Introduction of Business Environment Analysis Assignment
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Organizational forms of business can be of several types. These involve for profit organizations, not-for-profit organizations, charities as well public sector charities. For profit organizations refers to a company that is seeking to make money (Akhmetshin, et al., 2017). On the other hand not-profit organizations are those whose main aim to generate revenue for serving particular missions of the organization by transferring their efforts into community efforts. Next public sector charities refer to organizations such as hospital, churches, colleges, schools and universities. Lastly, charity is a company that operates for the general publics benefit.
For profit organization: The for-profit organization selected for this report is Morrison’s. The aim of the company is to contribute to creating brand new products and industries for attaining a better world through unique sales and marketing of advanced technologies, components, equipment and material. The business format of Morrison’s follows a hierarchy-cal structure. This means that they operate single format superstore. The company had a financial earning of £ 348 m in 2020.
Not-for profit organization: Funding circle is an important not-for-profit organization in UK whose main aim is to help new business as well as investors to grow through providing sufficient funding in their starting phase. Their business structure is quite simple and they believe in lending directly to business so that investors can gain better returns for gaining attractive returns for future purposes. Since, 2010 the company has raised around £250 of equity capital.
Public sector charity: Birmingham Women’s hospital can be regarded as a Public sector charity organization. The organization was established with the main aim of reducing the number of children and women dying needlessly of infections related to child birth and puerperal fever. The structure of the organization is like any other hospital. The organization has become quite developed in recent times and receives a research budget of £3 m each year.
Charities: Transparent Hands can be easily regarded as a major charity organization in UK. Their main aim is to fund surgeries for poor patients through utilization of a crowd funding platform. The structure of the organization is designed in a way such that poor patients gain visibility and personal relationships of trust can be building with them. They operate through receiving donations from organizations all over the world.
Advantages and disadvantages of different types of legal structure
While starting one of the most important decisions that the owner should take is to find out the appropriate legal structure for the company. The appropriate legal structure for a company can be decided through hiring professional and legal guidance. In the following four legal structures that are generally used have been along with discussion of their advantages and disadvantages (Möller, et al., 2020).
- Sole Proprietorship: This type of business is owned as well as run by only a single individual. No legal distinction can be made between the business and the owner. In case of small business proprietorship is very common. The advantages of this structure are that it is fairly cheap and easy to establish. Further the owner fully controls the business. However a major disadvantage is that the owner is himself exposed to different types of risks and is responsible for each liability within the business. Also investors tend to not invest in sole proprietorship business.
- LLC (Limited Liability Corporation): An LLC is a hybrtid of a sole proprietorship and general partnership. The LLC’s owners are called members. The members of an LLC may be corporations, foreign entities or individuals. Major advantage of this business structure is that it can have an unlimited number of members. Losses and profits of the company are shared among the members and each owner have to bear limited liability. However a major disadvantage is that the business may have to bear additional taxes and the share of each profit shows taxable income.
- General Partnership: A general partnership is an association between two or even more people conducting business for gaining profit. Major advantage is that it easy to create as well as maintain. Moreover losses and profits are passes to the personal returns of tax of the owner. However, major disadvantages the partners are not responsible for liabilities and business debt. Also it can lead to issues related to oversight and management.
- Corporations (S-Corp and C-Corp): Corporation business structures are very complex. The corporations are legal entities that are separate from the owners (mainly shareholders who run the business). Major advantage is that liability of the corporate shareholders and the organizations are highly favorable investors. However, disadvantages include high levels of oversight and governance by the board , and the earnings ar subjected to double taxation. Lastly, the process of establishing the business is costly.
Public and private sector organization
Public sector organizations are managed, controlled and owned by state-run or government bodies. On the other hand private sector organizations are those organizations that are managed and controlled by business entities, groups or individuals. The difference between the two types of organization have been outlined in the following.
The private sector organization can be owned by entities or individuals without any government interference.
They can be owned by local, state or central bodies.
Their core motive is to gain profit through business operations.
Their main motive is do activities that serve all general public.
They offer several benefits such as higher salary, better chances of promotion etc.
They offer certain benefits to the employees like housing facility, job security etc.
Here employees are generally promoted on the basis of job performance and merit.
Employees are generally promoted in this sector on the basis of the employee’s seniority.
Both the management structures of private sector and public sector have some specific sources of financing. The private sector organizations are mostly financed by owners, issuing shares, through loans and so on. On the other hand the public sector organizations are mostly financed through excise, tax collections, treasury bills, bonds, duties and so on.
UK competition policy and the legislative framework surrounding the different anti-competitive practice
To understand and asses the restrictive trading structures and policy control of the UK competition policy, we need to firstly analyze the different types of economic market structures. Different types of market structures have been defined in the following.
Oligolpoly: In the economic market structure of Oligopolly only a small number of firms are present within the market. Hence here the number of buyers are much greater than that of the sellers.
Monopoly: In this economic market structure, there is onbly one seller. Hence, one company will compete the overall market share.
Competion: Under the competition market structure, two types of structures are normally visible. Firstly there is the market structure of perfect competion. In this structure, the number of sellers and buyers are large and there is high competition between the several sellers. The second one is the monopolistic competition. In this market structure, the number of sellers and buyers are again large; however all of them do not sell the same product.
In this section the extent and policy control of the restrictive trading practices will be discussed through identifying UK competion policy (Hrechyshkina and Samakhavets, 2019). The UK competion policy will be assessed in detail and will be compared with the EU competion policy. To discuss the UK competion policy we should firstly know what is meant by competition policy. Competion policy are defined as government policies that reduce or prevent the abuse of monopolistic power. If monopoly power is abused then market failure is inevitable and it wil be against the interest of the public. Hence government is compelled to intervene and thereby protect the interest of the consumers. The Competition act of 1998 wanted to bring the UK competiton policy in line with the competition policy of EU. The competition policy of UK is regulated by Completion and Market authority (CMA). Hence this is managed Competition commission and OFT. The area of influence of CMA include regulation Collusions/ Cartels according to the Completion Act of 1998. It also involves providing business education so that it can comply with the relevant act of completion.
Operation of Competition and market Authority
The Competition and Markets Authority can be regarded as the governing body that improves competition among the different businesses and reduces any anti-competitive behavior within UK. The UK government operates the CMA, but it often functions as a non-ministerial department that functions as a regulatory body overseeing particular industry in the country. The CMA operates in a specific way within the economy. They investigate specific industries to see if they are run in public interest. CMA further handles the super complaints made by consumer bodies and investigates any unfair practices. Lastly when notified about mergers, they also investigate the merger of the two companies to find out if they are against public interest. The operations of CMA has significant effects on the consumers. The investigations done by CMA on particular industries helps to find out if they need more funding from the public sector which indirectly effects the consumers.
Macroeconomic objectives and government intervention into the economy
Macroeconomic policy aims at several objectives on the basis of the circumstances within the country. Core objectives of macroeconomic policy involve proper allocation of all economic resources. It also aims at suitable distribution of income wealth (Cherunilam, 2021). Compared to this the macroeconomic instruments can effect the overall aggregate spending via changing the levels of corporate and individual income. They involve government tax structures, rates or revenues. In this context it should be mentioned that the government intervenes significantly through the Fiscal, monetary and supply side policies. The impacts of the fiscal policies on the economy can be revenue neutral. This means that the spending changes are balanced by revenue collection changes. Next, if the growth in the economy is quite fast then the central government bank may manage this through the introducing monetary policy. Lastly, if the supply-side policies of the government are introduced then it will lead to lower inflation, lower unemployment, improved growth in economy and so on. Hence from the overall discussion it can be said that government intervention can have both negative and positive effects. Government intervention can lead to increased employment, proper taxation, balanced payments and increased rates of taxation.
Globalization and its effects
Globalization is defined as the process in which organizations or companies start to have an international influence or start operating internationally. Offshoring manufacture exerts statistically significant, although not economically modest positive impact on domestic employmert in different multinational parent firms (Hamilton and Webster, 2018).
In this report the impact of changes of public sector and not- for profit environment on business organizations have been properly analyzed. Further the governmet’s impact on the operations and structure of the business organization has also been analysed through discussion of different market structure, government structure and other business organizations.
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