Business Environment and its Impact on Organisation Assignment Sample

Introduction of Business Environment and its Impact on Organisation Assignment

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The report focuses on the description of different types of organisations in different sectors. The different legal structures that the business organisations need to face as well as their disadvantages and advantages are explained. Differences between private and public and their financing forms are also mentioned. Competition policy and the legislative framework have been assessed in this report. Objectives of fiscal and monetary policy and the impacts of different employment tax rates of payments on the business operations are well analysed. And finally, the concept of globalisation and its impacts on economic competition business has been analysed. With the help of this report, the concept of the business environment and how a business organisation can effectively deal with the business environment have been analysed.

Different types of organisations

The main sectors of organisations operating in the business world include private public and voluntary sectors.

Private Sector Organisations

Public sector organisations include all the government organisations at the state, federal and local levels. The public sector organisations deal with the public services in terms of employment, legal system, education, health service, natural resources, and welfare (Klein, Ramos and Deutz, 2020). Other examples of public sector organisations include police, public transit, and military service.

Private Sector

Private sector organisations are mainly governed by individuals. The main focus of the private sector organisations is to make profits. The profit of the private sector organisations provides advantages to the shareholders, investors, and business owners (Rösler et al., 2021). The retail sector, hospitality industries, financial services, construction, real estate, aviation, and home service are the main examples of public sector organisations. For the sector, the market size and share are enormous as the sector focuses on maximizing profits.

Voluntary Organisations

The non-profit organisations are designed to provide assistance and support to those in need. Because their only purpose is to aid people, many organisations generate little or no profit (Erdurmazl?, 2019). The primary goal of these organisations is to assist those in need by offering excellent services; but, because they do not want to make a large profit, their market size is tiny.

Legal structures and their advantages and disadvantages

Various business organisations have to maintain different legal structures. Mainly four types of legal structures are found in the various forms of business organisations.

Corporation or Company

A corporation is a legal body created by a group of people known as shareholders. To incorporate a business, a number of legal conditions must be satisfied (Kay, 2019). When one or more of the company's founders pass away, the company does not truly collapse. Companies have separate legal identities from their owners. A company is a separate legal entity with its own identity and logo.

Advantages

• The advantages of creating a company include liability insurance protection, sustainability, business stability, and simple access to funding.

Disadvantages

• The disadvantages of starting a business include the time consumption and potential for double taxation, as well as the need to adhere to strict laws and regulations (Kay, 2019).

LLC (Limited Liability Company)

A “Limited liability corporation” (LLC) is a flexible business structure that combines partnership and the features of the company. It is a collection of people who share personal and also professional characteristics. The legal etiquette is similar to that of a business (Reiser, 2018). Limited liability companies shield the owners from the actions of the company or other organisations.

Advantages

• The key advantage is that the corporation has minimal responsibility.
• The corporation is a separate legal entity from the rest of the organisation (Reiser, 2018).
• This protects shareholders and administrators from being held personally liable for the activities and liabilities of the corporation.

Disadvantages

• The owners have to pay self-employment taxes.
• As LLC is controlled by state law, the organisational operations can be greatly impacted by the changes in the state law (Reiser, 2018).

Sole Proprietorship

For setting up a business organisation the easiest form of legal structure is the sole proprietorship. In this type of legal structure, there is limited or no paperwork (Lee and Cho, 2020). This type of legal structure is basically unincorporated, and an individual is the main owner of this type of business.

Advantages

• No government approval is required in this type of legal form.
• There is no government presence in this type of business.
• Responsible and level for all the debts and business operations (Lee and Cho, 2020).

Disadvantages

• There is no protection for liability.
• It is hard to get any business or financing credit.
• the owners also face problems in selling the business (Lee and Cho, 2020).
• There is no difference between personal and business assets.

Partnership

In this type of business organisation, two or more two persons are the owners of the business, and they also distribute the profit between them. A partnership is developed when the organisation is established. The partnership is based on documents and the lawyer becomes a witness to the partnership. The profits and responsibilities are shared among the partners (Rahman and Ghadas, 2018). All the partners are responsible and liable for the debts of the partnership and also all the legal liabilities are shared among the partners.

Advantages

• The start-up cost is low, so it is easy to establish any partnership business.
• Numerous capitals can be available for the business setup.

Disadvantages

• There are unlimited liabilities of partnership for the dates of the business.
• There is no separation of legal and date liabilities
• All the partners are equally liable for the business debts (Rahman and Ghadas, 2018).

Differences between public and private organisations

The main difference between public and private sector organisations is that the public sector organisations are governed by the government and the private sector organisations are managed by individuals or corporations (Onukelobi, Okoye and Pius, 2019). The main focus of public sector organisations keys on serving people but estimating profit is the main motto of public sector organisations.

In the finance of the public sector organisation, the government first decides the total amount of spending to be made across different sectors, then assesses the various sources of revenue that may be utilized to fund those expenditures (Onukelobi, Okoye and Pius, 2019). In private sector finance, each individual, or business decides how much money to spend based on their earnings.

The primary goal of private sector finance is to manage money in a way that improves business performance (Casady et al., 2020). Financial management of the private sector, on the other hand, has as its primary goal to bring prosperity to the average individual. Private sector finance is concerned with a person’s or a family’s weekly, monthly, or annual budget, whereas public sector finance is concerned with the government’s fixed annual budget. Public finance is more flexible than private finance since an individual’s wages cannot change drastically.

UK competition policy and legislative framework

UK competition policy is mainly regulated by the Competition and Markets Authority. The goal of competition law is to protect consumers from harm caused by diminishing or restricting competition (Davison, 2018). This includes the use of a dominating market position by a corporation, anti-competitive agreements between companies, and mergers or takeovers that would significantly reduce competition if authorized. Competition law in the United Kingdom prevents rivals from entering into agreements or arrangements that are likely to hinder or diminish competition.

It also focuses on prohibiting non-competitive agreements that are likely to stifle competition, such as those between suppliers and consumers. 'The United Kingdom has a ‘common law system’ which combines legislation with case law to set standards (Davison, 2018). The Monarch, followed by the House of Commons, and finally, the House of Lords, approves legislation that defines the rules.

How Competition And Market Operate To Review Business Practice And Impact The Consumers

They look at corporate mergers to see if they impede competition. If there is a major danger of competition or consumer concerns, they evaluate whole markets. They take action against companies, individuals, and organisations that engage in anti-competitive behaviour. The CMA attempts to protect consumers from huge corporations abusing them through strategies like exaggerated pricing (Nazzini et al., 2018). The CMA can help the customers to get away from) the exploitation of the business organisations by identifying the areas the business creates anti-competition. CMA provides protection to the customers from being exploited.

Objectives of fiscal and monetary policy

The main objectives of the fiscal policy are to bring economic development, bring the equal distribution of the resources, provide employment opportunities, enhance investment opportunities, economic stability, growth, and development (Munir and Riaz, 2019). These policies are also developed to encourage full employment status in the society by maintaining a high-level growth of the economy and by stabilizing the wages and prices.

The goals of monetary policy are to curb the inflation rate, maintain the rate of employment, and control the interest rate for the long term (Huang, Ge and Wang, 2020). The price stability is mainly controlled by the monetary policy for bringing a good market economic condition.

On the business operation tax rates, employment, tax rates, the balance of payment, and exchange rate all have a huge impact. When these policies change, the organisation has to make necessary strategies to deal with the changed policies.

Employment impact on business

This decrease in economic activity will have an immediate impact on businesses. Several households will see their income dwindle as unemployment rises. Customers will buy less, resulting in lower profitability for many businesses. However, as the unemployment rate rises, so will the demand for various goods and services. Employment benefits disadvantaged families by providing financial support, renewing domestic consumer needs and wants, and accelerating exponential growth (Panella and Serafeim, 2021). Depending on the employment rate of the country, the prices of the products are set.

Taxation

Depending on whether money gets spent directly to the state or indirectly through business, taxation has a varying impact on enterprises. If the income tax is hiked, workers will have to pay greater taxes on their earnings. As a result, people have less money to spend on goods (Gius, 2018). Therefore, when the tax rates change, the company needs to change its strategies to deal with the tax rates.

Inflation rates

An increase in interest rates can impact a business in several ways. As they are paying higher interest rates to their suppliers, customers who are in debt have less money to spend. As a result, sales are on the decline (Sharpe and Suarez, 2021). As a result of the higher interest rate, the company will need to have to subject to extra costs.

Balance of payment

A shift in the balance of payments can cause fluctuations in the exchange rate of its currency against other currencies. The balance of payments can be affected by relative currency power fluctuations. Thus, when the Balance of payment changes, the overall financial operations of the company can be impacted (Gatawa and Mohammed, 2018). The import and export of the products can also be affected.

Impacts of globalisation

Globalisation generates new opportunities for business organisations to explore their business in large markets across the globe (Mwika et al., 2018). By increasing the flow of products and services ideas, people, capital, and service services around the globe globalisation can help a business organisation to develop and increase its brand at the international level. It also helps the business organisation to develop and generate more revenue collection attracting numerous customers across the world.

Globalisation also has a huge impact on developing a competitive advantage or competitive market. With the help of globalisation and business organisations entering the new large market at the international level, it can face huge competition from many other competitors (Zerrin and Dumrul, 2018). Globalisation also impacts the economy to a large extent by enhancing the standard of living for people. With the help of globalisation, the cost of manufacturing decreases. Through these, the company can produce more goods maintain cost-effectiveness, and can also deliver the products to the customers at a low price. It can increase the sales of the products by bringing a huge economic boost to the country.

Conclusion

The business environment faces various challenges including the legal structure and competition framework. Different fiscal and monetary policies set by the government of a country can also impact the business operation. Globalisation has a huge impact on the development and growth of any business organisation because it can provide increasing competitiveness at the international level.

References

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