BUSINESS ENVIRONMENT

Business environment

Table of Contents

Different types of organizations3

Sole proprietorship3

Purpose3

Partnership3

Purpose4

Corporation4

Purpose4

Franchise4

Purpose5

S-corporation5

Purpose5

Non-profit organization5

Purpose5

Organizational stakeholders5

Collective6

Individual7

Organizational course of meeting responsibilities of stakeholders8

The role of economics in resource allocation9

The allocation of resources10

Economic policies and business organizations11

The monetary policy12

The fiscal policy13

Government regulatory mechanics13

The competition policy14

Other regulatory mechanisms14

The market structures15

Market forces and organizational responses17

Demand, supply and organizational responses17

Increase in demand17

Increase in supply18

Organization and influence of business and cultural environment19

The business environment19

The external environment19

The internal environment20

The cultural environment20

The significance of international trade21

Global factors23

Policies of The European Union and their impact25

Business environment

Different types of organizations

A business organization is defined as “an entity pertaining to a commercial enterprise constituting of people and other resources, which is formed for making profits and reach collective goals”. Any business unit that is created for making profits through some commercial activity of manufacturing products or rendering services against money or any other economic gains. Moreover, any particular business unit pertaining to work for some sort of economic advantage are included in the domain of business organization. The key purpose of any business is to acquire high profits and economic gains in a given industry. However, there are three major types of business organizations; they are discussed as under;

Sole proprietorship

As evident from the word 'sole', it pertains to the ownership of one individual. It is defined as “a form of business organization that has a single owner and no other individual is authorized to take stake in its profits and losses”. The form of business pertains to one single individual in terms of control and responsibility.

Purpose

The purpose of sole proprietorship encompasses of 'sole ownership possessed by one person so that he takes stakes for profits, as well as, the total responsibility for functioning of business organization and the losses or liabilities incurred'.

Partnership

The context of partnership pertains to the idea that business ownership should be divided amongst few qualified amongst few qualified individuals. It is defined as “a form of business enterprise where two or more people come together to form of joint business venture to share the risk yet reap the profits and other economic gains”. A partnership pertains to execution of commercial activity for making profits.

Purpose

There are numerous purposes for partnership business; they include risk minimization and synchronization of business ideas. A partnership business encompasses of more people sharing legal, financial and other types of risk associated with the commercial activity, whereas, greater number of people leads to greater expertise and ideas for increasing efficiency and effectiveness.

Corporation

A corporation is a colossal form of business organization. It is much larger in scope, activity, and resources. It is defined as “a form of business organization that is chartered by the government and legal authorities, comprising of resources and runs as a separate entity from its owner”. A corporation encompasses of macro-scale operation and resources, it usually owns multiple number of production plants.

Purpose

The purpose of corporation is to mitigate risk yet acquire a large amount of resources and capital through large number of ...