Unit 1 Business Environment Assignment - Sainsbury Plc
The Unit 1 Business Environment Assignment - Sainsbury Plc paper will discuss the role of business organizations towards trade. Business organizations have different structures with different objectives to achieve and play an important role in the trade market. Various business organizations together develop a market environment in which business operates, fulfils its objectives and satisfies its customers. The present paper would elaborate the market environment, national environment create, business goals and focuses and factors affecting business operations in the context of Sainsbury Plc. A study of business environment is necessary to develop a market strategy and its successful implementation (Heizer and Render, 2003). Sainsbury Plc is a leading corporate of UK and has a stable market share in terms of growth. The objective of present paper is gain an understanding on the following issues:
- Business organizational purposes
- Nature of national and market environment
- Organizational behaviour in market environment
- Assessment of global factors shaping business activities in England
Thus, the study of the above topics will help in evaluating the overall business organization environment faced by the company undertaken in example i.e. Sainsbury Plc. A focused study of the environmental factors will help in developing a good and suitable marketing strategy for the organizational growth.
Task-1 Business Organizational purpose
P1.1 Explain briefly the following types of organizations and their purposes:
- Virgin Group Ltd
- Sainsbury Plc
- Mc Donald’s
- National Health Services (NHS) England
- A corner shop near where you live.
Business organizations are generally segregated into two segments which are private and public. Both types of organizations are found in UK in huge number. Private organizations are those on which there is a hold of individual and he personally would be liable for its debts. He may establish a business in collaboration with other individuals also but cannot take public or government interest in his business. These types of businesses include sole proprietorships, partnership concerns, private companies, joint ventures etc. On the other hand, public organization involves stake of public in its holding. Moreover, governments are also associated with this type of organization having generally vast scale of operations. Types and purposes of the organizations given above are as follows:
- Virgin Group Ltd.: A private company which is operating its business since last 50 years. Initially, it arranged its finance by issuing shares internally. No offer for subscription was made to the public. Moreover, the restrictions were imposed on the existing shareholders on transfer of their share to outsiders. Hence, the ownership was centred in few hands (Galloway, 2010).
- Sainsbury Plc: It is a public limited company of UK in which public is substantially interested. It started with a proprietorship concern and thereafter registered itself as a company. The company widely issued its share to public and distributed ownership.
- McDonald’s: This Company is working with its franchisee all over the world. This system makes easier distribution of the product and covers huge market network. Presently, McDonalds is a famous brand of food chain having its branches internationally. The franchisee system is suitable for these types of industries as anyone can its franchisee and can invest with a set up initially to associate with it. The company is using this system to reduce cost factor, to effectively manage distribution system and to establish a market place worldwide.
- National Health Services: This organization gets its funds to operate business through public participation. The main motto of these types of organizations is social service and not profit making. NHS was established with the goal of providing health services to public at large.
- A nearby corner shop: These shops generally operate small business with small investments. A single person generally owns the shop and handles its entire activities of his business. These types of shops are liberal to choose their own business models.
P1.2 Considering Sainsbury PLC, describe the extent to which it meets the objectives of its different stakeholders.
The person who is interest in the organization whether directly or indirectly will be deemed to be as stakeholder. Every stakeholder desires the organization to grow so as to directly affect their earnings. A business should develop its strategies to meet the requirement of its stakeholders. Sainsbury Plc also makes efforts to meet the desires of its stakeholders. Here, we would discuss the extent to which it became successful in doing so. The various stakeholders are:
- Customers: Customers play a vital role in the various decisions making process of the organization. They expect good quality product with low prices, value added customer services etc. The consumers should be given high importance by the company while drafting business policies. An organization can grow only if its customers are satisfied with its product and services (Slack, 2010).
- Shareholders: Shareholders have ownership of the company and has invested their funds in it. Being the owner of the company, management has to follow the instructions of the shareholders. They expect a high level of return on their investments. Thus, high profit distribution in terms of divided is expected by them. Sainsbury Plc satisfies its shareholders by providing moderate rate of return on their investments.
- Employees: Employees expect career growth in the organization and high remuneration as per their skill. Sainsbury has a huge staff employed all over the world and it meets the requirement of its employees to a great extent. Employee also expects knowledge about current the position of the organization in the market. So, they should be included in the information system also.
- Government: Government wants an organization to follow its rules and regulations. Moreover, it expects proper disbursement of tax liabilities of the organization. Thus, Sainsbury plc meets its government obligations timely by following its instructions.
- Suppliers: Suppliers expect timely payment of their dues and more purchases. Sainsbury plc also has a large number of suppliers. By fulfilling the expectations of suppliers, the company gets the supplies in time as and when required.
P1.3 Considering Sainsbury Plc, explain its various responsibilities as an organization and the strategies it employs to meet them.
There are many responsibilities that Sainsbury have to execute and have set of objectives which it has to achieve. The various strategies adopted to meet these objective and to meet the responsibilities are given as under:
- Responsibility towards Customers: Sainsbury has a sense of responsibility to its customers. These responsibilities include customer services with good quality product and at moderate price. For meeting this responsibility, Sainsbury has imparted training to its staff on customer relationship management skills so that customer’s satisfaction can be achieved to the maximum (Nordhaus, 2009).
- Responsibility towards shareholders: Shareholders are always keep to know the operational results of the organization, for this purpose, Sainsbury plc has managed to provide relevant financial results report for their clear understanding which are available on its website too. Shareholders expect growth of the organization and high return on their investments.
- Responsibility towards employees: Sainsbury plc has been complying with its responsibility towards its large number of employees by providing proper HR management policies, imparting training to enhance their skills and high remuneration according to their job. Employee satisfaction will lead to achievement of overall business objectives more efficiently.
- Responsibility towards society: Society in which an organization sustains, also expect a sense of responsibilities towards it. Sainsbury Plc is discharging its social responsibilities in the terms of legal, ethical, economical etc. Social responsibilities are need to be fulfilled for the smooth running of the business operations.
Task-2 Nature of national environment
P 2.1 Giving relevant examples, briefly explain how different economic systems
Different economic system allocates the human resources between stakeholders of the market. These economic systems include planned or command economy, free enterprise, mixed and transitional system etc. We shall here discuss these allocate the resources effectively in context of Sainsbury Plc as under:
- Planned or Command economy: Command economy always have command of government over the economic resources like capital, land, labour etc. only government have the entire hold of these resources of the economy and it possesses the whole information relating to them. This kind of economic system does not prove to be highly efficient in allocation of resources. There is always a lack of proper knowledge among staff and efficiency level in planning and judgments is also low resulting into improper decision making regarding allocation of resources. It leads to improper decision about production level, amount of resources available, any surplus or shortage etc. (Broady-Preston & Steel, 2012). Sainsbury Plc also feels difficulty in operating under such economy.
- Free enterprise economy system: In such type of economic systems, government gives a level of freedom to the enterprises in the economy. Government interference is low in allocating resources and it generally includes large number of small businesses. These enterprises are flexible to operate business activities and establish high market competition in market.
- Mixed Economy system: In mixed economy system, intervention from government is slightly higher than in free economy system and lower than command economy system. Fiscals and monetary controls are there to manage this kind of economy. This economy contains the advantages of the other two economies. This system is the most efficient system in allocation of resources. Sainsbury Plc frames its own policies to manage with government’s fiscal and monetary policies. The following figure depicts the mixed economy system
- Transitional economy system: It includes transition from planned economy to market economy. This economy is also considered to be highly efficient in allocation of resources. Prices of the products in this system are left upon market demand forces.
P 2.2 Considering Sainsbury Plc UK, assess the impact of fiscal and monetary policy on their activities.
Government uses fiscal and monetary policies to establish a control over the market activities. The policies are implemented by government keeping in view the prevalent circumstances. The various policies adopted by government are mentioned below:
- Variation in interest rate:Increase in interest rate will increase the cost of capital for the company and decrease in interest rate becomes beneficial for the company. The government varies the interest rates so as to affect the activities of business organization and to control economy as a whole. Low interest rate would lead to major benefit for the organizations in terms of cost factor and favourable profit margins (Allen, 2011)
- Variation in minimum maintenance of reserve: If government increases the reserve amount for minimum maintenance, people would deposit higher and spend comparatively low. The overall turnover of Sainsbury Plc tends to reduce in case of increase in reserve requirement and tends to decrease in case of decrease in reserve requirement.
- Exchange rate fluctuations: fluctuations in exchange rate affect the business decisions to a great extent. If the exchange rate of the country of supplier increases, it will automatically affect the decision relating to purchase and thus overall increase in purchase cost. Sainsbury plc trades in overseas too, hence, exchange rate fluctuations affects its business.
- Changes in Tax laws: Government has full authority to draw rule and regulations relating to tax. Any change in tax rate would affect the organization’s earnings and investments. A higher tax rate leaves a company with low production with low earnings. On the other hand, lower tax rate is favourable for the business investments.
- Government expenditure: government spending on a particular project leads to affect the business development. Any reduction in spending in a particular industry may create a difficult situation for the organizations like Sainsbury Plc to operate their business. Thus, government changes its decisions to affect the economy regarding expenditure to be incurred.
P 2.3 Explain the impact of competition policy and other regulatory mechanism on the activities of Sainsbury Plc UK.
Competitive policies and other regulations of UK affect the business activities of Sainsbury Plc. Their impact is discussed below:
Competitive policies: Sainsbury Plc faces a tough competition in the market as there are various other retailers selling the same product under similar situations. A high competitive market affects the business decisions relating to price of the product, area of distribution, providing value added services to consumers etc. The strategies adopted by competitors affect the business activities and may lead to frequent decision making at some time.
Impact of other regulations:Sainsbury Plc get affect with the various rules and regulations of UK government. Government changes its rules and laws to regulate the economy of the country (Gitman & McDaniel, 2009). The impact of these laws may be adverse or favourable depending upon the situation. If government regulates the industry by providing guidelines to maintain the quality of the product, it will lead to increase in production cost factor of the business. To tackle this situation, Sainsbury needs to adapt itself as per the government regulations time to time. It has to utilize its production efficiency in such an optimum manner so that it reduces the overall costs of the organization with higher standard product.
Task-3 Organization behaviour in market environment
P 3.1 Explain how market structures determine the pricing and output decisions of Sainsbury Plc UK.
The market structure affects the important decisions of the business operations in many ways. There are different types of market structure which impact the pricing and output decisions of Sainsbury Plc. These market structures depict the situation of the market on terms of domination. Some of the key markets structure that affect the decisions of Sainsbury Plc are given as under:
Monopoly Market structure: Monopoly is a situation where in the whole domination of the market is in one hand or other. There is only one player of the market who set the prices of the product to any extent for the purpose of earning huge revenues. Monopolists hold the market and operate it as they desire. The price and quality factor of the product remains in their hand and no other firm can affect its decisions or market strategies. Consumers are bound to pay higher prices to monopolists in this type of market structure as there is no other supplier of the same product with similar quality and considerations.
Oligopoly: This is a situation where the competition factors in the market are high. Prices are set by the organization keeping in mind the market share they want to sustain. The business decisions in this type of market structure are affected by top level competitive system.
Perfect competition: in this type of market structure, there are various sellers for a single product. The competitive level among the companies is its peak in this market structure. Prices of product remain stable and generally low so as to attract large number of customers. Sainsbury Plc is at present facing a tough completion in UK market retail shops, to manage this situation, the organization has to deal with high efficiency while making decisions (Martins and Terblanche, 2013). Prices are affected by demand and supply factors and the output quantity decisions are taken after considering the market situation. A company should develop effective market strategies to challenge the competitors and to efficiently sustain in the market by making profits.
P 3.2 Illustrate how market forces shape Sainsbury Plc UK responses using a range of examples
The markets forces needs to studies before formulating any market strategy and its implementation. These market forces affect the decision making process of Sainsbury Plc. Some of the market forces are elasticity in demand and supply of a product, consumer behaviours and perception, output cost etc. an organization has to follow a suitable market strategy to respond to these market forces. Some of the strategies followed by Sainsbury Plc are as follows:
- Cost and output effect: if the cost of a particular product increases, Sainsbury will make decision about the procurement of that product. This is because to verify that the organization may not sustain loss by sale of this product. These will include evaluation of overall profitability of the business.
- Demand and supply: Supply of the product should be on the basis of the demand for that production the market so as to keep the process stable. If demand for the product is high at a particular time, then Sainsbury would focus on to meet the demand of the consumers by increasing the supply.
- Economies of scale: for producing high volume of the product, an analysis of the economies of scale must be made in advance. Economies of scale have direct impact on the functioning of the organization which wants to produce in a high range. Sainsbury plc has also achieved economies of scale in order to produce high volume of products and to grow in the market.
- Customer perception and action: Consumer’s perceptions towards the product affect the actions taken by organization with regard to its sale. Mostly customers are highly sensitive to price of the product and easily switch over to the other supplier who provides them at cheap rates. An organization’s objective should be to provide good quality product without affecting it price (Scaner, 2009)
P 3.3 Explain how the business and cultural environmental shape the behaviour of Sainsbury PLC UK.
Various environmental factors affect the decision making of the organization. These factors include political factors, economical factors, social factors or technological factors etc. Business behaviour of Sainsbury Plc is also affected by these factors which are discussed hereunder:
- Political factors: political environment affect the policies of the business. Its stability has affected positively for Sainsbury Plc to develop market policies. The political environment of UK is stable; hence it acted positively for Sainsbury Plc to sustain in market. It framed its policies and decisions in accordance with prevailing political environment.
- Economic factors: Economical factors include factors affecting economic conditions of the market as a whole for e.g. variation in interest rates, exchange rate fluctuations, Government revenues and expenditure etc. UK has various favourable economic market conditions which has helped Sainsbury Plc in its business development.
- Social and cultural factors: Social factors generally include customer’s behaviour, expectations towards organization etc. Sainsbury has analyses its social market conditions as well before making important decisions with regard to its business. Cultural factors also affect the economy as a whole and its industries. The market policies of an organization must be coherent with social and cultural factors prevailing in the market.
- Technological Factors: changing in technology has a great impact on the functioning of the organization. An organization must keep itself updated with the changed technologies and should adopt strategies after making an analysis of current trend prevailing in the market. Sainsbury has used suitable technology for its business to enhance its efficiency (Kotler and Keller, 2010).
Unit 1 Business Environment Assignment - Sainsbury Plc has thrown light on business organizational purposes, international markets environment, and various external and internal factors prevailing in it etc. in the context of Sainsbury Plc. Being a public limited corporation, it has successfully established its market place globally. In addition to this, the present paper has discussed the various market structures an organization faces, significance of international trade, impacts of global factors on the business operations etc. Sainsbury makes its business policies after analysing the impacts of all these factors. Moreover, Sainsbury is following rules and laws of the country in which it operates its business so as to make its business to operate effectively and efficiency.
Allen M., (2011). “Analysing the Organisational Environment”. Select Knowledge Limited: New York.
Baron, A., and Greenberg, J (2008). Behaviour in organizations – 9th edition. Pearson Education Inc., New Jersey.
Broady-Preston, J. & Steel, L. (2012).Employees, customers, and internal marketing strategies in LIS. Library Management, 23, 384-393.
Burnes, B (2009) Managing Change: a Strategic Approach to Organisational Dynamics, 5th edition, Harlow: Financial Times/Prentice Hall.
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Sample Essay On Business Environment in organization
Task 1: LO1 Understand the organizational purposes of businesses.
1.1 Identify the purposes of different types of organization.
1.2 Describe the extent to which an organization meets the objectives of different stakeholders.
1.3 Explain the responsibilities of an organization and strategies employed to meet them.
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Task 2: LO2 Understand the nature of the national environment in which businesses operate.
2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected organisation.
Task 3: LO3 Understand the behaviour of organisations in their market environment.
3.3 Judge how the business and cultural environments shape the behaviour of a selected organisation.
Task 4: LO4 be able to assess the significance of the global factors that shape national business activities.
4.2 Analyse the impact of global factors on UK business organisations.
4.3 Evaluate the impact of policies of the European Union on UK business organisations.
Management of Business Organisations
Purposes of different types of organizations:- In existing business environment, there are different types of organizations which operate for accomplishing their different purposes (Jones, 2013). On the basis of the nature of business operations and objectives, all the organizations can be categorized into three broad categories which can be listed as below:
1. Private Companies
2. Government Departments
3 Charity Organizations
Private Company:- The purposes of these different types of organizations are quite different from each other. Specific objectives of different types of organizations can be illustrated as below:
A private company can also be regarded as close corporation. These companies can be defined as the corporations or business entities which are owned directly by private investors, owners as well as shareholders. The primary purpose of forming private companies is to earn profits from different commercial and economic activities. The profit earned by private companies is availed by owners as well as shareholders of the organization (Paul, 2008).
There are three different types of privately owned business organizations namely sole proprietorship, partnership, and corporation firms. This categorization is done on the basis of the composition of the organization. For example the purpose of sole proprietorship firm is to provide intensive profits to one person only. Moreover, in partnership firm, the primary purpose of business activities is to make profits to two or more people. Along with this, corporation organizations earn profits for the purpose of providing return to its shareholders (Paul, 2008).
For example Alliance Boots is a good example of UK base private companies which has significant goals and objectives that are followed by private companies in general. While examining the goal of the business of Alliance Boots as a private company, it has been observed that, the company seeks to have development of its business in core pharmacy led health and beauty products. The company in order to earn profits wants to become an important business player in the prime international markets (Alliance Boots, 2014).
The company with the help of its business activities wants to contribute its best for securing the well being of the customers of the immediate community to which it is serving. With such a provision the company wants to gain a differentiated business position among customers. In order to make its goal of providing better services and products to the customers to earn high degree of profits, the company focuses on five core values including partnership, trust, service, entrepreneurship and simplicity.
Other than this, the key objectives of the company include growth of the core business of the company in the existing markets by the provision of innovation and advanced services. The other objective of the company is to have continual improvement in the productivity of the business and even saving costs of production so that maximum profits can be earned. In addition to this, the company also wants to pursue growth opportunities with the selection of the new prospective growth oriented markets. The company also tends to make transformational strategic partnership in order to launch products into the new international markets (Alliance Boots, 2014). Overall, the business goals and objectives of Alliance Boots show that the company is highly growth and profit oriented and thus matches with the purpose of forming a private company.
Government Department:- These organizations are also known as public sector organizations which are directly owned and directed by local government. The primary aim of the public sector organizations is to provide benefits to the society so that holistic growth of the society can be achieved. Such types of organizations generally do not work for earning money and economic benefits (Wallace and Wallace, 2001). The basic purpose of government sector organizations is to help the entire society in the manner that it can be sustainable in the long run. The size and the span of business activities of government sector organization are quite broad and they are directed to provide better and non-economic benefits to the society.
The public sector organizations can be formed by several different means. For example; public sector organization can be formed by direct administration funded with the help of taxes paid by local residents. Another form of public sector organizations is the state owned enterprises which run on the expense of state and national government (Wallace and Wallace, 2001). Along with this, partial outsourcing is also one of the basic forms of public sector organizations, in which the private and public sectors come together for sharing assets and liability of the related ventures. The basic aim of such type of organizations is to diversify the risk associated with projects and avail maximum benefits of the venture.
For Example:- National Health Services (NHS), is one of the major public sector business organizations, which works for the holistic growth of the society and enhancing the community health in the most efficient manner. NHS is the organization, which is formed by the UK government for the purpose of ensuring the availability of better and approachable health services to each and every class of society regardless of their standards of living, and income level (Adams, 2001).
This organization provides different healthcare services to the community people who cannot afford highly expensive and advanced health services from private sector organizations. The basic goal of the organization is to secure the interest of the patients and provide best possible care to the needy community people. The main objective of the organization can be illustrated as below:
a.) To provide effective and efficient healthcare services to different classes of society so that each individual in the country can have better health services.
b.) To enhance the health profile of the organizations and reduce the level of different chronic and acute diseases prevailing in the society (Adams, 2001).
c.) To enhance, the standard of patient care so that privately owned organizations can be provided with intensive amount of competition.
d.) To secure the best interests of the people which are served by the organization as well as employed by the organization (Adams, 2001).
In this way, on the basis of this discussion regarding the purposes of government owned organizations, it can be cleared that earning economic profits is not the direct and sole aim of the government organizations, rather earning social profit is the main aim of the organization.
Charity:- Charity organizations are a specific type of non profit organization or NPOs. This type of organization does not work for earning any kind of profits from its activities. Charitable organizations targets own earning non-profit as well as philanthropic objectives on regular basis. Ensuring social well being and public interests is the sole and common goal of the organization (Fremont-Smith, 2009). These charitable organizations are formed for the purpose of providing security and sustainable growth to the society. The charitable organizations were indifferent sectors in the favour of community people.
As a charity company we can take example of Christian Aid, which is a Christian organization that intends to change the world swiftly. The company’s main goal is to make the world as comfortable so that all people can have a full life and can become free from the curse of poverty. This organization as a charity does not expect any benefits for the businesses but work for social and moral cause. This charity organization seeks to provide highly practical and urgent assistance to needy people and even works to find out and remove the root cause of the poverty. The main goal of this charity organization is to provide benefits to the people on ground and ending the injustice practices (Christian Aid. 2014).
The company’s main objective is to work at global level in order to make profound changes in the global society in order to eradicate the main causes of inequality, poverty, and social injustice. This charity works for providing dignity and freedom to all people and render effective assistance. The charity wants to make its vision true in all senses. Hence from this discussion, it can be viewed that formulation of charity organization is not done only for serving the human kind at the best level and they are not at all formulated for earning profits.
For the business organizations, securing the interests of the stakeholders is the primary concern. In this regard, all the business organizations focus on meeting the desires and interests of the stakeholders to an effective level. Shell, which is an oil and gas producing company, has high degree of openness and willingness to be engaged with the stakeholders. Shell shows a genuine commitment towards stakeholders and maintains high standards of environmental protection and even secure economies of scale (De Ruijter, 2014).
The stakeholder groups of Shell are quite diverse including owners, employees, environmental groups and government. All these categories of stakeholders of Shell have their distinct objectives with which they are associated with the company and Shell also meets these objectives of the stakeholders to a good level in various ways which are discussed below:
Part A: Meeting the Objectives of Shell’s Stakeholders
a.) Owners:- For a company it is essential to meet the core objective of its owners that is earning profits. In regard to this, the owners of Shell, who are the shareholders and investors of the Company, are aimed to earn adequate returns and regular income from the operations of company. To meet this objective of the owners, the company has undergone with several crucial and large sized projects related to oil extraction and refining so that overall profit of the organization can be enhanced up to a significant level (McBeth, 2013). Recent financial performance of the company is also quite healthy which indicates that the company is able to meet the objectives of owners in the most efficient way.
b.) Employees The employees are the main assets of the organizations as they provide the base for the overall functioning of the business organizations. This is the reason that in the stakeholder groups of organizations, employees have a significant role. The employees being the stakeholders of the organizations work for their organizations with good commitment and full dedication. However, in return of their efforts, they want to have some objectives that they desire to be met on the part of the organizations itself (Adams and Periton, 2009). The employees of Shell have several objectives which they want to be accomplished in the organization. The employees want to work in safe and healthy work environment.
The employees of Shell expect that the company deliver all categories of products including energy products in a safe and responsible manner. In order to meet this objective of the employees, the company keeps safety at the top priority and considers it as a core value while operating its business functions. The prime goal of the company is to have minimum or no fatalities and incidents at the workplace which can harm employees. The company focuses on continuous improvements in its operations to improve safety of the employees.
For safety purpose, the company runs several programs and employees of the company take active participation in the programs. The employees of the company want to have regular employment in order to earn their living. To meet this objective of the employees, Shell provides employment to more than 90,000 employees and 400,000 contractor staff all over the world (Sustainability Report, 2013). The company recruits local people where it operates to increase employment opportunities and provide training in order to make them learn working patterns.
c.) Environmental Groups:- The environmental groups are also among the major stakeholder groups of Shell. The environmental groups of Shell have several significant objectives that they want to observe in the corporate social responsibility practices of the company. The environmental groups want to have the best environment performance of the company. These groups expect that in the business plans and projects and operations, the company maintain high degree of sustainability (Sustainability Report, 2013).
In order to meet the objective of this stakeholder group, Shell operates in an environmentally responsible way. In this regard, company has adopted innovative and environment friendly production process under which its produces bio-fuel, which have minimal emission of carbon, as well as, residue remained as the by products of the production processes.
Along with other stakeholders, government can also be considered as one of the manor stakeholders for the organization which can affect the strategic and operational framework of the company by its different policies and regulation. The government of the UK provides financial and technical assistance to the company in order to make the company sustainable in the marketplace. There are two prime objectives of the government behind supporting the company, namely financial objectives, and social objectives. Under financial objectives, the government wants to arrange funds from the company in the form of taxes.
Moreover, under social objectives the government expects the company to enhance the level of economic growth and employment opportunities in the country. In order to meet these crucial objectives, the company accomplishes its tax liabilities timely and efficiently (Sustainability Report, 2013). In addition to this, from the perspective of social development of the society also, the company is quite committed as apart of being a large scale employer, the company also undertakes several social welfare programs which help the society to be sustainable. In this way, the company undertakes some intensive amount of efforts to accomplish the objectives of the stakeholder, i.e. government.
Part 2: Ethical Responsibilities of Shell
i. Health and Safety:- Health and safety is the prime concern of Shell and in order to secure this responsibility, Shell runs several safety programs and makes the occupational health and safety regulations aligned with its work process (Press Release, 2012).
ii. Equal opportunities:- Shell as an organization in order to render equal opportunities to employees in the organization, maintains and secure the provision of human rights. Even the company follows anti-corruption regulations to secure the opportunities of the employee groups (Press Release, 2012).
b.) Ethical issues:- There are two specific aspects related to ethical concerns paid by the organization
i. pollution:- The company is highly committed to reduce the carbon footprint in the environment for this purpose; the company employs some effective waste management strategies such as lean management and recycling for the waste products so that negative impact over environment can be reduced (Biello, D. 2014).
ii. Global warming:- For the purpose of reducing the level of Global warming shell the responsibility to minimize emission of CO2 and So2, as well as, other toxic pollutant which have heating effect on the climate. To mitigate this ethical issue the company runs several programs with support local government to keep a good check on its operational activities to minimise the emission of these harmful substances (Biello, D. 2014).
In this way, on the basis of the entire discussion it can be reflected that the company is quite committed towards its corporate social responsibilities related issues. There are a number of different crucial issues prevailing in the surrounding environment.
Antitrust Lawsuit against Microsoft and Measures Taken by the Company
Microsoft was accused in the year 1997 for following up the anti-competitive marketing practices which were directed at manufacturers of the personal computers who installed operation system software in the personal computers which were produced by them for the purpose of retail sale. The main rationale behind this law suit was based on an argument as per which Windows 95 and Internet Explorer were considered two separate and self standing products and through integrating them into one package, Microsoft was taking an unfair advantage over a corporation named Netscape Communications Corporation (Basala, 2002). Under the lawsuit, it was mentioned that Microsoft’s actions was a violation of the consent decree of 1995 signed by the company. In this suit, Microsoft was asked to provide Windows without including any features of internet explorer or without including Netscape Navigator in the package offered by it.
In such a case, the competition policy and other regulatory mechanisms have had direct impact on the business of Microsoft. The competition policy in the European Union has differences in terms of bundling and tying. The cases brought against Microsoft were subject to be the issue of bundling as per the competition policy (Economides and Lianos, 2009). The competition raises was unable to be tempted as antitrust, yet it affected the markets of the company and even its products and services, because the competitors were excluded from the market in which Microsoft was very active. Due to which the company had to face specific antitrust standards framed by competition authorities in the European Union.
Under regulatory regimes, Microsoft was posed by some legal allegations as per which Microsoft was to have elimination of the licensing and marketing contracts due to which the computer manufacturers’ ability was restricted in terms of selection of an appropriate browser to be installed in their PCs. The other regulatory mechanism’s impact was that the company was also made forced to have elimination of the ability of diverse range of services including internet services, internet services, content providing services, for the purpose of promotion and distribution of the other competing browsers (Basala, 2002).
In order to deal with such a legal issue of antitrust, Microsoft Corporation undertook some serious major to become free from litigation. The company struggled for a long period in order to deal with the issue of antitrust. The authorities of the company have started to undertake some critical actions for the purpose of fixing the critical issues related to law suit filed against it. For the purpose of preventing the occurrence of such critical situation in the future, the company has changed some its policy administrations in regard to this, the company has started to have separated legal department for dealing with such conditions (Lee, 2000).
These are some crucial policy actions, which are directed to company to be aligned with competition policies of the EU and address complications in global business issues.
1. Shell is one of the major business organizations operating in oil and gas industry. Like other business sectors, oil and gas sector is also exposed to dynamics of external business environment. For the country there are a number of internal factors related to the country, which can direct to shape the behaviour of the organization in the most effective manner. These factors can be elaborated as below:
a.) Political factors:- Oil and gas industry of the can be considered quite vulnerable to the political factors such government’s rules and regulations, political system of the country, attitude of the local government towards the industry and political relationship of the country with neighbouring countries (Ernst Young, 2011). For Shell Corporation, and other companies operating in the industry, the government has undertaken several crucial policies and regulations.
The government of the country also provides financial and technical assistance to the business organization to undertake various projects as the growth of the organization helps the country to accomplish its oil requirement. In addition to this, positive political relationship of the country with oil producing countries also enables the company to have proper and adequate supply of raw material in the most effective manner, which leads the company to be sustainable and effective.
b.) Socio-cultural factors:- The socio culture factors of the country is also directed to affect the company and its business practices in the most effective and efficient manner. The social and cultural perspective of the UK is quite formal which emphasis over proper and disciplined structure of the business entity. In this context, this cultural perspective affects the operational framework and strategic orientation of the organization (McPherson, 2003).
The management of the organization put intensive amount of attention over developing and fostering a formal working culture for its employees. In addition to this, social setting of the UK market is quite liberal for innovativeness. Innovative and advanced processes and products are thoroughly admired within the country. In regard to this, this social and cultural perspective of the UK market can be seen in the working culture of Shell. The company is known for its innovative approach and adaptation.
c.) Educational factors:- Along with other factors, educational aspects can also be considered as one of the major aspects of the market trend which can affect the operational framework of a company in a specific market place. In oil and gas industry, which is a highly advanced and technical industry, technical education can be considered quite essential phenomena. In regard to the market of the UK, the level of education is quite high (Tordo, Warner, Manzano and Anouti, 2013).
The country possesses world class universities and educational centres, which are directed to produce world class and highly efficient talent. In this regard, companies operating in Oil and gas industry, such as Shell Organization, needs not to face the problem of lack of efficient talent and human resources. There are a number of different educational institutions which provides special training and technical courses in regard to oil and gas industry. In addition to this, the availability advanced and developed educational settings across the country, also helps the company to provide trainings and develop efficient and customized workforce for the purpose of supporting the organization’s goals and objectives.
These are some of the crucial internal factors related to the business environment, which induces the business organization to make changes in its operational framework.
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2. Along with above discussed internally integrated market factors, there are a number of different outside factors which induce the company to have intensive amount changes in its existing operational and strategic orientation. These crucial factors in the context of Shell Organization can be discussed as below:
a.) Technological factors:- Availability of high class and advanced technologies in the market can be regarded as one of the major and prominent factors that directly influence operational processes of the company in the most critical manner. In regard to this, the availability of highly advanced and innovative technologies in the market helps the company to undertake its business operations more efficiently and smoothly (Eck and Pilot, 2001). In the UK, the technology environment can be considered quite turbulent and dynamic. There are a number of different technologies which keeps on changing on frequent basis. Owing to this reason, the company is required to keep its research and development department more updated and advanced to address changes in technologies.
b.) Legal factors:- Along with other external environmental factors, legal environment of the country is one of the major factors that can affect the operational framework and strategic orientation of the country. For a company it is quite essential to follow the legal conditions of the country in which it is operating. In the context of oil and gas industry of the UK, the legal system of the country is quite structured and well planned (Lindøe, Baram and Renn, 2013). There are different crucial laws in the UK system which is directed to affect the norms and strategic orientation of the business organizations in the most critical manner.
c.) Environmental factors:- In the UK and at global level also awareness regarding environment safety is increasing, which is putting some intensive amount of pressure over industries such as oil and gas industry. For organizations like Shell, adoption of some crucial environmental protection strategies and practices becomes quite essential and effective strategies. In regard to this, for the purpose of addressing environmental concerns, the company has considered environmental protection as the major aspects of its corporate social responsibilities (CSR) practices (Manlove, 2008).
The company has explicitly adopted green operational practices in which the company has focused on reducing the emission of carbon from the oil refining processes. In addition to this, at the time of transporting oil, proper protection and care is undertaken so that prevention of the incident of oil spills can be mitigated in the most efficient manner.
In this way on the basis of the discussion made in the paper, it can be reflected clearly that different crucial internal and external business environmental factors, which has affected business policies and strategies undertaken by Shell organization In the UK.
Impact of two policies of the European Union on UK business organizations:- European Union can be considered as an example of economic integration and its related strategies in the context of some crucial economies across the globe. There are different developed as well as semi developed economies which have integrated their policy measures and administrative orientations for the purpose of enhancing mutual cooperation and trade relations in the entire European region. Basically, European Union is an institution which works for the betterment and trade integration of different countries in the European region.
European Union is responsible for framing different policies, directions and regulations on which trade and economic transaction among different members’ countries is required to be proceeded. For the purpose of undertaking effective and efficient trade among countries, EU has formed several policies and strategies which are needed to be followed essentially by member countries. In this context, UK which is one of the major member countries of the European Union also needs to abide by policy directions of the EU. Different policies of the EU directly or indirectly affect business organizations and their practices in the UK. In relation to this, two major policies of the EU and its impact on the UK‘s business organizations can be highlighted as below:
1. Secured data EU General Data protection regulation:- This is one of the new and effective policy formed by the EU to regulate the business activities and transactional process followed in the member countries. The UK business organizations are directly affected by implication of this policy in terms of securing the confidential data related to business transactions occurring with other members of the EU.
The proposed draft of the new data protection framework imposes the compulsion of notifying data protection authorities as well as data subjects that have been affected within one day. This, compulsion has alerted the UK business corporations for keeping their data security system update. The data security policy has driven the UK business to have new and advanced technologies for the purpose of preventing cases of data breach. The new policy states that if the company does not follow the requirements of the data security, it has to pay one million Euro or 2% of its global turnover as fine.
This provision has dragged companies operating in the UK to enhance their security system or keep them updated (Ashford, 2012). The data protection of the EU mainly affect retail distribution and transport sectors as in existing period of time these business industries are quite vulnerable towards data security and breach incidents. Along with this, financial services industry and manufacturing industry has also made some crucial changes in their IT and data security systems to keep themselves aligned with new EU data protection policy.
About an average 59% UK IT managers have stated that the new EU data protection policy will lead to raise the overall operational cost of the company but in order to be aligned with EU’s policy framework, it is essential for the companies operating in the UK to update their data security system (Ashford, 2012). Hence, it can be reflected that the new EU policy of data protection has been governing and monitoring the data security aspects of the UK business organization in a consistent manner.
2. EU’s Competition Policy:- In order to promote healthy and effective competition, the EU has designed an effective and comprehensive competition policies for business organizations based at members countries. The prime objective of competition policy is to promote competition and securing benefits and interests of domestic companies. The competition policy of the EU prevents any critical and unlawful actions undertaken by a company to win competition in the marketplace.
The companies operating in the EU are required to be aligned with these policies regarding competition and reframed their marketing and operational activities accordingly. The UK firms have to change their strategies while operating in the domestic market as well as in the European Union, so that they can establish balance between policy requirements and profit objectives (ERT, 2014). As per the policy, there are three main source which leads to put competitive constraints which are listed below:
1. Demand substitutions: as per this policy aspect the company is required to assess the demand substitutions prevailing in the market and forecast the demand in near future so that effective supply can be ensured.
2. Supply Substitutions: As per this policy aspect, all the companies in the UK are required to design a specific supply network in order to provide a wide scope for customers in the EU and the country to accomplish their needs (ERT, 2014).
3. Potential Competition: The EU competition policy has directed to promote healthy and potential competition in the market which is in the favour of local customers. In order to accomplish this policy aspect, the EU has reduced the market entry barriers for domestic, as well as, foreign firms. However, there are some specific and essential regulatory regimes which are needed to be followed by the company to operate its business in the competitive marketplace in the EU. In this way, it can be reflected that the UK firms are taking advantage of the competition policy by making the market niche for them. For the foreign business organisations, it is essential to have proper licence and certifications from the side of EU’s regulatory committee before starting their business in the country (ERT, 2014).
In this way, on the basis of the discussion made on the impact of EU policies over UK business organisations it can be observed that the policy directions of the UK affect the business regimes followed by the country in the most effective and comprehensive manner.
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