BUSINESS ENVIRONMENT

Business Environment

Abstract

Business environment is composed of two words, business and environment. Business refers to an organization engaged in commercial, industrial or professional activities. Environment refers to the surroundings around any object. So, business environment can be defined as a set of political, social, legal and economical conditions that could affect the functioning of an organization. The purpose of this paper is to study and discuss the effect of different aspects of business environment such as market structures and forces, business and cultural environment, and global factors on the decisions and operation of an organisation.

Abstracti

Effect of Market Structures on the Pricing and Output Decisions1

Effect of Market Forces on Organizational Responses1

Influence of Business and Cultural Environments on the Behaviour of Organization1

Significance of International Trade to UK Business Organizations2

Impact of Global Factors on UK Business Organizations2

Impact Of Polices Of European on UK Business Organizations4

On Goods4

On internal market4

Elimination of Trade Restrictions4

References5

Business Environment

Effect of Market Structures on the Pricing and Output Decisions

Decisions of a firm regarding output and pricing are affected by actions and nature of the competition and the entry barriers. For instance, in an oligopolistic market decisions, a firm is faced with small number of key competitors. These firms are mutually interdependent on each other (Layton, 2011, pp.209-210). If a firm charges higher than the competitors, it will be out of the market in no time. Entry barriers create obstacles for the entry of new firm as a competition for the existing firms. It provides market power to the existing firms in the market. This can also be related to the market structures. Entry barriers such as cost of doing business affect the pricing decisions of firms.

Effect of Market Forces on Organizational Responses

The ability of the firm to create demand for the product is affected by numerous factors. When the relative price of a god falls, the demand for that product increases. It also increases the size of market for the firm. The price of substitute product also affects the demand of the firms' product. Complementary products affect the demand of its complement product or service.  For instance, as the use of computers and laptops are increasing throughout the country, the demand and market for wireless service is rising as well. Supply depends largely on price. The higher the price that a product can be sold for, the more of it businesses will be willing to supply (Aggaarwal & Vijay, n.d., pp.55-57). The factors that affect Ollo's decision about supply include change in technology and costs of making the product. 

Figure 1: Supply & Demand

Figure 2: Shift in Curves & Equilibrium Price

Influence of Business and Cultural Environments on the Behaviour of Organization

Government and regulatory authorities in any country are accountable for ensuring stable economic activity by providing stable framework for maintaining and enhancing the social, physical and market infrastructure. Currently only political risk Ollo might face toward development is the excessive corruption of government regulators. The economic activity has an effect on the organisation at a local and global level. Different economic variables such as inflation, interest rates and exchange rates affect the ...