Relationship between business and the local, national and global
The aim of this unit is to provide learners with an understanding of different organisations, the influence of stakeholders and the relationship between business and the local, national and global environments.
Q1: Identify the purposes of different types of organisation?
An organization is a social arrangement which brings towards collective goals, controls
its own performance, and it has a boundary to make it separate from its environment. The word I is
derived from the Greek word organon, itself derived from the better-known word ergon.
Bureaucratic structures have a certain degree of standardization. They are better suited for more
complex or larger scale organizations. They usually adopt a tall structure. Then tension between
bureaucratic structures and non-bureaucratic is echoed in Burns and Stalked distinction between
mechanistic and organic structures. It is not the entire thing about bureaucratic structure. It is
very much complex and useful for hierarchical structures organization, mostly in tall
Employees within the functional divisions of an organization plan to perform a specified set of
tasks, for instance the engineering department would be staffed only with software engineers.
This leads to operational efficiencies within that group. However it could also lead to a lack of
communication between other fields because these people jst tend to theie limited.
Also called a "product structure", the divisional structure groups each organizational function
into a divisions. Each division within a divisional structure contains all the necessary resources
and functions within it. Divisions can be divided from different points of view. There can be
made a distinction on geographical basi or on product/service basis. Another example, an
automobile company with a divisional structure might have one division for SUVs, another
division for subcompact cars, and another division for sedans. Each division would have its own
sales, engineering and marketing departments.
The matrix structure groups employees by both function and product. This structure can combine
the best of all other separate structures.This structure is often used by different employes to
complete some tasks in order to take advantage of combine strengths and to finish weaknesses.
An example would be a company that produces two products, "product a" and "product b". Using the
matrix structure, this company would organize functions within the company as follows: "product a"
sales department, "product a" customer service department, "product a" accounting, "product b" sales
department, "product b" customer service department, "product b" accounting department. Matrix
structure is amongst the purest of organizational structures, a simple lattice emulating order and
regularity demonstrated in nature.
One of the newest organizational structure which is developed in 20th century .In small
Business the team structure can be defined as the entire organization. Teams can be both horizontal
and vertical.while an organization is comprises as a set of people who meet to achieve newer
dimensions, the quality of organizational structure revolves around the competencies of teams in
totality. For example every one of the whole food market, the largest natural-foods grocer in the US
developing a focused strategy.While team leaders in any store or in any region are also a team.
Q2: Describe the extent to which an organization meets the objectives of different stakeholders?
It is called the measure to which an organization fulfil
the goals and overview the problems of stakeholders by taking review of
their whole business cases.
Major differences in how organizations carry out the various steps and activities in the strategic planning
process are more of a matter of the size of the organization than its for-profit/nonprofit status. Small
nonprofits and small for-profits tend to conduct somewhat similar planning activities that are different
from those conducted in large organizations. On the other hand, large nonprofits and large for-profits
tend to conduct somewhat similar planning activities that are different from those conducted in small
organizations. (The focus of the planning activities is often different between for-profits and nonprofits.
Nonprofits tend to focus more on matters of board development, fundraising and volunteer
management. For-profits tend to focus more on activities to maximize profit.
Also, with the size of the organization, differences in how organizations carry out the planning activities
are more of a matter of the nature of the inclusion in the organization -- than its for-profit/nonprofit
status. For example, detail given people may prefer a linear, top-down, general-to-specific approach to
planning. On the other hand, rather artistic and highly reflective people may favor of a highly divergent
and "organic" approach to planning.
Q: Explain the responsibilities of an organization and strategies employed to meet them?
It Is defied as the the duty and well being of the staff , contractors and the population in the
area where it operates.
Organisations also have a responsibility to ensure that others are not put at risk by their work-related
activities, including driving. These factors, therefore, point to a need to carry out an assessment of the
health and safety risks for employees while they are at work, and to other people who might be
affected by their work activities.
Organisations should also looks at its employers which includes in it the data of the employers should
be be kept in privacy and should provide them with all the peace of mind.
Organisations should also lookafter the environment means factory where the production takes place
the surrounding area .They should make sure that the surrounding area including population , land and
other things should not b harmed by their activities.
Organizational members, themselves, should be giving remarkable to what these new responsibilities
should be, rather than leaving this task to management.
It is also the responsibility of the organisatios to make peace of mind of costumers and making their will
by advertising their products in a well manner .
A greater awareness of environmental issues, working conditions and social responsibility has led an
increasing number of consumers to take these aspects into consideration when shopping.
If the chief executive isn't fully behind the program, employees will certainly notice -- and this apparent
hypocrisy may cause such cynicism that the organization may be worse off than having no formal ethics
program at all. Therefore, the chief executive should announce the program, and champion its
development and implementation. Most important, the chief executive should consistently aspire to
lead in an ethical manner. If a mistake is made, admit it.
Q: Explain how economic systems attempt to allocate resources effectively?
The allocated resources are the resources in a business by which we can sale our products
without the review of these resources we cannot take our business to the market.
The major function of an economic system is to work out the basic economic problems which are;
What is to be produced, How is it to be produced, For whom to produce and How efficient is the use of resources. These economic problems are caused by the fact that resources are limited but human wants are unlimited. Therefore, every country desires to adopt an appropriate system which will result in efficient allocation of resources so as to avoid scarcity.
There are three systems used for this purpose which are:
Command economic system
Mixed economic system
Free market economic system
In a command economic system resources are allocated by the government through their planning system. The main role in this system are government , employes and consumers. All system is owned by the government.
The Market system of economy which is also called the price system simply put is a means of allocating resources in which the resources are allocated by the “market mechanism” and the major economic problems are resolved by private individuals.
In mixed economic system resources are allocated by the government and the stakeholders as well
And this system is owned by the two parties I.e. government and the investers as well.
some resources are allocated through the price or market mechanism and others are allocated by the state. In theory, such a system is able to combine the best elements of both a planned economy and a market economy. In reality, the proportion of planned and market varies, with some countries placing more emphasis on market solutions to resource allocations and others favouring a greater role for state planning.
Third one is called pure economic system but it is rarely found. a market economy answers the three questions that form the economic problem through a market system. The market system is based on the demand and supply of products. Demand and supply determine prices and prices act as signals to both producers and consumers .
The market system depends on a number of terms to ensure it is working properly.
the profit motive _the incentive for a reward for enterprise
Good levels of information being available to both producers and consumers
Price accurately reflecting the costs and benefits of consumption and production
The ease with which resources can move to different uses
If I buy a usb priced at £12.99 but do not like the music on it, I might decide that I was not getting £12.99 worth of value - I could have used that £12.99 to better effect by buying something else that would have given me more satisfaction.
In short there should ba an understanding between the costumers and the producers for the well being of this system and for the progress of this business.
Q: Assess the impact of fiscal and monetary policy on business organizations and their impact?
This Paper compares the dynamic impact of fiscal policy on macroeconomic variables implied by a large class of general equilibrium models with the empirical results from an identified vector autoregression. In the data we find that positive innovations in government spending are followed by strong and persistent increase
There is a strong relationship between between public expenditure , reforms and growth as fiscal
adjudjustments are created by reforms and growth.
Assessing the effect of monetary policy and wage bargaining on employement and inflation in the
European monetary union in the first step a kay kensyen is developed.
Fiscal policy changes can be targeted to affect certain groups (e.g. increases in means-tested
benefits for low income households, reductions in the rate of corporation tax for small-medium
sized enterprises, investment allowances for businesses in certain regions)
Consider too the effects of using either monetary or fiscal policy to achieve a given increase in
national income because actual GDP.
Lower interest rates will lead to an increase in both consumer and fixed capital spending both of which
increases current equilibrium national income. Since investment spending results in a larger capital
stock, then incomes in the future will also be higher through the impact on LRAS.
When the economy is in a recession (when business and consumer confidence is very low and perhaps
where deflationary pressures are taking hold) monetary policy may be ineffective in increasing current
national spending and income. The problems experienced by the Japanese in trying to stimulate their
economy through a zero-interest rate policy might be mentioned here.
The government has introduced a lower starting rate of income tax for lower income earners.
This is designed to provide an incentive for people to work extra hours and keep more of what
Changes to the tax and benefit system also seek to reduce the risk of the ‘poverty trap’ – where
households on low incomes see little net financial benefit from supplying extra hours of their
labour. If tax and benefit reforms can improve incentives and lead to an increase in the labour
supply, this will help to reduce the equilibrium rate of unemployment (the NAIRU) and thereby
increase the economy’s non-inflationary growth rate.
Taxation and the Pattern of Demand
Changes to indirect taxes in particular can have an effect on the pattern of demand for goods
and services. For example, the rising value of duty on cigarettes and alcohol is designed to cause
a substitution effect among consumers and thereby reduce the demand for what are perceived as
“de-merit goods”. In contrast, a government financial subsidy to producers has the effect of
reducing their costs of production, lowering the market price and encouraging an expansion of
The use of indirect taxation and subsidies is often justified on the grounds of instances of market
failure. But there might also be a justification based on achieving a more equitable allocation
of resources – e.g. providing basic state health care free at the point of use.
Taxation and labour productivity
Some economists argue that taxes can have a significant effect on the intensity with which
people work and their overall efficiency and productivity. But there is little substantive
empirical evidence to support this view. Many factors contribute to improving productivity – tax
changes can play a role - but isolating the impact of tax cuts on producti
Q: Evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected organization?
A set of laws, practices and procedures aimed at enhancing the economic efficiency of the provision of goods and services by maximizing competition among suppliers and consumers in a market or market-like environment is called competition policy.
Competition policy is one of the Singapore issues , or new issue that were introduced at the first wto conference held in Singapore in 1996.According to the declaration of the Singapore minestarial conference a working group is to be established to study issues raised by members concerning the interaction between trade and policy in order to identify possible areas that may be subject of a mulatilateral framework agreemenat.
When markets deviate from competitive ideals, assessing the desirability of government intervention requires a careful assessment of the costs of market failures relative to the benefits of imperfect regulation. The recognition that even imperfect markets may be preferable to regulated outcomes accompanied a dramatic transformation in the nature and extent of government intervention across a broad range of markets over the past thirty years. Many industries long subject to price and entry regulation in the United States -- among them airlines, trucking, railroads, and banking -- were deregulated.
NBER researchers continue in the vanguard of research, market design, and implementation of electricity restructuring. Much of the empirical work to date has focused on restructured generation markets, in which prices generally are determined through a competitive bidding process.
Some of the topics or development of projects encouraged in this PA may also
be more suitable for a small project grant (projects requesting total costs
of $100,000 or less) (R03). If so, applicants are encouraged to apply under
the procedures outlined in the “AHRQ Small Research Grant Program” PA,
published in the NIH Guide for Grants and Contracts (NIH Guide), January 2,
Competition should be in business because in this way we can represent our products in a well maner for example take mc donalds as an organization .
When we talk about competition In mc donalds we have to keep eye on a lot of aspects which are by 1s competitions we should take care that others are not gona harm.
Special offers should be kept in such a way that other branches should not take negative effect by it .
It depends on the location as well means if some where rents are higher and the branch cannot afford it
So therefore it is difficult for them to make some promotional offers.
Q: Explain how market structures determine the pricing and output decisions of businesses?
A variety of recent proposals rely heavily on market forces as a means of controlling hospital
cost inflation. Sceptics argue, however, that increased competition might lead to cost-increasing
acquisitions of specialized clinical services and other forms of non-price competition as means of
attracting physicians and patients. Using data from hospitals in 1972 we analyzed the impact of market
structure on average hospital costs, measured in terms of both cost per patient and cost per patient
day. Under the retrospective reimbursement system in place at the time, hospitals in more competitive
environments exhibited significantly higher costs of production than did those in less competitive
Conventional wisdom has it that a large part of the explanation of Keynesian unemployment is the
observe rigidities and prices. What has been lacking however is a satisfactory theory which explains how
wages and prices can be at non market clearing level.
If all firms in an industry actin concert to determine pricing policies, they can maximize their combined
profits . Traditional oligopoly theories widely appericiate this fact and therefore they desire to collude to
maximize their joint long run profits.
It also suggests that the character and scope of collusive conduct is related to the structural and legal
conditions cotfronting the firms in a market.
Growth theorists have investigated extensively the idea that technological progress is endogenous and driven by market forces. General equilibrium (GE) models developed to explain these forces depart from the traditional theory of growth. Since innovation requires profit-seeking firms to undertake up-front research and development (R&D), the factors determining the incentives to undertake R&D in imperfect markets are central to the seminal theories of Romer (1990), Grossman and Helpman (1991), and Aghion, P. and Howitt, P., 1992. A model of growth through creative destruction. Econometrica 60, pp. 323–351Aghion and Howitt (1992). These contributions, however, downplay the role of market structure. In contrast, an important strand of literature in Industrial organization (IO) argues that market structure is a key factor determining R&D investment because it captures features of the business environment, like the size and number of firms, barriers to entry, and diversification. These factors determine market rivalry which, in turn, determines the opportunities and constraints that firms face when planning.
The financial structure and oligopoly have at least one common feature both place little emphasis on the strategic relationship between financial decisions and output market decisions.
In financial theory , the product market is typically assumed to offer an exogenous random returns which is un affected by the debt equity positions of the firms in the market.
A structural model is proposed which integrates and extends previous findings on the interrelations between risk—return outcomes, market share, firm conduct attributes, and inter-firm rivalry. It is argued that the relative impact of market share and firm conduct attributes on risk—return outcomes depends on the intensity of rivalry
By these market structure kinds we can determine these policies very well and can get achieveable goals by making business on the top.
Q: illustrate the way in which market forces shape organizational responses using a range of examples?
An organization is a collection of people working together under a defined structure for the
purpose of achieving predetermined outcomes through the use of financial, human, and material
resources. There are a number of approaches to the structure and management of organizations.
Forces of demand and supply representing the aggregate influenceof self-interested buyers and sellers on price
and quantity of the goods and services offered in a market. In general, excess-demand causes prices and
quantity of supply to rise, and excess supply causes them to fall
The market forces also effect the organisatioal structure in thses five steps which are illustrated as below:
The entry of competitors (how easy or difficult is it for new entrants to start to compete,
which barriers do survive)
The fear of substitutes (how easy can our product or service be produced, especially
The bargaining power of buyers (how strong is the position of buyers, can they work
together to order large volumes)
The bargaining power of suppliers (how strong is the position of sellers, are there many
or only few potential suppliers, is there a monopoly)
The rivalry among the existing players (is there a strong competition between the existing
players, is one player very dominant or all all equal in strength/size)
Some academics believe that a sixth force could be included - government.
A well-arranges organization is particularly important to call centers, given that the powerful pooling
principle - the immutable law that says consolidation of resources will result in improved efficiencies –
lies at the heart of call center effectiveness. In fact, when call centers began catching on several decades
ago, the big challenge was to get callers to abandon the need to reach specific individuals. Today, as
building customer relationships and loyalty have reached the forefront of strategy, the need to develop
effective, collaborative organizations is more important than ever.
However, there is an unfortunate paradox at work in many organizations. On one hand, the
organizational design is constantly exerting its forces as it channels communications, shapes protocol
and establishes lines of authority. It is one of the most influential and visible aspects of any enterprise.
Most managers can draw their organization charts in their sleep. Yet, it is an issue that, in the daily,
somehow becomes assumed - almost outside the realm of managerial consciousness.
By the use of these five market forces the organizational responses can be managed in a well way and
The company can make progress in a well way.
Q: Judge how the business and cultural environments shape the behavior of a selected organization?
Business and cultural environment comprises all those factors that affect a company's
operations, and includes customers, competitors, stakeholders, suppliers, industry trends, regulations,
other government activities, social and economic factors and technological developments.
These factors affect the behaviour of an organization in different ways and these are the base as well for
Organisation behaviour is a major part of any business and cultural environment because it sets
out to help students understand how human beings deal with being part of organisations, large or
small, working in teams and so forth. It is, essentially, the study of the 'soft' end of business.
The theories derive from a variety of disciplines including sociology and psychology. It concerns
itself with the complicated patterns of individual and group working. Thus the apparent aim of
the study of organisational behaviour is to understand why people work in certain ways and then
working out how to use this knowledge to improve the use of resources.
The history of the study of organisational behaviour is often broken down into different phases,
beginning with both Scientific Management and the study of bureaucracy in the early-twentieth
century. Both of these schools of thought were attempts to analyse human activity at work. The
first looked at human beings as though they were part of a machine and sought to break activities
down into discrete actions. The study of bureaucracy instead looked at the whole organisations
and sought to define them through the varying levels of authority within the whole. The role of
the manager in all this was also considered as the topic grew in scope.
As the study of psychology and psycho-analysis became more prevalent and more sophisticated,
these rather mechanistic views eventually gave way to a more humanistic period in which it was
seen that the workplace was also structured around mutually interactive groups of people who
could not be defined in the earlier simplistic terms. Later on these ideas became even more
sophisticated as it seemed that the work place was somewhere, if the conditions were right,
people would find positive experiences, and where they could seek fulfilment and become
Organisational behaviour, perhaps because it is about human beings, that generally defy
categorisation, is home to many theories. Because it is about people and the way they react to
and interact with each other, it is an ideal topic for teaching through fiction. Once again fiction
provides endless opportunities to describe the conflicts and allegiances that are constantly being
formed and re-formed in the work place. The fact that most novels are in some way or other
about relationships and the ways in which people deal with negative and positive experiences
within groups, and how alliances can shift over time and through internal or external pressures,
means that they are rich in examples to be used in illustrating the various theories that make up
the study of organisational behaviour. The fact that psychology, sociology and anthropology
feature so strongly in the topic offers a variety of approaches in interpreting the scenarios, just as
in real life.
Q: Discuss the significance of international trade to uk business organizations?
The buying and selling of goods and services across national borders is known as international
trade.It is of vast importance not just for a single country but all the countries because without international trade the economy of a country and business organization can not make a progress on international level and they will b unable to display their manufactures to display at international level.
International trade is the backbone of our modern, commercial world, as producers in different nations try to profit from an expanded market, rather than be limited to selling within their own borders. There are many reasons that trade across national borders occurs, including lower production costs in one region versus another, specialized industries, lack or surplus of natural resources and consumer tastes.
There is currently a great deal of concern over jobs being taken away from the United States, member countries of the European Union and other “developed” nations as countries such as China, Korea, India, Indonesia and others produce goods and services at much lower costs. Both the United States and the European Union have imposed face restrictions on imports from Asian nations to try to stem this tide. Clearly, a company that can pay its workers the equivalent of dollars a day, as compared to dollars an hour, has a distinct selling advantage. Nevertheless, American and European consumers are only too happy to lower their costs of living by taking advantage of cheaper, imported goods.
Even though many consumers prefer to buy less expensive goods, some international trade is fostered by a specialized industry that has developed due to national talent and/or tradition. Swiss watches, for example, will never be price-competitive with mass produced watches from Asia. German cutlery, English bone China, Scottish wool, fine French silks such as Hermes and other such products always find their way onto the international trade scene because consumers in many parts of the world are willing to foster the importation of these goods to satisfy their concept that certain countries are the best at making certain goods.
One of the biggest components of international trade, both in terms of volume and value of goods is oil. Total net oil imports in 2005 are over 26 million barrels per day (U.S. Energy Information admin.figures) (Note: Importedoil include crude oil, natural gas liquids, and refined products.) At a recent average of $50 per barrel, that translates to $1billion, three hundred million, PER DAY. The natural resources of a handful of nations, most notably the nations of OPEC, the Organization of Petroleum Exporting Countries, are swept onto the international trade scene in staggering numbers each day, and consumer nations continue to absorb this flow. Other natural resources contribute to the movement of international trade, but none to the extent of the oil trade. Diamonds from Africa, both for industrial and jewelry use, wheat and other agricultural products from the United States and Australia, coal and steel from Canada and Russia, all flow across borders from these nations that have the natural resources to the nations that lack them.
Despite complaints about trade imbalances, effects on domestic economies, currency upheavals, and loss of jobs, the reality of goods and services continually crossing borders will not go away. International trade will continue to be the engine that runs most nations.
Q: Analyse the impact of global factors on uk business organizations?
Businesses are affected by an external environment as much as they are affected by the competitors. Global factors affecting business are legal, political, social, technological and economic. Understanding of these factors is important while making a business strategy.
1. Social factors - These factors are stated to changes in social structures. These factors provide inner look into behaviour, tastes, and lifestyles patterns of a population. Buying patterns are greatly influenced by the changes in the structure of the population, and in consumer lifestyles. Age, gender, etc all determine the buying patterns and understanding of such changes is critical for developing strategies which are in line with the market situations. In a global environment it is important that business strategies are designed keeping in mind the social and cultural differences that vary from country to country. Consumer religion, language, lifestyle patterns are all important information for successful business management.
2. Legal factors - These factors that affected business strategies are explained to changes in government laws and regulations. For a successful business process it is important that the businesses consider the legal issues involved in a particular situation and should have the capability to corporate ways in which changes in laws will affect the way they must react. Laws keep changing over a period of time. By the point of view of business it is important that they are aware of these changes in the areas of consumer protection legislation, environmental legislation, health & safety and employment law, etc.
3. Economic factors - These factors involve changes in the global economy. A rise in living standards would at last apply an increase in demand for products thereby, providing greater opportunities for businesses to make profits. An economy witnesses alternations in economic activities. This would imply that in case of a rise in economic activity the demand of the product will increase and hence the price will increase. In case of reduction in demand the prices will go down. Business strategies should be created keeping in mind these alternations. Other economic changes that affect business include changes in the interest rate, wage rates, and the rate of inflation. Incase of low interest rates and increase in demand Businesses will be encouraged to expand and take risks. Therefore, business strategies should have room for such fluctuations.
4. Political factors - This complies to the changes in government and government policies. Political
factors greatly influence the operation of business. This has gained significant importance off late. For
example: companies operating in the European Union have to take instructs and regulations created
by the EU. The political place has a huge effect upon the regulation of businesses, and the spending
power of consumers and other businesses. Business must consider the stability of the political
environment, government’s policy on the economy etc.
5. Technological factors - These factors greatly influence business plans as they provide chances for
businesses to adopt new starters, and inventions. This helps the business to reduce costs and develop
new products. With the advent of modern communication technologies, technological factors have
taken great importance in the business field. Huge volumes of information can be securely shared by
means of databases thereby enabling vast cost reductions, and improvements in service. Organisations
need to consider the latest relevant technological advancements for their business and to stay
competitive. Technology helps business to achieve competitive advantage, and is a major driver of
globalization. While designing the business strategies firms must consider if use of technology will allow
the firm to manufacture products and services at a lower cost. Firms can select new modes of
distributions with the help of technology. It has become easier for companies to communicate with their
customer in any part of the world.
Q: Evaluate the impact of policies of the European union on UK business organizations?
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