assignment 1
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Prague College
Business Environment and Organization’s Mission
Statement
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Table of contents
1.0 Introduction
2.0 Main body
2.1 Identify the mission, values and key objectives of an organization and assess the
influence of stakeholders
2.2 Evaluate the extent to which an organisation achieves the objectives of three
stakeholders
2.3 Explain the responsibilities of an organisation and strategies employees to meet them
2.4 Explain how economic system attempt to allocate and make effective use of resources
2.5 Discuss the impact of social welfare and industrial policy initiatives on organizations
and the wider community
2.6 Evaluate the impact of macroeconomic policy measures and the influence of the
global economy on the UK-based organizations and stakeholders
3.0 Conclusion
4.0 References
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Introduction
In this assignment I will identify and discuss the ‘mission and goal’ of organization. I will show
the key objectives of organization and the responsibilities of organizations. I will also show the
example of organization’s responsibility. Also I will add the analysis of the three components of
business environment. This will include the analysis of Economic, Global and Social
environment. In the end I will make conclusions about the organizations’ tasks, goals and
responsibilities and about the role of the environment of organizations.
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Main Body
Identify the mission, values and key objectives of an organization and assess
the influence of stakeholders.
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010)
mission ‘describes the organization’s basic function in society, in terms of the products and
services it produces for its clients’. The mission of any organisation is the specific role, which
the organisation is planning to fulfill within society over the long term. This mission of
organization doesn’t allow the organisation to work in the areas outside its started mission. So
we can say that the mission of the organisation is a set of principles the organisation should
follow. But it can also influence the planning process. All the plans of the organisation should
follow the mission statement of the organisation. So we can say that the mission statement of the
organisation is the set of rules that organisation should follow in order to be successful, but there
are some problems connected with the mission. The first and the main problem is that mission is
sometimes stated only on the paper, when in real life no one is following it. The second big
problem is that mission can be made by the organisation in order to rationalize the relationships
with the certain audience (e.g. government, investors, stakeholders). Another problem I should
point out is the turning of wishes into the mission (e.g. the mission of the company is to become
the major and the biggest company on the market with the best quality product in one year).
The values of the company are the common beliefs of the all employees about how the company
should work and what mission it has. The values identify the culture and structure of the
company. Also it can give the opportunity to the owner of focusing his thoughts on the strategy
of the company, instead of controlling the employees, because when people are sharing beliefs
the owner will know how they are working so that he /she can predict their actions. According to
BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) the values provide
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you with the set of principles ‘that govern the overall conduct of the organization’s operations,
code of behavior, the management of people and its dealings with the other organisations. The
problem you can meet that is connected with the values of the company is that the values give
you the opportunity to reduce the control, but if someone will not share the values of your
company it can cause real problems.
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010)
Objectives of the organization ‘set out more specifically the goals of the organisation, the aims to
be achieved and the desired end result’. The objectives of the organisation can be divided with
two characteristics: the first is the importance of the objective and the second is what the
objective is related to. According to the importance the objectives can be divided into primary
and secondary objectives, and according to the relativity the objectives can be corporate and unit.
Let’s look at all the objectives separately: The primary objectives are the objectives that are used
to be the main goal for the whole organisation. The secondary objectives are made to bring the
company to the point of reaching the primary objectives. Usually the three primary objectives
that the organisation always has are: to continue in existence – survive; to maintain growth and
development; to make profit. These are key objectives of any organisation that are relatively
connected with each other. The corporate objectives are the objectives that are connected to be
related to the whole organisation. According to BPP Learning Media Ltd ’Business Essential:
Business Environment’ (2010) the corporate objectives are:
Profitability
Market share
Growth
Cash-flow
Return on capital employed
Sales
Customer satisfaction
Quality
Industrial relations
Added value
Earnings per share
Risk
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Brand loyalty
The unit objectives are the objectives that are connected to the certain department of the
organization. There are: commercial (e.g. increase the number of customers); public sector (e.g.
respond more quickly on calls) and general (e.g. employee development, technology) unit
objectives. The problems you can have with the objectives are that the unreachable objectives
can be set up.
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010)
Stakeholders are ‘individuals or groups who have an interest in how the enterprise performs
because it affects them in some way’. Traditionally the most important group of stakeholders are
shareholders. According to BPP Learning Media Ltd ’Business Essential: Business
Environment’ (2010) the list of stakeholder groups looks like it is shown below:
Stakeholder groups
Shareholders
Lenders
Intermediate (business) customers
Final (consumer) customers
Suppliers
Employees
Past employees
Retires
Competitors
Neighbors
The immediate community
The national society
Corporate management
The chief executive
The board of directors
Government and local government
Special interest groups
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Every organization has three types of stakeholder groups in organization. They are:
Internal stakeholders (employees, management)
Connected stakeholders (shareholders, customers, suppliers, financiers)
External stakeholders (the community, government, pressure groups)
The internal stakeholders are the stakeholder groups that are mostly connected with the
organization. The organization is a place where managers and employees spend a great part of
their lives. They are mostly interested in the continued existence of the company. Many writers
have stated that employees are the most important of all of the factors of production. These
stakeholders have their own individual interests and goals. According to BPP Learning Media
Ltd ’Business Essential: Business Environment’ (2010) these factors are:
Security of income
Increase in income
A safe and comfortable working environment
A sense of community
Interesting work
Skills and career development
A sense of doing something worthwhile
Another type of stakeholder groups is connected stakeholders. They are: shareholders/owners,
bankers (or lenders), customers and suppliers. These groups have different goals and type of
influence on the company so let’s speak about every group separately.
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Shareholders/owners. The main interest of this group is to get the return on their investments.
Some shareholders are concerned with the corporation’s ethical performance. Nowadays
shareholders are being asked to be more involved in company’s affairs.
Bankers (lenders). This group of stakeholders is interested in the overall condition of the
company in order to be secured that they will get the interest for every loan they give to this
company. Banks can give money under different conditions and according to what it is the loan
or a mortgage the banks are looking at the organizations’ condition from different points. For
example for mortgages the bank is looking at the property the company has because the
mortgages are secured by the real property, but when the bank is going to give a loan to the
company they are more likely to look at the income of the company.
Customers. This stakeholder group wants services and products. A big group of customers can
have a great effect on the products produced, prices of these products, the quality of the products
and if the development is needed. The customers can affect the companies with the help of
feedbacks, complains, suggestions, filling out questionnaires and actually choosing to byu this
product or not.
Suppliers. This group of stake holders has a small amount of interests but the great impact on the
workability of the company. If the company loses suppliers they will not be able to produce the
product because they will not have components or materials. The wants of suppliers are simple:
to be paid in time and to have the cooperation with this company in the future.
The last part of stakeholder groups is external stakeholders. According to BPP Learning Media
Ltd ’Business Essential: Business Environment’ (2010) ‘external stakeholder groups – the
government, local authorities, pressure groups, the community at large, professional bodies – are
likely to have quite diverse objectives and have a varying ability to ensure that the company
meets them’.
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Government. The government of the state can have a great influence on business through
creating new laws and regulations. According to BPP Learning Media Ltd ’Business Essential:
Business Environment’ (2010) its main laws include:
Passing laws to protect workers and customers
Collecting taxes
Supporting business in socially or economically deprived areas
Subsiding activities
Aiding exporters
Local authorities. This group of stakeholders is interested if the company can bring local
employment or cause damage to the local environment.
Professional bodies. They are interested if the company and its members comply with
professional ethics and standards.
Pressure groups. Every pressure group has its own interest and its own opportunity to influence
the company.
Now as we can see the stakeholders have a great influence on the organization and their wants
should be taken into the consideration of the company.
Evaluate the extent to which an organisation achieves the objectives of three
stakeholders.
We would like to speak about customers, employees and government. I decided to speak about
these groups because these are the most important groups of stakeholders. They have the biggest
influence on the organization. Let’s take a look at the needs of these groups.
Employees. Employees have to be educated and be insured that they will get their salaries and
that they will not lose their workplace without reasons. Also employees have to have the
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opportunity of improving their skills and the opportunity of career growth. The needs of
employees are shown in the Maslow’s hierarchy of needs. For motivated employee it is enough
to reach the safety and security needs for every employee.
Fig. 1
The education of employees can be reached with the help of organizing trainings for staff or
sending them to the courses in order to improve their qualification. The motivation can be
reached with the help of providing good working environment and good attitude to the
employees.
Customers. This group of stakeholders has a great influence through the creating the demand on
your product. According to their wants and needs you set up the price of the product, its quality
and the development of the product. The wants of this stakeholder group are to have a good
product that suits their needs and wants. This can be easily reached by producing the good
quality product and respect their wants. The definition of what the customers want can be
gathered with the help of questionnaires and respecting the complains from the customers.
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Government. Government is also a very important stakeholder group. They can directly
influence the work of the company and the costs it has by providing new laws and regulations.
Also this is the group that can stop the work of the company. The interest of this group is that the
organisation should respect all the legal regulations. It is easily reachable goal and this is a
required part of the existence of the organisation.
Explain the responsibilities of an organisation and strategies employees to
meet them.
Every organization has certain responsibilities. These responsibilities are different and related to
different organisations. Also they can be caused by the responsibility in front of the society.
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) there
are five types of responsibilities of organization. They are:
Social responsibility
Environment responsibility
Management responsibility
Social responsibility
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) social
responsibility of an organisation may be defined as the obligations that the organization has
towards the people and the environment in which the organization operates. Social responsibility
is expected from all types of the organisations. Even organizations like governmental schools
and hospitals exist because health care and education are seen to be desirable social objectives by
government at large. There are some examples of social responsibility by different types of
organisations.
Local government is expected to provide or improve the services for the local
community, but at the acceptable cost to the council tax and business rate payers.
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Universities and schools are expected to produce students whose abilities and
qualifications will prove beneficial to society.
Pollution control is a particular example of social responsibility by the industrial
company.
Environmental responsibility
Environmental responsibilities of the company are defined by several issues. First is the legal
regulations and legislation; second are ecological issues; third are green concerns and forth are
the aspects that relevant to business.
Legal regulations and legislation. This is the laws and acts that the government has according to
the rate of pollution your factory can cause. These regulations are regularly updated and
companies are responsible for respecting the laws.
Ecological issues. According to BPP Learning Media Ltd ’Business Essential: Business
Environment’ (2010) ecological issues can have direct and indirect impact on the organization.
Direct impacts:
Can affect the costs or availability of resources. E.g. it can be prohibited to get the natural
resources as coal in the places that are interesting for science or history.
Can affect customer demand, especially nowadays when a lot of people are really
concerned about the environmental protection.
Affect power balances between competitors in a market. Can lead to the additional costs
for some companies and this will put them into the disadvantage in front of the
competitors.
Indirect impact may manifest themselves in. E.g. pressure from customers or stuff as a
consequence of concern over ecological problem.
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Green concerns. Green concerns have different relation to the different sectors of industry. Let’s
take a look at each sector separately.
The primary sector
Many industries in the primary economical sector such as mining or extraction of oil are directly
connected with the physical environment. They are under the constant control with regard to
environmental legislation. According to BPP Learning Media Ltd ’Business Essential: Business
Environment’ (2010) concerns here relate to the following:
Deforestation
Threats to wild creatures
Replacing a natural habitat containing a diversity of species with a monoculture where
only one strain is bred
Pollution
Health and safety of produce
Poor working conditions and wages.
Green policies here would aim to promote efficient and effective use of resources and recycling
where appropriate, and creating alternatives to the materials that are being used up.
The secondary sector
In the secondary sector of economy building and constructions are relevant. There can be
opposition of building new roads and houses in the wild nature or in places that can be
historically important.
Consumer goods
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010)
manufacturers here may be seen as:
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Damaging the environment or social institutions to meet consumer demand
Producing ‘dirty’ products
Using ‘dirty’ processes
Using up scarce raw materials.
The tertiary sector
The tertiary sector is divided into two groups: retailing and service industry. Each group has its
responsibilities so let’s take a look at each group separately.
Retailing
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) in
retailing the green customer is dealing with the enterprise. The enterprise acts as a ‘filter’,
deciding which product will actually reach the customer.
Service providers
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010)
service providers have less environmental impact comparing with other businesses, but they still
consume goods and produce waste. They still face the same decisions in their choice of
suppliers, their investment and their contribution to the welfare of staff and customers.
Small businesses
Small businesses consume less raw materials and produce less waste so they face a different
scale of environmental challenge. According to BPP Learning Media Ltd ’Business Essential:
Business Environment’ (2010) green issues are becoming more significant for the following
reasons:
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Small companies may be able to develop products for green ‘niches’ more effectively
than large enterprises, and can take advantage of flexibility to create green processes and
systems.
Many small businesses are using traditional methods of manufacture, which are often
greener than more modern processes, using less energy and fewer non-renewable
resources. Demand for such products is increasing.
Aspects which are relevant to business
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010)
ecological aspects that are likely to be seen as relevant to business are:
Resource depletion;
Genetic diversity
Pollution concerns
Acid rain
Ozone depletion
Waste
Climatic changes
Energy resources
Resource depletion
Resource depletion may influence business operations through impacts on the availability of raw
materials through damage to soil, water, trees, plant-life, energy availability, mineral welth,
animal and marine spices.
Genetic diversity
Genetic diversity is relevant to pharmaceutical firms, firms in biotechnology and the agriculture
and food industries. The modified types of plants and animals can cause damage to the wild
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species. Nowadays the opposition to genetically modified products is growing because
uncertainties about the long-term effect on people and animals.
Pollution concerns
Pollution concerns are at the center of most worries about the environment. According to BPP
Learning Media Ltd ’Business Essential: Business Environment’ (2010) there are several main
parts of pollution concerns.
The businesses are pressured to curtail the impact of their activities on the water table,
the seas and oceans.
The quality of the air is plays a big role today. The fact that a lot of scientists are saying
that the global warming is starting because of the air pollution there were a lot of
discussions about how to reduce it.
Concerns about the pollution of land, through landfill policies and the long-term damage
wrought by industry upon the land it occupies.
Noise pollution is getting more and more important and it can have a great impact on any
type of business.
Acid rain
Acid rain is linked to damage to forest of the Northern Europe and acidification of water. It
causes problems with water supply and health of fish. The industries that can cause the such
effect are under constant pressure from the political power of different countries all over the
world because this affects the whole world.
Ozone depletion
This is a big problem that causes a lot of damages to the environment. Alternatives to CFCs have
been developed and many other things done (such as new legal regulations) to prevent the further
depletion of the ozone layer.
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Waste
There are different types of waste like nuclear waste, industrial waste and domestic waste. The
handling of waste is becoming the target of legislation by national governments. A lot of new
laws and regulations were invented to decrease the amount of waste.
Climatic changes
Nowadays climatic changes are constantly occurring in our everyday life. Because of the
pollution the unnatural weather is being fixed in many parts of the world. A lot of international
agreements are made to reduce the pollution and especially the emission of gases that cause
‘greenhouse effect’. The main agreement is still the agreement that occurred in 1997 in Kyoto. It
is called The Kyoto Treaty.
Energy resources
The concern about the energy resources and environmental impact of its usage are related to the
concern about the climatic changes. Another thing is that some resources are not giving full
energy when they are used. For example coal is giving only 40% of its potential into electricity.
Therefore energy saving programs are being made.
Management responsibilities
The stakeholder view is that management is responsible not only to shareholders but also to
employees, customers, suppliers, competitors and to the community. Let’s look at the
responsibility to each group separately.
Responsibilities to employees
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010)
general principles of responsibility towards employees should take the form of good pay and 17
working conditions, and good training and development schemes. Also it has to be extended
into: recruitment policy, and redundancy and retirement policies. Recruitment of new staff
should be done very carefully because if an individual that is recruited by the organisation turns
to be a bad worker it will be very difficult to fire a person. The staff that is about to retire should
be provided with the good pension scheme. Another problem of the retired people is that they
don’t know how to spend a free time that they got. In this case the organization can provide
people who are about to retire with the special courses that would help them to plan their future
time. Dealing with redundancies is a bigger and more complicated problem. Even for
organizations that show an ethical sense or responsibilities towards their employees there are
some situations when the jobs have to be lost. In this cases the organization should try to
redeploy as many staff as possible and give them retraining to gain new skills so that these
people could work at the other positions. For that people who are made redundant the
organization should make free trainings of skills that can be useful for a person in another
organization, to arrange ‘job fairs’, to provide good redundancy payment.
Responsibilities to customers
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) the
ethical responsibility to the customers are mainly those of providing a product or service of a
quality that customers expect, and dealing honesty and fairly with the customers.
Responsibilities to suppliers
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) the
responsibilities to suppliers are usually expressed in the terms of trading relationship.
Big organizations should not use their power to influence the supplies
To pay the agreed amount of money in time
All information obtained from suppliers and potential suppliers should be confidential
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All suppliers should be fairly treated.
Responsibilities to competitors
The responsibilities towards competitors are mainly ethical, but also a great deal of laws
surrounding the fair trading, monopolies etc.
Responsibilities to the community
In fact the organization is also a part of the community that it serves. According to BPP Learning
Media Ltd ’Business Essential: Business Environment’ (2010) it should be responsible for:
Upholding the social and ethical values of community
Contributing towards the well-being of the community
Responding to complaints of local residents and politicians
Explain how economic system attempt to allocate and make effective use of
resources
To make a right decision in allocation of resources there are three main factors you have to
mention when you are making a decision. According to BPP Learning Media Ltd ’Business
Essential: Business Environment’ (2010) they are:
What goods and services will be produces
How will these goods and services be produces
Who will be the customer
Let’s take a look at each factor separately.
What goods and services will be produced?
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) ‘in
the market economy, this will depend on what consumers want to buy, and what they will pay
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for each product or service.’ The decision should be made with the including of the demand and
supply of the product. The actual demand on the product is called consumption and the supply of
the product that exists in the market is called production. By the end you have to choose what to
invest in. In fact the investment into education or machinery can bring a lot of profit but only in
case if there will be the same demand. The fact is that in the end you have to make a decision
about what people will want in the future: if they want food or machinery.
How will these goods and services be produced?
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) after
making a first decision you have to go on and choose the ‘appropriate and efficient production
methods and technology’. Also you have to choose who your supplier will be. You have a
variety of choices beginning with the small businesses and up to the government itself. The next
choice about who will produce the goods and services and what mix of resources you need will
depend on the ‘cost of resources and the efficient of its utilization’.
Who will be the customer?
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) there
must be a mechanism of choosing who will get the product. The main problem of the distribution
is that there are different social layers and different types of consumers. Also some products and
services are provided by the government.
Different economic systems
Also I would like to speak about different economic systems. Different countries have different
systems with their own ways of dealing with various questions. But now I would like to keep my
attention on the three main types: free market economy, command economy and mixed economy.
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Free market economy
According to ‘BPP Learning Media Ltd Business Essential: Business Environment’ (2010) free
market economy – ‘sometimes called capitalism. In this type of economy the most decisions are
taken through the operation of the mechanism. Supply and demand and the ability to pay
influence decision-making. There is very little government intervention in business decision-
making.’ The market economy is based on the ideology that the customer choice will influence
market forces to ensure the optimum allocation of resources and there is no need for government
to influence this process. The only role of the government is to ensure that the “invisible hand” is
free to operate. According to ‘BPP Learning Media Ltd Business Essential: Business
Environment’ (2010) ‘the assumptions of a free market system include the following:
Firms seek to maximize profits.
Consumers seek the greatest benefits for least cost.
Workers seek to maximize their wage relative to the cost of working.
Individuals are free to make their own decisions, e.g. where to work, what to buy. Firms
are free to choose what to produce, who to sell.
The ‘Price Mechanism’ decides prices in the free market.
Prices will also rise if the demand is growing and fall if the goods become unpopular.
If there is an excess of supply than the price of the good will fall. As the price falls
consumers will get more benefits for less costs and thus demand more. The price will
eventually reach the point at which all the excess supply will bought up.
Because of the interaction of supply and demand, prices will fluctuate. But they will
always tend towards the ‘equilibrium price’ where the amount consumers want to buy
equals the amount producers wish to sell.’
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These all gives the opportunity for the companies to have the free competition. But there are
some problems with the market economy. According to ‘BPP Learning Media Ltd Business
Essential: Business Environment’ (2010) they are:
‘There is an unwillingness on the part of consumers to pay for ‘merit goods’ or ‘public
goods’
The public goods are most likely will not be produced in the free market economy
Willingness on the part of consumers to pay for ‘demerit goods’
Inequality of power in the market place
Barriers restricting entry to the market place and the immobility of factors of production
Producers may ignore ‘externalities’
The planned (command) economy
According to ‘BPP Learning Media Ltd Business Essential: Business Environment’ (2010) the
command economy – ‘sometimes referred as state controlled. In this type of economy decisions
are taken collectively, usually by central planning committees.’ In this type of economy the
government decides what to produce and how much of it to produce. In the today’s world there
are two countries that are still using the command economy. These are Cuba and North Korea.
According to ‘BPP Learning Media Ltd Business Essential: Business Environment’ (2010) ‘the
state plans at three levels:
Macroeconomic level
Microeconomic level
The distribution of output between consumers’
According to ‘BPP Learning Media Ltd Business Essential: Business Environment’ (2010) the
main fallings of command economies include:
‘Lack of investment
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No incentive to productivity
Wastage of resources
Black markets’
Mixed economy
According to ‘BPP Learning Media Ltd Business Essential: Business Environment’ (2010) the
missed economy is ‘one that combines elements of both private enterprise, where individuals
have the freedom to set up in business in their own right and personally enterprise and
intervention, in varying guises, by the state.’ In the mixed economy the government has two
main strategies to pursue – replacing the market or augmenting the market. According to ‘BPP
Learning Media Ltd Business Essential: Business Environment’ (2010) the ‘three main types of
intervention are:
Provision or prohibition – public goods are provided at zero prices to maximize
consumption and increase social benefit. Alternatively some products are meant to be so
harmful for the person and for society so that it is prohibited.
Subsidy or taxation – merit goods are encouraged by subsidies to increase their
consumption. On the other hand the taxes on some products are so heavy that they reduce
consumption and increase the social costs.
Regulations – price and quantity controls can be used to change production and
consumption patterns. Externalities that are bad can be taxed or banned; externalities that
are good may be subsidized.
Discuss the impact of social welfare and industrial policy initiatives on
organizations and the wider community
Social welfare policy and industrial policy have different aspects, different motives and different
impact on organization. I would like to look and discuss the impact of each policy separately.
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Industrial policy
The industrial policy has a great impact on the functioning of the organization and the position of
the product in the market. There are several fields of industry where the government can have a
greater influence, but firs I would like to speak about the impact of the industrial policy in
general and then show it on the examples of the certain fields.
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) the
government can have a great influence on the whole organisation by giving the assistance to the
companies (usually to the companies that are used to be the winners in their industry). Also
‘indicative planning’ includes the identifying of so called bottlenecks – the areas of industry that
has problems with the supply of goods. Also the government industrial policy can ‘either hamper
or promote the growth of new industries’. Also the government can also make difficult the entry
of new firms. According to BPP Learning Media Ltd ’Business Essential: Business
Environment’ (2010) it can be done in three main ways:
By placing restriction to foreign firms
By subsiding domestic firms that are already in the market
By imposing product standards requiring a particular level of safety.
Now let’s look at the different fields the government can strongly influence.
New products
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010)
government controls the adopting of new products in certain fields.
In pharmacy the government checks all the new drugs and medicines before the product
goes to the market. Every country has its own standards.
The food industry is under the strict control of the government. Organizations that are
working in this sphere have the biggest problems with changing the technology or the
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product mix that they are using for manufacturing. The biggest debate today is about the
safety of genetically modified product.
Competition
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) ‘as a
buyer, controller and supplier in the mixed economy the government can bring considerable
pressure to bear on competition within an industry’. Sometimes the government can identify the
structure of industry to be sure that the competition exists.
Industrial competitive policy
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) ‘the
new approach of the industrial policy is to focus on improving the factors that shape the nation’s
competitiveness’. This can be done with the help of:
Investment in physical and human capital
Reduction in non-wage employment costs
Support of small- and medium-sized enterprises
Promotion of R&D and innovations
Improvements to infrastructure
Reinforcing the law on copyright and patents to encourage enterprises to develop new
products.
Regional policy
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) the
industrial policy is complicated by the regional policy that is different for each region of the
country. In Ukraine for example there are twenty four regions and every region has its own
additions to the industrial policy.
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Training and skills policy
You have a lot of opportunities to improve your skills at all levels. These are trainings for the
employees and Skills Funding Agencies that provide the opportunity of getting new skills or
improving skills outside of higher education.
Social welfare policy
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010)
‘Social Welfare Policy seeks to protect and directly improve people’s standards of living’. The
social welfare has two senses. In the first sense the social welfare policy is ‘partly concerned
with the social services and welfare state’. In the second sense it ‘stands to the range of issues far
beyond the actions of government. Today the welfare policy ‘biases the role of the state towards
promotion of equality of opportunity and the provision of services targeted on specific lower
income or disadvantage groups’. Social policy expenditure accounts around 50% - 60% of
government spending and includes:
Old age programs
Unemployment
Sickness/disability
Social assistance/poverty alleviations
Health/medical care
Environmental policy
Universality and selectivity
The universal benefits are the benefits that are available for everyone and at any time (e.g.
roads). Selective benefits are reserved for people in need.
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Social security
Social security includes Contributory benefits and non-contributory benefits. The contributory
benefits are the benefits a person has paid for. These are:
Retirement pension
Incapacity benefit
Maternity allowance
Jobseekers’ allowance
The non-contributory benefits are:
The Child Tax Credit and Working Tax Credit
Housing benefit
Council tax benefit
Social fund
Child benefit
Attendance allowance
Invalid care allowance
Industrial injuries disablement benefit.
Health and social protection
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) the
welfare state ‘seeks to provide citizens with benefits they would find it hard to purchase as
individuals’. The government built hospitals and provides free health services. People are free to
choose and pay for the private medical insurance.
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Evaluate the impact of macroeconomic policy measures and the influence of
the global economy on the UK-based organizations and stakeholders
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010)
government economic policy affects organization in many ways. There are a lot of policies that
have a great influence on the company. These policies and their impact we will show lower with
the help of the table.
Government policy Impact on organization
Overall economic policy Market demand
Cost of finance; Taxation
Government policy Impact on organization
Industry policy Protection v free trade
Grants, incentives, sponsorship
Regulation eg, investor protection,
company law
Entry barriers, capacity
Environment and infrastructure policy Distribution
Social policy Workplace regulation, employment law
Labor supply, skills, education
Foreign policy Trade promotion, export credits
EU and WTO obligations
Export promotion to allies, aid
recipients
The government in the UK can influence the economy in three ways. They are:28
Taxation and interest rate policies
Public spending on goods and services
Regulations
There are a lot of points the economic policy is trying to reach but the main three which are used
to be the main ones. According to BPP Learning Media Ltd ’Business Essential: Business
Environment’ (2010) they are: ‘
Economic growth is desired in order to provide employment for the national increase in
the population and to improved living standards
Full employment (that is, the economy’s resources are fully employed, and there are very
few people out of work – just those between jobs, for example)
Price stability (e.g. no inflation)’
These aims often conflict to each other so it can be difficult to find a compromise.
There are two main policies the government operates in order to influence the economical
situation of the country. They are fiscal policy and monetary policy.
Fiscal policy
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010) fiscal
policy involves:
Taxation and other sources of income
Government spending
Borrowing whenever spending exceeds income
Replaying debts when income exceeds expenditure
The fiscal policy is made to identify how much the government is going to spend and identify
how much it needs to raise the income or by borrowing. You have to make a plan in order to
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establish what rate of taxation should be and which sector of economy (firms, small business, big
enterprises etc) the money should come from. The fiscal policy is usually established once a
year. In the UK the policies adopted are showing the high and stable level of growth and
employment.
Monetary policy
According to BPP Learning Media Ltd ’Business Essential: Business Environment’ (2010)
monetary policy influences economic activity through:
Interest rates
Exchange rates
Control of the money supply
Controls over bank lending and credit.
The aim of UK monetary policy is to control the inflation.
Monetary policy gives you the opportunity to control the economy during the year, without
changing the budget. According to BPP Learning Media Ltd ’Business Essential: Business
Environment’ (2010) the monetary policy is using:
A policy of low interest rate. This will stimulate the bank lending and increase the
expenditure. This leads to the growing inflation
High interest rates. Leads to the reduce in spending and reduce of inflation rate because
of it.
Strict credit controls. Might be introduced to reduce lending and so reduce the demand in
the economy.
Alternatively the monetary policy might be given prominence over fiscal policy as the most
effective approach by a government to achieving its main policy objectives.
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In my opinion the good thing to evaluate the impact of global economy is to make a PESTL
analysis. The PESTL analysis is the analysis of Political, Economical, Social, Technological and
Legal position in the country.
Political
The political point means the analysis of the influence of political parties in the country. In the
UK there are two main political parties: Labor party and Liberal Democrats. These are the
parties that have the biggest influence in the UK government and that can affect your
organization.
Economical
The economical factors of the UK are good for running a business. According to
http://www.statistics.gov.uk/cci/nugget.asp?id=19 the inflation rate of the UK in 2010 was 4%.
This is a normal inflation rate which gives you the opportunity of growth. Also the economy is
very stable.
Social
The social factors in the UK are very good. The government has a good social welfare policy and
cares about people who are living in the country by providing the services that are needed.
Technological
The UK is a technologically advanced company. This gives you the opportunity to use the
modern equipment.
Legal
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The legal regulations of the UK have recently changed. The government is strongly supporting
English people with starting their businesses but it became much harder for the foreigners to set
up a business in the UK.
All this factors have a great impact on organizations that already exist and on the organizations
that are just starting their activity.
Conclusions
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To conclude we would like to say that in my opinion we clearly identified the mission, values
and key objectives of the organization. Also we cleared the influence of all the stakeholders of
the organization and the interests that stakeholders have. In my opinion we also took three main
stakeholders and showed their wants and how the organization can achieve them. Also we
clearly identified the responsibilities of the organisation and the strategies that companies are
using to meet them. We had a clear explanation of the influence of economic system on the
effective use of resources. The impact of the social welfare and industrial policy on organizations
was discussed. Also we evaluated the impact of macroeconomic policy and the influence of the
global economy on the organization.
References
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1. BPP Learning Media Ltd. (2010), ‘Business Essential: Business Environment’ London:
BPP Learning Media Ltd.
2. Office for national statistics (2011), [Online]. Available at: http://www.statistics.gov.uk/cci/nugget.asp?id=19 (accessed on: 16.02.2011)
3. Fig.1 The Maslow’s pyramid Available at: http://drvaleriegalante.wordpress.com/2009/12/17/day-101-–-self-actualization/
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