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INTRODUCTION.
Is an absolute necessity in the business world nowadays for organisations to understand the
nature of their operating environment. Whether to evaluate the level at which the
business is meeting its stakeholders objectives (internal environment) orto understand
current market trends and their effects on the business and its activities (external
environment), the an understanding of the operational environment of a business
remains a vital tool for the success of every business and an intergral part of the
strategic business decision making process. This write-up shall, in this light, be
evaluating the nature the business environment (task 2), the effect of the operating
environment on the organizational behavior and how it shapes the decision making
process (task 3), and the effect of policies of the European Union on business
organisations and their decisions (task 3). To do this, one shall be taking a wide range of
examples from the business world to illustrate the issues discussed herein.
to be concentrated. However, organizations are never free to set their own prices if they
want to make the enough profit. A scale from perfect competition to monopoly and monopoly
competition can be found below.
Perfect Competition: in perfect completion, there are large numbers buyer and sellers. No
firm can influence the pricing of goods. They are price takers in this market structure and
must charge the same as everyone else. A perfectly competitive market is a market where
competition is at its greatest possible level. Some characteristics of a perfect completion
market are:
There are no barriers to entry into the market.
No single company can influence the market price or market conditions.
There will be a large numbers of companies in the market.
There is no need for government regulation, except to make markets more competitive.
Oligopoly: An oligopoly is a market structure in which few companies dominate the market.
In oligopolies, they must pay attention to the pricing decisions of competitors or other
organizations in the market.
Monopolistic Competition: is the sole seller of a goods and services or is a market structure
in which there is only one producer or seller of a product However, in monopolistic
competition firms most produce the quantity were their marginal revenues equal their
marginal costs.
In conclusion, Market structure does affect organization pricing decisions, but organizations
are never simply free to set their own prices if they want enough profits marking.
Figure:
Demand and
flops (Source:
www.raybromley.com)
The figure above shows the demand and supply curves of a company that produces flipflops. Initial price and quantity demanded are at P1 and Q1. As a result of changes in
weather, there is an increase in the demand for the product from Q1 to Q2 during the
summer. This would require the company to increase the supply of the product from Q1 to
Q2 in order to accommodate the demand for the product. As such, supply increases from the
green to the purple line in the right direction.
Conversely, let us assume that demand for the product dropped as a result of the weather in
winter. The company wpild have to decrease the quantity supplied from the purple to the
green line, which will mean a corresponding increase in price from P2 to P1, and the quantity
demanded for Q2 to Q1
ST strategy that maximises the use of the business Strengths to overcome the
Threats faced by the business
UK businesses will thus warrant a discussion on the four arms of the PEST framework
( Political, Economic, Social and Technology)
a) Political
Since government is at the helm of everything within the state, it is natural that the
political atmosphere of a business operational base affects the business. Political
change can determine the future of business strategy, especially where such change
is brought about by coup or by democratic elections. In the UK, business men would,
at this time, be hoping for a change of Government to the hands of the Democrats,
hoping that that it will boost the UK economy in their favour. Political unrest in the
form of wars and the ideologies of the government in power do affect the strategic
orientation of a company.
b) Economic
A wide array of economic factors exist that affect strategic decisions of businesses.
The nature of the economic system is a major one as it determines the ease at which
businesses can enter or leave the market. This will also determine the orientation of
tax policies, interest rates and prices of commodities. These will in-turn affect
purchasing powers of households, leading to an effect in demand for products, thus
causing businesses to review their strategies. Following the recession, the business
world in the Uk has been cutting jobs and changing prices in order to meet their daily
business needs.
c) Social
Businesses are nowadays becoming increasingly aware of the necessity to tailor
their businesses to the socio-cultural needs of the environment they operate.
Lifestyle changes, religious beliefs and cultural undertones all affect businesses in
the UK and abroad. Businesses selling sexual lubricants will thrive within the UK, but
will not make any profit in countries where homosexuality is prohibited, like the
Gambia.
d) Technology
Continuous advancement in technology have affected the way businesses manage
their sales and money (Accounting), train and manage their staff, make their products
available to all markets (even those with whom they do not share common
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languages) and their ability to meet customer demands faster as a result of the
involvement of machinery in production systems
CONCLUSION
This work fixates on the utilization of the business environment and the paramount role plays
for the UK governments and plan for environmental amendment. It is a process of starting
and developing a business and avail to engender an inspiriting business environment. The
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