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Business Environment Assignment

Business Environment Assignment Sample

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BUSINESS ENVIRONMENT ASSIGNMENT

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Introduction - BUSINESS ENVIRONMENT ASSIGNMENT

Business environment of an organization is impacted by different changes in public sectors and governmental policies. Recent Covid -19 pandemic has brought several changes in the government’s operational policies and actions. After the outbreak of the pandemic the government implemented some infection control measures that resulted in reduction of business activities. It has resulted into decline in retail, hospitality and tourism industries. Public sectors are generally consisted of organization that are operated by the government to give services to the society and citizens (Biber et al, 2017). On the other hand, private sectors are part of economy which are owned and operated by individuals or companies to earn profit and not directly controlled by the state. However, any changes in both sectors have impact on each other’s structure and activity. Unilever is a British multinational retail organization that operates in around 190 countries. The organization sells a diverse range of products including food items, water and air purifier, cosmetics and personal care. The organization has its headquarters located in London. As it is multination organization, the structure, business operations and profitability of the organization is impacted by different governmental policies and actions. This report will highlight the impacts of changes in governmental policies and action on the business environment of Unilever.

Legal structure and their impacts on business

 There are different legal structures that the organization follows in their business operations. Four most common legal structures are Sole Proprietorship, general partnership, Limited Liability Company and corporation. The explanation and advantages and disadvantages of these legal structures are discussed below.

Sole Proprietorship

Here the whole business is owned and operated by an individual. Thus, there is not legal distinction between the owner and the business.
Advantages

  • Easy to establish, cost of capital formation is low.
  • The owner has whole autonomy over the business.

Disadvantages

  • Personal exposure to risk is maximum.
  • Investors are less likely to invest in such businesses.

General partnership

Here the association of the business is between two or more people. Each of the partners are jointly liable for any partnership obligation. General partnership business does not pay federal income tax. Partnership agreements are established depending on capital contributions, distribution of profits or losses and management responsibilities (Just,2018).

Advantages

  • Easy to create and operate
  • Profits and losses are passed through to the owner’s personal tax returns.

Disadvantages

  • Partners are individually liable for debts.
  • Can lead to management issues between the partners.

Limited Liability Company

It is a hybrid of a corporation, general partnership, and sole proprietorship. Owners of an LLC is known as members. Members may be individuals, corporations or other LLC s.

Advantages

  • Owners have limited liabilities.
  • This legal structure allows numerous numbers of members.

Disadvantages

  • Such legal structures are sometimes subject to additional taxes.
  • Each member’s profit is taxable.

Corporation

It is the most complex legal structure. It is a legal structure that is separated and independent from its owners. It can enter into a contract that is separated from its shareholders.

Advantages

  • Shareholders have different liabilities.
  • Generally, a favourable formation that attracts investors.

Disadvantages

  • This process makes the business more complex and costly.
  • Liable to high level of taxation.

Unilever is an LLC with Anglo-Dutch structure However, the completion of Dutch and UK into a single London based entity occurred in 2020. Thus, the organization is largely impacted by the policies of the UK government.

Differences between public and private ownership

Difference between public and private ownership is that public money intentionally changes and changes the pay dependent on the costs while private money controls the costs dependent on future pay.

Public ownership:

  1. The primary benefit in looking for public ownership is that it offers a bigger pool of subsidizing for the organization than private ownership alone.
  2. The extent of subsidizing accessible from public financing is its central benefit.
  3. The first sale of stock is the point at which a privately owned business converts to a public organization by selling portions of its stock publicly (Parida & Madheswaran, 2021).
  4. An organization can sell further portions of stock in secondary contributions.
  5. An organization can likewise sell obligation, as bonds, openly trades.

Private ownership:

  1. Private ownership can upgrade an association's capital construction, save money on costs, and work on administrative impetus arrangement (Davis et al, 2018).
  2. One benefit of private ownership is that private financial backers might inject the organization with more capital than was accessible to it from public financing.
  3. Private ownership likewise saves money on regulatory expenses of being a public corporation.
  4. Private ownership can further develop impetuses for the executives, and increment financial backer contribution.

Unilever is a private sector organization. Thus, the owners have to focus on productivity and profit making.

UK Competition policy and the legislative framework

Competition policy of the UK was designed to save businesses and customers from anticompetitive actions and behaviour. This law secures effective competition for delivering open and dynamic markets as well as increased productivity and good customer experience. The UK government has to established different autonomous authorities to evaluate and implement action actions against anti-competitive practices. Anti-competitive practices lead to elimination of competition and misuse of market power. The UK’s exit from the EU has significant impact on competition policy. Unilever has been benefitted by the competition policy and the legislative framework.

Business review practices and its impact on customers

Competition and market authority of the UK promotes competition for benefits of customers. This organization is responsible for reviewing business practice and performance of different organizations. The CMA works for making sure that consumers can get a good deal when they buy goods and services and the organizations operates within the law(Angulo-Guerreroe al,2017). This body review mergers between organizations so that healthy competition does not reduce. Moreover, they investigate entire markets if we think there are competition or consumer problems. The organization has investigated Unilever’s business analysis recently and they are satisfied with it. Unilever promises to ensure delivery best of best products and service to its customers. The organization is rebuilding its operation policy after 2021.

Government policies during recession

The accompanying political external elements are critical in Unilever's customer merchandise business: Political stability of most nations. Policy cantered issues after exist from European Union and developing free trade relations. However, the government has to change its actions and policies during recession and other crisis. Government has to give some relaxation in its taxation polies for improvement of the country’s economy (House et al, 2020). The UK government has also implemented some measures for recovery of the business after the COVID 19 pandemic. The government had created polices to rebuild the business. The government has introduced effective packages for support small, medium and large business. It has implemented a business rates holiday worth 11bn euros. The government is also providing loan to businesses which have been critically affected by the COVID 19 pandemic. All of these policies are helpful for business recovery of Unilever. However, the UK government should focus on creating more effective policies and their implementation in the future.

Impact of globalization on business, competition and economy

Globalization has given rise of many multinational business organizations. Unilever manages a wide assortment of outer elements, considering the degree of its activities in the worldwide purchaser products market. It has changed the nature of production by outsourcing and mechanism. Implement of advanced technology has positive effect on profit making. Thus, globalization gave rise to economic boom (Coulibaly et al,2018). However, globalization has several negative impacts also. One of the major negative impacts of the globalization is definitely environmental crisis. Spreading of corona virus is another negative impact of globalization as the virus has spread from China to the whole world so much rapidly. It was not possible without globalization. This incident has negative impact on the global economy. The non-essential businesses have been most impacted by the pandemic and control polices related to this pandemic.

As a multinational organization Unilever has been also impacted by the changing governmental policies. The business of food item is stable now, but the other departments of the business have been affected negatively. The business performance became better during the beginning of 2021. However, it time take time for full recovery of the business.

Conclusion

From the above discussion it can be concluded that changes in the public sectors and governmental policies largely impact on the practices and profitability of a private organization. Unilever organization has also been affected by the changes in governmental policies and practices due to economic crisis and Covid-19 pandemic. The annual revenue and profitability of the organization had declined in 2020 like many other private organizations. The condition is improving in the current year as the intensity of the pandemic has been declined. However, the pandemic is still not over and the governments are concerned about the control measures. Thus, Unilever should take smart deskins to develop its business strategies so that they can cope with the governmental policies and practices. The UK government should also create and implement it polices wisely for economic development of the country. 

References

Biber, E., Light, S.E., Ruhl, J.B. and Salzman, J., 2017. Regulating business innovation as policy disruption: From the model T to Airbnb. Vand. L. Rev.70, p.1561.

Angulo-Guerrero, M.J., Pérez-Moreno, S. and Abad-Guerrero, I.M., 2017. How economic freedom affects opportunity and necessity entrepreneurship in the OECD countries. Journal of Business Research73, pp.30-37.

Just, N., 2018. Governing online platforms: Competition policy in times of platformization. Telecommunications Policy42(5), pp.386-394.

Davis, D., Kaplinsky, R. and Morris, M., 2018. Rents, power and governance in global value chains. Journal of World-Systems Research24(1), pp.43-71.

Parida, M. and Madheswaran, S., 2021. Effect of firm ownership on productivity: empirical evidence from the Indian mining industry. Mineral Economics34, pp.87-103.

House, C.L., Proebsting, C. and Tesar, L.L., 2020. Austerity in the aftermath of the great recession. Journal of Monetary Economics115, pp.37-63.

Coulibaly, S.K., Erbao, C. and Mekongcho, T.M., 2018. Economic globalization, entrepreneurship, and development. Technological Forecasting and Social Change127, pp.271-280.

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