Environmental Forces and Business

Table of Contents
Introduction.................................................................................................................... 3
Scenario 1...................................................................................................................... 3
Task 2........................................................................................................................ 3
1.2 Extent of meeting the objectives of the stakeholders.......................................................3
1.3 The responsibilities of ACS and strategies for meeting them.............................................3
Scenario 2...................................................................................................................... 5
Task 3........................................................................................................................ 5
2.1 Economic Systems role in Allocation of Resources........................................................5
2.2 The impact of Fiscal and Monetary Policy on the organisation and its activities.....................5
2.3 The impact of Competition Policy and other Regulatory Mechanisms on the organisations
activity................................................................................................................... 5
3.1 Market Structures Impact on the Pricing and Output decisions of the Business......................6
3.2 Influence of Market Forces on the Organisational Response.............................................6
3.3 Impact of Business and Cultural Environments on the behaviour of the business....................6
Scenario 3...................................................................................................................... 8
Task 4........................................................................................................................ 8
4.1 The Significance of International Trade to UK Business Organisations................................8
4.2 The Impact of Global Factors on UK Business Organisations............................................8
4.3 The Impact of Policies of the European Union (EU) on UK Business Organisations................8
Conclusion..................................................................................................................... 9
Reference List............................................................................................................... 10

Introduction
The present assignment deals with the topic of environment and business, combined it is termed
as business environment. Business is a system of different processes initiated by man for the
purpose of production, purchase, sales and earning money (Capon and Capon, 2009).
Environment on the other hand is a more natural system of our surroundings. Business
environment is the set of forces that impact the business in one way or the other (Capon and
Capon, 2009). Forces which are both external and internal exert pressure on the performance of
business activity.

Scenario 1

Task 2
1.2 Extent of meeting the objectives of the stakeholders
Stakeholders are the soul and wheel of a business organisation. It is with their contribution and
partnership that an organisation such as ACS will be able to establish, produce, sell and make
profit. Now, stakeholders for ACS are employees, customers, suppliers or investors, government
and also the community at large (Bbc.co.uk, 2015). These stakeholders have varying degree of
objectives in ACS and these needs to be met for growth and expansion of ACS. Meeting the
objectives will give ACS sufficient raw material and capital for establishment, partnerships for
expansion into international trade, efficient manpower for production and growth, and also loyal
customers to sale clothes too (Bbc.co.uk, 2015). Effectively meeting these objectives using all
the resources of ACS will give confidence to the management and commitment to the
stakeholders, eventually leading to a successful business.
1.3 The responsibilities of ACS and strategies for meeting them
As a major retail chain, ACS has a wide range of responsibilities that it needs to meet for
effective business growth. The responsibilities of ACS towards its various stakeholders and
strategies for meeting them are as follows:

Customers ACS responsibility towards its customers are good quality clothes at reasonable
prices which will be met by effective modes of production using advanced technology, which
will reduce the cost of production and ultimately prices (Barry and Pogge, 2005).
Employees Responsibility towards employees include safe working conditions with standard
living which will be met by ACS with safe and sound work condition policy, efficient and trained
employees, use of modern technology and pay according to work mechanisms (Barry and Pogge,
2005).
Investors Sole responsibility towards investors relates to good rate of return on investment and
this will be met by effective sales planning model which creates equilibrium between demands of
supply of ACS clothes, ultimately leading to profits (Mullins, 2011).
Government Governments motive relates to inquiring about ACS tax liability and legal-ethical
activities in the organisation. This responsibility will be met by indulging in good working
practices and effecting policy framework that germinates good working policy in the
organisation (Mullins, 2011).

Scenario 2
Task 3
2.1 Economic Systems role in Allocation of Resources
A business is a system of various processes and efforts working together using the available
resources. These resources to be used are allocated by the economic system the organisation
operates in. Economic systems differ from country to country but generally are of three types.
They are planned, free and mixed economic system (EconomicsOnline.co.uk, 2015). Planned
system is in direct control of the government of the country and allocates resources based on the
demand of people and also availability. In a free system, control is in the hands of private entities
with minor or no government control. Allocation of resources is based upon market forces of
demand and supply. A mixed system is a mix of both planned and free system, and allocation of
resources and its prices are controlled very smartly (EconomicsOnline.co.uk, 2015). Thus,
economic systems decide the level of quantity and quality of resources for an organisation.
2.2 The impact of Fiscal and Monetary Policy on the organisation and its activities
Fiscal policy is the use of various expenditure and tax control measures by the government to
stabilise a nations economy. In case of high taxes, organisations will limit any investment and
expansion activities whereas during low taxes organisations can increase employment, make
investments and also expand business (Barrell, 2004).
Monetary policy is the various control measures used by the central bank to reduce the flow of
money in the economy. Measures include modification of the interest rates, buying and selling of
government securities and adjustment of reserves by banks. A favourable monetary policy will
give organisations chances to acquire credit from the market at low rates and an unfavourable
policy will do the opposite (Barrell, 2004).
2.3 The impact of Competition Policy and other Regulatory Mechanisms on the
organisations activity
Business is a very competitive system which requires various measures and mechanisms to
function effectively (Braithwaite and Drahos, 2000). In UK, Competition Policy and other
regulatory mechanisms include Competition Commission 1998 and Enterprise and Regulatory
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Reform Act 2013, which look after the activities of organisation in UK. These mechanisms
promote healthy competition, look after use of unfair or illegal methods, promote innovation and
efficiency, restrict power abuse, forecast market conditions, ensure customer satisfaction and also
open new markets for doing business (Braithwaite and Drahos, 2000). All these impact the
activities of an organisation in pro-acting and promoting good business activities.
3.1 Market Structures Impact on the Pricing and Output decisions of the Business
A business operates according to the forces of the market and this decides its output and pricing.
In this, the market structure plays a very important role. In a monopoly market, business is as per
the instructions of a sole company or producer of goods and services. There is very limited or no
entry of other firms and customers pay prices as decided by that company (Brooks, Weatherston
and Wilkinson, 2004). In oligopoly, there are a handful of firms producing the goods and services
but prices are decided among the firms which may sometimes lead to higher prices (Brooks,
Weatherston and Wilkinson, 2004). Then there is perfect competition market, where there are
abundant sellers and buyers and there is a system for deciding output and pricing of
commodities. Here, no seller has strict control on prices and pricing and output is as per the
wishes of the consumers (Brooks, Weatherston and Wilkinson, 2004).
3.2 Influence of Market Forces on the Organisational Response
A business operates on the principle of demand and supply of its products or services in the
market. This demand and supply is affected by various forces which influence its choice of
product, pricing, place of business and various other strategies (Clark, 2000). These forces
demand some form of response from the organisation to minimise or maximise its effects. When
demands for a product increases, organisation increase their production for meeting the demand
and this sometime also requires lowering the prices, ultimately leading to more profits. In the
presence of competitors, this increase in demand is countered by more differentiated products
and also a price war (Clark, 2000). This causes various pricing strategies by organisations and
sometimes leading to stagnation of supply in the market. Therefore, market forces help decide
organisation the response to give to varying levels of demand and supply.
3.3 Impact of Business and Cultural Environments on the behaviour of the business
A business works for providing goods and services to the people and this requires the help of
various business and cultural environments (Hadjikhani and Ghauri, 2001). Business
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environment refers to the various political, legal, technological and economic factors that
influence the behaviour of a business. Cultural environment refers to the social and community
factors that impact a business organisation (Hadjikhani and Ghauri, 2001). Both these factors
impact the choice of activity of a business from choice of product to location and from investors
to environmental responsibilities. They impact the business responsibilities, aims and also
mission. They force an organisation to operate within the limits of law and social constraints
(Hadjikhani and Ghauri, 2001). Organisations must adapt to these environments for effective
business operation and substantial growth opportunities.

Scenario 3
Task 4
4.1 The Significance of International Trade to UK Business Organisations
UK is one of the most developed nations of the world specialising in doing business in a variety
of goods and services. These goods and services will get an opportunity to taste unknown
grounds by international trade. International trade will link business organisations of UK to other
parts of the world (Hamilton and Webster, 2009). International trade will enable UK to sell
commodities it has abundant of and buy commodities which are scarce in UK. Therefore,
international trade will be the bridge on which business organisations of UK can base their
relationship with the world and UK as a nation will be able to contribute towards global
economy development (Hamilton and Webster, 2009).
4.2 The Impact of Global Factors on UK Business Organisations
International trade will lead to direct contact with certain global factors which impact the
business operations of an organisation. For organisations of UK, global factors will motivate
international trade which will provide good quality products at cheaper prices (Gov.uk, 2015). It
will give opportunities for innovation and technological advancement leading to development of
the region of business. Global factors will also demoralise any illegal activity and encourage fair
trade by the use of various inter-governmental measures. All in all, global factors for UK will
lead to its economic growth and paving path for a globalised future of organisations (Gov.uk,
2015).
4.3 The Impact of Policies of the European Union (EU) on UK Business Organisations
UK is a part of the EU and accordingly it has to maintain certain rules and regulations of the EU
in context of business operations. The first obligation of EU is the use of euro exchange for terms
of trade (Greenwood, 2003). EU also controls the taxation liability of UK and any regulations
made by EU are immediately binding on the member nations without any formal acceptance. EU
can also give time bound instructions to its members making it necessary to follow and failure to
complete will lead to termination of membership and also penalties (News.cbi.org.uk, 2015). EU
regulations can control export and import aspects of UK organisations. EU legislations also
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control various public funded activities of UK such as education, transport and mining
(Greenwood, 2003). Thus, UK being a member of EU must follow its each and every legislation
for growth and development purposes.

Conclusion
Organisations all over the world are operating for a purpose, irrespective of the market stricture
and economic systems. These purposes can be for social welfare and monetary benefits but there
effectiveness lies in proper regulations of business activities. As for organisations of UK, any
activity must be in accordance to EU policies which will make it an emerging trade destination
which promotes integration of business and cultural environment.

Reference List
BOOKS
Barry, C. and Pogge, T. (2005). Global institutions and responsibilities. Malden, MA: Blackwell.
Braithwaite, J. and Drahos, P. (2000). Global business regulation. Cambridge [England]:
Cambridge University Press.
Brooks, I., Weatherston, J. and Wilkinson, G. (2004). The international business environment.
Harlow: FT/ Prentice Hall.
Capon, C. and Capon, C. (2009). Understanding the business environment. Harlow, England:
Prentice Hall/Financial Times.
Clark, A. (2000). Organisations, competition and the business environment. Harlow: Financial
Times.
Greenwood, J. (2003). The challenge of change in EU business associations. Houndmills,
Basinstoke, Hampshire: Palgrave Macmillan.
Hamilton, L. and Webster, P. (2009). The international business environment. New York: Oxford
University Press.
Mullins, L. (2011). Essentials of organisational behaviour. Harlow, England: Financial Times
Prentice Hall/Pearson.
Sloman, J. and Sutcliffe, M. (2001). Economics for business. Harlow, England: Financial
Times/Prentice Hall.
JOURNALS
Barrell, R. (2004). The Impact of Fiscal and Monetary Policy Imbalances on the UK
Economy. National Institute Economic Review, 189(1), pp.61-63.

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Hadjikhani, A. and Ghauri, P. (2001). The behaviour of international firms in socio-political

environments in the European Union. Journal of Business Research, 52(3), pp.263-275.
WEBSITES
News.cbi.org.uk, (2015). Benefits - CBI. [online] Available at: http://news.cbi.org.uk/businessissues/uk-and-the-european-union/choosing-our-future/benefits/ [Accessed 18 Nov. 2015].
Gov.uk, (2015). 2010 to 2015 government policy: business regulation - GOV.UK. [online]
Available at: https://www.gov.uk/government/publications/2010-to-2015-governmentpolicy-business-regulation/2010-to-2015-government-policy-business-regulation [Accessed
18 Nov. 2015].
EconomicsOnline.co.uk, (2015). Economic systems. [online] Available at:
http://www.economicsonline.co.uk/Competitive_markets/Economic_systems.html
[Accessed 18 Nov. 2015].
Bbc.co.uk, (2015). BBC - GCSE Bitesize: Conflicting stakeholder objectives. [online] Available
at: http://www.bbc.co.uk/schools/gcsebitesize/business/environment/stakeholders4.shtml
[Accessed 18 Nov. 2015].

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