury, which is a retail supermarket. With the rise in the rates of interest Sainsbury will face difficulty in financing cost of capital and with the rise in the inflation rates the customer’s purchasing power will decrease thereby making it difficult for the customers to purchase products. Moreover, changes in the exchange rates will also appreciate the monetary value of pounds in UK, which will increase the domestic sales of Sainsbury however will decrease the sales of Sainsbury in other countries.

 

Impact of competition policy and regulatory mechanisms on organizations activities

Sainsbury, which is one of the major players in the retail industry of UK, faces stiff competition from the other retail organizations like Tesco, ASDA and Marks and Spencer. Thus, the retail supermarket in order to retain its market share will focus on changing and implementing its competition policies (Kelly and Scott, 2011). Thus, Sainsbury has to frame its policies with regard to the changing policies of its competitors. The competition policy of Sainsbury focuses on cost and product diversification. The governmental policies concerning the product standards and product qualities as imposed by the UK government will have a direct impact on the product costs of Sainsbury. Thus, the governmental policies will threaten product-pricing strategies of Sainsbury along with its competitors.

Understand the behavior of organization in their market environment

Pricing and output decisions of organizations in UK

The three major market structures are namely monopoly, oligopoly and perfect competition. Sainsbury operates under the oligopoly market structure where the price levels are decided based on the pricing strategies of the competitors and customers demand (Tebloyeva, 2010). In case of monopoly, there is a presence of only one or two companies in the market and hence the pricing strategies do not depend upon the customer demands. In this segment of market structure, the customers have little or no options and thus they are not the parties who can influence the price levels (Kelly and Scott, 2011). The seller thus possesses the whole power to set prices accordingly. However in case of Sainsbury the number of competitors are high hence the retail chain sets prices according to the customer demand and pricing strategies of other retail companies (Chikara, 2013).

Evaluation of market forces shaping organizational responses

Major market forces like the demand and supply graph, customers perceptions, economies of scale and cost and output relations shapes the product and pricing decisions of various organizations in UK. Sainsbury has to make production and supply decisions depending upon the demand of the UK customers and hence they use Just in time approach in order to successfully supply the products (Schaffer and Schaffer, 2012). Moreover, due the high competition Sainsbury analyses the customer perceptions before launching new products in the market. Moreover, the retail companies have the option of producing goods at a large scale. Thus Sainsbury adopts the benefits of the economies of scale in order to successfully produced large volumes of goods at low production cost. Moreover, factors like rise in the inflation rates may increase the price of the products of Sainsbury. Thus, if the price of the products increases then Sainsbury decides to produce large volumes of products in order to avail economies of scale and in order to gain profits (Kirpalani, 2013).

Report on Virgin Atlantic

Virgin Atlantic Airways is the second largest British airlines serving some of the major cities of UK. The airline operates through Gatwick and Heathrow airports and operates in around 30 destinations around UK and other countries. The cultural, political, technological and social factor influences the operations of Virgin Atlantics (Leal Filho, 2004). In UK the political situation is stable for the organizations and thus Virgin Airlines can make the policies keeping in mind the considerations offered by the UK government. The major economic factors like GDP, interest rates, employment rates and inflation rates also influence the activities and policies of Virgin Airlines (Mackey and Sisodia, 2013). The high degree of technological inputs and outsourcing has helped Virgin Airlines to increase the quality of the airline services at a considerably low service cost. Apart from these business environments, the cultural diversities also play an important role in framing the internal employee culture of Virgin Airlines (Mackey and Sisodia, 2013).

 

Assessment of global factors that shape national business activities

Business in international prospective

International trade refers to the trade of goods and services between global countries. The world economic concepts are based on the supply and demand system of international trade. Thus, any change in any of the global factors can affect the demand supply and pricing techniques of the international trade. The process of international trade involves exchange of capital, products and services on a global context. In this regard on monitoring the service of Tesco Plc which has its branches in different parts of the world can show some of the major benefits that an organization derives from international trade. International trade is important for development of revenue sources for Tesco (Kirpalani, 2013). Moreover with the enhanced production techniques, highly advanced supply chain systems, rapid industrialization and outsourcing of products Tesco has also been able to focus on the product and the marketing strategy. Further, the principle of comparative pricing advantages can also be derived with the help of international trade relations. Tesco has also been able to increase the domestic competitiveness, sales, profits and attained global market share. However, there are certain disadvantages of international trade. Firstly, the international trade has increased the product cost for Tesco (Baron, 2013). Tesco has to produce different products according to fit to the various diverse cultures within of the different countries. Moreover, the fluctuations in the exchange rates have also contributed to the loss of revenue for the organizations (Mackey and Sisodia, 2013). It is opined that another disadvantage of international trade is that the organization engaging in international trade tends to ignore the welfare of the individuals of the domestic or the production country for the sake of revenue generation. International trade has also resulted in exhaustion and destruction of the resources of Tesco and in some countries, the economic decisions and the political decisions influence the trading profit of Tesco. Tesco at times has to also reduce the product prices because of the high tariff charges charged by the other countries. In order to ensure sell of the product in that country Tesco strives to reduce the price and has to bear the high tax rates (Bansal and Hoffman, 2012).

Impact of global factors on UK business organizations

Globalization refers to the international operations of a particular organization. The different global factors like international competitiveness, global business environment, taxation policies and exchange rates influences the global business process of organizations in UK. Companies having global branches in different countries have to focus on the global competitiveness in order to earn equal revenue in all sectors. If the competition is high in the global market from some domestic company then the UK companies find it difficult to operate in that market. For analysis of the international business environment, the companies generally undertake the PESTEL analysis. Similarly high taxation and tariff rates in the global markets like China, Germany and USA threatens the revenue of the UK companies (Cherunilam, 2010).

European Union policies and their impact

The rules and regulations of the European Union are to be abided by the member countries. The major policies of EU are employment policy, regional policy, global trading policy, education sector policy, and inflation and taxation policy.
All of these policies have a direct impact on the business activities of the member country. Thus, the companies operating under the EU policies needs to focus on the implementation of these policies. In this context, Sainsbury operates in the segment of both taxation and global trading policy (Mackey and Sisodia, 2013). The global trading policy is influenced by the exchange rate fluctuations and the tariffs and taxation policies of different countries give Sainsbury the opportunity to frame the pricing policies. Sainsbury thus formulates the different policies in order to cater to the needs to the customers and the shareholders equally(Chikara, 2013)

 

Reference list

Bansal, P. and Hoffman, A. (2012). The Oxford handbook of business and the natural environment. Oxford: Oxford University Press.

Baron, D. (2013). Business and its environment. Boston: Pearson.

Cherunilam, F. (2010). Business environment. Mumbai [India]: Himalaya Pub. House.

Chikara, M. (2013). Book Review: Business Environment. Vision: The Journal of Business Perspective, 17(2), pp.185-186.

Daniel, F., Wang, J. and Weber, B. (2013). Business process management. Berlin: Springer.

Gil Aluja, J. and Terceño, A. (2012). Methods for decision making in an uncertain environment. Singapore: World Scientific.

Griffin, R. and Pustay, M. (2013). International business. Upper Saddle River, N.J.: Pearson.

Gupta, J. (2013). Economic and Business Environment. Vision: The Journal of Business Perspective, 17(1), pp.83-85.

Jacob, W. (2013). Economic and Business Environment. Vision: The Journal of Business Perspective, 17(1), pp.87-89.

Kelly, S. and Scott, D. (2011). Relationship benefits: Conceptualization and measurement in a business-to-business environment. International Small Business Journal, 30(3), pp.310-339.

Kirpalani, V. (2013). International Business Handbook. Hoboken: Taylor and Francis.

Leal Filho, W. (2004). Environment 2010. [Bradford, England]: Emerald Group Pub.

Mackey, J. and Sisodia, R. (2013). Conscious capitalism. Boston, Mass.: Harvard Business Review Press.

Makhbul, Z. (2012). Workplace Environment Towards Health and Performance. International Business Management, 6(6), pp.640-647.

Mirwoba, S. (2010). Rethinking ethical issues in global business environment. KCAJBM, 2(2).

Schaffer, R. and Schaffer, R. (2012). International business law and its environment. Mason, OH: South-Western Cengage Learning.

Subba Rao, P. (2010). International business environment. Mumbai [India]: Himalaya Pub. House.

Tebloyeva, V. (2010). BUSINESS ENVIRONMENT FEATURES AND SMALL BUSINESS PROBLEMS IN THE NORTH OSSETIA-ALANIA. EoR, pp.192-196.

Tokuoka, K. (2012). Does the business environment affect corporate investment in India?. [Washington, D.C.]: International Monetary Fund.

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