The Business Environment

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Information about The Business Environment

Published on October 19, 2008

Author: guest3bd2a12

Source: slideshare.net

Business Environment Lecturer: Anthony Williamson Email: anthonylwilliamson@yahoo.com

Course Contents Internal & external environments Demographics Resources Organizational structures Markets Internationalisation E-business Ethics

Internal & external environments

Demographics

Resources

Organizational structures

Markets

Internationalisation

E-business

Ethics

Chapter 1 Business Organizations: The External Environment

Figure 1.1 The business organisation as a transformation system

Figure 1.2 The firm in its environment

Figure 1.3 Two levels of environment

Chapter 2 Business Organizations: The Internal Environment

Human Resource Management Recruitment & selection Working conditions Training & career development Job evaluation Employee relations Manpower planning Legal aspects of employment

Recruitment & selection

Working conditions

Training & career development

Job evaluation

Employee relations

Manpower planning

Legal aspects of employment

Figure 2.2 A functional organisation structure

Figure 2.3 A product-based structure

Figure 2.4 A divisional structure

Figure 2.5 A matrix structure in a business school

Chapter 3 The Political Environment

Figure 3.1 Representative democracy

Figure 3.2 Government and its environment

Figure 3.3 The elected government at Westminster

Figure 3.4 The local government system

Chapter 4 The Macroeconomic Environment

Figure 4.1 The market economy

Figure 4.2 Politico-economic systems

Figure 4.3 ‘Real flows’ in the economy

Figure 4.4 Income flows in the economy

Figure 4.5 A simplified model of real flows and income flows

Figure 4.6 The circular flow of income with ‘leakages’

Figure 4.7 The circular flow of income with ‘injections’ added

Figure 4.8 The allocation of UK government spending, 2005/6 Source: Adapted from Budget Statement, 2005

Figure 4.9 Sources of government revenue, 2005/6 Source: Adapted from Budget Statement, 2005

Chapter 5 The demographic, social and cultural context of business

Demographics Population size Characteristics Social influences

Population size

Characteristics

Social influences

What business function is most concerned with demographics ? Marketing Marketing is concerned with adge, gender and geographical distribution

Marketing

Marketing is concerned with adge, gender and geographical distribution

Issue facing many European countries Ageing Population Better diet Improved healthcare Fall in birth rates (smaller families) -many countries need migrant workers to fill jobs

Ageing Population

Better diet

Improved healthcare

Fall in birth rates (smaller families)

-many countries need migrant workers to fill jobs

Table 5.1 Population size in selected countries, 2003 Source: Various (including Eurostat)

Table 5.3 Percentage of EU populations aged 65 and over for selected EU countries, 1970–2003 Source: Adapted from Eurostat

Social class Population can be segmented based on social class

Population can be segmented based on social class

Table 5.4 The ABC1 system of social grading

Some people can have the same social class but different ‘Lifestyles’

Some people can have the same social class but different ‘Lifestyles’

Other social influences Influence Attitudes Values opinons

Influence

Attitudes

Values

opinons

Table 5.5 National Statistics Socio-Economic Classifications (NS-SEC) Source: Office of National Statistics

Table 5.8 Methods of segmenting consumer markets

Table 5.9 Projected growth rates between 2000 and 2050, percentages Source: World Population Prospects , United Nations, 2000

Figure 5.1 Projected fertility rates between 1950 and 2050 Source: United Nations, 2000

Figure 5.2 Projected life expectancy between 1950 and 2050 Source: United Nations, 2000

Trends Healthy eating Exercise

Healthy eating

Exercise

Reference Groups Primary – family/friends Secondary – social clubs/ religious organizations ‘ Family life cycle’ Different needs depending on age and current situation.

Primary – family/friends

Secondary – social clubs/ religious organizations

‘ Family life cycle’

Different needs depending on age and current situation.

What is culture ? Sub cultures Cultural diversity Multiculturalism

Sub cultures

Cultural diversity

Multiculturalism

Table 5.10 Expenditure on selected products by age of head of household, UK, 2002, £ per week Source: Adapted from www.statistics.gov.uk/CC1/SearchRes.asp?tem=household+expenditure+age

Chapter 6 The Resource Context

Different kinds of resources Renewable- labour, water, air, solar power Non-renewable – minerals, coal, oil

Renewable- labour, water, air, solar power

Non-renewable – minerals, coal, oil

People (human resource) People can be said to be either producers or consumers Quantity – population size / age Quality – education/ training/ motivation

People can be said to be either producers or consumers

Quantity – population size / age

Quality – education/ training/ motivation

Workforce- no. of people eligible for work Working week – hours/days Wages- remunerations (UK min. wage 5.05 p/h)

Workforce- no. of people eligible for work

Working week – hours/days

Wages- remunerations (UK min. wage 5.05 p/h)

Trade Unions ‘ To protect individually weak members (collectively much stronger)’ Craft unions-craft/skill Industrial unions-NUM General unions-TGWU White collar unions-NUT

‘ To protect individually weak members (collectively much stronger)’

Craft unions-craft/skill

Industrial unions-NUM

General unions-TGWU

White collar unions-NUT

Powerful unions ‘ If the union is very powerful and demands increased wage rates then this couls lead to unemployment’

‘ If the union is very powerful and demands increased wage rates then this couls lead to unemployment’

Immobility ‘ Workers unable to locate to areas where there are jobs’ Geographical-don’t want to move from family Occupational- don’t have the training/natural ability (e.g. doctors/footballers)

‘ Workers unable to locate to areas where there are jobs’

Geographical-don’t want to move from family

Occupational- don’t have the training/natural ability (e.g. doctors/footballers)

Table 6.3 Average hours worked per week* by gender for selected EU countires, 2003 Source: Eurostat, 2005

Figure 6.1 The market for labour

Figure 6.2 The effect of trade unions on the labour market

Figure 6.3 Occupational structure of UK workforce by gender, 2004 Source: Adapted from Table 4.11, Social Trends , 2005, ONS, UK

Chapter 7 The Legal Environment

UK Law Public – State laws Private - Individuals

Public – State laws

Private - Individuals

Tort Duty to others – negligence/ nuisance / defamation / trespass

Duty to others – negligence/ nuisance / defamation / trespass

Common Law Based on traditional behaviour English legal system is based on judicial precedence and legislation (rules made by Parliament)

Based on traditional behaviour

English legal system is based on judicial precedence and legislation (rules made by Parliament)

Contract Law Offer Invitation to Treat (advertisements etc.) Acceptance *Offer and Acceptance = Agreement Consideration (profit)

Offer

Invitation to Treat (advertisements etc.)

Acceptance

*Offer and Acceptance = Agreement Consideration (profit)

Consumer Protection Laws Please read & understand the consumer protection laws; Trade Descriptions Act (1968) The Consumer Credit Act (1974) Sale of Goods Act (1979) Consumer Protection Act (1987)

Please read & understand the consumer protection laws;

Trade Descriptions Act (1968)

The Consumer Credit Act (1974)

Sale of Goods Act (1979)

Consumer Protection Act (1987)

Figure 7.1 The hierarchy of courts

Table 7.1 Law and the business organisation

Chapter 8 Legal Structures

How to classify business organisations Size Type of industry Sector (public / private) Legal status (sole trader/ ltd. Co./ partnership

Size

Type of industry

Sector (public / private)

Legal status (sole trader/ ltd. Co./ partnership

Private Sector Organisations

Sole Trader Business owned by one individual Unlimited personal liability

Business owned by one individual

Unlimited personal liability

Partnership ‘ Persons carrying on a business in common with a view to making profit Partners have unlimited personal liability

‘ Persons carrying on a business in common with a view to making profit

Partners have unlimited personal liability

Limited Companies Company has a legal identity in its own right Property and other assets belong to the company Personal assets of shareholders do not belong to the company Individual liability equals the amount invested in the company Companies must be registered under the Companies Act

Company has a legal identity in its own right

Property and other assets belong to the company

Personal assets of shareholders do not belong to the company

Individual liability equals the amount invested in the company

Companies must be registered under the Companies Act

2 kinds of limited company: Public Ltd. Co. Private Ltd. Co.

Public Ltd. Co.

Private Ltd. Co.

Public Limited Company (PLC) Minimum of 2 shareholders At least 2 directors 50,000 UK pounds share capital Offer shares for sale to the general public Certificate from the Registrar of Companies Memorandum stating it to be a public company

Minimum of 2 shareholders

At least 2 directors

50,000 UK pounds share capital

Offer shares for sale to the general public

Certificate from the Registrar of Companies

Memorandum stating it to be a public company

Private Limited Company (Ltd) Shares cannot be offered to the general public Therefore usually small or medium sized

Shares cannot be offered to the general public

Therefore usually small or medium sized

Co-operatives Belong to its members Profits should benefit members Shares not quoted on the Stock Exchange

Belong to its members

Profits should benefit members

Shares not quoted on the Stock Exchange

Workers’ co-operatives Business in which the ownership and control of assets are in the hands of the people working in it. At least 7 members required to form a co-operative Democracy, open membership, social responsibility, mutual co-operation, trust

Business in which the ownership and control of assets are in the hands of the people working in it.

At least 7 members required to form a co-operative

Democracy, open membership, social responsibility, mutual co-operation, trust

Public Sector Organisations

Central government departments (DTI) Local authorities (county councils) Public corporations & nationalised industries (BBC)

Central government departments (DTI)

Local authorities (county councils)

Public corporations & nationalised industries (BBC)

Privatisation 1980’s many public corporations were privatised; British Coal British Rail British Telecom British Energy

1980’s many public corporations were privatised;

British Coal

British Rail

British Telecom

British Energy

Legal structure: implications The degree of personal liability Willingness to share decision-making Costs of establishing the business Legal requirements Taxation Commercial needs (access to capital) Business continuity

The degree of personal liability

Willingness to share decision-making

Costs of establishing the business

Legal requirements

Taxation

Commercial needs (access to capital)

Business continuity

Table 8.1 Organisational stakeholders and their interests

Franchising Buy the right to market a product or service Business format franchise e.g. Starbucks, KFC, McDonalds

Buy the right to market a product or service

Business format franchise e.g. Starbucks, KFC, McDonalds

Why buy a franchise ?

Licensing Intellectual property E.g. patents, copyrights, trade names

Intellectual property

E.g. patents, copyrights, trade names

Joint Ventures Business involving more than 1 organisation Many foreign co.’s entered China as a JV

Business involving more than 1 organisation

Many foreign co.’s entered China as a JV

Chapter 9 Size Structure of Firms

How to measure the size of an organisation Turnover Value of outputs Capital employed Level of employment

Turnover

Value of outputs

Capital employed

Level of employment

Table 9.1 The ten largest companies in the UK, 2004 Source: Key British Enterprises , 2005

Why do organisations grow ? Managerial objectives (security, higher remuneration) Maintain market share in expanding markets Economies of scale Defensive strategy against competitors

Managerial objectives (security, higher remuneration)

Maintain market share in expanding markets

Economies of scale

Defensive strategy against competitors

Table 9.2 Size structure of UK industry by employment, 2003 Source: Adapted from Table 1, www.sbs.gov.uk/content/analytical/statistics/'UK Industry Summary'!A1

Methods of growth Internal growth e.g. expand product lines External growth e.g. takeovers or mergers

Internal growth

e.g. expand product lines

External growth

e.g. takeovers or mergers

Mergers Horizontal merger 2 organisations at the same stage in a production process Vertical merger 2 organisations at different stages of the same production process (backwards or (forwards) Conglomerate mergers 2 organisations involved in producing different products or services

Horizontal merger

2 organisations at the same stage in a

production process

Vertical merger

2 organisations at different stages of the

same production process (backwards or

(forwards)

Conglomerate mergers

2 organisations involved in producing different

products or services

Finance for growth Internal – profits External – banks, capital market (stock exchange), money markets, governments

Internal – profits

External – banks, capital market (stock exchange), money markets, governments

Types of Stocks & Shares Preference shares Ordinary shares Debentures

Preference shares

Ordinary shares

Debentures

Networking Relationships between organisations and people within them (formal or informal)

Relationships between organisations and people within them (formal or informal)

Figure 9.5 A typical network

Multinationals Operate in more than 1 country Examples ? UK European US Chinese

Operate in more than 1 country

Examples ?

UK

European

US

Chinese

Chapter 10 Industrial Structure

The Standard Industrial Classification Classifies industries into different sectors Each general sector is then sub-divided into more specific sectors (See Table 10.1 pg. 265)

Classifies industries into different sectors

Each general sector is then sub-divided into more specific sectors

(See Table 10.1 pg. 265)

Figure 10.2 A simplified production process

The Structure of Industry is not static The development of new products (e.g. computer games) New patterns of demand (e.g. declining and emerging industries) Changes in society (e.g. UK moving away from production based industry to service industries)

The development of new products (e.g. computer games)

New patterns of demand (e.g. declining and emerging industries)

Changes in society (e.g. UK moving away from production based industry to service industries)

Figure 10.3 Percentage shares in employment in the three main sectors of the EU, 1979 and 2004* Source: Adapted from Table 2, Eurostat Yearbook , 2004

Figure 10.4 Employment by sector in the EU as a whole, 1980–2004* Source: Eurostat Yearbook , 2004. © European Communities. Eurostat. Reproduced by permission of the Publishers, the Office for Official Publications of the European Communities

Table 10.4 Percentage employed in different sectors of selected countries, 2004 Source: Eurostat Yearbook , 2004. © European Communities. Eurostat. Reproduced by permission of the Publishers, the Office for Official Publications of the European Communities

Figure 10.5 Index of employment in manufacturing industry in selected countries (1995 = 100) Source: Yearbook of Labour Statistics , 2004, OECD How do you interpret this data?

Table 10.7 Percentage share of total employment of primary, secondary and tertiary sectors (UK), 1969–2004 Source: Adapted from Table 7.5, Annual Abstract of Statistics , 2005, ONS, UK What can we tell from these figures?

Figure 10.6 Percentage share of total employment of the secondary and tertiary sectors of the UK economy Source: Adapted from Table 7.5, Annual Abstract of Statistics , various editions, ONS, UK

The Life Cycle Model Can be applied to products, industries, sectors, markets

Can be applied to products, industries, sectors, markets

Figure 10.8 A life cycle

Table 10.9 Implications of the different stages of the life cycle

A product or industry may not go through all of the stages Length of each stage will vary according to product or industry An industry or product saturated in the one geographical location may be able to extend its life by expanding into other countries

A product or industry may not go through all of the stages

Length of each stage will vary according to product or industry

An industry or product saturated in the one geographical location may be able to extend its life by expanding into other countries

Causes of Changes in Industrial Structure Demand factors – changes in patterns of demand (fashion / tastes) Supply factors – changes in supply conditions (e.g. increased price of oil leads to development in new technologies)

Demand factors – changes in patterns of demand (fashion / tastes)

Supply factors – changes in supply conditions (e.g. increased price of oil leads to development in new technologies)

Figure 10.9 Expenditure on selected goods in the UK, 1983–2003 Source: Adapted from Table 6.15, Annual Abstract of Statistics , 2004, ONS, UK

Figure 10.10 Expenditure on services in the UK, 1983–2003 Source: Adapted from Table 6.15, Annual Abstract of Statistics , 2004, ONS, UK

Deindustrialisation Decline in manufacturing

Decline in manufacturing

Table 10.10 Output per person employed, selected countries, 2002 (UK = 100) Source: Adapted from Table 1, www.statistics.gov.uk/cci/article.asp?ID=737

Table 10.11 Comparative output per hour worked, selected countries, 2002 Source: Adapted from Table 2 , www.statistics.gov.uk/cci/article.asp?ID=737

Chapter 11 Government & Business

If left entirely to their own devices markets can act in a way that is not always economically or socially desirable - ‘Market Failure’

If left entirely to their own devices markets can act in a way that is not always economically or socially desirable - ‘Market Failure’

Main concerns include; Public goods – defence, social services Merit goods – libraries, education Externalities – pollution Danger of monopolies Under-utilisation of economic resources Output determined and distributed on the ability to pay

Public goods – defence, social services

Merit goods – libraries, education

Externalities – pollution

Danger of monopolies

Under-utilisation of economic resources

Output determined and distributed on the ability to pay

How can governments respond to these problems? Public ownership Legislation Fiscal regulation

Public ownership

Legislation

Fiscal regulation

Regional Policy Many countries have a regional policy Designed to help areas with economic or social problems

Many countries have a regional policy

Designed to help areas with economic or social problems

UK Urban ‘problem’ Large scale unemployment Loss of industry Riots during the 1980’s in several large cities

Large scale unemployment

Loss of industry

Riots during the 1980’s in several large cities

The Urban Programme Combat the economic, social and environmental problems of urban areas 1. Bring land and buildings into effective use 2. Encourage development of industry and commerce 3. Provide housing and other social facilities

Combat the economic, social and environmental problems of urban areas

1. Bring land and buildings into effective use

2. Encourage development of industry and commerce

3. Provide housing and other social facilities

Chapter 12 The Market System

‘ The market system is an economy in which all the basic economic choices are made through the market.’ The market is a place where buyers & sellers of a product are brought together There are many different kinds of market involving different buyers and sellers A free market system is one in which the basic economic choices are made through the market

The market is a place where buyers & sellers of a product are brought together

There are many different kinds of market involving different buyers and sellers

A free market system is one in which the basic economic choices are made through the market

The Market Mechanism The way in which buyers and sellers are brought together

The way in which buyers and sellers are brought together

Demand The quantity of a good or service that households are willing and able to purchase at a particular price (effective demand)

The quantity of a good or service that households are willing and able to purchase at a particular price (effective demand)

Demand depends on; Price of the good Prices of other goods (substitutes or compliments) Disposable income Tastes

Price of the good

Prices of other goods (substitutes or compliments)

Disposable income

Tastes

Table 12.1 The demand for ‘Real Brew’ draught beer

Figure 12.1 A demand curve for ‘Real Brew’ draught beer

Figure 12.2 Shifting demand curves

Supply The quantity that firms are willing and able to supply to the market at a particular price (effective supply)

The quantity that firms are willing and able to supply to the market at a particular price (effective supply)

The quantity supplied depends on; The price of the good The prices of other goods The prices of the resources used to produce the good Technology Expectations Number of suppliers

The price of the good

The prices of other goods

The prices of the resources used to produce the good

Technology

Expectations

Number of suppliers

Table 12.2 The supply of ‘Real Brew’ draught beer

Figure 12.3 The supply of ‘Real Brew’ draught beer

Figure 12.4 Shifting supply curves

The equilibrium price The amount which consumers wish to buy is the same as the amount that producers wish to sell Point where the demand and supply curves cross (equilibrium price & equilibrium quantity)

The amount which consumers wish to buy is the same as the amount that producers wish to sell

Point where the demand and supply curves cross (equilibrium price & equilibrium quantity)

Excess supply = buyers market Excess demand = sellers market

Excess supply = buyers market

Excess demand = sellers market

Table 12.3 The supply and demand for ‘Real Brew’ draught beer

Figure 12.5 The market for ‘Real Brew’ draught beer

Figure 12.6 A shift in the demand curve

Figure 12.7 A shift in the supply curve

Figure 12.8a The normal working of the market

Figure 12.8b A reduction in supply

Figure 12.8c Increases in demand

Price controls Occasionally governments decide that a particular equilibrium price is politically, socially or economically unacceptable Impose their own prices; Price ceiling Price floor

Occasionally governments decide that a particular equilibrium price is politically, socially or economically unacceptable

Impose their own prices;

Price ceiling

Price floor

Figure 12.9 Imposition of a price ceiling

Figure 12.10 Imposition of a price floor

Figure 12.11 The effect of taxation on the market

Elasticity of demand Measures responsiveness of demand and supply to price changes

Measures responsiveness of demand and supply to price changes

Measuring Price Elasticity EP = %change QD % change P If > 1 elastic (responsive to price changes) If < 1 inelastic (not very responsive to price changes)

EP = %change QD

% change P

If > 1 elastic (responsive to price changes)

If < 1 inelastic (not very responsive to price changes)

Figure 12.12 Responsiveness of demand to a price change

Table 12.4 Elasticity and total revenue

Other Elasticity's Income elasticity of demand Cross-price elasticity of demand

Income elasticity of demand

Cross-price elasticity of demand

Table 12.5 Income elasticity and total expenditure

Figure 12.13 Responsiveness of supply to a price change

The Importance of the Market The nature of the good they produce The way in which it is viewed by consumers The factors that affect demand Any changes in the future that will affect the market Any likely government intervention in the market

The nature of the good they produce

The way in which it is viewed by consumers

The factors that affect demand

Any changes in the future that will affect the market

Any likely government intervention in the market

Chapter 13 Market Structure

Market Structure Market structure refers to the amount of competition that exists in a market between producers. Perfect competition Monopoly

Market structure refers to the amount of competition that exists in a market between producers.

Perfect competition Monopoly

Table 13.1 Structure–conduct–performance model

Perfect competition So many sellers and buyers that not one of them can influence price The good sold is homogeneous (identical) Perfect knowledge exists (prices and costs) Perfect mobility exists No barriers to entry or exit

So many sellers and buyers that not one of them can influence price

The good sold is homogeneous (identical)

Perfect knowledge exists (prices and costs)

Perfect mobility exists

No barriers to entry or exit

Figure 13.1 Market structures

Table 13.2 Implications of perfect competition for conduct and performance of firms in an industry

Monopoly No competition One single producer Can also be a group of producers acting together to control supply (OPEC)

No competition

One single producer

Can also be a group of producers acting together to control supply (OPEC)

Table 13.3 Implications of monopoly for the conduct and performance of firms in an industry

Comparisons of Monopoly & Perfect Competition Prices higher under a monopoly Monopolies usually offer less choice

Prices higher under a monopoly

Monopolies usually offer less choice

Oligopoly ‘ A small number of producers supply a product’ There is interdependence between the firms Lack of price competition in the market Non-price competition (branding / advertising)

‘ A small number of producers supply a product’

There is interdependence between the firms

Lack of price competition in the market

Non-price competition (branding / advertising)

Table 13.4 Implications of oligopoly for conduct and performance of firms in an industry

Table 13.7 Implications of monopolistic competition for the conduct and performance of firms in an industry

Table 13.8 Implications of theory for behaviour of firms

Porter’s Five Forces Current competition Potential competition (threat of new entry) Threat of substitute products Power of buyers Power of suppliers

Current competition

Potential competition (threat of new entry)

Threat of substitute products

Power of buyers

Power of suppliers

Chapter 14 International Markets & Globalisation

International trade takes place because resources are unevenly distributed throughout the world. Some countries are better at producing certain goods than others. Some countries cannot produce certain goods

International trade takes place because resources are unevenly distributed throughout the world.

Some countries are better at producing certain goods than others.

Some countries cannot produce certain goods

Example of specialization

Table 14.1 Production of video cameras and wheat

Table 14.2 Production of video cameras and wheat

Table 14.3 Production of video cameras and wheat

Restrictions to International trade Quotas Tariffs Exchange controls (limit amount of currency) Subsidies (payments to domestic producers) Qualitative controls

Quotas

Tariffs

Exchange controls (limit amount of currency)

Subsidies (payments to domestic producers)

Qualitative controls

Balance of payments A record of a country’s international trade usually over a 1 year period

A record of a country’s international trade usually over a 1 year period

Table 14.4 UK balance of payments, 2004 (£m) Source: Adapted from www.statistics.gov.uk/statbase/tsdatset/asp?vlink=209&more=Y

Table 14.6 UK’s imports and exports of goods by destination/source (%) Source: Adapted from Tables 19.5, 19.6, Annual Abstract of Statistics, various, ONS, UK

Table 14.7 Pattern of trade by type of good (%) Source: Adapted from Tables 19.4, 19.3, Annual Abstract of Statistics, various, ONS, UK

Exchange rates ‘ The price of a currency in terms of other currencies’

‘ The price of a currency in terms of other currencies’

2 types of exchange rate; Floating exchange rate Fixed exchange rate

Floating exchange rate

Fixed exchange rate

Floating exchange rate Determined within a free market No government intervention Exchange rate is free to fluctuate according to market conditions Exchange rate is determined by supply and demand

Determined within a free market

No government intervention

Exchange rate is free to fluctuate according to market conditions

Exchange rate is determined by supply and demand

Demand and supply is determined by Changes in the balance of payments Changes in investment flows Speculation in the foreign exchange markets

Changes in the balance of payments

Changes in investment flows

Speculation in the foreign exchange markets

Figure 14.3 The determination of the exchange rate of £ for $

Figure 14.4 The effect of changes in the balance of payments on the exchange rate

Figure 14.5 The effect of changes in the investment flows on the exchange rate

Figure 14.6 The effect of depreciation

Figure 14.8 The effect of changes in the balance of payments on a fixed exchange rate

Figure 14.10 Exchange rate of the euro with sterling Source: Adapted from www.bankofengland.co.uk/links/setframe.html

Fixed exchange rate Fixed & maintained by government Less uncertainty about the future

Fixed & maintained by government

Less uncertainty about the future

Globalisation ‘ Integration of markets & production on a worldwide scale’

‘ Integration of markets & production on a worldwide scale’

Advantages Increased globalization leads to increased specialization Countries open to international trade have experienced much faster growth Barriers to trade encourage inefficient and uncompetitive industries All companies can benefit not only MNC’s

Increased globalization leads to increased specialization

Countries open to international trade have experienced much faster growth

Barriers to trade encourage inefficient and uncompetitive industries

All companies can benefit not only MNC’s

Disadvantages Benefits not shared equally throughout the world Undermines the power of nation states WTO and IMF are not democratically elected Policies only aimed at trade

Benefits not shared equally throughout the world

Undermines the power of nation states

WTO and IMF are not democratically elected

Policies only aimed at trade

Table 14.10 The world’s ten largest non-financial MNEs, ranked by foreign assets, 2002 Source: World Investment Report, UNCTAD, 2004

Chapter 15 Government & Markets

Government & Markets

Privatisation policy ‘ The transfer of assets or economic activity from the public sector to the private sector’

‘ The transfer of assets or economic activity from the public sector to the private sector’

‘ The Conservative government under Thatcher (1979-1990) believed that the free market was a superior method of allocating economic resources and that large scale state involvement in business hampered economic progress’

‘ The Conservative government under Thatcher (1979-1990) believed that the free market was a superior method of allocating economic resources and that large scale state involvement in business hampered economic progress’

Arguments for privatisation Improve efficiency & general performance Increased competition Broader customer choice Improved performance of management & workers Employees offered shares to give them a vested interest in the organisation

Improve efficiency & general performance

Increased competition

Broader customer choice

Improved performance of management & workers

Employees offered shares to give them a vested interest in the organisation

Criticisms of privatisation Disposing of important national assets for short term financial gain Overseas buyers could control important parts of the UK’s industry Commercial goals allowed to displace broader economic goals (closure of unprofitable services)

Disposing of important national assets for short term financial gain

Overseas buyers could control important parts of the UK’s industry

Commercial goals allowed to displace broader economic goals (closure of unprofitable services)

Competition Policy ‘ Concerned with regulating market behaviour and controlling potential abuses of market power by firms’ – use legislation e.g. Monopolies and Mergers commission and the Competition Act (1998) See pg.’s 419-420 for examples

‘ Concerned with regulating market behaviour and controlling potential abuses of market power by firms’ – use legislation e.g. Monopolies and Mergers commission and the Competition Act (1998)

See pg.’s 419-420 for examples

Government & the labour market Conservative government sought to curb trade union powers through legislation; The employment act (1980, 1982, 1990) The trade union act (1984) Trade union & labour relations Act (1992) The trade union reform & employment rights act (1993)

Conservative government sought to curb trade union powers through legislation;

The employment act (1980, 1982, 1990)

The trade union act (1984)

Trade union & labour relations Act (1992)

The trade union reform & employment rights act (1993)

Chapter 16 The Technological Environment: e-business

E-business ‘ E-business generally means doing business over the Internet’ ‘ The exchange of products, services or information, whether paid or unpaid, across electronic networks, at any stage within the value system’

‘ E-business generally means doing business over the Internet’

‘ The exchange of products, services or information, whether paid or unpaid, across electronic networks, at any stage within the value system’

E-commerce ‘ Process of electronic transactions involved in the exchange of products, services and information between buyer & seller’

‘ Process of electronic transactions involved in the exchange of products, services and information between buyer & seller’

Figure 16.1 The value system

Table 16.1 Broad spectrum of e-business applications Source: Adapted from OECD, 2000

Mini Case – Dell Computers Read the mini case, and in small groups discuss the questions

Read the mini case, and in small groups discuss the questions

Look at Case Study; Amazon.com HOMEWORK

HOMEWORK

Chapter 17 Corporate responsibility & the environment

Corporate responsibility & the environment

Corporate Social Responsibility ‘ A corporation should be held accountable for any of its actions that affect people, their communities and the environment’

‘ A corporation should be held accountable for any of its actions that affect people, their communities and the environment’

How should business interact with the environment Have to balance business needs and environmental concerns

Have to balance business needs and environmental concerns

Stakeholder theory Stakeholders are all groups affected by a corporations decisions, policies & operations Traditionally shareholders, customers & employees Nowadays its argued that stakeholders should include society and the environment

Stakeholders are all groups affected by a corporations decisions, policies & operations

Traditionally shareholders, customers & employees

Nowadays its argued that stakeholders should include society and the environment

Environmental Management Reconcile economic growth with greater environmental protection The environment is now on the political agenda

Reconcile economic growth with greater environmental protection

The environment is now on the political agenda

Business responses to environmental concerns Social obligation (re-active strategy) Social responsibility (goes beyond legal requirements) Social responsiveness (pro-active strategy)

Social obligation (re-active strategy)

Social responsibility (goes beyond legal requirements)

Social responsiveness (pro-active strategy)

Methods of encouraging environmental concern within businesses Overnment intervention Market mechanisms External pressures (Greenpeace) Self-regulation

Overnment intervention

Market mechanisms

External pressures (Greenpeace)

Self-regulation

Benefits to business Efficiency of factor inputs Improved market image (e.g. The Bodyshop) Providing new market niches (organic foods) Proactive legislation compliance

Efficiency of factor inputs

Improved market image (e.g. The Bodyshop)

Providing new market niches (organic foods)

Proactive legislation compliance

Chapter 18 Monitoring Change

Analysing the business environment SWOT PESTLE Porters five forces

SWOT

PESTLE

Porters five forces

Figure 18.1 The strategic management process

Table 18.1 Locating a car plant: a PESTLE approach

Figure 18.2 A simple cross-impact matrix

Figure 18.3 A SWOT matrix

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