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Environment
Subject – Business
Environment
Batch - 33
9/6/2014
Acknowledgment
I express my sincere gratitude to all the following individuals those contributed towards
the success full completion of my Business environment assignment.
Finally I would like to thank to staff of ESOFT as they provide necessary support during
the period of assignment.
The beginning of the CPC was made as a state enterprise act No:- 28 of 1961 at the parliament in
Sri Lanka.
The main objective of CPC is to provide continuous fuel supply to fulfil sri Lankan needs.
To do the above successfully, CPC has to import oil from foreign countries.
An also, CPC import some part of oil as crude oil and convert them into various petroleum
products at the refinery at Sapugaskanda.
To attend all the things properly, CPC has to consider the environment factors, safety and
welfare of the employees.
Finally, CPC should attend to the duties by following the conditions mentioned in factory
ordinance
A variety of legal structures exist for private sector business organization, depending on the
jurisdiction in which they have their legal domicile. Individuals can conduct business without
necessarily being part of any organization.
Sole trade
Partnership, either limited or unlimited liability
Public limited company – shares are open to the public. Two examples are:
Franchise – business owner pays a corporation to use their name, receives spec for the business
Workers cooperative – all workers have equal pay, and make joint business decisions
Private companies may issue stock and have shareholders. However, their shares do not trade on
public exchanges and are not issued through an initial public offering. In general, the shares of
these businesses are less liquid and the values are difficult to determine.
The standard legal designation of a company which has offered shares to the general public and
has limited liability. A Public Limited Company's stock can be acquired by anyone and holders
are only limited to potentially lose the amount paid for the shares. It is a legal form more
commonly used in the U.K. Two or more people are required to form such a company, assuming
it has a lawful purpose.
A limited company grants limited liability to its owners and management. Being a public
company allows a firm to sell shares to investors this is benificial in raising capital.
Advantages:
1. The liability being limited the shareholder bear no rick & therefore more as make persons
are encouraged to invest capital.
2. Because of large numbers of investors, the risk of loss is divided.
3. Joint stock companies are not affected by the death or the retirement of the shareholders.
Disadvantages:
1. It is difficult to preserve secrecy in these companies.
2. It requires a large number of legal formalities to be observed.
3. Lack of personal interest.
4. Different between public company and the private company
8. Issue of Prospectus: A Private Company is prohibited from inviting the public for
subscription of its shares, i.e. a Private Company cannot issue Prospectus, whereas a
Public Company is free to invite public for subscription i.e., a Public Company can issue
a Prospectus.
9. Number of Directors: A Private Company may have 2 directors to manage the affairs of
the company, whereas a Public Company must have at least 3 directors.
10. Consent of the directors: There is no need to give the consent by the directors of a Private
Company, whereas the Directors of a Public Company must have file with the Registrar
consent to act as Director of the company.
11. shares : The Directors of a Private Company need not sign an undertaking to acquire the
qualification shares, whereas the Directors of a Public Company are required to sign an
undertaking to acquire the qualification shares of the public Company
12. Shares Warrants: A Private Company cannot issue Share Warrants against its fully paid
shares, whereas a Private Company can issue Share Warrants against its fully paid up
shares.
Voluntary organization
A voluntary association or union (also sometimes called a voluntary organization,
unincorporated association, or just an association) is a group of individuals who voluntarily enter
into an agreement to form a body (or organization) to accomplish a purpose.
Many voluntary organizations are working in this district for socio economic development of
rural people and for promotion and dissemination of art, culture & sports.
Charitable organization
A charitable organization is a type of non-profit organization (NPO). The term is relatively
general and can technically refer to a public charity (also called “charitable foundation,” “public
foundation” or simply “foundation”) or a private foundation. It differs from other types of NPOs
in that its focus is centered on goals of a general philanthropic nature (e.g. charitable,
educational, religious, or other activities serving the public interest or common good)
The legal definition of charitable organization (and of charity) varies according to the country
and in some instances the region of the country in which the charitable organization operates.
Charities and voluntary organizations share many features. They are generally:
Government organization
Government company” means any company in which not less than fifty one percent of the paid-
up share capital is held by the Central Government, or by any State Government or
Governments, or partly by the Central Government and partly by one or more State
Governments, and includes a company which is a subsidiary company of such a Government
company”
Cooperative
Cooperative, organization owned by and operated for the benefit of those using its services.
Cooperatives have been successful in a number of fields, including the processing and marketing
of farm products, the purchasing of other kinds of equipment and raw materials, and in the
wholesaling, retailing, electric power, credit and banking, and housing industries. The income
from aretail cooperative is usually returned to the consumers in the form of dividends based on
the amounts purchased over a given period of time.
Modern consumer cooperatives, usually called co-ops in the United States, are thought to have
begun in Great Britain in 1844, with the Rockdale Equitable Pioneers Society the society created
asset of organizational and working rules that have been widely adopted. They included open
The cooperative movement developed rapidly in the latter part of the 19th century, particularly in
the industrial and mining areas of northern England and Scotland. It spread quickly among the
urban working class in Britain, France, Germany, and Sweden and among the rural population of
Norway, the Netherlands, Denmark, and Finland.
In the United States, attempts at consumer and agricultural marketing cooperatives were made at
the beginning of the 19th century. Although most U.S. cooperatives developed in rural areas,
consumer and housing cooperatives spread substantially in metropolitan areas in the late 20th
century.
Cooperatives were introduced in Latin America by European immigrants in the early 1900s; later
they were often fostered by state action in connection with agrarian reform. Marketing and credit
cooperatives have been important in many African nations, especially since World War II.
During the Soviet era, marketing cooperatives of the U.S.S.R. and Eastern Europe functioned as
part of a centrally controlled purchasing network for farm produce. Cooperative farms in those
countries were modeled on the Russian artel, in which all land was pooled and worked in
common and income was distributed according to work performed.
Task 01 (1.2)
A stakeholder is any individual or organization that is affected the activities of a business. They
may have a direct or indirect interest in the business, and may be in contact with the business on
a daily basis, or may just occasionally.
Management and employee – they may also be shareholders - they will be interested in their job
security, prospects and pay.
Government – especially the Inland Revenue and the customers and excise who will be
collecting tax from them.
Pressure groups – who are interested in whether the business is acting appropriately towards their
area of interest.
Combine high levels of performance with responsibility for all stakeholder groupings. The
company recognizes that its long-term development depends on maintaining a balance between
the needs of customers, employees, shareholders and the environment. This involves not only
considering the 'individual benefit' of a particular stakeholder grouping, but also the 'collective
benefit' of all the groups.
Task 01 (1.3)
Level 1 - Basic Value Proposition At this most basic level, the entrepreneur or manager needs to
understand how the firm can make the customer better off, and simultaneously offer an attractive
value proposition to employees, suppliers, communities, and financiers.
The competitive, macro-economic, regulatory, and political environments are so dynamic they
necessitate constant revision of the initial stakeholder arrangements. Each revision upsets the
delicate balance struck in the basic value propositions to various stakeholders. Managers must
have a deep understanding of how these trade-offs affect each stakeholder, the amount of
sacrifice a given stakeholder will accept, and how these current sacrifices can be compensated.
Recognize that stakeholders are real and complex people with names, faces and values.
We often make assumptions that business people are only in it for their own narrowly defined
self-interest. Most human beings are more complicated. Most of us do what we do because we
are both self-interested and interested in others. Business works in part because of the urge to
create things with others and for others.
Every company, business, department has a duty and remit to provide a service.
An organization must operate within the boundaries of the law. Reputation and trust are
everything, and a consumer can’t have trust or faith in your ability to deliver if you
can’t prove and guarantee you’re legitimacy.
An organization must also have strict financial control. Taking a gamble is acceptable but sloppy
mathematics in a budget isn’t. Inadequate financial management is more likely than not going to
result in bankruptcy and closure, losing investors a hefty sum of money.
Recruitment is vitally important. You need reliable workers who have enthusiasm but also
intelligence; workers that are able to be creative but also to take advice and critique from
management. Poor recruitment can result in a lack of progress or the inability to develop a
rapport with prospective clients and consumers. Human Resources comes into effect here too,
because a successful workforce is a happy workforce, and vice versa. Finding out what the
employees expect of management and in terms of support and acting upon this will generate
positive momentum. A popular place to work quickly becomes a popular place to do business
with. Structured management is obvious. There needs to be a boss who hires and fires, who has
the respect of the employees and keeps the management in check. There also needs to be
managers along the way down to the base level, to act in the same manner and make sure the
workforce meets their targets that their complaints or ideas are heard, and that can provide ideas
for growth or improvement.
Marketing is the final point and is vital. People can’t consume what they don’t know about. A
good campaign is critical. Depending on the organization’s function and aims you will choose a
medium and manage where these advertisements appear and are linked in so as to be relevant
and enticing.
Task 02 (2.1)
An economy consists of the economic system of a country or other area, the labor, capital and
land resources, and the economic agents that socially participate in the production, exchange,
distribution, and consumption of goods and services of that area.
Land – all the natural resources of the earth. That includes the fish in the sea, all the minerals
found in the earth, metals, sand, stones, rocks, timber, food form the soil and so on. Economists
have a name for the reward for the income form ‘land’ which is rent.
Labor – all the human mental and physical effort that goes into production, this will include
people who work as street cleaners, people who are interior designers, teachers, the police,
doctors, bricklayers, architects and so on. The reward for labor is referred to as wages.
Capital – all the equipment, machinery and buildings that is not used for its own sake but for the
contribution it makes to production. This includes things like office desks and chairs, computers,
Lorries, cranes, specialist machinery in a factory, the humble office coffee machine and so on.
The ‘price’ of acquiring capital is referred to as interest.
Command economy:
Also known as controlled economy. This is an economy where both the supply and price are
controlled by the government rather than the market forces. Government decides which good or
service should be produced, how should it be produced and for whom it shall be produced.
Transitional economies:
A transition economy or transitional economy is an economy which is changing from a centrally
planned economy to a free market. Transition economies undergo economic liberalization, where
market forces set prices rather than a central planning organization and trade barriers are
Consumers and producers take prices as a symbol in a free market. When the product prices
raises as compared to another product on the customer behalf. The purchased products should be
rationed by the consumer. In other words, every product should be treated dearly due to higher
cost at which they are purchased. A great revenue opportunity is gained by the producers when
the price of specific products goes higher. By the government there is low intervention in the
market in the free market economic system which causes waste of market forces. China has the
world’s successful economy. In china allocation of resources is done mostly by the private
sector, the producer sets the price of their products according to the demand of their product and
the chinies government does not enforce restrictions on the prices.
In china resources are allocated according to the demand. In short, the Free Market leads to an
efficient allocation of resources because prices are continually fluctuating, demonstrating
scarcity and surplus through the actions of millions of individuals.
Economic systems
Type of economies
- Different approaches or economies systems are adopted by different countries. In a free market
economy, government intervention is kept to the minimum while supply and demand and the
ability to pay influence decision making. Most decisions are based on market mechanism.
The profit motive of the free market economy, however, give rise to question of who
will provide not-for-profit goods and services and infrastructures necessary for the country to
meet the needs of the Public. On the other hands, in a command economy, resources are centrally
planned and controlled by the government. This, however, means that no freedom for individuals
to choose what they produce and what they consume. Most, if not all, countries adopt a mixed
economy today. That is, a mixed economy combines elements of both free private enterprises
and intervention, in varying guises, by the state.
Effective use of resources
-i. The extent to which the mix economies, for effective allocation of resources, between the
government intervention and private enterprises varies from countries to countries. Government
interventions are usually in the form provision or prohibition, subsidies or tax and regulation. For
example, public goods are priced low or zero to maximize consumption and increase social
benefits. Merit goods are encouraged by subsidies to increase consumption whereas the de-merit
goods are taxed heavily to reduce social costs. Most government has subsidized heavily
education of children to ensure the less fortunate are not left out from the main stream.
According to the four main resources Sri Lanka has enough lands to use for businesses, but there
are limited numbers of lands in high residential arias, considering about the labor, Sri Lanka has
labor more than the demand in that case Sri Lankan labor cost is very low, considering about
Capital – Sri Lanka has very limited capital to invest. Because most of investors they don’t like
to invest in Sri Lanka because of the unstable political background, inflation and the high
taxation in Sri Lanka. Final resource is enterprise. Enterprise in Sri Lanka is in very good level
but there are some difficulties to do those thing in Sri Lanka, such as inflation, politics, interest
rates and the taxation.
Task 02 (2.2)
In economic, fiscal policy is the use of government expenditure and revenue collection to
influence the economy. Fiscal policy can be contrasted with the other main type of economic
policy, monetary policy, which attempts to stabilize the economy by controlling interest rates
and the supply of money. The two main instruments of fiscal policy are government expenditure
and taxation.
Fiscal policy: Fiscal policy is basically used for the betterment of a society or a country or a
nation, it works for the development of the economy of any state .it generates its own funds via
taxation and the revenue generated by the government is spent on the state in its different fields
like education ,employment ,constructions and medications etc. . The amount of revenue
collected is less than the amount budgeted, the country is said to be running at a deficit and
issues debt (notes and bonds) to make up the difference. There are three types of fiscal policy
which are mentioned below
1. Neutral fiscal policy: this is undertaken when economy is in equilibrium. Here the government
spending is completely funded by the taxes.
2. Expansionary fiscal policy: this is undertaken in recession. This is when the government
spending increase than the taxes collected.
Monetary policy is the process a government, central bank, or monetary authority of a country
uses to control (i) the supply of money, (ii) availability of money, and (iii) cost of money or rate
of interest to attain a set of objectives oriented towards the growth and stability of the economy.
The monetary policy have a huge effect on the overall economy of any nation it all also effects
business organizations by lacking them to have an opportunity to avail credits for their further
investments. in contractionary monetary policy it higher the interest rates which reduces the
supply of money and it gets harder for any business organization to be financed by other sources,
where as in expansionary monetary policy it provides lower inters rates so for any business
organization it gets easier to be financed by other sources and the organization can avail a lot of
new opportunities.
In fiscal policy the government either changes the level of taxation or the level of spending. If
government increases the level of taxation so people will be left with little disposable income so
they will spend less. As a result spending in the economy will fall. Raising taxes will also affect
the producers as well because when taxes are raised people pending falls this means the demand
for products falls and thus the revenue falls. However if the tax is reduced and the government
spending is increased people will have more money this will increase the aggregate demand in
the economy in order to cope with this high demand producers increases their operations for this
they hire more labors so with this the unemployment rate also falls. Expansionary fiscal policy
also decreases exports.
There will be also downward pressure on spending in the economy. This will hit the producers as
well because they will face a fall in demand and thus fall in revenue. High interests will also
attracts great inflows of money because people from outside will put money in banks of that
country in order to get higher rate of return on it. Same will be the case with domestic people
they also will put money in banks for high return and this again will decrease the spending in the
economy. However if the interest is lowered so people will start taking loans from the banks and
they will start investment, this also will increase the spending and producers or firms will
experience an increase in their demand. As a result the unemployment rate will also fall because
the producers will hire more labors in order to cope with the demand.
Task 02 (2.3)
Private companies can be divided into many organizational types like sole traders; private
limited companies (Ltd), partnerships, public limited companies (PLC).These have mainly
financial objectives. However, nowadays all organizations understand the importance of
introducing non-financial objectives to their portfolio.
The motivation and design of Italy’s competition policy have made it a strong foundation for
market-oriented regulatory reforms. This role for competition policy institutions is particularly
significant, in light of the magnitude of the challenge that Italy faced in improving market
functioning. Its traditional policy framework for market regulation took little note of competition
principles, and thus competition policy faced a host of constraints imposed by the government
itself.
• A multitude of controls on entry and market conduct, through concession and licensing
Requirements and other regulations, especially in services and professions;
• Devolution of responsibilities to local governments, which apply many of these constraints, and
which are responsible for delivering services in traditionally monopolized sectors, but which are
not always sympathetic with the objectives of competition-based reform;
• Reform of local utilities and public services, through legislation now being developed.
Implementing details need to be worked out carefully, to ensure that local and regional
government action does not dilute the success of large-scale infrastructure reforms;
Task 03 (3.1)
The popular basis of classifying market structures rests on two crucial elements, (1) the number
of firms producing a product and (2) the nature of product produced by the firms that is whether
it is homogeneous or differentiated. The price elasticity of demand for a firm’s product depends
upon the number of competitive firms producing the same or similar product as well as on the
degree of substitution which is possible between the product of a firm and other products
produced by rival firms. Therefore, a distinguishing feature of different market categories is the
degree of price elasticity of the demand faced by an individual firm.
Perfect Competition
As is evident from the above Table, Perfect Competition is said to prevail where there is a large
number of producers (firms) producing a homogeneous product. The maximum output which an
Imperfect Competition
Imperfect competition is an important market category wherein individual firms exercise control
over the price to a smaller or larger degree depending upon the degree of imperfection present in
a case. Control over price of a product by a firm and so the existence of imperfect competition
can be caused either by the fewness of the firms or by the product differentiation. Therefore,
imperfect competition has several sub-categories. The first important sub-category of imperfect
competition is Monopolistic competition. In monopolistic competition a large number of firms
produce somewhat different products which are close substitutes of each other. The second sub-
category is oligopoly without product differentiation which is also known as pure oligopoly.
Under it there is competition among the few firms producing homogeneous or identical products.
The fewness of the firms ensures that each of them will have some control over the price of the
product and the demand curve facing each firm will be downward sloping which indicates that
the price elasticity of demand for each firm will not be infinite. The third sub-category is called
differentiated oligopoly. It is characterized by competition among the few firms producing
differentiated products which are close substitutes of each other. The demand curve under this
kind of oligopoly is downward sloping and so firms would have control over the price of their
individual products.
EQUILIBRIUM OF A FIRM
Firm is said to be in equilibrium when it has no tendency either to increase or to contract its
output. Firm’s equilibrium level of output will lie where its money profits are maximum. Now
profits are the difference between total revenue and total cost. So in order to be in equilibrium,
the firm will attempt to maximize the difference between total revenue and total cost.
An old method of explaining the equilibrium of the firm is to draw the total revenue and total
cost curves of the firm and locate the maximum profit point. But, with the appearance of
Marginality Revolution, equilibrium of the firm is explained with the aid of marginal revenue
and marginal cost curves.
Equilibrium of the Firm by Curves of Total Revenue and Total Cost Profit is the difference
between total revenue and total cost. Thus the firm will be in equilibrium at the level of output
where the difference between total revenue and total cost is the greatest. Figure 8.1 depicts short-
run total revenue and total cost curves of the firm. As a firm starts from zero output and increases
its production of the good, in the very initial stages, total cost is greater than total revenue and
the firm is not making any profit at all. When it is producing OL level of output, total revenue
just equals total cost and the firm is therefore making neither profits, nor loss, that is, the firm is
only breaking even. Thus the point S corresponding to OL output is called break-even point.
When the firm increases its output beyond OL, total revenue becomes larger than total cost and
profits begin to accrue to the firm. It will be seen that profits are rising as the firm increases
production up to output OM. At OM output, the distance between TR and TC is the greatest and
The firm will be making maximum profits by expanding output to the level where marginal
revenue is equal to marginal cost. If it goes beyond the point of equality between marginal
revenue and marginal cost, it will be incurring losses on the extra units of output and therefore
will be reducing its total profits. Thus, the firm will be in equilibrium when it is producing the
amount of output at which marginal revenue equals marginal cost. It will be earning maximum
The equality between marginal revenue and marginal cost is a necessary but not a sufficient
condition of firm’s equilibrium. The second order condition requires that for a firm to be in
equilibrium marginal cost curve most cut marginal revenue curve from below at the point of
equilibrium.
Only at the equilibrium price, wishes of both the buyers and sellers are satisfied. If prices were
greater or less than the equilibrium price the buyers, and sellers’ wishes would be inconsistent. If
prices were greater than the equilibrium price, quantity supplied would exceed quantity
demanded. It means some of the sellers will not be able to sell the amount of the goods they
wanted to supply. These sellers would try to dispose of the unsold goods by bidding price down.
Task 03 (3.2)
There are varieties of market forces may need to be addressed by your organization; there are
three common ones that affect businesses today; customer responsiveness, information demand
and cost pressure.
The relationship between demand and supply underlie the forces behind the allocation of
resources. In market economy theories, demand and supply theory will allocate resources in the
most efficient way possible.
Market forces shape organizational responses through a very basic economic principle: Supply
and demand.
A company or organization will always try and predict demand for its product or service,
and ensure that demand is met by implementing a cost effective strategy.
Market forces, by definition, can have an effect on that demand - and as such, will have an affect
on the supply chain and strategy used by an organization.
Market forces describe the interaction between supply and demand within a market.
Organizational response is the reaction given by a company or business to an economical or
business circumstance. An organization’s response to market forces is key in any circumstance
as it will have a direct impact on the company’s profits and reputation. In terms of supply and
demand the most successful companies will have appropriate market research and analysis in
place to ensure that they are able to supply a product or service to meet the demands of its
customers.
If a company has judged the market demand for their product correctly then they will keep their
customers happy by ensuring they supply the product or service requested by their customers in
the appropriate quantities. It will also increase profits as the company will have judged their
margins correctly to be able to supply and sell as much of their product as possible, without over
stocking, bringing added finances to the business. Poor judgment could lead to a
misinterpretation of market forces, either leaving customers empty handed as not enough product
has been supplied, or leave their business overstocked as customers do not want the quantities
supplied. In both scenarios a company’s profits would be greatly affected, and the organization’s
reputation may be tarnished.
The relationship between market forces and organization response is therefore paramount in
terms of business success and customer satisfaction. For this reason, market research is key in
order to determine market forces so that an organization can respond correctly to the market they
Since the 1990s, the financial services sector has played an increasingly significant role in the
English economy and the City of London is one of the world's largest financial centers’. Banks,
insurance companies, commodity and futures exchanges are heavily concentrated in the City.
The British pound sterling is the official currency of England and the central bank of the United
Kingdom, the Bank of England, is located in London. United States
The US has abundant natural resource, a well-developed infrastructure, and high productivity. It
has the world's sixth-highest per capita GDP (PPP). The U.S. is the world's third-largest producer
of oil and second- largest producer of natural gas.
It is the second-largest trading nation in the world behind China. It has been the world's largest
national economy (not including colonial empires) since at least the 1890s. China
the Socialist market economy of People’s Republic of China (PRC) is the world's second largest
economy. It is the world's fastest-growing major economy, with growth rates averaging 10%
over the past 30 years. China is also the largest exporter and second largest importer of goods in
Task 03 (3.3)
When considering CPC activities in Sri Lanka, CPC should adopt to below mention criteria.
Political environment can affected any business in the country, especially countries like Sri
Lanka. Sri Lanka has very unstable political parties in that case Sri Lanka can’t enter in to
international agreement. In this case Sri Lanka doesn’t have petroleum in that case Sri Lanaka
has to import everything. Other thing is Sri Lanaka doesn’t have any barging power because Sri
Lanka is a very small buyer when comparing with other countries.
In Sri Lanaka CPC control by the government in that case political changes are directly affect to
CPC.
"The end of armed conflict provides Sri Lanka with a historic opportunity to achieve a dual
transition from a low income country in conflict to a middle income country in peace," the bank's
latest economic update on the country said.
"For longer-term stability needed to bolster the investment climate it would be necessary to
address minorities’ underlying grievances."
But underlying Tamil grievances on sharing political power that triggered the war remain
unresolved leading to fears Tamil Tiger extremists might try to revive the conflict.
The World Bank report said that in terms of devolution of power to provincial councils, the Sri
Lankan government has announced further devolution will only be considered after the
forthcoming elections.
The World Bank said that preliminary estimates suggest that Sri Lanka’s long-term potential
growth rate is around six percent.
"The post-conflict boom may help Sri Lanka to return relatively rapidly to growth rates in this
range, but is unlikely to significantly increase the long-term potential growth rate, unless a
significant structural policy agenda is implemented."
The bank said that prospects for enhanced foreign direct investment inflow would depend on an
improvement in the overall investment climate, elimination of the security threat, improvement
in debt sustainability prospects and continuation of low inflation.
"In the short-to-medium term, prospects for the Sri Lankan economy look positive," the report
said.
"First, there are increasing signs that the global economic crisis is bottoming out.
"Prospects of a global recovery would provide enhanced growth impetus through recovery in
exports, increase in tourism and possible greater FDI inflow."
In a low-inflation environment, the real effective exchange rate can be expected to support
export competitiveness, the World Bank said.
But the bank said that sustaining the positive investor sentiment will be a key challenge in the
coming months.
"A still-weak global economy, uncertainty about the continuation of the preferential access for
Sri Lankan exports to the EU market under the GSP+ scheme and persistently high fiscal deficits
are risks to the outlook."
On the other hand, the World Bank said, reconstruction spending in the war-affected north is
expected to provide a short-term stimulus, while the lagged effects of the recent monetary
stimulus would also act as a fillip.
"In the longer term, movement towards a sustainable political solution to the underlying causes
of the conflict will be key, as will decisive moves on the structural policy agenda to unleash Sri
Lanka’s full growth potential."
Sri Lanka is one of the fastest growing economies in the world and an emerging investment
hotspot. Over the last two decades, substantial steps have been taken to diversify the economy,
and open it up to trade. The Government’s 10-year development plan envisages the key role in
promoting economic growth, with a focus on harnessing resources to the less developed regions.
Key policy documents advocate infrastructure development and livelihood support in rural areas.
The economy grew by 8.3 per cent in 2011, the highest in Sri Lanka’s post-independence
history, following a growth of 8 per cent in 2010. Improved consumer and investor confidence
arising from the peace dividend, favorable macroeconomic conditions, increased capacity
1. Employee law, under employee law if the any employee who working as a permeant employee
CPC should give EPF, ETF, funds to the employee and as a basic salary CPC should pay at least
the minimum salary amount. And employee who is working more than the working hours CPC
should pay the overtime to the employee.
2. Government pricing control. CPC should follow the government pricing control. CPC can’t
apply their own pricing.
3. Business registration. CPC should be under Sri Lankan government and government control.
CPC can’t privatize.
According to the PESTEL analyze this is the six types of environment CPC should face in Sri
Lanka.
Task 04 (4.1)
One of the biggest challenges for business organisations in the UK is learning how and where to
trade overseas. In an interdependent world, international trade is an economic necessity.
However, there are marked differences between trading in a national economy with known
markets and known parameters, and trading on an international basis. Business organisations
require support to enter markets as well as to sustain their activities.
This case looks at British Trade International and its aim to help UK firms compete successfully
overseas.
British Trade International helps businesses make the most of global trading opportunities. With
over 800 staff in the UK and over 200 diplomatic posts overseas, British Trade International
supplies various information, from basic advice - such as for a small business which may be a
first time exporter to Dublin - to highly specific niche market information, i.e. a small specialist
market.
Within the UK, British Trade International provides dedicated market support including:
advice/information services for initial market research
professional help from export promoters who have widespread export experience
information on various methods of conducting business in a specific country
help with meeting language and cultural requirements
assistance in bringing key contacts to the UK
Helping UK organizations market themselves overseas, including grants for visiting countries
and exhibiting at international trade shows.
Services tailored for each organization’s needs are provided by British Trade International’s
overseas offices, which can supply direct support for each exporter.
British Trade International’s Export Market Information Centre possesses an extensive range of
publications and statistics relating to businesses worldwide. It may be accessed in person, by
telephone, fax or e-mail. Making the most of IT and the Internet is another major step in
improving services to UK businesses.
A new Internet service, Trade UK, provides information on sales leads gathered by overseas
offices. This is instantly fed into the system so UK companies can respond more rapidly than
their competitors to new business opportunities.
UK businesses can obtain details of all the leads together with full details of five leads free every
month. To access Trade UK, a business has to be part of the National Exporters’ Database. This
Task 04 (4.2)
Politics, economy, society, and technology are the 4 key global factors that influence UK
businesses.
The impact of global factors on the UK economy and UK business can actually be explored by
breaking down the various strategies businesses in the United Kingdom employ, and then
looking at the factors that influence and affect those strategies.
The following are seen as factors that can influence the success rate of the aforementioned
strategies:
1. Politics
2. Society and culture
3. Economic stability
4. Technology
These are known by the acronym PEST, and are a well-established group of factors that can
impact not only UK business organizations, but also the economy of any sovereign state that
takes part in international trade or the free market.
Task 04 (4.3)
Employment policy:
Governments play a major part in trying to stimulate employment. For example, the present
government is keen to encourage business efficiency so that UK businesses are competitive in
international markets and therefore create jobs. For those who have difficulty finding work, the
2. Regional policy:
At European Union level, funds are made available to support regions of high unemployment
and social deprivation such as large areas of Southern Italy and rural France, as well as the
Highlands and Islands of Scotland. Regional policy sets out to compensate for the fact that with
the development of the more prosperous parts of the European Union, jobs have been lost in
other areas.
3. Inflation policy:
The government seeks to make sure that there are no sudden general rises in prices. They do this
through the Monetary Policy Committee (MPC) of the Bank of England which sets interest rates.
Interest rates are put up if there is a danger of people borrowing and spending too much, thus
pushing prices up. Raising interest rates makes it more expensive for businesses to borrow
money. It also makes it more expensive for consumers to borrow money. They then have less to
spend, which helps to force down prices.
6. International policy:
The government can promote trade, encourage sales of British goods abroad (exports), or
discourage goods coming in from other countries (imports).
European Union
The European law making it compulsory for coach passengers to wear seatbelts was costly for
bus companies because it forced them to fit safety belts - but it also makes passengers a lot safer.
European Union regulations are directly binding on all Member States without the need for
national legislation to put them in place.
European Union directives bind Member States to the objectives to be achieved within a certain
time-limit, but leave national authorities to decide on how to implement them. Directives have to
be implemented in national legislation.
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