Relationship between business and the local, national and global

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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

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


Functional structure

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.

Divisional structure

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.

Matrix structure

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

they earn.

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

an organization.

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. Understand

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