Business Environment

Purposes: mission; vision; aims; objectives; goals; values; profits; market share; growth; return on capital employed (ROCE); sales; service level; customer satisfaction; corporate responsibility; ethical issues Stakeholders: owners; customers; suppliers; employees; debtors; creditors; financial institutions (banks, mortgage lenders, credit factors); environmental groups; government agencies (central government, local authorities); trade unions Responsibilities of organizations: stakeholder interests; conflict of expectations; power- influence matrix; satisfying stakeholder objectives; legal responsibilities e. g. consumer legislation, employee legislation, equal opportunities and anti-discriminatory legislation, environmental legislation, health and safety legislation; ethical issues egg environment, fair trade, global warming, charter compliance e. g. Banking Code 2 Understand the nature of the national environment in which businesses operate Economic systems: the allocation of scarce resources; effective use of resources; type of economic system eg command, free enterprise, mixed, transitional The UK economy: size (gross domestic product, gross national product); structure; population; labour force; growth; inflation; balance of payments; balance of trade; exchange rates; trading partners; public finances (revenues, expenditure); taxation; government borrowing; business behaviour eg investment, objectives, risk awareness; cost of capital; consumer behaviour; propensity to save; propensity to spend; tastes and preferences Government policy: economic goals; fiscal policy: control of aggregate demand; central and local government spending; Public Sector Net Borrowing (PSNB) and Public Sector Net Cash Requirement (PSNCR); euro convergence criteria, monetary policy; interest rates; quantitative easing; private finance initiative (PFI); competition policy (up-to-date legislation including Competition Act 1998, Enterprise Act 2002); Competition Commission, Office of Fair Trading; Directorate General for Competition); European Commission); sector regulators eg Ofgem, Ofwat, Civil Aviation Authority; Companies Acts; regional policy; industrial policy; enterprise strategy; training and skills policy 3 Understand the behaviour of organisations in their market environment Market types: perfect competition, monopoly, monopolistic competition, oligopoly, duopoly; competitive advantage, strategies adopted by firms; regulation of competition Market forces and organisational responses: supply and demand, elasticity of demand; elasticity of supply; customer perceptions and actions, pricing decisions; cost and output decisions; economies of scale, the short run; the long run, multi-national and transnational corporations; joint ventures, outsourcing; core markets; labour market trends; employee skills, technology; innovation; research and development; core competencies; business environment (political, economic, social, technical, legal, environmental); cultural environment 4 Be able to assess the significance of the global factors that shape national business activities Global factors: international trade and the UK economy; market opportunities; global growth; protectionism; World Trade Organisation (WTO); emerging markets (BRIC economies – Brazil, Russia, India, China); EU membership; EU business regulations and their incorporation in to UK law; EU policies eg agriculture (CAP), business, competition, growth, employment, education, economics and finance, employment, environment, science and technology, regional); labour movement; workforce skills; exchange rates; trading blocs (eg monetary unions, common markets; customs unions, free trade areas); labour costs; trade duties; levies; tariffs; customs dues; taxation regimes; international competitiveness; international business environment (political, economic, social, technical, legal, environmental); investment incentives; cost of capital; commodity prices; intellectual property; climate change eg Kyoto Protocol, Rio Earth Summit; third world poverty; the group of 20 (G-20); global financia l stability Learning outcomes and assessment criteria Learning outcomesOn successful completion of this unit a learner will:| Assessment criteria for passThe learner can:| LO1 Understand the organizational purposes of businesses| 1. 1 identify the purposes of different types of organisation1. 2 describe the extent to which an organisation meets the objectives of different stakeholders1. explain the responsibilities of an organisation and strategies employed to meet them| LO2 Understand the nature of the national environment in which businesses operate| 2. 1 explain how economic systems attempt to allocate resources effectively2. 2 assess the impact of fiscal and monetary policy on business organizations and their activities2. 3 evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected organisation| LO3 Understand the behaviour of organizations in their market environment| 3. 1 explain how market structures determine the pricing and output decisions of businesses3. 2 illustrate the way in which market forces shape organizational responses using a range of examples3. judge how the business and cultural environments shape the behaviour of a selected organisation| LO4 Be able to assess the significance of the global factors that shape national business activities| 4. 1 discuss the significance of international trade to UK Business organisation4. 2 analyse the impact of global factors on UK business organizations4. 3 evaluate the impact of policies of the European Union on UK business organizations. | GRADE DESCRIPTORS Learners would be graded as ‘PASS, MERIT or DISTINCTION. The indicative characteristics for each grade are mentioned below: Pass grade:A pass grade is achieved by meeting all the requirements defined in the assessment criteria for pass for each unit. Merit grade: Merit descriptors| Indicative characteristics| In order to achieve a merit the learner must:| The learner’s evidence shows for example:| IdentifyandapplyStrategiestofind appropriate solutions| ? Effective judgments have been made? Complex problems with more than one variable have been explored? An effective approach to study and research has been applied| Select/design and apply appropriateMethods/techniques| ? Relevant theories and techniques have been applied? A range of methods and techniques have been applied? A range of sources of information has been used? The selection of methods and techniques/sources has been justified? The design of methods/techniques has been justified? Complex information/data has been synthesized and processed? Appropriate learning methods/techniques have been applied| Present and communicateappropriate findings| ? The appropriate structure and approach has been used? Coherent, logical development of principles/concepts for the intended audience? A range of methods of presentation have been used and technical language has been accurately used? Communication has taken place in familiar and unfamiliar contexts? The communication is appropriate for familiar and unfamiliar audiences and appropriate media have been used| Distinction grade: Distinction descriptors| Indicative characteristics| Inordertoachieveadistinctionthelearner must:| The learner’s evidence shows for example:| Use critical reflection to evaluate own work and justify valid conclusions| ? Conclusions have been arrived at through synthesis of ideas and have been justified? The validity of results has been evaluated using defined criteria? Self-criticism of approach has taken place? Realistic improvements have been proposed against defined characteristics for success| Take responsibility for managing and organizing activities| ? Autonomy/independence has been demonstrated? Substantial activities, projects or investigations have been planned, anaged and organized? Activities have been managed? The unforeseen has been accommodated? Theimportanceofinterdependencehasbeen recognized and achieved| DemonstrateConvergent/lateral/creative thinking| ? Ideas have been generated and decisions taken? Self-evaluation has taken place? Convergent and lateral thin king have been applied? Problems have been solved? Innovation and creative thought have been applied? Receptiveness to new ideas is evident? Effective thinking has taken place in unfamiliar contexts| Assignment Unit 1 McCain McCain is the worlds largest producer of chips. Its range includes other potato products like hash browns and waffles. It buys 12% of the UK potato crop. It is also one of the biggest suppliers of frozen light meals. External factors Businesses set themselves aims. These help them to be efficient. For instance, they may aim to increase sales or make more profit. It then plans to reach these aims. To do this it must look at its own strengths. These are called internal factors. It must also look at outside influences. These are called external factors. McCain looks at changes in these. This helps it to plan how to respond. SLEPT SLEPT is one tool that can be used to look at external factors. It can be used to measure their effect. The letters in SLEPT stand for five factors. These are * Social Legal * Environmental * Technological and * Political. McCain dealt with these factors as follows: Social and Legal factors Social A number of campaigns have told people to eat in a more healthy way. This led to falling sales for some McCain products. McCain responded by reducing the salt and oil in its potato pr oducts. It also sent out the message that its chips were not unhealthy. Legal Governments pass laws, and set standards. McCain has to obey the law or set its own, higher, standards. The Food Standards Agency has developed a system of traffic light labels. These are designed to help consumers see which products may be less healthy. The food industry uses a system based on Guideline Daily Amounts. These GDAs are what an average person should eat to stay healthy. McCain uses both of these. All of its potato products can display the green traffic light (low levels) for saturated fat. None of its products displays a red traffic light (for high levels) in any category. Economic, Political and Technological Factors Economics 100 Edition 12 This refers to changes in buying habits. Income is rising, but people have less time to spend it. This is called being cash-rich but time-poor. This leads to more demand for convenience foods. To meet this challenge McCain provides a range of products to suit different tastes. Political There is government pressure for suppliers to come up with healthier foods. McCain supports the government. It believes that the foods it provides are healthy when prepared properly. Technological The technology used to prepare food is fast moving. McCains food technologists have made its potato products more healthy. They have reduced levels of fat and salt but still maintained flavour. This was achieved through a switch to sunflower oils. This reduced saturated fats by 70%. Conclusion Businesses must take account of changes in external factors. Change comes from a number of sources. Each presents a challenge. McCain is a business focused on the market. It knows that it is vital to keep customers happy. It has listened to what customers want and made changes in response. It aims to give them the best value chips and other healthy food products. Task 1 1. 1 Using working example or the case the study indentify the purposes of different types of organisation. (Outcome 1. 1) 1. 2 Using an example of your choice illustrate how an organisation meets the objectives of different stakeholders. (Outcome 1. 2) 1. 3 Using the case study, explain the responsibilities of an organisation and the strategies employed to meet them. (Outcome 1. 3) Task 2 2. 1 Illustrate how economic systems attempt to allocate resources effectively. Use the case study to illustrate your answer. (Outcome 2. 1) 2. Fiscal and monetary policy affects business organisations and their activities, disucuss this with a working example of your choice. (Outcome 2. 2) 2. 3 Evaluate the impact of competition policy and other regulatory mechanisms on the activities of an organisation of your choice or that or the case study. (Out come 2. 3) Task 3 3. 1 Pricing and output decisions of an organisation are determined by market structures. In your opinion is this true. (Outcome 3. 1) 3. 2 Using a working example of your choice show how market forces shape organisational responses. (Outcome 3. 2) 3. 3 Using an example of your choice discuss how the business and cultural environment shape the organisations behaviour. (Outcome 3. 3) Task 4 4. What is the significance of international trade to the UK business organisation? (Outcome 4. 1) 4. 2 The impact of global factors on UK business organisations is quite variable, discuss. (Outcome 4. 2) 4. 3 Discuss the impact of policies of the European Union on the UK business organisations. (Outcome 4. 3) To achieve a Pass/Distinction or Merit student must address all the above criteria by producing a word processed report of 2500- 3500 words. Reports must be supported by appropriate referencing. The report must be submitted by the required formal submission date by 5pm at r eception where a receipt will be given. The Times 100 Edition 12