LO1 (Task 01): Undertand the organizational purposes of business

Table of contents

LO1 (Task 01): Understand the organisational purposes of business

1.1 Identify the purposes of different types of organisation

1.2 Describe the extent to which Siemens meets the objectives of different stakeholders

1.3 Explain the responsibilities of Siemens and strategies employed to meet stakeholders.

LO2 (Task 02): Understand the nature of the national environment in which businesses operate

2.1 Explain how economic systems attempt to allocate resources effectively.

2.2 Assess the impact of fiscal and monetary policy on business organisations and their activities.

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

LO3 (Task 03): Understand the behaviour of organisations in their market environment

3.1 Explain how market structures determine the pricing and output decisions of businesses

3.2 Illustrate the way in which market forces shape organisational responses using a range of examples

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

LO4 (Task 04): Be able to assess the significance of the global factors that shape national business activities

4.1 Discuss the significance of international trade to UK business organisations

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.

LO1 (Task 01): Undertand the organizational purposes of business

1.1 Identify the purpose of different types of organization

There are different categories of organization, orgatisation can be according to their legal structure private company, public company, government, voluntary organization, co-operative, charitable also they can be divided in different sector (primary, secondary or tertiary).

The purposes of the organization is mission, vision, aims, objectives, goals, values, profits, etc. Different organizations have different purposes.

All business organizations have purposes a rage of objectives, they can change over time.

New private sector initially are likely with survival and establishing a position in the market. When they are established they will tend to regard profit and growth as key objectives included market domination, maximizing sales revenue and minimizing operating costs.

Organisations objectives are conditioned by the firms legal structure.

Public companies, these companies tends to be separate from control. They operate in the interest of the public at large ( or national interst) favours the creation of a state-owned-and-controlled organization, with goals laid down by politicians and generally couched in social and financial terms (e.g. return on assets, reinvestment, job creation) rather than in terms of profit maximization.

This apparent dichotomy betwen the profit motive of the private sector and the broader socia-economic goals of public, however, become less clearcut over last decade, as an increasing number of state-owned organisations have been prepare for privatisation and successive goverments have sought to bring private money into public projects by creating public/private partnerships.

A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically controlled enterprise. Co-operative purposes are to serve their members by carrying on business as a co-operative in accordance with co-operative.1.2 Describe the extent to which Siemens meets the objectives of different stakeholders

All organizations have stakeholders, there are individual or group who are affected by or affect the performance of the organization in which they have an interest.

Stakeholders are owners, customers, suppliers, employees, debtors, creditors, financial institutions, environmental groups, government agencies, trade unions, etc.

Stakeholder is defined as a person, group, organization or system who affect or can be affected by an organization actions. A proyect stakeholders is defined as a person, group or organization with an interest in a proyect. In order to perform good project management, you need to both manage and meet stakeholder expectations. The result of the project should match their expectations for what will be delivered at the end of the project.

Here are some ways that organizations use to meet stakeholders objective:

-Providing a mechanism for stakeholders to check on the status of the project ( such as task and schedule completion).

-Providing a collaborative platform to interact and view interactions, such as via a blog.

-Sending proactive reports, such as cost, schedule, and issue data.

In addition, project management software can help the Project Manager and other managers ensure that a) the project team understands the stakeholder expectatios (perhaps by having a project description or attaching a key project document), and b) the project team is currently on the right path to meeting those objectives.

How you utilize project management software depends on your particular needs, objectives, and culture, but meeting stakeholder objectives is one way to demonstrate the value of a good tool.

1.3 Explain the responsibilities of Siemens and strategies employed to meet stakelholders.

To explain responsibilities of organizations we need to analyze about stakeholders interest, 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.

Business objective are the ends that an organization sets out to achieve. A business creates business plans to enable it to achieve these ends. The objectives and plans that an organization creates are determined by balancing the requirements of the various stakeholders in the organization. The stakeholders are those individuals and groups that are affected by and have an interest in how the business is run and what it achieves. Every business has a range of stakeholders, including:

The objective that a company establishes are based on blending the various interest of these stakeholder groupings.

For example, an objective to be the market leader, will benefit all stakeholders because customers will receive high quality products, shareholders will receive high dividends, employees will receive good wages, and so on.

Organisations create a hierarchy of objectives. At the top level an organization will often create a mission setting out the purpose of the organization. This will be followed by a set of objectives relating to such aspects as:

-Objectives about market share.

-Objectives about customer satisfaction.

-Objectives about employee satisfaction.

-Objectives about returns to shareholders.

-Objectives about cutting pollution

-Objectives about reducing waste, etc.

A business plan will then enable an organization to achieve its objectives. The business plan must be set within a time frame and set out how the organisation, and the various components of the organization will work towards meeting required objectives. Responsibility for delivering various parts of the plan will be allocated to key individuals, and performance targets will be established which enable the plan to be delivered. The business will create a series of policies, programmes and budgets to enable it to achieve planned targets. It is also essential from the outset to clarify how the plan will be evaluated on an ongoing basis.

LO2 (Task 02): Understand the nature of the national environment in which businesses operate

2.1 Explain how economic systems attempt to allocate resources effectively.

Introduction: the economic problem of resource allocation has a political dimension.

Different countries have different economic systems and different political regimes. Political systems can be characterized as ranging from democratic to authoritarian, depending on the degree of public involvement in decision-making processes.

According to the level of state intervention in the process of resource allocation we can differentiate: democratic-free/market on the one hand to authoritarian-planned on the other. Free-market are predominantly associated with democratic states. Democracy includes the notion of individuals being able to express their preferences through the ballot box and having the opportunity to replace one government with another at periodic intervals. Authoritarian regimes and planned economic system can equally be rationalised, in that government control over the political system is considerably facilitated if it also directs the economy through the ownership and control of the means of production, distribution and exchange.

In practice, some authoritarian states have predominantly capitalist economic systems, while some democratic countries have a substantial degree of government intervention either by choice or from necessity.

Added to this, even in states where the political or economic system appears to be the same, considerable difference can occur at an operational or intitutional level and this gives each country a degree or uniqueness not adequately portrayed by the model.

An Economy Sytem is the system of producing and distribucion of good and services and allocating resources in a society, production is influence by the limited supply of such elements as labour, land and natural resource and capita.

The scarcity of supply of resources means that the Government has decided the allocation of these limited resources

Government intervention are usually in the form provision or prohibition, subsidies or tax and regulation.

There are:

- Free Market: government intervention is kept to the minimum while supply and demand and the ability to pay influence decision making

- Command Economy: resources are centrally planned and controlled by the Government

- Mixed Economy: combines elements of both free private enterprise and intervention in varying guises by the state.

A mixed economy is usually adopted by government to promote free enterprises while some degree of intervention with the objective of effective allocation of resources within country.

2.2 Assess the impact of fiscal and monetary policy on business organisations and their activities

Fiscal policy is defined as Government spending policies that influence macroeconomic conditions. Through fiscal policy, regulators attempt to improve unemployment rates, control inflation, stabilize business cycles and influence interest rates in an effort to control the economy. Fiscal policy is largely based on the ideas of British economist John Maynard Keynes (18831946), who believed governments could change economic performance by adjusting tax rates and government spending.

To illustrate how the government could try to use fiscal policy to affect the economy, consider an economy thats experiencing a recession. The government might lower tax rates to try to fuel economic growth. If people are paying less in taxes, they have more money to spend or invest. Increased consumer spending or investment could improve economic growth. Regulators dont want to see too great of a spending increase though, as this could increase inflation.

Another possibility is that the government might decide to increase its own spending say, by building more highways. The idea is that the additional government spending creates jobs and lowers the unemployment rate. Some economists, however, dispute the notion that governments can create jobs, because government obtains all of its money from taxation in other words, from the productive activities of the private sector.

One of the many problems with fiscal policy is that it tends to affect particular groups disproportionately. A tax decrease might not be applied to taxpayers at all income levels, or some groups might see larger decreases than others. Likewise, an increase in government spending will have the biggest influence on the group that is receiving that spending, which in the case of highway spending would be construction workers.

Fiscal policy and monetary policy are two major drivers of a nations economic performance. Through monetary policy, a countrys central bank influences the money supply. Regulators use both policies to try to boost a flagging economy, maintain a strong economy or cool off an overheated economy.

Monetary policy can be defined as the actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. Monetary policy is maintained through actions such as increasing the interest rate, or changing the amount of money banks need to keep in the vault (bank reserves).

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

The UK has had a competition policy regime since as far back as 1948, but this area of policy has not, for most of this period, been seen as the most gripping or most challenging part of either microeconomic analysis or economic policy-making. Yet there has been an evolution, some would say a revolution, in both, which arguably has brought the area where they intersect-competition policy and economic regulation-to a prominence unprecedented in the UK.

Any audience not totally absorbed in this somewhat arcane subject, could be forgiven for not having noticed this phenomenon. As recently as the beginning of this year it was quite credible to argue that, despite a general toughening in application, the competition regime of the UK had remained fundamentally unchanged for over 25 years, since the Fair Trading Act of 1973. But this first year of the new millennium is, as I will seek briefly to demonstrate, a major turning point, in a number of dimensions, which will in due course be seen to have created a sea-change in the regime, and established a new climate, a new culture even within which industry operates in the UK. In short, a new era is upon us, one which reflects a number of economic and social trends, within which quite powerful economic ideas or even ideologies are moving, and which many (though not necessarily all) regard as manifestly beneficial to the well-being of society.Competition and Markets Authority (CMA) with new powers and duties. The UK government has undertaken this reform because it wishes to strengthen the effectiveness of the competition regime, and thereby strengthen enhance economic performance. The UK regime is changing as a consequence of the new legislation.LO3 (Task 03): Understand the behavior of organisations in their market enviroment3.1 Explain now market structures determine the pricing and output decision of businesses

The concept of a market structure is therefore understood as those characteristics of a market that influence the behaviour and results of the firms working in that market.

The main aspects that determine market structures are: the number of agents in the market, both sellers and buyers; their relative negotiation strength, in terms of ability to set prices; the degree of concentration among them; the degree of differentiation and uniqueness of products; and the ease, or not, of entering and exiting the market. The interaction and differences between these aspects allow for the existence of several market structures, from which we can highlight the following:

-Perfect competition: the efficient market where goods are produced using the most efficient techniques and the least amount of factors. This market is considered to be unrealistic but it is nevertheless of special interest for hypothetical and theoretical reasons.

-Imperfect competition, which includes all situations that differ from perfect competition. Sellers and buyers can influence in the determination of the price of goods, leading to efficiency losses. Imperfect competition includes market structures such as:

-Monopoly: it represents the opposite of perfect competition. This market is composed of a sole seller who will therefore have full power to set prices.

-Oligopoly: in this case, products are offered by a series of firms. However, the number of sellers is not large enough to guarantee perfect competition prices. These markets are usually studied by analysing duopolies, since these are easier to model and the main conclusions can be extrapolated to oligopolies.

-Monopolistic competition: this market is formed by a high number of firms which produce a similar good that can be seen as unique due to differentiation, that will allow prices to be held up higher than marginal costs. In other words, each producer will be considered as a monopoly thanks to differentiation, but the whole market s considered as competitive because the degree of differentiation is not enough to undermine the possibility of substitution effects.

Market types: perfect competition, monopoly, monopolistic competition, oligopoly, duopoly, competitive advantage, strategies adopted by firms, regulation of competition.

Perfect competitionImperfect competitionMonopolistic

Lot substitutesNot lot substitutes Not substitutes

Free entrySine restrictionFull restriction

Perfect Competition

There are large number of buyers and sellers, homogeneous product, free entry and exit and perfect information.

In perfect competition do not choose price and total cost (TC) includes opportunity cost of capital invested

E.g coke

Monopoly

There are single seller of product, not close substitutes and significant barrier to entry.

In Monopoly profit maximization will be achieved by setting price.

MC=MR

Imperfect Competition or Monopolistic

Imperfect competition exict when there are substitutes but not a lot, it is betwen perfect competition and monopoly, in imperfect competition there are some restriction to go inside the market.

E.g restaurants

Characteristics: there are large number of firms in the industry, there are too control over price, entry and exit are relative easy and consumer and producer know about imperfect.

Oligopoly

Competition between the few, may be a large number of firms in the industry but the industry is dominated by a small number of very large producers.

There are high barrier to entry non-price competition may be prevalent.

Product can be homogenous or highly differentiated.

Duopoly

Industry is dominated by two large producers.

Collusion can be a possible feature. Highly independant and high barriers to entry.3.2 Illustrate the way in which market force shape organisational response using a range of examples.

Market force: demand and supply.

The Law of Demand say that the quantity demanded of a good falls when the price of the good rises, and vice versa.

*Quantity demanded is how much the buy want to buy.

*Demand say that price change as demand change.

Quantity of demand depend on: prices, prices of related good, consumers income, consumers tastes, consumers expectations about future prices and income, number of buyers, etc.

Demand decrease when price of good increase.

The Law of Demand say that demand depend on to price plus other factors are unchanged.

The Law of Supply say that the quantity supplied of good rise when the price of the good rises.

It happens too when price of the good decrease the quantity of supply decrease.

We can see shift in the demand curve, examples when consumers income increase demand for a normal good increase as when consumers income increase the demand for an inferior good decrease.

We can see shifts in the supply curve when there are changes in input prices, technology, number of sellers. The market supply will shift right if raw material becomes cheaper, tecnology becomes more efficient or number of sellers increases.

To be in EQUILIBRIUM demand have to be same than supply, quantity demanded equals the quantity supplied.

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

Organization response to market force is the reaction given by a company or business to an economical or business circumstance.

The more successful company have appropiate market research and analysis to ensure that they are able to supply the demand of its customers.

Misinterpretation of market force cause that not enough product have been supplied or overstocked ( customer dont want or need to buy), in both scenarios companys profit would be affected.

Organisation have to response to the market forces to get success and customer satisfation, market research is the key to respond corectly, organisation need to respond to any change in market condition.

PESTLE :Political, Economic, Social, Technological, Legal, and Environmental analysis: a management method that examines the effect that events or influences from outside may have on the performance of a company or organization:

The PESTLE analysis tool is one of many used to help managers identify their market positioning and strengths.LO4 (Task 04): Be able to assess the significance of the global factors that shape international business activities

4.1 Discuss the significance of international trade to UK business organisations

International trade can be defined as the exchange of capital, goods, and services across international borders or territories to satisfy the objectives of individuals, companies, and organisations.

Firms around the world are going global, including: manufacturing firms, art,film,music, services companies, it cause a flow of ideas, new choices permits the acquisition of a wider, variety of products,facilitates the mobility of labor, capital, and technology provides challenging employment opportunities reallocates resources, makes preferential choices, and shifts activities to a global level.

International Trade can be phrased as "the exchange of goods and services across international borders. In most countries, it represents a significant share of GDP. The significance of international trade varies within each economy.

The share trade in good as a percentage of GDP increased between 1990 and 2005 for all income groups and particularly for the middle income group. The same is true for services. There is evidence of increased globalisation. Although the share has increased overall, there are countries that have experienced negative growth, share of developing countries has increased over time, world markets are still dominated by ther developed world, especially in high-value, high-tech products. It is also true that increased trade does not automatically lead to increased development as in parts of sub-Saharan Africa where the products sold are basic primary products.

International trade is an essential feature of the UK economy, it is vital for the UK so that it can sustain its economics strengths and progress in an increasingly competitive global economy.

First we need identify how the UK economy operates on an international level. Second, we need consider the costs and benefits of international trade, and how the UK economy has been influenced by international trade and the consequences of an increasingly globalised economy.

International trade has been vital for the UK economy to develop throughout the colonial period, and the post war period. The issue of globalisation has created clear economic uncertainty and the evident understanding that the UK economy is susceptible to effects that are clearly outside its realm of influence.

4.2 Analyse the impact of global factors on UK business organisations. With the increase of the countries of the European Union, the European Union (EU), the European monetary Union (EMU), international trade, globalization, economic integration and global markets, and these nouns has come up in the line of sight of people.

The report mainly analysis the international trade, the reason of international trade, the importance of international trade, economic integration and global markets to UK business organizations, the fiscal policy and monetary policy of the European Union on UK business organizations, and the economic implications for the UK of entry into EMU.Organisations funcome part of its work that can be completed off site. Forrester Research jobs that 3.3 million U.S. service- and knowledge-based occupations will be conveyed overseas by the year 2015, 70 per century of which will move to India. Communication and facts and numbers circulating are occurrence over the globe in multiple dialects and multiple cultures. Global affray and worldwide collaboration coexist in the new world economy.

One foremost conclusion of globalization is bigger mobility in worldwide capital and work markets. This conceives a worldwide marketplace where there is more unfastening, because there are more pledge customers. However, there are furthermore more affrays, as localized businesses have to argue with foreign businesses for customers.

According to Dani Rodrik, lecturer of worldwide political investments at Harvard's Kennedy School of Government, the procedures affiliated with the worldwide integration of markets for pieces, services, and capital have conceived two determinants of tensions (Mohammadi, 2000, pp. 41-196).

First, declined obstacles to trade and buying into accentuate the asymmetries between assemblies that can cross worldwide boundaries, and those that cannot. In the first class are proprietors of capital, highly carried out workers, and many professionals. Unskilled and semiskilled workers and most middle managers pertain in the second category.

Second, globalization engenders confrontations interior and between nations over house norms and the communal organisations that embody them. As the know-how for assembled pieces becomes normalized and diffused internationally, nations with very distinct assemblies of measures, norms, organisations, and collective preferences start to argue head on in markets for alike goods. Trade becomes contentious when it unleashes forces that destabilise the norms implicit in localized or house workplace practices (Milanovic, 2003, pp. 667-683).

Table 1: Change-Trends and Tensions in Organisations

Trends

Tensions

1. Globalization

Global versus Local

2. Diversity

Heterogeneity versus Homogeneity

3. Flexibility

Flexibility versus Stability

4. Flat

Centralization versus Decentralization

5. Networks

Interdependence versus Independence

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

European Union play a big part in influencing business activity today:

-through taxation and spending

-through laws, directives and regulations

-through encouraging business activity through subsidies and support

-by providing advice and support for business.

Here are some examples of the way in which government influences business activity today:

1. Employment policy:

Governments play a major part in trying to stimulate employment. For example, the present government is keen to encourage business efficiency so that UK businesses are competitive in international markets and therefore create jobs. For those who have difficulty finding work, the government has created what is termed 'The New Deal', offering people the opportunity of developing training and experience on government funded and sponsored employment programmes.

2. Regional policy:

At European Union level, funds are made available to support regions of high unemployment and social deprivation such as large areas of Southern Italy and rural France, as well as the Highlands and Islands of Scotland. Regional policy sets out to compensate for the fact that with the development of the more prosperous parts of the European Union, jobs have been lost in other areas.

3. Inflation policy:

The government seeks to make sure that there are no sudden general rises in prices. They do this through the Monetary Policy Committee (MPC) of the Bank of England which sets interest rates. Interest rates are put up if there is a danger of people borrowing and spending too much, thus pushing prices up. Raising interest rates makes it more expensive for businesses to borrow money. It also makes it more expensive for consumers to borrow money. They then have less to spend, which helps to force down prices.

4. Education and training policy:

Education and training is seen in the UK as having a valuable contribution to make to business life. The government plays an important part in forcing through education and training changes, for example by creating more Vocational Subjects in the school curriculum.

5. Taxation policy:

Businesses can make a valuable contribution to the community by the taxes they pay. In return, the government can help businesses by spending money on projects like airports, roads, aid to developing countries and many other items.

6. International policy:

The government can promote trade, encourage sales of British goods abroad (exports), or discourage goods coming in from other countries (imports).

7. Establishing the 'rules of the game'.

Many of the laws of this country have been in existence for a long time. Others are much newer. New legislation can be made at a European Union, national or local level. These laws set out how people can and should behave towards one another, and particularly, how business should be conducted. They are very important in setting 'the rules of the game'.