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 Business Environment in organization

Question:

Task 1:
LO1 Understand the organisational purposes of businesses.

1.1 Identify the purposes of different types of organisation.

1.2 Describe the extent to which an organisation meets the objectives of different stakeholders.

1.3 Explain the responsibilities of an organisation and strategies employed to meet them.

Task 2:

LO2 Understand the nature of the national environment in which businesses operate.

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2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the activities
of a selected organisation.

Task 3:

LO3 Understand the behaviour of organisations in their market environment.

3.3 Judge how the business and cultural environments shape the behaviour of a selected
organisation.

Task 4:

LO4 be able to assess the significance of the global factors that shape national business activities.

4.2 Analyse the impact of global factors on UK business organisations.

4.3 Evaluate the impact of policies of the European Union on UK business organisations.

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 Management of Business Organisations

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Task 1

Purposes of different types of organizations

In existing business environment, there are different types of organizations which operate

for accomplishing their different purposes (Jones, 2013). On the basis of the nature of business

operations and objectives, all the organizations can be categorized into three broad categories

which can be listed as below:

1. Private Companies

2. Government Departments

3 Charity Organizations

The purposes of these different types of organizations are quite different from each other.

Specific objectives of different types of organizations can be illustrated as below:

Private Company:

A private company can also be regarded as close corporation. These companies can be

defined as the corporations or business entities which are owned directly by private investors,

owners as well as shareholders. The primary purpose of forming private companies is to earn

profits from different commercial and economic activities. The profit earned by private

companies is availed by owners as well as shareholders of the organization (Paul, 2008). There

are three different types of privately owned business organizations namely sole proprietorship,

partnership, and corporation firms. This categorization is done on the basis of the composition of

the organization. For example; the purpose of sole proprietorship firm is to provide intensive

profits to one person only. Moreover, in partnership firm, the primary purpose of business

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activities is to make profits to two or more people. Along with this, corporation organizations

earn profits for the purpose of providing return to its shareholders (Paul, 2008).

For example Alliance Boots is a good example of UK base private companies which has

significant goals and objectives that are followed by private companies in general. While

examining the goal of the business of Alliance Boots as a private company, it has been observed

that, the company seeks to have development of its business in core pharmacy led health and

beauty products. The company in order to earn profits wants to become an important business

player in the prime international markets (Alliance Boots, 2014). The company with the help of

its business activities wants to contribute its best for securing the well being of the customers of

the immediate community to which it is serving. With such a provision the company wants to

gain a differentiated business position among customers. In order to make its goal of providing

better services and products to the customers to earn high degree of profits, the company focuses

on five core values including partnership, trust, service, entrepreneurship and simplicity.

Other than this, the key objectives of the company include growth of the core business of

the company in the existing markets by the provision of innovation and advanced services. The

other objective of the company is to have continual improvement in the productivity of the

business and even saving costs of production so that maximum profits can be earned. In addition

to this, the company also wants to pursue growth opportunities with the selection of the new

prospective growth oriented markets. The company also tends to make transformational strategic

partnership in order to launch products into the new international markets (Alliance Boots,

2014). Overall, the business goals and objectives of Alliance Boots show that the company is

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highly growth and profit oriented and thus matches with the purpose of forming a private

company.

Government Department:

These organizations are also known as public sector organizations which are directly

owned and directed by local government. The primary aim of the public sector organizations is

to provide benefits to the society so that holistic growth of the society can be achieved. Such

types of organizations generally do not work for earning money and economic benefits (Wallace

and Wallace, 2001). The basic purpose of government sector organizations is to help the entire

society in the manner that it can be sustainable in the long run. The size and the span of business

activities of government sector organization are quite broad and they are directed to provide

better and non-economic benefits to the society.

The public sector organizations can be formed by several different means. For example;

public sector organization can be formed by direct administration funded with the help of taxes

paid by local residents. Another form of public sector organizations is the state owned

enterprises which run on the expense of state and national government (Wallace and Wallace,

2001). Along with this, partial outsourcing is also one of the basic forms of public sector

organizations, in which the private and public sectors come together for sharing assets and

liability of the related ventures. The basic aim of such type of organizations is to diversify the

risk associated with projects and avail maximum benefits of the venture.

For example; National Health Services (NHS), is one of the major public sector business

organizations, which works for the holistic growth of the society and enhancing the community

health in the most efficient manner. NHS is the organization, which is formed by the UK

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government for the purpose of ensuring the availability of better and approachable health

services to each and every class of society regardless of their standards of living, and income

level (Adams, 2001). This organization provides different healthcare services to the community

people who cannot afford highly expensive and advanced health services from private sector

organizations. The basic goal of the organization is to secure the interest of the patients and

provide best possible care to the needy community people. The main objective of the

organization can be illustrated as below:

To provide effective and efficient healthcare services to different classes of

society so that each individual in the country can have better health services.

To enhance the health profile of the organizations and reduce the level of different

chronic and acute diseases prevailing in the society (Adams, 2001).

To enhance, the standard of patient care so that privately owned organizations can

be provided with intensive amount of competition.

To secure the best interests of the people which are served by the organization as

well as employed by the organization (Adams, 2001).

In this way, on the basis of this discussion regarding the purposes of government owned

organizations, it can be cleared that earning economic profits is not the direct and sole aim of the

government organizations, rather earning social profit is the main aim of the organization.

Charity:

Charity organizations are a specific type of non profit organization or NPOs. This type of

organization does not work for earning any kind of profits from its activities. Charitable

organizations targets own earning non-profit as well as philanthropic objectives on regular basis.

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Ensuring social well being and public interests is the sole and common goal of the organization

(Fremont-Smith, 2009). These charitable organizations are formed for the purpose of providing

security and sustainable growth to the society. The charitable organizations were indifferent

sectors in the favour of community people.

As a charity company we can take example of Christian Aid, which is a Christian

organization that intends to change the world swiftly. The companys main goal is to make the

world as comfortable so that all people can have a full life and can become free from the curse of

poverty. This organization as a charity does not expect any benefits for the businesses but work

for social and moral cause. This charity organization seeks to provide highly practical and urgent

assistance to needy people and even works to find out and remove the root cause of the poverty.

The main goal of this charity organization is to provide benefits to the people on ground and

ending the injustice practices (Christian Aid. 2014). The companys main objective is to work at

global level in order to make profound changes in the global society in order to eradicate the

main causes of inequality, poverty, and social injustice. This charity works for providing dignity

and freedom to all people and render effective assistance. The charity wants to make its vision

true in all senses. Hence from this discussion, it can be viewed that formulation of charity

organization is not done only for serving the human kind at the best level and they are not at all

formulated for earning profits.

Task 2:

For the business organizations, securing the interests of the stakeholders is the primary

concern. In this regard, all the business organizations focus on meeting the desires and interests

of the stakeholders to an effective level. Shell, which is an oil and gas producing company, has

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high degree of openness and willingness to be engaged with the stakeholders. Shell shows a

genuine commitment towards stakeholders and maintains high standards of environmental

protection and even secure economies of scale (De Ruijter, 2014). The stakeholder groups of

Shell are quite diverse including owners, employees, environmental groups and government. All

these categories of stakeholders of Shell have their distinct objectives with which they are

associated with the company and Shell also meets these objectives of the stakeholders to a good

level in various ways which are discussed below:

Part A: Meeting the Objectives of Shells Stakeholders

a. Owners

For a company it is essential to meet the core objective of its owners that is earning

profits. In regard to this, the owners of Shell, who are the shareholders and investors of the

Company, are aimed to earn adequate returns and regular income from the operations of

company. To meet this objective of the owners, the company has undergone with several crucial

and large sized projects related to oil extraction and refining so that overall profit of the

organization can be enhanced up to a significant level (McBeth, 2013). Recent financial

performance of the company is also quite healthy which indicates that the company is able to

meet the objectives of owners in the most efficient way.

b. Employees

The employees are the main assets of the organizations as they provide the base for the

overall functioning of the business organizations. This is the reason that in the stakeholder

groups of organizations, employees have a significant role. The employees being the

stakeholders of the organizations work for their organizations with good commitment and full

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dedication. However, in return of their efforts, they want to have some objectives that they desire

to be met on the part of the organizations itself (Adams and Periton, 2009). The employees of

Shell have several objectives which they want to be accomplished in the organization. The

employees want to work in safe and healthy work environment. The employees of Shell expect

that the company deliver all categories of products including energy products in a safe and

responsible manner. In order to meet this objective of the employees, the company keeps safety

at the top priority and considers it as a core value while operating its business functions. The

prime goal of the company is to have minimum or no fatalities and incidents at the workplace

which can harm employees. The company focuses on continuous improvements in its operations

to improve safety of the employees. For safety purpose, the company runs several programs and

employees of the company take active participation in the programs. The employees of the

company want to have regular employment in order to earn their living. To meet this objective of

the employees, Shell provides employment to more than 90,000 employees and 400,000

contractor staff all over the world (Sustainability Report, 2013). The company recruits local

people where it operates to increase employment opportunities and provide training in order to

make them learn working patterns.

c. Environmental Groups

The environmental groups are also among the major stakeholder groups of Shell. The

environmental groups of Shell have several significant objectives that they want to observe in the

corporate social responsibility practices of the company. The environmental groups want to have

the best environment performance of the company. These groups expect that in the business

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plans and projects and operations, the company maintain high degree of sustainability

(Sustainability Report, 2013).

In order to meet the objective of this stakeholder group, Shell operates in an

environmentally responsible way. In this regard, company has adopted innovative and

environment friendly production process under which its produces bio-fuel, which have minimal

emission of carbon, as well as, residue remained as the by products of the production processes.

d. Government

Along with other stakeholders, government can also be considered as one of the manor

stakeholders for the organization which can affect the strategic and operational framework of the

company by its different policies and regulation. The government of the UK provides financial

and technical assistance to the company in order to make the company sustainable in the

marketplace. There are two prime objectives of the government behind supporting the company,

namely financial objectives, and social objectives. Under financial objectives, the government

wants to arrange funds from the company in the form of taxes. Moreover, under social objectives

the government expects the company to enhance the level of economic growth and employment

opportunities in the country. In order to meet these crucial objectives, the company accomplishes

its tax liabilities timely and efficiently (Sustainability Report, 2013). In addition to this, from the

perspective of social development of the society also, the company is quite committed as apart of

being a large scale employer, the company also undertakes several social welfare programs

which help the society to be sustainable. In this way, the company undertakes some intensive

amount of efforts to accomplish the objectives of the stakeholder, i.e. government.

Part 2: Ethical Responsibilities of Shell

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a. Employees

i. Health and Safety

Health and safety is the prime concern of Shell and in order to secure this responsibility,

Shell runs several safety programs and makes the occupational health and safety regulations

aligned with its work process (Press Release, 2012).

ii. Equal opportunities:

Shell as an organization in order to render equal opportunities to employees in the

organization, maintains and secure the provision of human rights. Even the company follows

anti-corruption regulations to secure the opportunities of the employee groups (Press Release,

2012).

b. Ethical issues

There are two specific aspects related to ethical concerns paid by the organization

i. pollution

The company is highly committed to reduce the carbon footprint in the environment for

this purpose; the company employs some effective waste management strategies such as lean

management and recycling for the waste products so that negative impact over environment can

be reduced (Biello, D. 2014).

ii. Global warming

For the purpose of reducing the level of Global warming shell the responsibility to

minimize emission of CO2 and So2, as well as, other toxic pollutant which have heating effect

on the climate. To mitigate this ethical issue the company runs several programs with support

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local government to keep a good check on its operational activities to minimise the emission of

these harmful substances (Biello, D. 2014).

In this way, on the basis of the entire discussion it can be reflected that the company is

quite committed towards its corporate social responsibilities related issues. There are a number

of different crucial issues prevailing in the surrounding environment.

Task 3

Antitrust Lawsuit against Microsoft and Measures Taken by the Company

Microsoft was accused in the year 1997 for following up the anti-competitive marketing

practices which were directed at manufacturers of the personal computers who installed

operation system software in the personal computers which were produced by them for the

purpose of retail sale. The main rationale behind this law suit was based on an argument as per

which Windows 95 and Internet Explorer were considered two separate and self standing

products and through integrating them into one package, Microsoft was taking an unfair

advantage over a corporation named Netscape Communications Corporation (Basala, 2002).

Under the lawsuit, it was mentioned that Microsofts actions was a violation of the consent

decree of 1995 signed by the company. In this suit, Microsoft was asked to provide Windows

without including any features of internet explorer or without including Netscape Navigator in

the package offered by it.

In such a case, the competition policy and other regulatory mechanisms have had direct

impact on the business of Microsoft. The competition policy in the European Union has

differences in terms of bundling and tying. The cases brought against Microsoft were subject to

be the issue of bundling as per the competition policy (Economides and Lianos, 2009). The

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competition raises was unable to be tempted as antitrust, yet it affected the markets of the

company and even its products and services, because the competitors were excluded from the

market in which Microsoft was very active. Due to which the company had to face specific

antitrust standards framed by competition authorities in the European Union.

Under regulatory regimes, Microsoft was posed by some legal allegations as per which

Microsoft was to have elimination of the licensing and marketing contracts due to which the

computer manufacturers ability was restricted in terms of selection of an appropriate browser to

be installed in their PCs. The other regulatory mechanisms impact was that the company was

also made forced to have elimination of the ability of diverse range of services including internet

services, internet services, content providing services, for the purpose of promotion and

distribution of the other competing browsers (Basala, 2002).

In order to deal with such a legal issue of antitrust, Microsoft Corporation undertook

some serious major to become free from litigation. The company struggled for a long period in

order to deal with the issue of antitrust. The authorities of the company have started to undertake

some critical actions for the purpose of fixing the critical issues related to law suit filed against it.

For the purpose of preventing the occurrence of such critical situation in the future, the company

has changed some its policy administrations in regard to this, the company has started to have

separated legal department for dealing with such conditions (Lee, 2000).

These are some crucial policy actions, which are directed to company to be aligned with

competition policies of the EU and address complications in global business issues.

Task 4:

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1. Shell is one of the major business organizations operating in oil and gas industry. Like other

business sectors, oil and gas sector is also exposed to dynamics of external business

environment. For the country there are a number of internal factors related to the country, which

can direct to shape the behaviour of the organization in the most effective manner. These factors

can be elaborated as below:

A. Political factors: Oil and gas industry of the can be considered quite vulnerable to the

political factors such governments rules and regulations, political system of the country, attitude

of the local government towards the industry and political relationship of the country with

neighbouring countries (Ernst & Young, 2011). For Shell Corporation, and other companies

operating in the industry, the government has undertaken several crucial policies and regulations.

The government of the country also provides financial and technical assistance to the business

organization to undertake various projects as the growth of the organization helps the country to

accomplish its oil requirement. In addition to this, positive political relationship of the country

with oil producing countries also enables the company to have proper and adequate supply of

raw material in the most effective manner, which leads the company to be sustainable and

effective.

b. Socio-cultural factors

The socio culture factors of the country is also directed to affect the company and its

business practices in the most effective and efficient manner. The social and cultural perspective

of the UK is quite formal which emphasis over proper and disciplined structure of the business

entity. In this context, this cultural perspective affects the operational framework and strategic

orientation of the organization (McPherson, 2003). The management of the organization put

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intensive amount of attention over developing and fostering a formal working culture for its

employees. In addition to this, social setting of the UK market is quite liberal for innovativeness.

Innovative and advanced processes and products are thoroughly admired within the country. In

regard to this, this social and cultural perspective of the UK market can be seen in the working

culture of Shell. The company is known for its innovative approach and adaptation.

c. Educational factors

Along with other factors, educational aspects can also be considered as one of the major

aspects of the market trend which can affect the operational framework of a company in a

specific market place. In oil and gas industry, which is a highly advanced and technical industry,

technical education can be considered quite essential phenomena. In regard to the market of the

UK, the level of education is quite high (Tordo, Warner, Manzano and Anouti, 2013). The

country possesses world class universities and educational centres, which are directed to produce

world class and highly efficient talent. In this regard, companies operating in Oil and gas

industry, such as Shell Organization, needs not to face the problem of lack of efficient talent and

human resources. There are a number of different educational institutions which provides special

training and technical courses in regard to oil and gas industry. In addition to this, the availability

advanced and developed educational settings across the country, also helps the company to

provide trainings and develop efficient and customized workforce for the purpose of supporting

the organizations goals and objectives.

These are some of the crucial internal factors related to the business environment, which

induces the business organization to make changes in its operational framework.

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2. Along with above discussed internally integrated market factors, there are a number of

different outside factors which induce the company to have intensive amount changes in its

existing operational and strategic orientation. These crucial factors in the context of Shell

Organization can be discussed as below:

a. Technological factors

Availability of high class and advanced technologies in the market can be regarded as one

of the major and prominent factors that directly influence operational processes of the company

in the most critical manner. In regard to this, the availability of highly advanced and innovative

technologies in the market helps the company to undertake its business operations more

efficiently and smoothly (Eck and Pilot, 2001). In the UK, the technology environment can be

considered quite turbulent and dynamic. There are a number of different technologies which

keeps on changing on frequent basis. Owing to this reason, the company is required to keep its

research and development department more updated and advanced to address changes in

technologies.

b. Legal factors

Along with other external environmental factors, legal environment of the country is one

of the major factors that can affect the operational framework and strategic orientation of the

country. For a company it is quite essential to follow the legal conditions of the country in which

it is operating. In the context of oil and gas industry of the UK, the legal system of the country is

quite structured and well planned (Linde, Baram and Renn, 2013). There are different crucial

laws in the UK system which is directed to affect the norms and strategic orientation of the

business organizations in the most critical manner.

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c. Environmental factors

In the UK and at global level also awareness regarding environment safety is increasing,

which is putting some intensive amount of pressure over industries such as oil and gas industry.

For organizations like Shell, adoption of some crucial environmental protection strategies and

practices becomes quite essential and effective strategies. In regard to this, for the purpose of

addressing environmental concerns, the company has considered environmental protection as the

major aspects of its corporate social responsibilities (CSR) practices (Manlove, 2008). The

company has explicitly adopted green operational practices in which the company has focused

on reducing the emission of carbon from the oil refining processes. In addition to this, at the time

of transporting oil, proper protection and care is undertaken so that prevention of the incident of

oil spills can be mitigated in the most efficient manner.

In this way on the basis of the discussion made in the paper, it can be reflected clearly

that different crucial internal and external business environmental factors, which has affected

business policies and strategies undertaken by Shell organization In the UK.

Task 5

Impact of two policies of the European Union on UK business organizations

European Union can be considered as an example of economic integration and its related

strategies in the context of some crucial economies across the globe. There are different

developed as well as semi developed economies which have integrated their policy measures and

administrative orientations for the purpose of enhancing mutual cooperation and trade relations

in the entire European region. Basically, European Union is an institution which works for the

betterment and trade integration of different countries in the European region. European Union is

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responsible for framing different policies, directions and regulations on which trade and

economic transaction among different members countries is required to be proceeded. For the

purpose of undertaking effective and efficient trade among countries, EU has formed several

policies and strategies which are needed to be followed essentially by member countries. In this

context, UK which is one of the major member countries of the European Union also needs to

abide by policy directions of the EU. Different policies of the EU directly or indirectly affect

business organizations and their practices in the UK. In relation to this, two major policies of the

EU and its impact on the UKs business organizations can be highlighted as below:

1. Secured data EU General Data protection regulation:

This is one of the new and effective policy formed by the EU to regulate the business

activities and transactional process followed in the member countries. The UK business

organizations are directly affected by implication of this policy in terms of securing the

confidential data related to business transactions occurring with other members of the EU.

The proposed draft of the new data protection framework imposes the compulsion of notifying

data protection authorities as well as data subjects that have been affected within one day. This,

compulsion has alerted the UK business corporations for keeping their data security system

update. The data security policy has driven the UK business to have new and advanced

technologies for the purpose of preventing cases of data breach. The new policy states that if the

company does not follow the requirements of the data security, it has to pay one million Euro or

2% of its global turnover as fine. This provision has dragged companies operating in the UK to

enhance their security system or keep them updated (Ashford, 2012). The data protection of the

EU mainly affect retail distribution and transport sectors as in existing period of time these

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business industries are quite vulnerable towards data security and breach incidents. Along with

this, financial services industry and manufacturing industry has also made some crucial changes

in their IT and data security systems to keep themselves aligned with new EU data protection

policy. About an average 59% UK IT managers have stated that the new EU data protection

policy will lead to raise the overall operational cost of the company but in order to be aligned

with EUs policy framework, it is essential for the companies operating in the UK to update their

data security system (Ashford, 2012). Hence, it can be reflected that the new EU policy of data

protection has been governing and monitoring the data security aspects of the UK business

organization in a consistent manner.

2. EUs Competition Policy:

In order to promote healthy and effective competition, the EU has designed an effective

and comprehensive competition policies for business organizations based at members countries.

The prime objective of competition policy is to promote competition and securing benefits and

interests of domestic companies. The competition policy of the EU prevents any critical and

unlawful actions undertaken by a company to win competition in the marketplace. The

companies operating in the EU are required to be aligned with these policies regarding

competition and reframed their marketing and operational activities accordingly. The UK firms

have to change their strategies while operating in the domestic market as well as in the European

Union, so that they can establish balance between policy requirements and profit objectives

(ERT, 2014). As per the policy, there are three main source which leads to put competitive

constraints which are listed below:

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 1. Demand substitutions: as per this policy aspect the company is required to assess the

demand substitutions prevailing in the market and forecast the demand in near future so

that effective supply can be ensured.

2. Supply Substitutions: As per this policy aspect, all the companies in the UK are required

to design a specific supply network in order to provide a wide scope for customers in the

EU and the country to accomplish their needs (ERT, 2014).

3. Potential Competition: The EU competition policy has directed to promote healthy and

potential competition in the market which is in the favour of local customers. In order to

accomplish this policy aspect, the EU has reduced the market entry barriers for domestic,

as well as, foreign firms. However, there are some specific and essential regulatory

regimes which are needed to be followed by the company to operate its business in the

competitive marketplace in the EU. In this way, it can be reflected that the UK firms are

taking advantage of the competition policy by making the market niche for them. For the

foreign business organisations, it is essential to have proper licence and certifications

from the side of EUs regulatory committee before starting their business in the country

(ERT, 2014).

In this way, on the basis of the discussion made on the impact of EU policies over UK

business organisations it can be observed that the policy directions of the UK affect the business

regimes followed by the country in the most effective and comprehensive manner.

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