Unit 1 Business Environment Merit Copy

Introduction

For all types of organizations in the market like public, private, non profit organizations etc, the business environment can contribute a long term success for the organization. Analyzing and monitoring the business environment has become very crucial for achieving the objectives of the organizations as it can influence the business operations both positively and negatively. Business environment of an organization comprises the internal and external factors which can influence its business operations and functioning including that of its stake holders (Wetherly, & Otter, 2014).

This paper speaks about the relevance of the business environment for an organization by considering an organization Tesco for the purpose of analysis. Tesco is a multinational public limited company which is based on UK, London. This organization is one among the largest retailer or the super market chain in UK which deals with grocery and general merchandise. Tesco operates as the supermarket, hypermarket, super stores etc throughout the world and it stood in the third position among the worldwide retailers in making profit. Some of its major operations include Tesco express, metro, one time shopping etc which has gained huge customer attraction and generated a dominant position in the market. The organization Tesco provided importance to customer preferences and customer satisfaction. This made them to provide innovative and differentiated products which are required by their target customers. They provide value to their stake holders through proper stake holder engagement programs. The purpose, aim, objectives, economic systems etc of Tesco are analyzed and discussed detail in this report.

Task 1

(i) Identify the purposes of different types of organisations and compare the missions, goals and the strategic objectives of your chosen organisation with a similar organisation.

An organization which is operating in a market will possess its own purposes, aims, objectives, vision, mission etc. There are various types of organizations operating in the world, the purposes of these organizations are identified and are mentioned below

• Private Sector organizations: This sector includes the organizations which are controlled by individuals or group of individuals and its purpose is to gain profit, revenue, reputation, and to expand throughout the world. Some of the private sector organizations include the Sole Traders, Partnerships, Companies/Corporations, franchises etc (Imran et al, 2014). For Example: Virgin Atlantic Groups Pvt Ltd
• Public Sector organizations: This sector includes the organizations which are controlled or owned by government and its purpose is to provide a public oriented service. These organizations have some specific standards which focus more on the welfare of the people, society, environment, etc. The aim of these organizations is to enhance the living standard of the people. For example: National Health Service.
• Charity organizations: The charity organizations are the non profit organizations which provide service to the public without any intention of making profit. The purpose of such organizations is to provide charity services to the poor and to those people who are in need of food, shelter, child education, who suffers from natural disasters etc. These organizations also follow some ethical and quality standards through which they can provide appropriate services. For Example: National Society for the Prevention of Cruelty to Children

The aim, strategic objectives, mission etc of the organization Tesco PLC is compared with that of the aims, objectives, mission etc of the similar organization ASDA. ASDA is also a largest retailer UK which operates as a supermarket and possesses a dominant position in the market. A comparison is performed on three two organization and the outcome is mentioned below in a tabular form.

	TESCO PLC	ADSA
Mission	Create value for the customers and to obtain life time loyalty	Exceeding the needs of the customers and to become a best retailer throughout the world
Aim	To achieve customer loyalty, organizational growth throughout the world and to gain huge revenue	Providing affordable product and services to the customers and to achieve competitive advantage and to make revenue
Strategic Objectives	Achieving quality and service standards which can provide customer satisfaction. Enabling stake holder and customer engagement programs	Making provision of high quality service and products and to achieve customer satisfaction Focussing on the reducing the cost of production.

Table 1

The purpose, aim and objectives of the organizations may vary from organization to organization which is clearly highlighted above.

(ii) Describe the extent to which your organisation meets the objectives of its different stakeholders. Explain the responsibilities of your organisation and the strategies it uses to meet the needs of these different stakeholders.

Stake holders are the individual or group of individuals who are directly or indirectly influenced by the operations of the business and vice versa. The extent to which the organization Tesco meets the objectives of its stake holders are mentioned below.

• Customers are the major stake holders of the organization Tesco. Meeting their aims and objectives can gain success and profit for the organizations. The objectives of the customers are to get quality and worthy products. Hence the organization is more customers oriented and considers meeting these objectives as a main one.
• Employees are the internal stake holders of Tesco. This organization believes that a happy employee can make a customer happy. Hence Tesco focus on meeting the objectives of the employees like good salary, respect, recognition etc and provides a good priority in meeting those objectives (Smillie et al, 2013).
• The organization considers meeting the objectives of the government as an important one for the well functioning of the organization. Hence it strives to meet its objectives like licensing, maintaining standards etc
• It also provides importance to the objectives of the suppliers like maintaining good relationship, proper agreements and gentle man conduct, proper payment etc. Meeting their objective are relevant for Tesco for running a hinder free operations

Hence it is evident that meeting the objectives and aims of the stake holders can bring benefits to organizations

Some of the responsibilities of the organization Tesco and the strategies that the organization adopted to meet those responsibilities are mentioned below

• The organization Tesco holds a prime responsibility towards the customers. Tesco is responsible to provide quality product and service which the customer expects. For meeting this responsibility Tesco has developed a customer service policy which includes guidelines, rules and procedures to achieve customer satisfaction which all employees from higher to lower level should follow.
• Tesco has also responsibility toward the employees who strives to achieve organizational goals. Tesco is responsible to meeting their needs, providing job security etc for the employees. For meeting this responsibility they have developed an HRM policy which protects the rights of the employees in work place. Tesco has developed a culture which provides respect, recognition, right to express opinions etc to the employees (Beringer, Jonas, & Kock, 2013).
• Tesco is responsible for following the rules and regulations kept by the government. Through this the organization can ensure the welfare of the public and can contribute to national growth. For this the management of Tesco conducts frequent internal audits so as to ensure its adherence to the rules.
• Tesco’s responsibility towards suppliers are to be honest and to run a gentle man business relationship. For meeting this responsibility Tesco conducts frequent supplier meetings and update all relevant information with them.

Understanding responsibilities and meeting the objectives of the stake holders can contribute a long term stake holder relationship for the organization like Tesco which can gain success for the organization.

Task 3

(i) Using your chosen company as an example, explain how market structure determines the pricing and production decisions.

The market structures are having a vital role in determining the pricing and the production decisions of the organizations. The market structure constitutes the number of organizations in the market which produces similar products and services. Some of the market structures include monopolistic, oligopolistic and perfect competition market structures.
In monopolistic market structure there will be one or two companies providing specific product or services. Under this structure these companies can fix price and production as per their interest. In oligopolistic market structure competitive pricing system is followed and a low pricing is fixed as per the customer demand. In a perfect competition market there will be high degree of competition as there is more number of companies operating in the same industry (Carraro, 2013).
The organization Tesco has many competitors which is dominant in the market and hence it fall under the perfect competition market structure. Some of the ways through which this market structure determines the pricing and production of Tesco is mentioned below. Here the organization Tesco itself is the price taker. It charges its products based on the costs incurred in production, marketing principles, etc. This market structure doesn’t provide any control over the pricing as there are many organizations. Tesco will have to keep a competitive price and should add value to its pricing strategy through perceiving the customers. Here the production decisions are based on the customer demand. In a perfect competition market the value for customer demand will be high.

(ii) Using a range of examples, analyse how market forces influence the organisational response and examine how your organisation would respond.

Market forces are the forces or the economic factors which can influence the availability or resources and the demand for that product. The market forces can influence the decision making process of the organizations like Tesco. Some of the market forces include supply and demand, elasticity of demand and supply, perceptions and actions of customers, economics of scale, and cost and output decisions. Some of the ways through which these market forces influences Tesco and its response towards these market forces are discussed (Ryan, 2013).

• Tesco being in the competitive industry meeting the customer demand with appropriate supply of products is essential. Hence making supply decisions becomes highly relevant for Tesco. The changes in the market forces demand and the supply makes Tesco to formulate new strategies. Tesco monitors the market situation carefully and when demand increases it increases its production volume. It also maintains proper inventory management to manage the supply and demand market forces.
• Customer perception about the service, quality of the product etc can influence the Tesco’s decision making process. The customer may not buy the product if they get perceived that the product is of high cost. For this Tesco focus on the price quality perception of the customers. If the buyers concern is about the price then they emphasis on the quality of the product.

(iii) Discuss the business and cultural environment of your selected organisation and assess to what extent it shapes the behaviour of the organisation.

• The business environment of the organization Tesco includes the political factor, economic factor, social and technological factors which are discussed below.
• The political situation of UK is highly stable which provides an opportunity for the organization Tesco to establish its business operations efficiently. This stable political situation enables the organization to implement policies; procedures etc which can shape the behaviour and can achieve its objectives.
• The economic situation of UK is also stable with stable interest rate, employment opportunities, and good buying potential for customers etc. This enables the organization to finance the business properly to meet the cost of production. This economic situation enables Tesco to make profit and to remain competitive (Scott, 2013).
• The social factors like the customers buying behaviour, customer perception etc can influence the business operations which have to be considered by Tesco. These factors make Tesco to exhibit innovative and differentiated products and services.
• The technological factors can make Tesco competitive through providing fast and quick service delivery. The adoption of the technological paradigm can make Tesco highly savvy which can attain customer satisfaction.

Apart from these factors the cultural environment also influence and shapes the organization behaviour of Tesco. The population of UK are very trendy, early adapters and has a busy schedule. Hence Tesco has to adopt the strategies through which it can meet these requirements. The one time shopping facility and the online shopping facility of Tesco contributes to the cultural adaption.  

Task 4

(i) Discuss the significance of international trade on UK business organisations and use examples from your chosen organisation.

International trading constitutes the exchange of the products and services between different countries across the world. International trade plays a significant role in the UK business organizations through providing comparative advantage. International trading has benefitted the organizations of UK through the better utilization of the resources, importing the resources or products which are not available, meeting the customer demands and needs (Yarbrough, & Yarbrough, 2014).
For example: Tesco being a leading retailer in UK could exhibit many imported products and services to its customers as per their demands. Through this Tesco provide accessibility to any products and services for the customers which made them loyal and committed towards Tesco. International trading also supported the operation of its worldwide branches without any barrier.

(ii) Analyse the impact of global factors on UK business organisations and use examples from your chosen organisation.

The impact of the global factors over the UK organizations can be analyzed through PEST analysis.

• Political factor: The political situation of the nation worldwide may be different which can hinder the global operations of the UK organizations. For example if there is any political change or political uncertainty in any country on which Tesco operates then it can affect the functioning of Tesco.
• Economic factors: The changes or rise in the exchange rates, commodity prices like the price of oil, macroeconomic policies of various nation, etc can influence the business operations of business organizations like Tesco. For Example the economic slowdown has increased the interest rates and reduced the buying potential of the population which affected the business operations of Tesco adversely.
• Social factor: The ethical, cultural and religious values vary from country to country. The operations of the business organizations like Tesco should not hurt the religious and cultural beliefs of any particular nation. For Example: beef and its products are not used in Islamic countries hence promotion of such products should not be done in such countries.
• Technological factors: Even though the whole world is behind the technological paradigm some population of world remains under savvy and prefers to practice the traditional technologies. In such countries the organizations like Tesco should implement the technology which those populations prefer. For example some countries in Asia are not comfortable in online purchases which Tesco provides as a customer service provision.

(iii) Assess the role and impact of the European Union policies on the UK business organisations and use examples from your chosen organisation.

The European Union has introduced some policies which are supposed to be followed by the organizations of UK. Some of the policies introduced by the European Union include employment policy, taxation policy, inflation policy etc. These policies are introduced by EU to ensure smooth business operations management for the organizations in UK and to eliminate any unethical or business misconduct (Smith, 2013).
The business organizations in UK should follow these policies; any violation in this may cause legal actions against the organization. For example the employment policy of EU specifies equal employment opportunities to all individuals who are eligible for the job. Through registering with the EU the organization Tesco could export and import the goods and services withour paying extra money.

Conclusion

Business environment is the major component of the organization which can influence the business operations. This paper describes various aspects of business environment by considering Tesco PLC as an example. Various types of organization are identified and their purposes are discussed. The vision, mission, aims and objectives of Tesco and ASDA are compared and discussed. The responsibility of Tesco towards its stake holders is discussed. The nature of UK economic sytem, macro economic sytem is discussed and their impacts over Tesco are analyzed. The business and cultural environment of the organizations are discussed. The role of EU and its impact over the business organizations are also discussed.

References

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