Unit 1 Demand Supply in Business Environment Assignment

Program	Diploma in Business
Unit Number and Title	Unit 1 Demand Supply in Business Environment
QFC Level	Level 5

Introduction

Demand supply in business environment  assignment delves with the aspect of business environment where the identification of the type of organization Primark is has been done and its purpose has been discussed. Also, the extent to which Primark will be meeting the objectives of the various stakeholders have been described as well as the Primark’s responsibilities as an establishment has been explained as well as the strategies that are used for meeting them. Also, the ways by which the economic systems are attempting to do the effective resource allocation requires being explained and also, the influence of the fiscal as well as monetary policy on business organizations and their activities need to be assessed.

 

Task 1

1.1 Identify what type of organization is Primark and discuss its purpose. In addition, identify and discuss the purpose of one organization within the following categories,

• The public sector
•  Charity
• Cooperative

Primark is a private sector organization and is an Irish clothing retailer and the purpose of Primark is providing better quality products in respect of the public, so that the public has the realization that Primark is a good organization. Another important purpose of Primark is selling the products at prices that are considered reasonable and also being supportive in respect of the customers as well as the employees.

Purpose of organizations:

• The Public sector – National Health Service aka NHS is considered to be a public sector organization that is headquartered in London, United Kingdom and the purpose of NHS is creating the culture as well as conditions regarding health as well as care services and employees for delivering the highest degree of care as well as ensuring that there is the utilization of valuable public resources in an effective manner for receiving the optimum result regarding people, communities as well as society in respect of the current as well as future generations. (Lussier, 2011)
• Charity – The British Red Cross Society is considered to be a charity organization that is being considered a registered charity having more than 32,500 volunteers as well as 3,500 employees. The purpose of British Red Cross Society is carrying out relief operations for assisting the victims of disasters as well as combining this with development work for strengthening humanitarian values, disaster response, preparedness for disasters as well as health and community care. (Johnson, 2011) They also focus towards the aspects of reducing the number of deaths, injuries as well as impacts from disasters, reducing the number of deaths, illnesses, as well as impact from diseases as well as public health emergencies, and also promoting respect regarding diversity as well as human dignity and reducing intolerance, discrimination as well as social segregation.
• Cooperative – The Cooperative Bank is considered to be a retail as well as commercial bank that is situated in the UK whose purpose is to promote a certain aspect of banking that will be creating a positive impact to the lives of the customers of the Cooperative Bank as well as the communities.

1.2 Describe the extent to which Primark meets the objectives of its different stakeholders

Primark meets the objectives of its various stakeholders in the following manners,

• Investors – The investors of Primark are having the concern in relation to the investment risks, interest as well as overall return. The investors of Primark require information for determining whether they should be buying, keeping or selling. The shareholders of Primark are interested regarding the stability as well as organizational profitability. Primark is providing the necessary information that is making them evaluate the dividends. (Lussier, 2011)
• Employees – Primark will be meeting the expectation of the staffs with the help of salary, bonuses as well as ensuring a safe working environment in respect of the staffs.
• Lenders – The lenders are having the interest regarding the information in respect of their loans as well as trade credits. Primark is paying them back as proceedings from sales that are coming from the end of the customers. (Lussier, 2011)
• Suppliers – The suppliers are having the interest for making the determination whether their supplies as well as trade credits are safe or not. Primark is doing the work of paying off to them in respect of the supplies received from them.
• Clients – They are keeping an eye towards the commitment of Primark or the position of the market. Primark is ensuring the interest of the clients with the assistance of business growth.
• Government institutions – Primark is providing assistance to the government for the allocation of resources under the business regulation practices for a country through the payment of taxes that are considered to be the elemental national income in respect of a country. (Lussier, 2011)
• Public - Primark is assisting various individuals towards finding employment and as a result, providing assistance for the development of the domestic economy and also the country. They are also providing assistance for encouraging the domestic suppliers as well as providing information regarding various trends as well as general productivity in respect of a specific country.

1.3 Explain the responsibilities of Primark as an organization and the strategies employed to meet them.

Primark as an organization is having different kinds of responsibilities in respect of stakeholders and simultaneously, the organization is taking most efficient strategic aspects for meeting the interest of the stakeholder’s, anticipation of conflict situations, as well as providing satisfaction in respect of their goals. The various stakeholders are having various kinds of priorities in respect of the accountabilities for the company named Primark that are mentioned as under,

• Staffs - Primark as a retail company has the requirement for making sure that effective conditions for work exist as well as appropriate payment structure is being maintained in the organization. (Johnson, 2011)
• Shareholders – Primark is having the accountability in respect of the shareholders of the organization for making sure the conditions regarding profitability as well as dividend.
• Government & governmental institutions – Allocating appropriate resources, solutions regarding employment, following a country’s business regulations, making timely payment of the corporate taxes and so on are considered to be the responsibilities of Primark in respect of the Government as well as supporting establishments. (Johnson, 2011)
• Customers – Towards the customers, the responsibilities of Primark is to make sure that optimum quality of products as well as services are provided to the customers at least possible prices and this is being regarded as a significant organizational responsibility.

In addition to the aforementioned organizational responsibilities in respect of Primark, there is a need for the retail organization to do the introduction of certain innovative concepts in respect of being responsible that are being regarded as Corporate and Social Responsibility or in other words, CSR. There is also the requirement for Primark in developing its objectives. To develop an organizational strategic aspect is having he need for the occurrence of the changing scenario that is desirable. The strategic aspects regarding an organization such as Primark that are implemented regarding purposes that are considered having focus is related with the aspect of explaining the purposes that are regarded as short-term, making sure that there is accuracy towards the operational aspects as well as allocating the beneficial aspects regarding every shareholders. The perception for the future is associated with the aspect of explaining the lasting view, having engagement towards the lasting beneficial aspects of every shareholder. (Johnson, 2011) Improvement associated with strategic aspect is associated with the aspect of development regarding the strategic aspect regarding Primark, improvement of competitiveness with the assistance of every shareholder, as well as supporting the organizational strategic aspects with the help of the staffs.

Task 2

2.1 Research and explain the type of system operated in the following countries and reasons why you think they follow these systems.

• Cuba
• United Kingdom
• China

It is a very certain fact that various countries are operating various economic systems for attempting the allocation of resources in an effective manner. The economic system is comprising of different methods regarding the aspect of organizing as well as motivating the production of work, distribution as well as circulation that takes into consideration the products as well as services. There is the existence of three kinds of economic systems viz. market economy, centrally planned economic system as well as mixed economic system. (Iqbal, 2011) Let us first explain the three kinds of economic systems briefly before proceeding with the discussion further.

• Market economy – This is regarded as an economy where decisions are taken in respect of investment, production, as well as distribution that depends on the market determined supply and demand as well as the prices in respect of products as well as services are decided with the help of a free price method. The economic decisions as well as product as well as service pricing are guided exclusively with the help of collective interactions between the individual citizens of a country as well as businesses. The intervention of the government is very less. (Iqbal, 2011)
• Centrally planned economic system – This is regarded as an economic system where the state or the government is making the decisions regarding the economical aspects to a certain extent than the interaction within the customers as well as businesses. This means that the government is deciding what type of products required production and in what ways their production needs to be made. The prices of the products as well as services are being determined by the government in this respect.
• Mixed economic system – This is regarded as an economic system that comprises of an amalgamation of different markets as well as economic planning, public ownership as well as private ownership. This type of economic system is safeguarding private property as well as allowing a standard of economic independence regarding the utilization of capital and also allowing the governments in interfering in various economic activities for the achievement of the social plans. (Jenkins, 2011)

Now, coming back to the discussion as to which economic system is being followed in Cuba, United Kingdom as well as China is mentioned as under,

• Cuba – Cuba is having centrally planned economic system where unemployment is not being considered to be a significant crisis scenario as because the Government is planning in respect of every activity of the economy as well as resources.
• United Kingdom – United Kingdom is having the mixed economic system in which both the public as well as private price mechanisms are functioning collectively regarding this economic system. In this economic system when a particular economic system is not functioning in a proper manner then the one which will work is taken into consideration and balance is made in the overall economic system.
• China – China is having the combination of socialist as well capitalist market economy. In contrast to various western countries, different businesses of China are having government ownership and China is possessing strong regulatory power in respect of private businesses.

2.2 Assess the impact of fiscal and monetary policy on the following type of businesses

• Farming
• Housing

In the UK, the Chancellor of the Exchequer and the Bank of England are playing a crucial part towards the regulation of the economy. The tools that they are using are being considered as fiscal as well as monetary policies.

Farming: The impact of fiscal and monetary policy in respect of farming are mentioned as under,

• Cash Flow Impacts – Since real estate is accounting for 80% of the assets of the farms, the proposition in respect of the farmers regarding this fundamental theorem is insightful. When the earnings of the land are keeping pace with inflation, and when the prices for the lands is averaging approximately 25 times to the profits that were incurred in the past, then there can occur the expectation of capital gain for compensating the owners of the land in respect of inflation. The problem regarding cash flow occurs since there is non-realization of capital gain till the selling of land is done. (Jenkins, 2011) Therefore, the owners of the lands will be borrowing capital gains for covering the deficit in respect of the cash flow. Investment is influencing the cash flow. High inflation rates are tilting the net cash flow in respect of large deficits in early years as well as increased surpluses in the later years strong life cycle of the farm, thus giving rise to the aspect of promoting increased average savings rate as well as investment since it is forcing high rate of investment for surviving in the early years.
• Real Wealth Impacts – Previously, farmers had acquired great benefit from inflation since they were considered as net debtors incurring compulsions that are associated with long-term interest at rates that are very much lower than the successive rate of inflation. (Jenkins, 2011)
• Instability Impacts – Flexible rate of interests are growingly utilized for coping with the inflation cycle reducing the scope regarding the aspect of transferring real-wealth within the debtors as well as creditors such as flexible rate of exchange, reducing the occurrence of significant lasting financial shocks in respect of the farming economy. In similarity to the flexible rate of exchanges, flexible rate of interests possibly increases short-term farming instability in the economy.

Housing: Changing aspect regarding the fiscal policy of the government impacts aggregate demand in a direct as well as indirect manner with the help of a different complex multiplier as well as mechanisms regarding feedback. Changing scenarios regarding aggregate demand may in return impact disposable personal income, distribution of income, employment, price levels and so on. The policy makers in the government might also be impacting the aggregate demand through the increase or decrease of expenditures of the government in respect of transferred payments, or purchasing the products as well as services. Transfer payments takes into consideration individual payments in respect of social security benefits, Medicare benefits, unemployment compensation and so on. Changing aggregate demand will be triggering changes regarding housing starts. The monetary policies are required increasing the money supply that is having the availability in the economy which will be leading to the aspect of reducing the rate of interests. (Iqbal, 2011) Lower rate of interest will be stimulating the aspect of consumption as well as investment. Regarding the market related to housing, lower rate of interest will be implying the reduced credit cost and reduced credit cost will b stimulating the demand in respect of housing.

2.3 Identify at least five competition policy and regulatory mechanisms in the UK and evaluate their impact on the activities of a selected organization.

To begin with, it can be stated that competition is an important component regarding the effective functioning of the markets. However, the sizes of the businesses are different and that might be creating an unfair competition. In the UK as well as other nations of Europe, there occurs the use of competition policies for encouraging as well as improving the process of competition as well as ensuring that the customers are feeling the beneficial aspects of the process that is being taken into consideration. (Iqbal, 2011)

Competition Policies in the UK:

• Antitrust – Antitrust legislation will be covering two essential areas. One of them is associated with agreements amongst two or more organizations that are restricting competition like, fixing of prices or market sharing. Abusing a dominant position like making an attempt towards pushing a competitor out of the market with the help of predatory pricing. Commencing from 2004, national regulators such as UK are empowering the application of the EU rules. The application of the rules take place regarding trade that takes place between the member states in the common market. (Iqbal, 2011)
• Mergers – When mergers are involving organizations such as TESCO whose turnover is more than a specific threshold, the examination might be done exclusively by the European Commission. There might occur the restriction or prevention of the merger if it is impeding competition in a significant manner and as a result will be affecting the customers in an adverse manner. (Furnham, 2012) TESCO might make the agreement for taking specific steps in mitigating the reduced competition and as a result, will be avoiding exclusion like the aspect of conceding a license to another organization for utilizing the technological aspects of the organizations that are having an involvement in the merger.
• Cartels – Cartels are considered to be illegal under the competition law of EU. Since, cartels are not having an open visibility, the Commission will be offering an incentive of ‘no-fine’ in respect of the first cartel member in providing information or in other words, the person becomes a whistle-blower. (Furnham, 2012)
• State aid – Basically, the EU Treaty law will be forbidding national governments from providing unfair support to the various industries that also includes the retail industry (for instance, TESCO), such as with the help of subsidies.

Task 3

3.1 Explain how pricing and output decisions of businesses is determined in the following market structures

• perfect competition
• monopoly
• oligopoly
• duopoly

Perfect Competition:  This considered to be the situation of the market in which there is the existence of large number of buyers as well as sellers that deals in homogeneous products. The price of a product in perfect competition is determined at a point where there occurs the intersection of the demand and supply curve with one another. This point is being considered as the equilibrium point. At the equilibrium point, the quantity that is being demanded as well as supplied is known as equilibrium quantity. For instance, the local farmer’s market is an example of perfect competition. (Furnham, 2012)

Monopoly:  The pricing and output decision regarding a monopoly states that a monopolist will be taking a market demand as its individual demand curve, an organization is considered to be a price maker but it will not be able to charge a price that the customers will not be able to bear. A monopolist is having the market power that is associated with raising the price more than marginal cost in the absence of fear to lose out on supernormal profits in respect of new market entrants. For instance, NHS is an example of monopoly.

Oligopoly : The prices regarding the oligopoly market is associated with the aspect of independent pricing where at times, the organizations will be ignoring interdependence. In respect of the price wars, the organizations are having the ability for predicting the counter moves of the competitive brands and regarding price leadership, every organization will be accepting a single organization as a leader and the other organizations will be following that firm to set the prices. (Frydman, 2013) For instance, the automobile industry, steel industries are the examples of oligopoly.

Duopoly : In duopoly, perfect substitutes are engaging in competition regarding pricing, the organizations having reduced costs, improved goodwill as well as clientele will be driving the competitive organization out of the market and then having the establishment of a monopoly. (Frydman, 2013) Basically, this is a market where two massive brands will be controlling majority of the product that is being sold and as a result, will be having a significant impact in respect of the factors that are having the involvement regarding selling. For instance, Reuters & Associated Press is an example of duopoly.

3.2 Illustrate the way in which market forces (demand and supply) shape organizational responses.

The ways by which the market forces are shaping the organizational responses are mentioned as under,

Supply is considered to be the amount of products as well as services that is having the availability in the market whereas demand is the number of products or services that is having the desirability in the market. (Boone, 2015)

Demand and Supply are regarded as regarded as the economic model that is associated with the aspect of making the determination of the market prices. In this regard, a statement can be provided that within a competitive market, the unit price regarding a particular product of TESCO will vary till the time it settles at a point where the quantity that the customer has demanded will be equal to the quantity that the producers have supplied which will be resulting in the formation of an economic equilibrium in relation to the price as well as quantity. When the demand in respect of a specific product of TESCO increases and there occurs no change in supply, it will lead towards increased price equilibrium and also quantity. At a certain time when there will occur a decrease in demand regarding a specific product of TESCO and supply will remain unchanged, it will lead towards the reduction in price equilibrium and also quantity. Also, at times when the supply of a particular product of TESCO will be increasing and there will occur no changing aspects regarding demand, then the scenario will give rise to diminished equilibrium price and also increase in quantity. (Boone, 2015) At a certain point of time, supply of a specific product of TESCO will be diminishing and there will occur no changing aspect regarding demand and this will be lead towards increased equilibrium price and also diminished quantity.

TESCO is interested in reaching an equilibrium point in which supply as well as demand are considered to be equal and is considered to be the ideal point regarding the market. Through price, there occurs the measurement of supply as well as demand.

For example, in respect of a specific product regarding TESCO, when the price will be changed by the company to a reduced level, the product will have an attractive use of the  financial resources  regarding the increasing number of purchasers and therefore, the overall market will get expanded in relation to the product. Another example can be stated that, as because TESCO operates in a very high competitive market, price might be used in relation to specific strategic beneficial aspects for acquiring as well as maintaining the market share. (Berger, 2011)

3.3 Judge how the business and cultural environments shape the behavior of a selected organization

The judgment of the ways by which business and cultural environment will be shaping the behavioral aspect of TESCO can be ascertained with the help of a help of a PESTLE analysis for the company that is mentioned as under,

Pestle Analysis for tesco:

• Political (P) – As because TESCO is having its operations throughout the world, international political factors hugely influences the retail organizations’ performance that takes into consideration tax rates, legislation acts and the stable condition of the country where the organization is functioning. TESCO assists in the creation of employment scope and as a result, grows the product demand and workforce diversity. (Baker, 2010)
• Economical (E) – This factor is considered very significant in respect of TESCO since it is associated with the aspect of leveraging costs, demand, profitability as well as prices. As a result, the organization is having the awareness regarding any kind of policy changes that are taking place like taxation changes or other issues that will be influencing the financial convenience. TESCO is still having a strong dependency on the UK market even though the business is having an international growth.
• Social (S) – The UK customers are shifting towards the trends that are associated with bulk shopping as well as one-stop shopping. Taking into consideration this trend, the retail organization is increasing the percentage of non-food products that is provided in respect of sale. TESCO is also focusing towards organic products since the customers are increasingly becoming health conscious. (Baker, 2010)
• Technological (T) – Technological development has assisted towards developing as well as introducing facilities that are in association with online shopping in respect of home delivery. Also, the self-service checkpoints are offering comfort and easiness regarding the customers that as a result did the reduction of labor costs.
• Legal (L) – TESCO is also directly influenced by the policies of the government as well as legislations and regarding the facilitation of these polices, TESCO will be providing its customers with reduction in prices regarding certain items that they are purchasing in relation to the amount they are spending on their grocery stores. (Baines, 2012)
• Environmental (E) – TESCO is having sheer commitment towards the reduction of its carbon footprint by 50% till 2020. Moreover, TESCO does the minimization of the production of waste in the different stores through the increase social awareness within the customers.

Task 4

4.1 Discuss the significance of international trade to UK business organizations.

The significance of international trade for the UK business organizations such as TESCO can be discussed by giving reference to the scenario of comparative advantage. The aspect of comparative advantage is stating that there will be occurring the relations of trade between two countries in a jointly effective manner when one of the countries will possess the comparative advantage to manufacture the products that are required for trading. (Berger, 2011)

Moreover, international trade is assisting towards bringing the opportunity for transferring capital with minimum expenses that will lead towards sustainable development in business in the extended time –period. International trade is providing a growing employment opportunity in respect of the retail organization in UK as there is the occurrence of the amalgamation of different cultural aspects towards the improvement of services and also for satisfying the customers. There will be an increase in the investment opportunity due to the impact of international trade that is considered significant for sustaining the business of the retail organization. (Barden, 2015) International trade also supports TESCO to build strong networks that are considered effective internationally in relation to the suppliers, shareholders, employees and consumers.

4.2 Analyze the impact of global factors on UK business organizations.

The impact of global factors in UK business organizations such as TESCO are mentioned as under,

Pestle Analysis for tesco:

• Political (P) – As because TESCO is having its operations throughout the world, international political factors hugely influences the retail organizations’ performance that takes into consideration tax rates, legislation acts and the stable condition of the country where the organization is functioning. TESCO assists in the creation of employment scope and as a result, grows the product demand and workforce diversity. (Baker, 2010)
• Economical (E) – This factor is considered very significant in respect of TESCO since it is associated with the aspect of leveraging costs, demand, profitability as well as prices. As a result, the organization is having the awareness regarding any kind of policy changes that are taking place like taxation changes or other issues that will be influencing the financial convenience. TESCO is still having a strong dependency on the UK market even though the business is having an international growth.
• Social (S) – The UK customers are shifting towards the trends that are associated with bulk shopping as well as one-stop shopping. Taking into consideration this trend, the retail organization is increasing the percentage of non-food products that is provided in respect of sale. TESCO is also focusing towards organic products since the customers are increasingly becoming health conscious. (Baker, 2010)
• Technological (T) – Technological development has assisted towards developing as well as introducing facilities that are in association with online shopping in respect of home delivery. Also, the self-service checkpoints are offering comfort and easiness regarding the customers that as a result did the reduction of labor costs.
• Legal (L) – TESCO is also directly influenced by the policies of the government as well as legislations and regarding the facilitation of these polices, TESCO will be providing its customers with reduction in prices regarding certain items that they are purchasing in relation to the amount they are spending on their grocery stores. (Baines, 2012)
• Environmental (E) – TESCO is having sheer commitment towards the reduction of its carbon footprint by 50% till 2020. Moreover, TESCO does the minimization of the production of waste in the different stores through the increase social awareness within the customers.

4.3 Evaluate the impact of policies of the European Union on UK business organizations.

The influence of policies of the European Union on UK business organizations are evaluated as follows,

• Eliminating the cost for conversion of currencies – Since, there exists separate currencies regarding different countries of the European Union, costs will get incurred whenever there will be the exchanging of one currency with a different currency. The influence of this is in association with the growing GDP in respect of country.
• Increasing the competition as well as effectiveness – This will assist towards the elimination of the need to convert one currency into a different currency as well as transparent pricing did the implementation of increasing descending force in respect of prices in organizations that are having costs that are considered very high. (Armstrong, 2014)
• Eliminating uncertainty for exchange rate – This will support towards providing assistance for instigating relations regarding trade within the member countries and this will be provide encouragement towards investment with the assistance of the companies within various countries when there exists an increasing assurance towards the aspect of calculating costs and also profits.

Conclusion

This assignment is associated with the aspect of  business environment  where the pricing and output decisions of businesses have been determined in respect of the different market structures such as perfect competition, monopoly, oligopoly as well as duopoly. Then, the ways by which the market forces such as demand and supply are shaping the organizational responses have been illustrated. Then, business and cultural environments that are shaping the behavior of a particular organization has been judged. Along with this, the significance of international trade regarding to the business organizations in UK have been discussed, the impact of global factors regarding business organizations in UK have also been analyzed. Lastly, the impact of polices regarding the European Union on business organizations in UK have been evaluated.

Reference

Armstrong, G (2014).  Principles of Marketing 
Baines, P (2012) ‘Essentials of Marketing’. Oxford University Press
Baker, R (2010) Implementing Value Pricing. John Wiley & Sons.
Barden, M (2015) A Beautiful Constraints. John Wiley & Sons.
Berger., A. (2011). Operations Management. GRIN Verlag
Boone, L (2015). Contemporary Marketing. Cengage Learning
Frydman, R (2013). Rethinking Expectations: The Way forward for Macroeconomics. Princeton University Press.
Furnham, A (2012). The Psychology of Behaviour at Work: The Individual in the Organization. Psychology Press
Iqbal, T (2011). The Impact of Leadership Styles on Organizational Effectiveness. GRIN Verlag.
Jenkins, D (2011). Managing Empowerment. Random House.