Business Enviornment

1. Introduction
Today world has the globalized economic system. With this system all of individual countries are linking with others with purpose benefiting each of them. Business is main linkage factor for countries to link with each other. Then it will grow up to political, cultural and in too many more sectors. With all this condition environment of business is getting complicated but it is very helpful function of business and it will benefited too.
Business Environment can identify as “All of the factors, both internal and external, which influence the function of a business. Internal factors include items such as the company's products or services, employees, assets, and marketing. External factors include competitors, stockholders, customers, and economic conditions.” (InvestorWords.com, 2013)

UKs’ business environment – Despite is the current global economic turmoil and unique economic challenges currently faced by Europe, the UK business environment remains positive, forward-looking and open for business. The UK government is committed to creating the supportive business environment that will encourage a private-sector-led economic recovery. Today, the UK is the world’s sixth-largest economy and one of the world’s top ten manufacturers (six of the world’s top ten vehicle makers are based in the UK). It is also the world’s second-largest services exporter (after the U.S.) and the world’s sixth- largest trading nation. It also remains the most attractive place in Europe for a European headquarters: more overseas companies have their European headquarters in the UK than in France and Germany put together.

Unilever UK- In 1885 launched the first packaged and branded laundry soap by Mr. William and Mr. James Lever as the start of Unilever. London is home to one of our two global headquarters, the other being in Rotterdam in the Netherlands. Unilever has two global research facilities at Port Sunlight and Colworth, as well as manufacturing sites and distribution depots dotted around the UK. Unilever is not only focussing about their profit earnings. Unilever is involving many CSR project among community to build up their goodwill. Business environment of Unilever is very broad, complexes and structured clearly for easy function. (Unilever, 2103)

2. Task 01
2.1 Explaining Different types of Organization
Group of people are working to achieve for common objective, can be identify as Organization. There are five main common responsibilities to any kind of organization. Social, environment, management, ethics and business, public relation and corporate image are the five responsibilities of an organization.
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Chart2.1.1
Type of Organization

2.1.1. Private Organization
Organization operates with purpose of earning profit and is running, by individual with non state control.
• Sole Trades
Sole trade is a business which owning by one person. This is the common business model that operates most of countries. Advantages
Sole trade is owned by one person. So it is very easy to take decision. All control a power has with the single person is most valuable advantages of this business type. Profit is total earning by one person and this type of business can start and end very easily with low cost. Legal requirements are less and confidential of business transaction high than other business types. Customer service of this business is easy and gathering feedback of them also easy. Accounting and auditing is not compulsory.
Disadvantages
Business is liability is unlimited. One person investing for this business so capital is inadequacy. Business losses also should bear individually. Decision takes individually so decision may be incorrect and less ability to develop business. This type has lack of management skills, due to one person controlling.

• Partnership
Partnership business is organization that is operating by group of individual. More than of two partners will be there and maximum of twenty. Partnership should have intention to earn profits, collective responsibility and a common responsibility. There are many rules and regulations apply to type of business. Most of partnership businesses have agreement, with include name of the partnership, partners details, objective, nature of business, duties and rights of partners, manner of dissolution and method of profit sharing. Advantages
In this model of business there are many partners. So investment is dividing among all partners. They can invest the amount according to their capacities. Finally collectively investment amount will be big amount. As well as investment, liabilities of the business also divide among partners. Partner has to responsible for liabilities according ratio that they invested to the business. Sole trades has only one decision maker, but here have more than it. So decision power of this business is higher than the sole trades. With many partners in the business credibility with potential customers and suppliers will be increased, who may see dealing with the business as less risky than trading with just a sole trader. Disadvantages
As sole traders this business model also liabilities not limited. If any liability available after windup business, it is not limited only for the business asset. There are many partners so profits also divide among partners as there invested ratio. When they make decision regarding business it may be complicated, due to partners with different opinions and also implementing decision may face difficulties. If a partner wants to transfer his business share to other person there should be concern from other partners also.

*More details in the Appendices Note -01

2.1.2. Public Sector Organization
Government organization are controlling by state. The main purpose of them is to provide services to public. But they are charging for their some of services. There are departments, corporations are some government organization types.

2.2 Stakeholders of an Organization
Stakeholders can be defining people, group or other organizations that interest on business activity of organization such as performance, operations, current status.

Stakeholders are making some contribution to the organization in purpose of more return from organization. Expecting return can calls as inducements. Inducement includes rewards, money, quality, service etc. Inducement is motivation factor for stakeholders to stay with business and providing inducement is responsibility of organization.

There are two types of stakeholders in any business i.e. internal stakeholders and external stakeholders.

2.2.1. Internal stakeholders
Internal stakeholders are the party which involves directly to activities of the organization with the purpose inducement.

• Shareholders
Shareholders can be identifying as owner of the organization. They are investing capital with purpose receiving profits against their investments. It is the main objective of them. If they not receive enough return for their investments they will withdraw from business. Shareholders are investing to the business through buying shares or stock. If they want withdraw from business they can sell their shares to other one.
Organization objective is to retain their investors with business for getting more investments to the business. Organization responsible is to provide good return for investors’ investments. If organization able to earn good profit shareholders will be encourage to stay in the business.

• Managers
Managers are the decision maker of the organization. Their responsibility is to utilize available resource to gain the maximum benefit to organization. Mangers are the stakeholders that planning and make action to the successfully achieve the organization goals and objectives. Senior managers are responsibility to invest money of investors. So managers are the responsibility party to satisfy investors. Managers are contributing their skills to the organization’s response to pressures from within and outside the organization. Managers are expecting high salary, bonuses, other extra benefits, psychological satisfaction etc. Managers are the people that responsibility to stakeholders behalf of organization.

• Employees
Employees are the do the action plans create by managers. Organization is expecting performance of employees in their duties. Mangers are measuring their performance and mangers are providing benefits to them according to performance. An employee’s motivation to perform well relates to the rewards and punishments that the organization uses to influence job performance. Objective of employees’ are good earning and other motivation factors and responsibility of company is to provide it to them.

2.2.2 External stakeholders
External stakeholders are people, group or other organization that not involve in directly to the internal activities of organization. But they are analyzing the activity of organization by staying outside of organization.

• Customers
Customer is the main factor of starting business and continues it. When consider with other stakeholders, customer is the largest group that involve with an organization. Customer is expecting good and quality products and services from organization. They are always measuring the worth of the product/services with they paid amount. Customers are always considering about stability of company and history of the company before they get product/service from them. This is most applying on financial companies. Customer is pay money for product/services as their contribution and quality product/service expecting as inducement. That is customers’ objective and company responsibility is to provide quality products and services to them.
• Suppliers
Suppliers contribute their product and services to the organization on requirement of organization. Suppliers are expecting on time payments as inducement. Suppliers always consider about financial stability of the organization. If there good financial stability suppliers not fear to supply goods and services to organization on credit also. Organization responsibility is to pay on time and reasonably to the suppliers. Suppliers can make direct effect on business by demand and supply.

*More details in the Appendices Note -02

2.3 Purpose of the Organization
Unilever is one of major multinational company that operating all over the world. Unilever is based on fast moving goods which consumers required essentially. Unilever says that “No matter who you are, or where in the world you are, the chances are that our products are a familiar part of your daily routine. Every day, around the world, people reach for Unilever products”. (Unilever, 2013)

2.3.1 Vision Vision is a motivating summary of what an organization hopes to achieve. It links the objectives with the core values of the business.
“A Vision Statement defines what your business will do and why it will exist tomorrow and it has defined goals to be accomplished by a set date. A Vision Statement takes into account the current status of the organization, and serves to point the direction of where the organization wishes to go.”(biznik.com, 2013)

Vision of Unilever
Unilever products touch the lives of over 2 billion people every day.

2.3.2 Mission
A sentence describing a company's function, markets and competitive advantages; a short written statement of your business goals and philosophies (Entrepreneur, 2013)

Mission describes the organization’s basic function in society, in terms of the products and services it producers for it clients. (Mintzberg, 1997)
• Advantages of mission
Give employees a sense of purpose and something to aim for.
Can be used as a promotional tool – lets external stakeholders know the company’s purpose

Mission of Unilever
Our mission is to meet everyday needs for nutrition; home hygiene and personal care with brands that help people feel good, look good and get more out of life.

2.3.3 Aims
Aims are the long term goals of an organization.
Aims of Unilever
As many organizations, Unilever also has a aim to achieve in specific time bound. Unliver is aiming to maximize market share which is distributed among other competitors. Unilever is also aiming to increase the profit and turnover of the company. Not only that CSR activities also ,main part of aim in the Unilever.

*More details in the Appendices Note -03

3. Task 02
3.1 Market economics system
The government of a country is using a process to utilize of available resources to full fill the needs and wants of the people of country. This process can be defined as economic system. “What is produced”, “how it is produced” and to “whom produced” are the three main key issues that government should identify in this process or economic system.

“An economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses and there is little government intervention or central planning.” (INVESTOPEDIA, 2013)

There are three types of economic system in the world that are implementing in various countries. Economic system will be change time to time with reason of internal and external of country. But economic system is no change in short time period.

3.1.1 Planned economic system (command)
Planned economy/command economy the system of more economical decision authority has government. Producers only can work according to the instruction of government. Government is making decision on selling price too. In this economic system, not highly concern about developments and less investments. Government is always funding to the defence than other infrastructures developments. People of this country are working under similar benefits and their living styles also similar basic life style. In the current world North Korea, Cuba and Iran can bring as examples for Command economic system. Above characterises are highly available in these countries.
3.1.2 Free economic system (Market economic)
This economic process system is completely free or with little control of government. Government is only providing essential services such as defence and ensures the country’s money supply is stable. Entrepreneurs mostly focus on profit, so quality may not consider much. Customers are expecting low level product and continues supply goods. So demand will be create on price, not on the quality of good. There is no government intervention. So business possibility to fail and customer will not be protecting. Fail of business will be badly effect to the country. But in current world there is no country which applying pure free market concept.

3.1.3 Mixed economic system

“The economy of a nation is based upon a certain ideology. A mixed economy is primarily a combination of a capitalist and socialist ideology, but may include other ideologies and influences too.” (Buzzle, 2013)

*More details in the Appendices Note -04

• Unilever UK company’s- economic system
United Kingdom is operating a mixed economic system. So it is an advantage to Unilever to do their business activity in the UK. However Unilever highly concern about the market system before they enter in to a country. In command economy there is no Unilever products. Unilever’s business model is market-orientated and customer focused. Unilever always do researches to identify customer needs and wants and then introduce products to cater it. UK has developed mixed economic system. This sector represents the top of the socio- economic pyramid. It means people of UK have high level of needs and wants. So customer is going to the select the product with highly concern on good quality and same time less consider on price. Unilever is doing differentiate itself in the market. It relies on its strategic mix of innovation in products, customer focus and its responsible approach to business to meet consumer demand and develop long-term customer relationship.

3.2 Fiscal and Monetary policy

3.2.1 Fiscal policy
In a country fiscal policy must factor in the economic process. The policy is guiding government how should earn revenue and do expenditures in various situations. Main elements of fiscal policy are Government income and Government expenditure.

“Fiscal policy is carried out by the legislative and/or the executive branches of government. The two main instruments of fiscal policy are government expenditures and taxes.” (Cliffs Notes, 2013)

Fiscal policy can divided as Expansionary and Contractionary policy *More details in the Appendices Note -05

3.2.2 Monitory Policy
“This a action that take by Central Bank of the country that determine the size and rate of growth of the money supply, which in turn affects interest rates.” (INVESTOPEDIA, 2013)
If the money supply grows too fast, the rate of inflation will increase; if the growth of the money supply is slowed too much, then economic growth may also slow. So Central Bank should act according to the situation of the country with concept of Monitory Policy. There are three tools in the monitory policy. These are Open market Operations, Reserve ratio and Discount Rate.
• Open market Operations
Central Bank (FED) open to all buyers and sellers of corporate and government bonds to buy and sell. FED is sells their bonds to commercial banks and commercial bank will be sell it to public. When FED wants to buy bond, FED will buy it from Commercial Bank and Commercial Banks buy it from public. This is the important instrument to control the money supply and demand in the economy. *More details in the Appendices Note -06

• Reserve ratio
This is the ratio that Central Bank/FED asks to commercial banks to deposit at FED. This money is naming as reserves. By increasing ratio of reserve FED will able increase up their fund and the mean time fund of commercial bank (shrinking reserves) decrease. So commercial banks’ ability to creating money will be reducing. Lowering the reserve ratio will be increase/ stable of funds of commercial banks and ability of creating money will be increase.

• Discount rate-Interest rate
FED is changing their interest on deposit and lending time to time. If FED want more funds they will increase the interest rate of both deposit and lending. Then public will be encourage to make more deposit to get more interest income and minimize to get loans due to have pay much as interest. By public deposits FED can increase up their fund and FED can reserve money due to low request for loans. If FED has many funds with them they will decrease the interest rate of both deposit and lending. By decrease interest rate of deposit public will not encourage to make deposit to banks. By decrease interest rate of loans public will encourage to gate more loans. Then FED can reduce their fund.

3.2.2.1 Easy Money and Tight money policy
• Easy money policy
Easy money policy can name as Expansionary Monitory Policy. In this policy FED is using all three tools of Monitory policy to increase commercial banks’ funds. Under open market operations FED will buy securities. From this bank reserves will be increase. FED will use Reserve ratio tool also to increase up commercial bank funds. FED will reduce reserve ratio then commercial banks can keep money with their wallet and crating more money. FED will use Discount rate tool as to increase up the fund of banks. FED will reduce their interest rates then commercial banks will borrow more funds from FED.

*More details in the Appendices Note -07

3.3 Effect of Fiscal and Monitory policy to business and money supply in the economy
• Current status of Economy in the UK
UK is holding 6th biggest economy in the world. UK has 75% service sector contribution to their GDP. Inflation rate of UK is 2.6% in the year 2012 and it was 3% in year 2011. (See Annex II)

*More details in the Appendices Note -08

• Money supply through Fiscal Policy
Unilever Company is paying taxes directly and indirectly to the government of UK. Not only is that Company involving in the international trade too. So Unilever pays other tariff and duties as government charges. In year 2012 Unilever paid €1735M as taxation and it was €1622M in the year 2011. UK government received such big amount from Unilever as only income taxes. Unilever paid €725M as Differed Tax and paid €167M as tax on other comprehensive income. This is only direct tax. When Unilever buys raw material, company is paying tax indirectly too. Unilever is paying big amount as taxation for the government under situation some stability of UK economy. If arise inflation rates company should have to pay more taxes directly and indirectly. And government will also reduce their investments. It will be effect to get loan from banks. So inflation is not good for any businesses. (See Annex III)

*More details in the Appendices Note -09

5. Task 04
5.1 International trade
“International trade is the exchange of goods and services between countries” (Theja, 2013).
In the international market there are two ways goods and services exchanging. One way is sending goods and service from UK to other countries is can identify as export. The other way of international market is import. Import is opposite of export, that is bringing goods and services from other countries to UK. International market is very important to distribute resources to other country. For an example UK needs tea, but in UK there is no tea plantation. So UK is importing it from countries such as India, Sri Lanka, and Kenya etc.
*More details in the Appendices Note -12

5.1.1 Pros of International trade to Unilever UK
Unilever UK is able to create new market segmentation such as Maldives for Dove products. By exchanging goods to among countries risk will be minimized. As an example if there is financial recitation in the UK Unilever UK may lose their profits due to less product sales. If Unilever is supplying to other country with same time they can survival on that revenue. Also Unilever UK can earn foreign exchange by sell their surplus products to another country. Unilever UK cannot product tea due to tea plantations not available in UK. So they are import tea as raw materials from overseas and they develop it and sell to UK consumers. From this Unilever is earning some additional revenue and consumers are also benefiting from this. Also international trades help to reduces trade fluctuations too. Through international trade Unilever can gain their goodwill also.
5.1.2 Cons of International trade to Unilever UK
When consider about import trade there are more cons in the international trade. Unilever UK is importing some raw materials and products from other countries. At that situation local currency is going to another country as foreign exchange. It may bad effect to the company for temporary period. This effect may available for long term or permanently.

*More details in the Appendices Note -13

5.2 Entering to emerging markets
“A nation's economy that is progressing toward becoming advanced, as shown by some liquidity in local debt and equity markets and the existence of some form of market exchange and regulatory body.” (INVESTOPEDIA, 2013)
*More details in the Appendices Note -14

5.2.1 Barriers to enter emerging market
UK is a open for any business to launch at any country of in this world. If Unilever or any other company goes to emerging market they have to face several barriers and these barriers will be change country to country. Lengthy registration process is the one of main barrier to enter emerging market. Emerging market take much period to identify the new business and they analyzing it how it may effect to their country. When go for emerging market company should identify correct partner in that country. It is also difficult, due to less relationship with those partners as new faces. Emerging market available countries have different culture and values than UK. So company should identify, those differentiations before enter the market. Not only the culture commanding process also different than the UK. So it should also identify by the company. Also company has to face to big competition at there, because of emerging market countries giving priority to local products than imports. So import tax also high than other market. In addition to import tax, company have to face other local taxes such as, regional taxes. Find skilled full employees and low infrastructure also barriers to launch business at there.

5.2.2 Opportunities to enter emerging market Emerging market has good opportunities to develop their businesses. The main driver for moving to emerging markets is the potential to capitalise on growth opportunities. In line with the focus on growth, competitive activity is also a factor moving into emerging markets. UK respondents most associate emerging markets with significant opportunities for growth and cost effectiveness however culture of innovation as being a characteristic of an emerging market. Also company can create new market and huge market; because of these emerging markets have very big population. With huge population and unemployment ratio can get unskilled labour/employees under low level salary.

5.3 European Union Market
5.3.1 History of EU
European Union was establishing in year 1955 as co-operation had commenced with the European Coal and Steel Community and this collaboration named as European Economic Community(EEC) as in year 1957. Core members of EEC were Belgium, France, Italy, Luxembourg, Netherlands and West German. Main objective was of EEC to gain economic of scale and to be good competitor to foreign countries. EEC was starting with purpose of trade in cal, steel and iron between member countries without any restrictions and this facility extended to all products, free movement of labours and enterprise and capital. In 1968 established common tariffs and UK was joining with EEC in 1973. Currently there are 27 countries as members of EU. European Union presently identify as Single European Market

5.3.2 EU effect to Unilever UK
Most of companies have the problem of skilled employees. With right of free movement for EU citizens is valuable for employers as it enables them to recruit from a far wider pool. So Unilever can recruit from any country of EU without have restrictions. The Community trade mark and the registration of industrial designs are two ways EU law has made life less bureaucratic for business and protected intellectual property. EU businesses can register a trade mark or an industrial design once and have it recognised in all 27 Member States. Most of business has another problem with cost incurred to energy. Unilever able to reduce their cost of energy with establishment of Single Market Energy in year 2004 and it helpful to reduce the energy cost. A key benefit from the single market is that businesses only have to deal with one set of rules rather than 27 different sets of rules when exporting to or operating in more than one EU Member State. Due to consider as one market huge consumers in a single market and this gain potential situation to the business.

6. Conclusion
Unilever UK company is a one of leading FMCG firm which is operating in the UK. It is registered as Private Company. In the Mixed economic of UK, Unilever is benefiting in several ways. Currently UK has freedom environment for business and Unilever is using this freedom, Unilever able to expand the business in good way with some economic control of UK government. Unilever business model is in the structure of Perfect Competition. Unilever is price taker. Unilever has big competition in the market due to many suppliers are there to cater the same market. Hence Unilever is always finding ways to retain their supply according to the available demand. New innovation, research and development and new technology are the some strategies Unilever use to gain their market positioning. Unilever has good image in the global market. They always consider about new opportunities and threats which may arise from international market. Unilever is gaining maximum benefit of European Union for their business. Unilever currently operate in the emerging market also. But it has given high consideration in emerging market to find more opportunities.