Understanding the organisational purposes of businesses

Introduction
Within this assignment I will use Marks and Spencers (M&S) as my organisation as an eample to
answer the criteria! I will source a range of information from a range of resources that will produce
reliable information" M&S is largely recogni#ed organisation amongst the high street! offering high
quality products to their customers" I feel M&S will be the best eample to use as I work within
M&S therefore I am $uite knowledgeable of the criteria headlines set below"
Identify the purposes of different types of organisation
%ifferent organisations will ha&e different mission! &alues and ob'ecti&es that they would like to
encounter" It is first important to define Mission and (alues and how M&S meets them" In terms of
Mission it is the long)term goal your organisation seeks to achie&e! and in terms of (alues those
things your organisations belie&es in and search for to understand in its work Within M&Ss their
ob'ecti&es are incorporated within its mission statement of (ision! Mission and (alues*
(ision* +he standard against which all others are measured
Mission* Making aspirational $uality accessible to all
(alues* ,uality! (alue! Ser&ice! inno&ation and trust
+he Mission Statement is a &ital part of a business organi#ation in strategic planning! it assess
what key ob'ecti&es they would like to endure" +his is a &ital building block to the organisations
o&erall strategic planning and how they would like to meet their Mission Statement by meeting their
ob'ecti&es" M&Ss Mission Statement summari#es their key aims of what they would like to
achie&e for their different types stakeholders! most importantly their customers"
M&Ss Mission Statement is important that it meets all Stakeholders! internally and eternally" +he
Mission Statement and the influence of Stakeholders on M&Ss is helped it to achie&e to be a
successfully organisation"
+he influence of stakeholders can be shown by stakeholder mapping which is a diagram to eamine
and &isually display the relati&e influence that different indi&iduals and groups ha&e o&er decision)
making of an organisation" In -igure .! diagram represented shows a simple approach how a
stakeholder has influence o&er an organisation! the closer the stakeholder is to the organisation at
the top of the pyramid the more influence it eerts to the organisation"
customer being the most important Stakeholder and with the aims of M&S to increase their sale as
meant that returning customers has increases profits meaning the /ustomers will always ha&ing
increasing influence o&er M&S"
0ffecti&ely M&S Mission Statement and their most important Stake holder has helped create a
largely successfully retailer amongst the 1igh Street" M&S has aimed their Mission Statement
towards the /ustomer to create a e&er increasing bond which will help dri&e the sale of M&S and
create returning customer for profit"
%escribe the etent to which an organisation meets the ob'ecti&es of different stakeholders
It is important for M&S to meet all ob'ecti&es of a stakeholder! I will e&aluate 2 different
stakeholders and whether M&S meet the ob'ecti&es set by the stakeholder" 3 Stakeholder is any
indi&idual or group who has an influence o&er a organisation" 4ot all stake holders ha&e the same
e$ual influence5importance to an organisation! howe&er all stakeholders play a part in the eistence
of a company" Stakeholders can be split into three categories which is shown in figure . which
eplains the different types of stakeholders present within a organisation" In order to e&aluate the
etent of how M&S achie&es the ob'ecti&es of three stakeholders! I ha&e produced a diagram to
eplain the three different categories of a stakeholder and the different types of stakeholders
branched to gain a better understanding of what they want from an organisation"
Suppliers
M&S sources products from o&er .666 suppliers from around the world" M&S belie&e in esteem in
third party rights and honesty in pro&iding customers with the best $uality and &alue products with
competiti&e prices" M&S work under international standards noted in the Ethical Trading
Initiative 7ase /ode in making sure suppliers comply with the re$uirements" M&S also work with
suppliers who practise and stick to high principles of animal welfare! and high standards of
sustainable farming and fishing" +he Suppliers ob'ecti&es are met by fair pricing which will lea&e
them with profit and not out of profit and by offering them long term eclusi&e contracts! with the
placing of regular orders"
Shareholders
M&S ha&e large amount of indi&iduals that in&est the shares of M&S" M&S are largely focused on
building a long term relationship with their shareholders! by creating a sustainable business with
increasing profit! therefore meeting the shareholders re$uirements of a consistent profit growth of
M&S" M&S keep daily! weekly! monthly and annually records of their performance as a
organisation in promoting more shareholders to in&est within their company and meeting both
ob'ecti&es of M&S and the shareholders) generating profit for both"
/ustomers
M&S promote ,uality! (alue! Ser&ice! inno&ation and trust to their customers! to present the
highest achie&able standards of $uality a&ailable to their customers" M&S belie&e in building a
customer goodwill! ecellent customer ser&ice! reasonable prices! $uality products! and hearten
customer fidelity" M&S achie&e their &alues by the accuracy of their ad&ertisement! their labelling!
and any other sort of communication is correct! truthful and apparent" M&S offer positi&e and
negati&e feedback which will help the organisation as a whole to impro&e customer ser&ice and
make sure their ob'ecti&es of a customer is met"
0plain the responsibilities of an organisation and strategies employed to meet them
3ny organi#ation has a corporate social responsibility (/S8) to encourage positi&e actions within
its company9 it is the &oluntary action of an organisation to look after the en&ironment and the
society" M&S fully embraces /S8 who has the philosophy of :helping others to help themsel&es
where M&S aim to support their philosophy which can also be seen through their Mission statement
which is also aimed at e&ery indi&idual in&ol&ed with M&S" /S8 are grouped in 2 general areas*
;roducts! the local community and its employees"
;roducts) M&S stresses on producing high $uality and good &alue products which ha&e a positi&e
social and en&ironmental benefits" M&S show a high responsibility protecting the en&ironment by
becoming the worlds most sustainable retailers9 the programme named ;lan 3 was launched in
<anuary .66= sets out >?6 commitments which they aim to achie&e by .6>@" +hese >?6
commitments are categorised were they are working with their suppliers and customers to reduce
waste! combat climate change! trade ethnically! help customers to lead a healthier lifestyle and to
using sustainable resources" I ha&e produced a diagram with information taken from the ;lan 3
website as a eample of a few of the commitments of how they would like to combat climate
change"
Aocal /ommunity) M&S started a community programmed in -ebruary .66B offering work
eperience to the young employed who found it hard to secure a 'ob! also including the homeless!
other groups that were also offered were disabled peoples! school students raging from >B)>C years
old! parents returning to work etc! M&S aims were to a responsibility to ensure their local
community were treated fairly making sure e&eryone is treated e$ually" +he aim of the programme
was to offer these in people a taste or introduction of life in a working en&ironment! and the all
important eperience in gaining other careers for the capability of gaining employment" With the
strategy of offering a two)four hour placement a week with a allocated buddy as mentor for gaining
work eperience! which all of this that M&S offer go beyond the legal obligations of a organisation"
0mployees) M&S emphasis e$uality within their organisation) the 0$ual Dpportunities ;olicy is
stressed from recruitment selection that they treat e&eryone e$ually! no matter you religion! age!
se! seuality etc" M&S belie&e e&eryone is e$ually and shall be treated with respect and dignity"
M&S also ha&e the policy to promote the Ethe best fit between personal re$uirements and business
needsF 3ll 'udgments recounting to employment practices will be ob'ecti&e! open from unfairness!
and based only on work criteria and indi&idual &alue"
Conclusion
M&S clearly has a strong Mission Statement! which is renowned through its customers and its
workforce! the generally pattern through this assignment is M&S has a strong relationship through
all of its stakeholders and the way that they treat them which has led to their success! I feel I ha&e
achie&ed in successfully fulfilling the criteria of the assignment by using M&S as a eample! due to
M&S being a highly reformed organisation within retail" I feel I ha&e presented the assignment
through diagrams in order for it to be easier to read and classify my research which is a positi&e to
my assignment" +o conclude! I feel I ha&e answered the criteria! through identifying! describing and
eplaining within my bullet points"
Task 2
."> 0plain how economic systems attempt to allocate resources effecti&ely"
+here are different economic approaches that are classified as 2 main types* Market economy! the
planned (command) economy! the mied economy"
Market economic* 3n economic system in which economic decisions and the pricing of goods and
ser&ices are guided solely by the aggregate interactions of a countryGs citi#ens and businesses and
there is little go&ernment inter&ention or central planning" +his is the opposite of a centrally planned
economy! in which go&ernment decisions dri&e most aspects of a countryGs economic acti&ity"
/ommand economic* 3n economy where supply and price are regulated by the go&ernment rather
than market forces" Ho&ernment planners determine the assortment of goods to be produced!
allocate raw materials! fix $uotas for each enterprise! and set prices" Most communist countries
ha&e had command economies9 capitalist countries may also adopt such a system during national
emergencies" +he former So&iet Union was an eample of a command economy"
+he mied economy* Mied economy is an economic system in which both the state and pri&ate
sector direct the economy! reflecting characteristics of both market economies and planned
economies" +his type of economic system includes a combination of pri&ate economic freedom and
centrali#ed economic planning and go&ernment regulation" Most mied economies can be described
as market economies with strong regulatory o&ersight! and many mied economies feature a &ariety
of go&ernment)run enterprises and go&ernmental pro&ision of public goods"
In the UI! with market economy! 4estle will ha&e little go&ernment inter&ention" So! resource
arent tightened by go&ernment! lead to the easy purchase and price of the product is not affected"
1owe&er! 4estle found that manufacturing the products o&erseas would be a lot cheaper than to
ha&e factories in the UI! so they set up o&erseas factories in +hailand and the ;hilippines"
Unemployment is relati&ely low in the UI" 7ut not only that! because of the standard of li&ing!
labor costs are high" D&erseas in +hailand and the ;hilippines! unemployment is relati&ely high and
the standard of li&ing is low ) so since the market supply of workers are high! 4estle was able to
lower their labor costs by hiring o&erseas workers"
Aower labor costs mean higher profit margins" 7y utili#ing the market economy of an o&erseas
country! 4estle was able to reduce their labor costs through the use of supply and demand forces on
labor"
In /hina! 4estle operates under the mied economy" Ho&ernment planning dominates the direction
of economic acti&ity of 4estle" So 4estlJs business acti&ities will be planned by the go&ernment!
4estlJ will pro&ide labor for the local people" In other words! there is state control of the factors of
production and centrali#ed! state planningKwhat to produce! how to produce it! and who to produce
it forKbut with some freedom for indi&idual decisions! like which 'ob to take" 7eside it! the target
&olume of production is established by the go&ernment so 4estle 'ust produce products meeting the
targets without effort of impro&ing performance" So the business of 4estlJ not be promoted and less
moti&ation for producti&ity"
In /ambodian! 4estlJ with mied economy! all of the products and raw materials are controlled by
the go&ernment" 7esides! the go&ernment has policies to pre&ent dumping from businesses so
4estle products will ha&e reasonable prices and change in suitable with market" 1owe&er! 4estle
will pay high taes to the go&ernment because the go&ernment has a profound effect on the
de&elopment of 4estle!
.". 3ssess the impact of fiscal and monetary policy on business organi#ations and their acti&ities"
+here are . main policies that the go&ernment can use for purposes such as economic growth!
lowest unemployment rate! price stability* -iscal policy and Monetary"
-iscal policy is go&ernment spending policies that influence macroeconomic conditions" +hese
policies affect ta rates! interest rates and go&ernment spending to control the economy"
Monetary policy is actions of a central bank! currency board or other regulatory committee that
determine the si#e and rate of growth of the money supply! which in turn affects interest rates"
Monetary policy is maintained through actions such as increasing the interest rate! or changing the
amount of money banks need to keep in the &ault"
+he main duty of fiscal policy is to balance the &alue of the go&ernmentGs income and ependiture"
+he two main stances of fiscal policy are*
0pansionary fiscal policy in&ol&es go&ernment spending eceeding ta re&enue! and is usually
undertaken during recessions"
/oncretionary fiscal policy occurs when go&ernment spending is lower than ta re&enue! and is
usually undertaken to pay down go&ernment debt"
-rom two perspecti&es of fiscal policy! 4estle will be affected directly profound"
If borrowing costs rise! the cost of borrowing of the pri&ate sector also increased" +hus! the
economy will be unstable and inefficient to in&estment for businesses and social" When spending
cuts and ta policy higher of the go&ernment to stabili#e the financial which will affects the 4estlJs
growth policy" 3t the same time! the go&ernment must reduce spending to support the standard of
li&ing for the society which has led to 4estle no longer supported! 4estle product prices will
increase! resulting in reduced consumption and reduced taes! as well as the product It also increase
the cost of borrowing will push input costs and also increased production! reduced profitability and
competiti&eness of enterprises and causing losses for 4estle" When interest rates rise! along with the
consumption of less of the market! 4estle will reduce capital in&estment led to the scope of work
will be narrowed"
+he main duty of monetary policy is monetary tightening to curb inflation"
When the market is inflation and recession! 4estlJ will be &ery difficulty to against inflation and
recession! so they must change the business to o&ercome" +his has led to difficulties in operating
policies and methods of business" 3s input costs rise rapidly! especially the interest rate and
echange rate fluctuations increased beyond the tolerance of the business! which causing instability
for 4estle
+he same time! 4estlJs eport market will shrink in&entory made up! leading to storage costs! price
increases" 3s banks tighten lending! 4estle will be difficult because they can not access capital"
7esides! there are phenomena not met between banks and 4estle" When 4estle need capital! they
can not ha&e access to borrow capital from bank! but also some bank ha&e demand for loans! they
do not negotiate and options business to lending"
If the economic growth may become slower! the ependiture is decrease! business such as 4estle
hard to approach the capital" So! it may lead to the situation of increasing unemployment rates" So!
consumer will turn to be sa&ing instead of spending and purchasing" +he re&enue of 4estle
companies will become lower and may ha&e the pressure finance problems"
."2 0&aluate the impact of competition policy and other regulatory mechanisms on the acti&ities of
4estle"
Dperating in the (ietnamese economy! 4estlJ opens the new door with &ariety and interesting 'ob
opportunity for yourself and e&eryone to be able to de&elop career and impro&e lifes $uality"
7esides! 4estle also interested in the policy as the economy healthy and stable de&elopment from
the go&ernment" Industrial and social welfare policy is an important factor affecting directly in
industry production! distribution and consumption of fast mo&ing consumer goods"
Welfare fund of company is one of the funds appropriated from the profit after ta of the company"
+he preparation and use of welfare funds to take care of the material and spiritual life of employees!
and corporate social responsibility"
+he social welfare policies to employees*
)Support Aabor accidents and occupational diseases! long time illness! natural disasters"
) Support periodic health eamination"
) Staff)laborers died while working"
) -amily of staff dead or sick"
) International WomenGs %ay! women in (ietnam! International /hildrenGs %ay and Mid)3utumn"
) 7uilding! upgrading the companyGs welfare"
) ;urchase of e$uipment! employee organi#ations for staff"
) +ourism"
+he social welfare polices to social*
)+he policy of po&erty reduction"
);olicy for persons with the re&olution"
) /ompetition policy! competition"
) /onsumer ;rotection"
) /onsumer ;rotection"
) ;olicy stability! especially price stability policy"
) +he policy of social insurance"
7esides! rivacy olicy is also an important influence on competiti&e strategy of 4estle*
+his Statement of ;ri&acy co&ers how 4estle treats personal information collected and recei&ed"
E;ersonal InformationF refers to information that personally identifies you by your name! email
address or phone number and other information that is not otherwise a&ailable publicly" +his
Statement of ;ri&acy applies only to the practices of 4estle and the people we employ or manage"
Dther websites or ser&ices linked to will ha&e their own statements of pri&acy which can be &iewed
by clicking on their respecti&e pri&acy links"
4estle is committed to protect the security of your personal information" We use a &ariety of
security technologies and procedures to help protect your personal information from unauthori#ed
access! use! or disclosure" -or eample! your personal information is stored on computer systems
that are located in controlled facilities"
Users of 4estle are also supposed to respect the security term when logging into out webpage" Lou
are asked to create an account pro&iding information for 'ob application purpose only" Dnce the
pro&ided information is acknowledged as one for none of 'ob application purpose! your account will
be automatically deleted"
In addition! finding and sol&ing labor workforce is one factor plays an important role in the
competiti&e strategy of 4estle"
/urrently! the de&elopment of industrial parks! eport processing #ones is too strong! the supply
does not meet demand! many enterprises do not recruit skilled labor! skilled labor and unskilled
labor"
+he main reason is that low)income workers! an a&erage of >". to ."@ million (4% 5 person 5
month! but ha&e to pay rent! electricity! water and the epensi&e cost of li&ing" 7esides! the support
of migrant workers of administrati&e procedures! such as residence! education and medical """ has
not been paying attention" So 4estle should pay workers the e$ui&alent of the a&erage wage for
unskilled labor and reasonable wages for skilled workers" It will help 4estlJ attracts labor to help
ensure product $uantity and $uality"
+he go&ernment also has the policy to support for the low income ob'ects" 7ecause the inflation is
going to increasing continuously so the li&ing of the low income person will become harder" +hey
also create a stabili#ation fund that help the producers and manufacturers to buy in more and storing
to keep the price stay at stable le&el" So! 4estle should ha&e the strategies to prepare the input !
producing and storing their products to keep its price not increasing so fast as the change of the
materials prices and ha&e a plan to prepare for the human resource in case of lacking labor force"
Task !
Explain ho" market structures determine the pricing and output decisions of businesses#
1ow market structures determine the pricing and output decisions of Dllo*
-irms pricing and output decisions depend onbarriers to entry and the beha&iour
of competitors"+he actions of ones competitors can easily influence the beha&iour of afirm"+his is
proper for an oligopolistic industry whereby firms display mutual interdependence"Dllo is
an oligopolistic business with 7anglalion & ,ubee as their ma'or competitors"If Dllo sets a price
higher than that charged by others! the company can epect to lose a lotof sales"Moreo&er! there are
some barriers of entry Dllo must consider before epanding theirbusiness"7arriers to entry are
obstacles that deter new firms from entering a market to compete withthe eisting firms" +hey gi&e
firms a degree of market power such that decisions can bemade by eisting firms without risking
their market share"+he most common types of barriers to entry are as follows*
>" 3&ailability of key resources"
." Ho&ernment restrictions & legal barriers"
2" 0clusi&e rights & patents"
B" Initial capital cost"
We must keep in mind that! the degree of barriers of entry can determine firms :pricing decisions"
+he wireless industry re$uires a big sum of capital and it uses mobile data net"ork as its main
resource"Dllo had to put down a lot of money 'ust to enter this market still they must consider
thefact that their competitor 7anglalion has already co&ered 26 ma'or districts of the country with
their ser&ice" /onsidering this fact Dllo now is preparing to build network co&erage in any one
di&ision among Shyllet! /hittagong! 7arisal and 8angpur"+his will gi&e them a competiti&e
ad&antage o&er their other close competitor ,ubee"$ore importantly! if Dllo decide to epand their
ser&ice in 8angpur it will make them a monopolist in that locality because no other wireless
company is operating there yet" Aastly! when considering the marketing aspects of pricing we must
consider the following*
>" 7rand loyalty"
." /ustomers perception of prices"
2" /ompetitors price! and
B" Maimi#ing profit"
+he assumption of profit maimi#ation pro&ides a basis for beginning to look at the output of
indi&idual firms"+he optimal le&el of output is where either profit is maimi#ed or losses are
minimi#ed" If a firm is trying to maimi#e its profits in the short)run! there are two e$ui&alent ways
in which the firm can achie&e this ob'ecti&e*>" +he firm can produce at the point where the
difference between +otal 8e&enue (+8) and +otal /ost (+/) is at a maimum"." +he firm can
produce at the point where the difference between Marginal 8e&enue (M8) and Marginal /ost
(M/) is e$ual to #ero" 3lthough as a new company Dllo cannot aim to maimi#e its profits yet"
+hus! in order to gain strong brand loyalty Dllo is offering relati&ely low priced packages to
eceed customers perception o&er their competitors"
+hey are pro&iding a &olume of 2"@ H7 at the price of @66 7%+> while 7anglalion pro&ides only
."@ H7 &olume at the price of C66 7%+.
"Moreo&er! Dllo is pro&iding prepaid modem at the price of >BMM 7%+ while 7anglalion is charging
>MMM 7%+ for their US7 modem" +here is a chance of loss but the firm will continue to operate in
the short)run as long as there is a positi&e contribution margin and the firm is reco&ering some of its
fixed costs"
>" http*55ollo"com"bd5get
." http*55www"banglalionwima"com5inde"php5products)a)ser&ices5prepaid)plan
2".* Illustrate the way in which market forces shape organi#ational responses using range of
eamplesN
Dllos response toward deman
d
O

7usiness cannot sell anything unless there is a demand for it" ;eople must both want a
product and ha&e the money to buy it" 1ow people will buy Dllos ser&ice depend on the
following*
;rice
O
-or the indi&idual consumers! a fall in the price of an item makes it cheaper compared toother
goods" 3 fall in the relati&e price of an item increases demand for it"
3 fall in the items price also means that people with lower incomes will also be able to
afford it" +hus the o&erall si#e of the market for the item increases"-or these reasons! to penetrate
and increase the market share Dllo has lowered theirser&ice price which has increased demand for
their product"
Substitute
O
;eople may change from one product to another! as the relati&e prices changes" 3s asubstitute
product of 7anglalion & ,ubee! Dllo has decreased their price to attractcustomers to switch"
/omplementary products
O
3s the use of computers and laptops are increasing throughout the country! the demandand market
for "ireless service is rising as well" -eeling this Dllo has decided to epand theirser&ices to
any one di&ision among Shyllet! /hittagong! 7arisal and 8angpur"
Dllos response toward supply O

Supply depends largely on price" +he higher the price that a product can be sold for! the more of it
businesses will be willing to supply" +he factors that affect Dllos decision about supply are as
followed*
/hange in technology
O
+echnological de&elopments which reduce costs of production will increase the $uantity of a
product supplied at a gi&en price" In past wireless technology were &ery epensi&e! as it became
cheaper and more a&ailable Dllo felt its feasible to enter the business" 3lthough at the same time to
a&oid diseconomies of scales Dllo must not get beyond its ideal si#e because by employing too
many people! with many le&els in the hierarchy of management! there may be a number of
undesirable effects"
/osts of making the product
O
+o epand and run their business Dllo need to pay wages and build network towers to sustain their
ser&ice" -or this purpose Dllo has already co&ered most of %haka with their ser&ice and still
working to epand their ser&ice outside of the capital
2"2* <udge how the business and cultural en&ironments shape the beha&ior of selected organi#ationN
+ask 2 (Ao >"2"2) 1ow business and cultural en&ironments shape the beha&iour of Dllo*
+he wider business environment may be analysed into si segments using the
;0S+0Aframework")

;olitical)

0conomic)

Socio)cultural)

+echnological)

0n&ironmental protection)

Aegal
+he political en&ironment O
Ho&ernment is responsible for pro&iding a stable framework for economic acti&ity and! in
particular! for maintain and impro&ing the physical! social and market infrastructure" /urrently only
political risk Dllo might face toward de&elopment is the ecessi&e corruption of go&ernment
regulators in 7angladesh"
+he economic en&ironment O
+he economic acti&ity affects firms at both national and international le&el! both in the general
le&el of economic acti&ity and in particular &ariables! such as exchange rates! interest rates and
inflation
Since there is a shortage of gross domestic product in 7angladesh the demand for goods andser&ices
are low here"3lso! because of the critical inflation situation Dllo might face problems relating with
price inneat future"
+he socio)cultural en&ironment O
+he social and cultural en&ironment features long)term social trends and peoples beliefs"+hese can
bring changes in Dllos patterns of demand! location of demand and recruitment policies"
+he technological en&ironmentO
+he types of products or ser&ice that are made and sold! the way in which products aremade! the
way in which ser&ice are pro&ided! the way in which markets are identified! theway in which the
firms are managed! and the means and etent of communication witheternal clients all depends on
the technological en&ironment"Dnly reason ser&ice pro&ider like Dllo eist is because of
the technological de&elopment inwireless sector"
0n&ironmental protection O
+he physical en&ironment is important as a source of resources and because of
increasingregulation"3s a ser&ice pro&ider Dllo does not enforce much en&ironmental resources!
still they do useresources like electricity and gas"
+he legal en&ironment O
Aaws come from common law! parliamentary legislation and go&ernment regulationsderi&ed from
it"0specially the ta law and competition law effects companies like Dllo directly"
Task %
7e able to access the significance of global factors that shape the national business acti&ities
%&'( discuss the significance of international trade to U) business organi*ations#
+he buying and selling of goods and ser&ices across national borders is known asinternational trade"
International trade is the backbone of our modern! commercial world!as producers in &arious
nations try to profit from an epanded market! rather than belimited to selling within their own
borders"
-or an indi&idual UI business organi#ation eporting to o&erseas markets can be attracti&e for a
number of reasons" Some are as followed*
i" D&erseas markets represent new market segments"
ii" Saturation of its domestic market can force an organi#ation to seek o&erseas markets"
iii" +he nature of a firms product may re$uire an organi#ation to become acti&e in an o&erseas
market"

i&" /ommercial buyers of products operating in a number of o&erseas countries mayre$uire their
suppliers to be able to cater for their needs across national boundaries"
&" Some goods and ser&ices are highly specialised and the domestic market is toosmall to allow
economies of scale to be eploited
B".* 3nalyse the impact of global factors on UI business Drgani#ationsN
7ecause of the international nature of ser&ice markets! the ser&ice industry is hea&ilyinfluenced by
global economic de&elopments"
+he barrier between the domestic and international en&ironment is relati&ely permeable" Intimes of
free trade! firms can epect incoming competition" +hat said the possibility of competing abroad is
also a&ailable"
+he en&ironment of international trade can be analy#ed using the ;0+0A approach"
;olitical factors (Ho&ernment attitudes)
+he de&elopment of plans in global en&ironment depends on the stability of thego&ernment! its role
in the economy! international relations and informal relations betweengo&ernment officials and
businesses"
+here is a risk of business being epropriated by the local go&ernments and there is also therisk of
political unrest affecting the business"
+o reduce these risk*
i"Use local partners with good contacts"
ii"Use leasing rather than outright purchase of facilities in o&erseas markets"
iii"+ake out insurance"
0conomic factors
0conomic factor affect the demand for! and the ability to ac$uire! goods and ser&ices"1ere are
some important economic factors that can affect a business*
i" +he o&erall le&el of economic acti&ity"
ii" +he relati&e le&els of inflation in the domestic and o&erseas market
"iii" +he echange rate"
i&" +he relati&e prosperity of indi&idual o&erseas markets"
&" 0conomic growth in newly industrialised countries"
Social issues
/hanges in social trends can impact on the demand for a firmGs products and the a&ailability and
willingness of indi&iduals to work
In the UI! for eample! the population has been ageing" +his has increased the costs forfirms who
are committed to pension payments for their employees because their staffs areli&ing longer"
+he ageing population also has impact on demand* for eample! demand for
shelteredaccommodation and medicines ha&e increased whereas demand for toys is falling"
+echnological factors
3 business is affected by following technological factors*
i"3ccess to domestic and o&erseas patents"
ii"Intellectual property protection"
iii"+echnology transfer re$uirements"
i&"8elati&e cost of technology compared to labour"
3lthough! new technologies create new products and new process it cannot on its own promote
economic growth" Modern gadget and techni$ues ha&e had &ery une&en success inmodernising
underde&eloped countries"
0n&ironmental protection
+he en&ironment and sustainability aspects of the home en&ironment are e$ually applicablein the
international trade en&ironment" +he legislati&e impact may differ! but the westernmedia are likely
to gi&e enormous publicity to any percei&ed failings"
Aegal factors
Aegal factors are related to the legal en&ironment in which firms operate"In recent years in the UI
there ha&e been many significant legal changes that ha&e affectedfirmsG beha&iour"
+he introduction of age discrimination and disability discrimination legislation! an increasein the
minimum wage and greater re$uirements for firms to recycle are eamples of relati&ely recent laws
that affect an organisationGs actions"
Aegal changes can affect a firmGs costs (e"g" if new systems and procedures ha&e to bede&eloped)
and demand (e"g" if the law affects the likelihood of customers buying the goodor using the ser&ice)
B"2* 0&aluate the impact of polices of 0uropean on UI business organi#ationsN
+he 0uropean Union comprises fifteen member states! with a further enlargement planned"It is a
free trade area! and a customers union with a common eternal tariff"
+here are two sources of 0U law*
;rimary sources
P +reaty ;ro&isions Q+reaty of 8ome! +0UR
Secondary sources
Aegislation made by the 0U institutions
0/<s interpretations of primary and secondary sources of 0U law
3rticle .BM of the +reaty pro&ides that Secondary legislation constitutes the following*
S8egulation
S%irecti&e
S%ecision
S8ecommendations and opinions
8egulations are the most direct form of 0U law ) as soon as they are passed! they ha&e binding legal
force throughout e&ery Member State! on a par with national laws" 4ational go&ernments do not
ha&e to take action themsel&es to implement 0U regulations"
0U directi&es lay down certain end results that must be achie&ed in e&ery Member State" 4ational
authorities ha&e to adapt their laws to meet these goals! but are free to decide how to do so"
%irecti&es may concern one or more Member States! or all of them" 0ach directi&e specifies the date
by which the national laws must be adapted ) gi&ing national authorities the room for maneu&er
within the deadlines necessary to take account of differing national situations"
In order to 'oin the Union! some economic and political conditions must be fulfilled9 according to
which a perspecti&e member must*
i"7e a stable country! respecting human rights! the rule of law! and the protectionof minorities"
ii"1a&e a functioning market economy"
iii"3dopt the common rules! standards and policies that make up the body of 0U law"
+he 0U assists these countries in taking on 0U laws! pro&ides a range of financial assistanceto
impro&e their infrastructure and economy"
+he 0uropean /ommission is the eecuti&e of the 0U" +he main tasks of the /ommission are to*
i"0nsure that community rules and the principles of the :common market are obser&ed"
ii"Make policy proposals to the council of ministers"
iii"0nforce the implementation of legislation"
i&"3dminister community ependiture"
+he 0uropean 0conomic /ommunity has a number of features affecting UI business"
Dn goods*
i"3n end to customs documents"
ii"4o need for traders to submit ta declarations"
Dn internal market*
i"-irms learn to compare more effecti&ely"
ii"Dpen trade policy makes 0U firms match the world best"
iii"Stable echange rates cement the internal market"
i&"Internal market rules embody a high le&el of en&ironmental protection"
0limination of trade restrictions co&ers the following areas*
i" 0uropean regulations and standards means that products appro&ed in any one 0U country can be
freely marketed throughout the Union"
ii"+here is more competition and efficiency in 0urope)wide ser&ices intelecommunications and
information technology by de&eloping commonstandards for e$uipment"
iii"Shipping ser&ices between member countries are being pro&ided on e$ual terms"/ompetition on
air routes ha&e increased! resulting in lower fares"
i&";rotections of ideas ha&e become easier through harmonisation of national lawson patents!
trademarks and copyrights"