Features of Business Management and Organization

Features of Business Management and Organization Business Environment Individual 1.0 Introduction to organization 1.1 What is an organization? Managers are the ones who operate in organization. Organization is an individual or group of people that collaborate to achieve certain commercial goals that its members would be unable to reach by themselves. Every organization have a management structure that determines relationships between the different activities and the  members, and subdivides and  assigns  roles,  responsibilities, and  authority  to carry out different  tasks. Organizations are open systems in that they affect and are affected by the environment beyond their boundaries. So according to that organization should have following features. Vision A statement of what a company wishes to accomplish in the course of its operations. It is a declaration of a companys goals for the midterm or long-term future E.g.:- Apple Corporation’s Vision- To make a contribution to the world by making tools for  the mind that advance humankind. Mission A statement of the purpose of a  company,  organization  or  person, its  reason for existing. E.g.:- Unilever’s mission- â€Å"To add Vitality to life. We meet everyday needs for nutrition; hygiene and personal care with brands that help people look good, feel good and get more out of life.† Objectives A specific  result  that a  person  or  organization  aims  to  achieve  within a  time frame with available  resources. E.g.:- Unilever objective is to increase their profit by 35% end of the year 2014 Goals An observable and measurable  end result  having one or more  objectives  to be achieved within a more or less fixed timeframe. E.g.:- Unilever goal for 2020 To improve health and well-being, reduce environmental impact and source 100% of our agricultural raw materials sustainably and enhance the livelihoods of people across our value chain. Values Value statements define the organization’s basic philosophy, principles and ideals . they also set the ethical tone for the institution. 1.2 Organisation categories There are various ways to categories the organizations. We can divide organizations in to three types as characteristics, legal form and by size (Figure 01). (Figure 01- Organization Categories) Sole Trader A business owned by one person is a sole proprietorship. In a sole proprietorship, the owner invests capitol, makes all decisions, and receives all profits. Owners in a sole trader however may have more difficulty than larger organizations obtaining loans. More significantly, sole traders are personally liable for their debts if their businesses fail. A purpose of a Sole Trader is to provide a service for a client and charge for that service. Partnership Partnership is the relation between the persons who have agreed to share the profits of a business carried on by all or any of them acting for all or a business owned by two or more people also can be a partnership. The partners share the responsibility for financing, operating and managing the business. Usually profits are divided in proportion to the amount of money that each partner has invested in the business. Private limited company Private companies main objective is maximize the profit; these organizations are owned by shareholders by buying company shares, there can be minimally one shareholder and maximally fifty shareholders in the company. Profit and loss will be shared between shareholders at the company general meeting. The company should be named their company name along with (PVT) Ltd term. 2.0 Stakeholders of an organization The persons and organizations that have an interest in the strategy of the organization are called stakeholders. Stakeholders normally include shareholders, customers, staff and the local community. (Figure 02- Stakeholders) 2.1 Stakeholders of the D-MAC Bookshop 2.3 Stakeholder Analysis What is stakeholder analysis? Stakeholder analysis is methodology of systematically gathering and analyzing qualitative information to determine whose interests should be taken in to account when developing and /or implementing a policy or program. And this can be done by using the stakeholder mapping. Stakeholder mapping 2.4 Identifying the key stakeholders of D-MAC Bookshop Managers High salaries Profit maximization Bonuses Job security Status and growth of the business Employees High pay Job security Pleasing the customers Promotion prospects Job satisfaction and motivation Customers Safe and reliable products Value for money Innovation Product availability Customer service Suppliers A long term relationship with the firm Prompt payment Frequent and regular orders Large size and value of contracts Growth of the business Competitors To compete by all lawful means To differentiate its products Keeping up with innovation If an organization has to achieve the goals and objectives with efficiently and effectively, first of all the organization have to fulfill the objectives of stakeholders. So organization has to do something to achieve it. Those as follows, Employees Speak to them respectfully Make attract full remuneration packages By giving bonus and other allowances By introducing medical and entertainment allowance Providing job securities Customers By providing quality products. Providing products regularly. By giving truthful information about their products. By giving discounts and gifts. Providing other customer services. Government By paying taxes other payment correctly And provide some helps to government sector 3.0 Responsibilities of an organization 4.0 Economic systems â€Å"Economic system is an organized way in which a state or nation allocates its resources and apportions goods and services in the national community† a world in which all humans wants are instantly fulfilled is hard to imagine. Productive resources are limited while human wants are unlimited. Scarcity occurs] because human wants exceed the amounts of production possible with the limited time and resources that are available. Because of the scarcity every country needs a system to determine how to use its recourses productively. There three basic questions that needs to solve by any economic system. Three basic economic problems-: What to produce? –what kinds of goods and services should be produced How to produce? –what productive resources are used to produce goods and services For whom to produce? –who gets to have the goods and services The way a society answers these questions determines its economic system. There are tree economic systems. Command Economy Free Market Economy Mixed Economy 4.1 Command or planned Economy Economic system in which the government largely decides what goods and services will be produced, who will get them and how the economy will grow. Where the means of production are stake controlled and the allocation of resources are managed by centralization. What to produce? – The goods and services produced in a command economy are those which the governments choose to produce to produces. How to produce? – The government chooses the method of production it can direct resources including labor, to whatever activity it chooses Whom to produce? The output of economy is distributed in what the government sees fit. E.g.: it may try to distribute goods and services equally in order to minimize inequality. 4.2 Free Market Economy Economic system in which decisions about what to produce and in what quantities are decided by the market, that is , by buyers and sellers negotiating prices for goods and services. Where the competitive interaction of many producers and consumers without any intervention of by government, provide the forces of demand and supply which allocate resources through the price mechanism. What to produce? – Generally there is an economic incentive for the firm to choose to produce the most profitable goods and services and these will be those which are in higher demand. How to produce? There is an incentive for firm to choose the production method which is the least costly and therefore is the most profitable. Whom to produce? – The people who get the goods and services produced in a free market are those who are will and able to pay the price for them. 4.3 Mixed Economy Economic system in which allocation of resources is made by the market and some by the government. Where resources are allocated by a mixture of free markets and government intervention. Simply in such a type economic there is the presence of private economic freedom and centralized planning with a common goal of avoiding the problems associated with both economic systems. 5.0 Government of UK Economy of UK changes every year. According PWC publication in United Kingdom their economy has grown high in the past year and they are expecting to keep that growth in 2014 as well. The government of UK controls the economy in different ways. Firstly through a legal standard issuing by parliament that creates new laws. Another way is through arrangement of subsidies that create goods and services for people. And thirdly through taxation. 5.1 UK Government Policies Every government have their own aims and objectives to carry out their economic system. mains objectives in UK government are increase the economic growth, to maintain full employment, to stabilize exchange rates, control the inflation and to improve the standard of living of people in the country. To achieve these main objectives the government uses two main strategies. Fiscal policy Monetary policy 5.2 Fiscal Policy Fiscal policy is the use of government spending and tax policies to stimulate or contract macroeconomics activity. This includes taxation and how government adjusts its expenditure. fiscal policy changes in the taxing and spending of the federal government for purpose of expanding or contacting the level of aggregate demand. 5.3 Monetary Policy The actions central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply and interest rates. This includes interest rates and credit controls. 5.4 The impact of Fiscal and Monetary policy on business organizations In United Kingdom monetary policy is controlled by the Bank Of England. According to Bank of England monetary policy called as monetary stability. Monetary stability means stable prices and confidence in the currency. Stable prices are defined by the government’s inflation target, which the bank seeks to meet through the decisions delegated to the monetary policy committee, explaining those decisions transparently and implementing them effectively in the money markets. In England fiscal policy is called as financial stability. Financial stability entails detecting and reducing threats to the financial system as a whole. This is pursued through the bank’s financial and other operations, including lender of last resort, oversight of key infrastructure and the surveillance and policy roles delegated to the financial policy committee. In UK mostly fiscal policy and monitory policies have an influence on organizations. By fiscal policy government is influencing organization by receiving tax. E.g.:- income tax, vat, BTT, By monitory policy the central bank will increase the interest rate for the deposits, then government will get more and more money, then they will increase the interest rate for loans, then organizations will not going to barrow loans from the bank likewise government influence the organizations, and some of social responsibility also will influence an organization. 6.0 Types of Market Structures Market structure is used to describe the number of buyers and sellers operating in a market. The extent to which the market is concentrated in the hands of a small numbers of buyers and/or sellers and the degree of collusion or competition between buyers and/or sellers. We can identify four types of market structures 1) Perfect Competition Perfect competition is a market structure where competition is at its greatest possible level. There are large number of buyers and sellers, and none begin influence prices. 2) Monopoly- a firm that is the lone producer of a good for which there are no close substitutes. 3) Oligopoly – are industries dominated by a few firms whose decisions are strategically linked; barriers to entry tend to be significant 4) Monopolistic Competition requires easy entry and exit in to industries in which many potential suppliers compete vigorously with makers of close, but not perfect substitute for their â€Å"brand- name† products According to the above information following table can be describe the types of market structure. Perfect Competition Monopoly Oligopoly Monopolistic Competition No. of Firms infinite one many few Product Type Homogeneous Unique Homogeneous or Differentiate Differentiate Freedom of Entry Unrestricted Restricted or blocked Restricted unrestricted Control over Price None Total Significant Some Size of Firms Small Large Small Very large Profit Normal Economic profit. Short long run Losses to normal economic in short long run Economic in short run normal over long run Implications For demand curve Horizontal (price taker) Downward sloping more inelastic than oligopoly Downward sloping relatively inelastic Downward sloping but relatively elastic Possible consumer demand Highly elastic Highly inelastic Inelastic Elastic 6.1 Pricing and output decisions of market structures Generic office supplies, most agricultural and few relatively homogeneous goods are produced by Perfect Competitive markets. Each buyer or seller is too insignificant to single handedly affect the total demand or supply of the goods. There acting as price takers in this market they have no choice but to accept the price set in the market. The demand is perfectly elastic in perfect competition. The producer tires to sell goods for a high price he won’t be able to sell because other competitors also selling for the same price. The demand curve of monopoly market slops down; prices will be inversely related to quantity demanded. Any firm with market power must lower its price to sell more if it can charge only one price at time. Market power is a firm’s ability to alter the price of its output because of inadequate competition or a lack of perfect substitutes for its products.