Business Environment



Task 1 – Individual written report
Select one local charity and one national large business (large PLC or Ltd.) and prepare a report addressing the

Identify and describe the purpose and ownership before linking these to the size and scale of each organisation. Compare

and contrast these two businesses. AC 1.1.
Describe the different stakeholders who influence the purpose of the two businesses and the extent to which an

organisation meets the objectives of different stakeholders. AC 1.2.
Explain the responsibilities of both organisations and strategies employed to meet them. AC 1.3.


Categories of organisation: legal structure; type e.g. private company, public company, government, voluntary

organisation, co-operative, charitable; sector (primary, secondary and tertiary)

Purposes: mission; vision; aims; objectives; goals; values; profits; market share; growth; return on capital employed

(ROCE); sales; service level; customer satisfaction; corporate responsibility; ethical issues

Stakeholders: owners; customers; suppliers; employees; debtors; creditors; financial
institutions (banks, mortgage lenders, credit factors); environmental groups; government agencies (central government,

local authorities); trade unions

Responsibilities of organisations: stakeholder interests; conflict of expectations; power influence matrix; satisfying

stakeholder objectives; legal responsibilities e.g. consumer legislation, employee legislation, equal opportunities and

anti-discriminatory legislation, environmental legislation, health and safety legislation; ethical issues e.g.

environment, fair trade, global warming, charter compliance e.g. Banking Code

Task 2 – Individual written report

The dominant aspects of an organisation’s environment are assumed to exist in and around the industry, or industries, in

which a firm competes. Thus, for strategic decision-making there is no such thing as ‘the’ environment-if the work

‘environment’ is taken to mean a single, holistic entity. Instead, organisations may confront multiple environments,

each with its own characteristics and pivotal competitive issues.

Environmental variables exert significant influences on corporate performance. According to Grant (1997) these

environmental variables are critical determinants of threats and opportunities a company will face in the future. The

complexity of the environment is heightened by the fact that change is a regular feature of these environmental

variables and they are also in constant interaction. The demand on management, therefore, is to establish a framework

for understanding this complex web of interaction and changes in order to survive (Wendy, 1997).

Therefore, managers’ task of influencing the rate and direction of change within their organisation becomes an uphill

task if the enterprise is ignorant of the events and trends outside the organisations. The fact is that managers’

perception and scanning of business environment are crucial for the formulation and attainment of corporate goals and


According to Grant (1997) a firm’s environment can be regarded as all external influences that impinge upon the firms’

decision and performance. Extant literature’s view of business environment is not significantly different, for example,

Ducan (1972) defined business environment as all factors outside an organisation that are taken into considerations by

the organisation in its decision making. Business environment is usually classified by source or proximity. Bourgeoise

(1980) segregated the environment to general (macro) and task (micro) environment: both have implications for the

organisation, especially in strategy formulation and adaptation and consequent performance.

Select one national large organisation (large PLC or Ltd.) and prepare a report addressing the following:
(a) Explain how economic systems attempt to allocate resources effectively. AC 2.1.
(b) Assess the impact of fiscal and monetary policy on business organisations and their activities AC 2.2.
(c) Evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected

organisation AC 2.3.
(d) Explain how market structures determine the pricing and output decisions of businesses AC 3.1.
(e) Illustrate the way in which market forces shape organisational responses using a range of examples AC 3.2.
(f) Judge how business and cultural environments shape the behaviour of a selected organisation AC 3.3.

Economic systems: the allocation of scarce resources; effective use of resources; type of economic system e.g. command,

free enterprise, mixed, transitional

The UK economy: size (gross domestic product, gross national product); structure; population; labour force; growth;

inflation; balance of payments; balance of trade; exchange rates; trading partners; public finances (revenues,

expenditure); taxation; government borrowing; business behaviour e.g. investment, objectives, risk awareness; cost of

capital; consumer behaviour; propensity to save; propensity to spend; tastes and preferences

Government policy: economic goals; fiscal policy: control of aggregate demand; central and local government spending;

Public Sector Net Borrowing (PSNB) and Public Sector Net Cash Requirement (PSNCR); euro convergence criteria, monetary

policy; interest rates; quantitative easing; private finance initiative (PFI); competition policy (up-to-date

legislation including Competition Act 1998, Enterprise Act 2002); Competition Commission, Office of Fair Trading;

Directorate General for Competition); European Commission); sector regulators e.g. Ofgem, Ofwat, Civil Aviation

Authority; Companies Acts; regional policy; industrial policy; enterprise strategy; training and skills policy

Task 3 – Individual report
According to the article written by Gavin Thomson and published by the Commons library Standard on 18 September 2013, EU

membership influences the UK economy in a number of ways. The most important effects arise through the Single Market,

the programme of economic integration through which the EU’s ‘four freedoms’ are guaranteed.
But the economic impact of the EU is felt in other areas of its policy, too. The EU has exclusive competence to

negotiate trade and investment agreements with countries outside the Union; and it is a customs union with a common

external tariff on imported goods. Membership thus profoundly affects the UK’s trade relations with non-EU members.
There are also fiscal consequences to membership as a result of the UK’s contributions to the EU budget. Consumer prices

are affected through the Common Agricultural Policy and common external tariffs levied on imports. And the fact of EU

membership may also influence decisions made by foreigners about whether to invest in the UK.
Prepare a report addressing the following:
(a) Discuss the significance of international trade to UK business organisations. AC4.1.
(b) Analyse the impact of global factors on UK business organisations AC4.2.
(c) Evaluate the impact of policies of the European Union on UK business organisations
Market types: perfect competition, monopoly, monopolistic competition, oligopoly, duopoly; competitive advantage,

strategies adopted by firms; regulation of competition

Market forces and organisational responses: supply and demand, elasticity of demand; elasticity of supply; customer

perceptions and actions, pricing decisions; cost and output decisions; economies of scale, the short run; the long run,

multi-national and transnational corporations; joint ventures, outsourcing; core markets; labour market trends; employee

skills, technology; innovation; research and development; core competencies; business environment (political, economic,

social, technical, legal, environmental); cultural environment

Global factors: international trade and the UK economy; market opportunities; global growth; protectionism; World Trade

Organisation (WTO); emerging markets (BRIC economies – Brazil, Russia, India, China); EU membership; EU business

regulations and their incorporation in to UK law; EU policies e.g. agriculture (CAP), business, competition, growth,

employment, education, economics and finance, employment, environment, science and technology, regional); labour

movement; workforce skills; exchange rates; trading blocs (e.g. monetary unions, common markets; customs unions, free

trade areas); labour costs; trade duties; levies; tariffs; customs dues; taxation regimes; international

competitiveness; international business environment (political, economic, social, technical, legal, environmental);

investment incentives; cost of capital; commodity prices; intellectual property; climate change e.g. Kyoto Protocol, Rio

Earth Summit; third world poverty; the group of 20 (G-20); global financial stability



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