business environment

Introduction
Organisations have a variety of purposes that depend on why they were established. The majority operates for profits others, just for improve quality life of the community.
Businesses operate in an environment shaped by the consumers, the Government, suppliers and International factors.
It’s my job now explain and understand how organisations shaped with the environmental factors and determine strategies and a modus operandi that allow them to meet their organizational purposes.
Business Environment
Business refers to economy activity, goods and services in exchange of money. Also include buying and selling, manufacturing products, extracting natural resources and farming.
An Organisation is an arrangement of people, pursuing common goals, achieving results and standards of performance.
There are three basic forms of ownership in the Private Sector when, usually organisations are set up for personal gain and funded by shares issued, loans from banks or overdrafts. On the other hand the, Public Sector is set up I the interest of the community and are funded, owned and controlled by the Government. E.g: Job Center and NHS.
We have Non-Corporate and Corporate organisations. Non-Corporate organisations do not have a separate legal-identity from their owners. The main forms of such organisations are:
Sole Trader, which provide financial resources and is the only person who makes decisions, have independence, control and self-reliance. He does not need consult others and do not use formal procedures. The business is close to the customers and can respond quickly to market changes but, the financial issues and business expansion are limited to ploughing back profits and, the proprietor usually just had one skill.
Partnership, when we have two or more people carrying on the business with a view of profit. The partnership can be arranged only verbally but all the partners should share profits and make decisions together. They are flexible and close enough with clients of the business, to know what is going on. There can be division of labour with each partner specializing in their areas of expertise and operate as individuals and share common costs like rent, utilities, etc. There ae a few disadvantages, like, on decision maker, where may be difficult because all partners have to agree or simply because the partner is lazy, dishonest and the withdraw or his death can dissolve the organization.
Corporate Organisation has a separate legal identity of their ownership. The most common corporate business organisations are:
Public Limited Liability Companies (PLC) The shares can be offer to the public and are often traded on the stock exchange. E.g. Thomas Cook and Barclays Bank.
Limited Liability Companies (LTD) The shares cannot be offered to general public and sold without the agreement of the others directors, otherwise it is possible maintain close control over the way the business is run. E.g. Sainsbury Supermarkets and New Look Retailers Ltd.
There are many advantages and disadvantages in being a PLC instead of LTD :
-It is easier PLC raise finances;
-PLC represents lower risk investment than LTD;
-The suppliers offer more attractive credit facilities to PLC because they will be thought less likely to default on payments;
-The cost of floating a business on the Stock Market is high and make gaining a listing more cost effective as the size of the company increases;
-A PLC must always inform a wide range of people about their financial performance; -The extent to which anyone individual, or group, can maintain control of an organisation is severely limited by the sale of its shares on the Stock Market.
The environment in which they operate affects all organisations. The suppliers, customers, community and employees have an impact on the success of an organization and at the same time, they can be affecting by any changes in its activities.
Groups such as suppliers, employees and community are known as the firms stakeholder groups because they depend on an organization to fulfill their own goals.
Stakeholders can be:
Owners who are interest in how much profit the business makes.
Managers who are concerned about their salaries.
Workers who want to earn high wages and maintain their jobs.
Customers who want quality products at a good price.
Suppliers who want the success of the business to they continue buy their products.
Lenders who want to be repaid on time and in full.
And the community which has a stake in the business as employers of local people.
Stakeholders influence a lot on business activities. The Owner has big influence on decision-making and has a big say in how the aims of the business are decided. Customers are also key stakeholders because if the organisation ignores the concerns of customers, they lose sales to competition.
Different stakeholders have different objectives and this can crate conflicts. E.g : Owners generally seek high profits and so may be reluctant to see the business pay high wages to staff. A business decision to move production overseas may reduce staff costs. It will therefore benefit owners but work against the interest of existing staff who will lose their jobs and customers can received bad service.
Every organization should study their issues and how accomplished their goals. They need have a Mission, to understand what business they do, how they can make difference and why they do business to provide stakeholders and employees aims; a Vision to set strategic intentions and their targets; Values that guide an organization and define the way that organization should operate based on culture, beliefs and attitudes.
On a Micro environment, also known as the task environment and operating environment, they suffer changes and are affect directly and impinged on their activities.
On the Macro environment, there are a symbolic relationship between business and the environmental factors. These factors are dynamic and a particular business firm, by itself, may not be in a position to change its environment.
The organization should have a hierarchy of objectives that cascade down them and define specific objectives at each level, financial terms and structures and systems of control by which managers are hold accountable to those who have a legitimate stake in an organization.
The Economic system depends and changes due to social, cultural and governmental issues, or simply, through the study of environmental factors.
Basically, there are three types of economic systems that are adopted in organisations:
- Free Market that belongs to the buyers and sellers and they are responsible for the choices they make. The Free Market gives the power to determinate the prices, allocation and distributions of goods and services. Is also known as free trade without tariffs or subsidies imposed by the Government.
- Centrally Planned or Command Economy where the Government decides and plans all the economic activities like, how much we can buy, how much we produce,etc.We can find these kind of economic in Cuba, Iraq or Iran.
- Mixed Market Economic where the economic resources are split between the private sector and Government. When one type of economic struggles to meet the public desire, the other can get it and helps, maintain the economic balance.
Fiscal and Monetary policies are Government Policies. Fiscal Policy is to control inflation and reduce unemployment. Also to, encourage investment. This is done by lowering interest rates for easy credit to entice businesses to expand. Organisations are affected on decisions from hiring more workers to loans and finance expansion.The level of taxation imposed by businesses is affected by the fiscal policies.
There are three types of efficiency that organisation can pursue:
- Productive Efficiency where the use of low cost production techniques are used to produce a maximum possible goods and services.
- Allocative efficiency, resources are channeled to the sectors where they are best utilized in order to produce goods and services that are valued by customers.
- Dynamic efficiency, firms strive to maintain their competiveness by investing in research and development, innovation, marketing and management to keep up with the change of technology and product.
For example: Microsoft was a monopoly organisation and did not want to give any other organisation their software. But, competition policy Government forced them to change their strategy, otherwise they wouldn´t have developed as much and dominated the global market. Nowadays, there is an enormous amount of software available for both domestic and business use.
Conclusion
All business shares the same purpose: Earn Profits.
Every business shoud create new job opportunities, offer better quality life and contribute to the economic growth. Every organization has a certain vision, mission, objectives and strategy to their goals. Under the stakeholder approach it is believed that all group can benefit at the same time because they work all as one to generate more profits. E.g. With good relationship with suppliers, the organization can produce better quality goods and services and improve customer loyalty with a better quality of work to the employees.
The external environment that affects every business organisations creates opportunities as well as threats. To have a successful business, every organization should analyse, study market changes, and transform every threat in opportunities.
The market environment impact organisations behaviour such as business operates in an environment shaped by consumers, competition, suppliers, Government, international factors and technology.
References
Begg D – (2009) Foundations of Economic,4th edition. McGraw –Hill Higher Education
Morrison J – (2006) International Business Environment: Global and Local Market Places in a Changing World. Palgrave Macmillan
Ian, Andrew, Malcolm, Marie, Ian, Barry, Nancy, Andrew and Nigel. (2003) Business Studies, 2nd Edition. Hodder & Stoughton

References: Begg D – (2009) Foundations of Economic,4th edition. McGraw –Hill Higher Education Morrison J – (2006) International Business Environment: Global and Local Market Places in a Changing World. Palgrave Macmillan Ian, Andrew, Malcolm, Marie, Ian, Barry, Nancy, Andrew and Nigel. (2003) Business Studies, 2nd Edition. Hodder & Stoughton