Unit 4: Business Environment (Business Management)

Question 1 A:

A.C 1.1:

The rationale of different firms is not similar which is described below;

Glaxo Smith Kline or GSK: The main priority of strategies is to establish a balanced growth and expansion process. This reduces the threats and vulnerabilities of enhancing the monetary problems and challenges affecting the long-term view of an organization.

National Health Service or NHS: NHS targets delivering health and care services to society. The main concern comprises of provision of services with superior standards to the users of the services (Alban and Alimo 2016). It offers the assurance of efficiency concerning the utility of the resources, which is valuable to derive outcomes that are profitable for the community and individuals.

Red Cross: The objective of the Red Cross is to put an end to the pain and miseries of people from society. It works by creating mobility of workforce through cost-effective resources.

Heart of England Co-operative Society: The society aims to provide better value and care with a wide range of facilities having an alliance with the services.

AC 1.2

The key stakeholders comprise of the following objectives, which is stated below;

Investors: GSK provides information to the stakeholders and investors concerning the projects to be taken in future by assessing risk and return offered from investment.

Employees: The employees of the organization work in favour of the public and the management of GSK offers their employees a hike in pay together with other benefits.

Government legal framework: The Company adheres to the government legal framework together with legislative measures of the government (Aula and Heinonen 2016).

Customers: GSK offers quality service to its customers of the highest standards. The company adheres with the health and care of the society that makes it efficient and effective,

AC 1.3

The major responsibilities are as follows;

Legislative framework: The legislative framework should be maintained for each business operation with sufficient business policies on maintenance.

Social responsibilities: A business is required to meet numerous social responsibilities in favour of society by enhancing public service.

Contractual: The Company following the legislative activities of the firm creates a wide range of contracts.

Below stated are the different strategies of meeting the stakeholder’s obligations;

Employee: There should be a fair remuneration structure to obtain job satisfaction for employees (Boons and Lüdek 2013). GSK must put their effort into promoting a safer work environment with advanced technologies.

Customers: There should be a sense of responsibility in adhering to the customer’s needs and GSK should strive towards building suitable value in product contributions.

Government: For healthy and effective working of the firm the legislative measures should be adhered to by GSK.

Question 1 B:

In 2009 UK economy faced the greatest recession leading to scarcity of resources and assets in the market. The government imposed financial measures to lower the risk that existed in the financial structure that also affected the business of AZ and GSK. The impacts are as follows;

Fiscal policy: The opportunities and development structure have improved because of the fiscal policies since they helped in improving the national economy together with government spending and taxation.

Monetary Policy: The government policies observe the contribution of currency and speed of dealings (Buchbinder and Shanks 2016). The policies implements control over the inflation rate and the cost of products are settled with the help of monetary policies.

Question 1 C

AC 2.3

The Enterprise Act 2002 formed by the UK parliament modifies the law of competition for mergers and insolvencies. The impacts are stated below;

Competition policy: The policy includes the rules and regulations to be followed by companies in a competitive market. GSK and AZ are required to follow the rules of the competition act since it assists in advantageous mergers.

Trade policies: The policies of competition promote fair trading policies (Epstein and Buhovac 2014). The Enterprise act 2002 promotes fair trading for effective management of trading activities.

Reorganization of liquidation: Implementing rescue of liquidation by the organization helps in promoting the effectiveness of the administration.

Question 1 D

AC 3.2

The two major factors affecting the decision-making process of the organization consists of demand and supply. Different market forces are present within the market to influence the organization decision. They also affect the price and sales decision in the following manner;

Demand: The customer’s willingness in purchasing the GSK products represents demand with the sum of orders placed determines the demand structure of products. GSK can set up higher price for their product that has higher demands.

Supply: GSK targets creating the availability of products in terms of the demand in the market and the increase in demand requires an increase in the supply of products (Galí 2015).

An increase in demand and supply of products leads to higher quantity with equilibrium prices of products of GSK. The fall in demand for products might increase in price.

Question 1 E

AC 3.3 (a)

PEST analysis – GSK:

Political environment: Numerous laws such as taxation, export and import policies and environmental laws is a worry for GSK. The carbon footprint and political laws must be considered for maintaining the threats of the political environment.

Economical: The different rate of inflation, interest rate and purchasing power of the consumers affects the GSK business.

Social-cultural factors: GSK possess the ability to manage factors such as fitness in society, lifestyle and human behaviour that helps in reducing risk and threats (Greaney 2014).

Technological factors: GSK uses a wide range of research and development in its business operations for their proposed research and projects.

AC 3.3 (b)

The cultural environment determining the behaviour of GSK consists of internal and ecological factors. These factors include employee behaviours, relations and the advancement of GSK for its employees.

Culture and values: GSK offers regular motivations to their employees through regular transparency and integrity forming their internal culture.

Integrity: The actions of GSK states commitment towards truthfulness and integrity and this is enforced at each level of the organization (Haria 2016).

Transparency: The maintenance of international business transparency promotes integrity with the cultural environment of the organization.

Question 1 F

AC 4.1

International trade has helped in providing better goods across the globe because the expansion procedure has helped in attaining a wide variety of opportunities and accomplishments for companies. GSK and AZ were successful in establishing a wide range of goods having links with diverse diseases (Mithas, Tafti and Mitchell 2013). Both GSK and AZ have prepared medical products for diseases such as oncology, respiration and other infectious diseases spreading across several nations. Globalization of trade has provided accessibility to a wide range of sources required during production.

AC 4.2

There are a wide range of global factors that have an association with the international industry and they are as follows;

Political: The trading activities of AZ and GSK face numerous laws relating to import and export. Situations such as instability can create an impact on the business of AZ and GSK.

Economic: A stable economic condition is necessary to create an impact on the resources of the countries on an individual basis (Morden 2016). Therefore, stability helps in providing a shared advantage to the consumers.

Social: GSK and AZ must analyse the social inclination across the world. This comprises of analysing the food culture, lifestyle, quality of life etc. GSK and AZ should consider chronic disease and obesity in their medicine and other products.

Legal factors: Legal factors such as diverse legal policies and regulations can create an impact on the GSK international trade.

Ecological: Global warming and the outbreak of a harmful disease with scarce natural products have been creating risks and threats for GSK.

AC 4.3

The policies of the EU have created a greater impact on the business of AZ and GSK. The cross border trade helped in the expansion of the growth of business with the lowering of tax on products was efficient in executing the business income (Taussig 2013). The lowering of VAT in Spain helped in reducing the cost of imports and exports for AZ and GSK.

The barriers of technical trade have a link with the EU strategies and guidelines since it creates an impact on the liberty of the mobility and transferability of goods. The presence of harmonization in the health, safety and environment policies ultimately creates a major impact on the goods of the company.

Question 2

There are three forms of the economic system, which are stated below;

Free Market: The free markets have been created more than the authority and the control of demand and supply of goods or services. The free market system of economic policies does not take into consideration any intervention from the government.

Command economy: The surrounding of the command economy imposes a system where the administration has command over the value of the goods and services (Sloman, Norris and Garrett 2013). The government authority can make a decision on the range of product and services that is necessary to be produced.

Mixed economy: Under this economic system, there is an inclusion of both the aspects of free market and command financial system. The government partially controls the economy with other parts are based on the allocation of supply and demand. The mixed economy has the contribution of both the public and private sectors.

The free market has resulted in situations of independence of customers over the procedure of allocation of resources. The supply of goods and products is reliant on the demand for such kinds of products. Planning in a centralized manner resulted in the allocation of resources by the government in the command economy as there was a decision involved in the production through available components.

The mixed structure possesses an inclusion of allocation of resources by the supply and demand of products (Frank 2014). The private sector possesses the tendency of allocation of possession by analysing the demand and supply graph. The public sector uses the process of allocating resources with planning. The reason for the mixed economy, in this case, is the allocation of resources that is reliant on the power of customer purchasing power.

Question 3

The price and decision of output are determined in numerous forms of the market in several ways. This includes a perfectly competitive market, Monopoly, monopolistic competition and Oligopoly and the process of decision making implemented by the above markets regarding price and output which is discussed below;

Perfect competitive market: Under this market, there are a large number of undersized sellers and buyers (Rios, McConnell and Brue 2013). The market provides the buyers and sellers with the ease of entering and exiting in comparison to other types of markets. Below listed are the features of this market;

1. The firms operating in this market offer products of a similar in nature
2. The demands of products create a major impact on the decision of the output
3. The purchasing power of the consumer is forms the main reflector and the pointer of decisions regarding the pricing of the product.

Figure 1: Perfect Competitive Market

 

Monopoly: Under this kind of market there is a single firm with no close substitute or near competitors operating in the market because price competition is absent (Frank 2014). Below listed are the following features of this market;

1. The owner of this kind of market is supreme and there is a prevalence of government regulations and policies
2. Only one organization operates under this market with the seldom of decision-making vest in the hands of the organization
3. Demand for the products is higher under this market since it reflects the way towards higher demand of the output.

Figure 2: Monopoly Market

Monopolistic competition: Under this kind of market there are several small firms and the production is reliant on the discrimination and differentiation amid the products (Sloman, Norris and Garrett 2013). One of the significant features of this kind of market is that it includes forces of non-pricing competition.

Figure 3: Monopolistic Competition Market

Oligopoly: Under this kind of market structure both smaller and larger firms are mutually dependent on the situation of the market (Morden 2016). The demands exerted by the purchasers create an influence over the decision of the output. The decision made on the price of the product influences the buyers.

Figure 4: Oligopoly Market

 

Reference List:

Alban-Metcalfe, J. and Alimo-Metcalfe, B., 2016. 14 Public sector leadership. Leadership in Organizations: Current Issues and Key Trends, p.264.

Aula, P. and Heinonen, J., 2016. Stakeholders Revised. In The Reputable Firm (pp. 121-131). Springer International Publishing.

Boons, F. and Lüdeke-Freund, F., 2013. Business models for sustainable innovation: state-of-the-art and steps towards a research agenda. Journal of Cleaner Production, 45, pp.9-19.

Buchbinder, S.B. and Shanks, N.H., 2016. Introduction to health care management. Jones & Bartlett Publishers.

Epstein, M.J. and Buhovac, A.R., 2014. Making sustainability work: Best practices in managing and measuring corporate social, environmental, and economic impacts. Berrett-Koehler Publishers.

Frank, R., 2014. Microeconomics and behaviour. McGraw-Hill Higher Education.

Galí, J., 2015. Monetary policy, inflation, and the business cycle: an introduction to the new Keynesian framework and its applications. Princeton University Press.

Greaney, T.L., 2014. Regulators as market-makers: accountable care organizations and competition policy. Ariz. St. LJ, 46, p.1.

Haria, B.R., 2016. An assessment of the market and macro factors that affect forecasting in fast-moving consumer goods companies–a case study of GlaxoSmithKline (Doctoral dissertation, Strathmore University).

Mithas, S., Tafti, A. and Mitchell, W., 2013. How a Firm’s Competitive Environment and Digital Strategic Posture Influence Digital Business Strategy. Mis Quarterly, 37(2), pp.511-536.

Morden, T., 2016. Principles of strategic management. Routledge.

Rios, M.C., McConnell, C.R. and Brue, S.L., 2013. Economics: Principles, Problems, and policies. McGraw-Hill.

Sloman, J., Norris, K. and Garrett, D., 2013. Principles of economics. Pearson Higher Education AU.

Taussig, F.W., 2013. Principles of economics (Vol. 2). Cosimo, Inc.