Chapter 2 Business environment

1. Chapter 2Business environment Qiang Jiang School of Business Sichuan University, China jiang.qiang@outlook.com

2. Topic list 1 Analysing the business environment 2 The political and legal environment 3 Employment protection 4 Data protection and security 5 Health and safety 6 Consumer protection 7 Social and demographic trends 8 Cultural trends

3. Topic list 9 The impact of technology on organisations 10 Environmental factors 11 Competitive forces 12 Converting resources: the value chain 13 Competitive advantage-Porter’s five forces model

4. 1 Analysing the business environment • Procedure • Step 1:assess the nature of the environment • Step 2:identify influences affected the organisation • Step 3:Prepare a structural analysis identifying the key forces at work • Step 4:organisation`s position • Step 5:Threats and opportunities

5. 1 Analysing the business environment • Uncertainty • Simplicity/complexity: • variety of influences • Amount of knowledge necessary • interconnectedness of environmental influences • Stability/dynamism • Predict demand face a stable environment • environment of Fashion good is unstable

6. 1 Analysing the business environment • Rule of thumb • Simple and stable :low uncertainty • complex and stable: low to moderate uncertainty • simple and unstable: moderate to high uncertainty • complex and unstable: high uncertainty

7. 1 Analysing the business environment • Changing environment • Globalisation of business • Science and technology development • Mergers, acquisitions and strategic alliances • Changing customer values and behaviour • Increased scrutiny of business decisions by government and the public • Increased liberalisation of trade, deregulation and co-operation between business and government • Changes in business practices • Changes in the social and business relationships

8. 2 The political and legal environment • How political environment affects the firm • Legal framework • Government stance on certain issues • Government overall conduct of economic policy

9. Legal factor affecting all companies • General legal framework • Criminal law • Company law • Employment law • Health and safety • Data protection • Marketing and sales • Environment • Tax law

10. Impact of government • Capacity expansion • Demand • Divestment and rationalisation • Emerging industries • Competition

11. Influencing government • Employ lobbyists to ministers or civil servants • Give MPs non-executive directorships • Influence public opinion • EU's role in conduct of European businesses • Product standards • Environmental protection • Monetary policy • Research and development • Regional policy • Labour costs

12. Political risk and change • At national level ,political influence significant and includes legislation of many aspects • At international level, politics has direct bearing on organisations.

13. International trade • Political environment is of importance in international trade

14. European Union • Operates a single European market, allowing for the free movement of labour, goods and services, and free competition

15. World Trade Organisation • Promote free trade and resolve disputes between trading partners • Comparative advantage theory : free trade is the best way to promote global economic growth and domestic prosperity.

16. 3 Employment protection • Retirement • Resignation • Dismissal • Disciplinary procedures • Redundancy • Equal opportunities

17. Retirement • Reasons for Encourage retirement of organisation • Promotion opportunities for younger workers • Early retirement is an alternative to redundancy • Age structure of an organisation may become unbalanced • Cost of providing pensions rises with age

18. Resignation People resign for many reasons There should be an exit interview, the leaver explains the decision to go The period of notice required for the employee to leave be set out in contract of employment

19. Dismissal • Three forms of termination as dismiss • Termination of an employee` s contract by employer • Ending of a fixed-term contract without renewal • Resignation by the employee where employer` s conduct breaches the contract

20. Wrongful dismissal Dismissal breaches the contract of employment Relate to the method of dismissal

21. Unfair dismissal Dismissal without good reason

22. Disciplinary procedures The use of disciplinary system can be evidence in certain situations that an employee has not been dismissed unfairly

23. Redundancy • Redundancy is dismissal under two circumstances • Employer ceased to carry on the business at all or in place employee employed • Requirements of the business for employees to carry out work of a particular kind ceased or diminished or expected to

24. Redundancy • Compensation is a legal entitlement ,without damage to industrial relations • In three circumstances employee not entitled to compensation • Employer made an offer of suitable alternative employment • Employee is of pensionable age or over, or less than two years` continuous employment • Employee`s conduct merits dismissal without notice

25. Redundancy • Impact of a redundancy can be reduced by • Retirement of staff over normal retirement age • Early retirement to staff approaching normal retirement age • Restrictions on recruitment to reduce the workforce over time by natural wastage • Dismissal of part-time or short-time contract staff • Offering retraining and /or redeployment within the organisation • Seeking voluntary redundancies

26. Equal opportunities Some groups are discriminated against with little or no justification Law and bureaucracy exist to redress the balance

27. 4 Data protection and security Why is privacy an important issue The Data Protection Act 1998 Definitions of terms used in the Act The data protection principles The rights of data sunjects

28. 5 Health and safety • Importance of maintaining health and safety at work • Employer `s legal obligations • Accidents and illness cost employer money • Company `s image in marketplace and society may suffer

29. Employers’ duties Work practices must be safe Work environment be safe and healthy Plant and equipment maintained to necessary standard Encourage safe working practices ,provide training and information to staff. Safety policy be communicated to staff Employer must carry out Risk assessments Share hazard and risk information with other employers Introduce controls to reduce risk Revise or initiate safety policies Identify employees at risk Employ competent safety and health advisers

30. 5 Health and safety • Importance of maintaining health and safety at work • Employer’s legal obligations • Accidents and illness cost employer money • Company‘s image in marketplace and society may suffer

31. Employers’ duties Work practices must be safe Work environment be safe and healthy Plant and equipment maintained to necessary standard Encourage safe working practices ,provide training and information to staff. Safety policy be communicated to staff Employer must carry out Risk assessments Share hazard and risk information with other employers Introduce controls to reduce risk Revise or initiate safety policies Identify employees at risk Employ competent safety and health advisers

32. Employee's duties Care of themselves and others Allow employer to carry out his duties Not interfere with any machinery or equipment Inform employer of any situation in a danger Use equipment properly

33. Reducing the frequency and severity of accidents Develop safety consciousness Develop effective consultative participation Adequate instruction Materials handling minimised Good maintenance pays dividends Implement code of practice Safety inspection

34. Accident reporting system Accidents be reported on an accident report form and records kept Statistical trends be monitored to reveal recurring accidents Preventing recurrence Risk audit or sampling Procedure for reporting near-misses

35. Health and safety policy Statement of principles Detail of safety procedures Compliance with the law Detailed instructions on using equipment Training requirements

36. Senior managers set a good example Reacting to breaches of the policy Ensuring that the policy is communicated to staff Setting priorities for operations Involving staff in the heath and safety process

37. 6 Consumer protection • What is a contract • Sale of goods and services • Implied terms • Time of performance • Seller’ title • Goods to correspond with contract description • Satisfactory quality • Fitness of goods for a disclosed purpose

38. 7 Social and demographic trends • Population and the labour market • Growing populations offer a larger labour market • Increasing birth rates_more young people • Falling death rates _more elderly people • Changing age structure of the labour force__few young people_more young people in 1970s • Women are increasing their participation in the labour force • More part time jobs • Rising male unemployment as • Growth of the service sector • Increase in the average age women have children

39. Implications for employmers Establish the labour market Discover catchment areas Discern supply side trends Examine education trends Assess demand from other employers Assess whether some of your demand be satisfied from other sources

40. Family life cycle Effects of age, marital status, career status and the presence of absence of children Particular products and services can be marketed to people at specific stages of the life cycle

41. Social structures and class • Social class • The basic idea of class is that a society can be divided into broad strata which comprise individuals, whose members share common features, such as type of occupation, income level, education background and other variables.

42. Buying patterns Behavioural determinants encourage people to buy product or service. Inhibitors make the person less likely to purchase something.

43. Cultural trends • Health and diet issues • Some people are slowly moving to a healthier diet • Impact of health and diet on businesses • Growing market for sports-related goods • Employee health gyms • New foods _added vitamins • New sorts of convenience vitamins • Organic foods

44. 8 Cultural trends • Women in work • Many more women entered the labour force • Environmentalism • Issues relating to the effect of an organisation` s activities on the physical environment have come to the fore in recent years

45. 9 Impact of technology on organisations • Organisation structure • Information systems and information technology have played a significant role in the development of the modern business environment including encouraging the flattening of organisation hierarchies and widening spans of control.

46. Impact of technology on organisations • Span of control • Appropriate span of control depend on : • Ability of manager • Ability of subordinates • Nature of the task • Geographical dispersal of the subordinates ,and communication system of organisation • Availability of good quality information

47. Impact of technology on organisations • Tall and flat organisations • Information system help organisation unity and coherency in flat, decentralised organisations

48. Impact of technology on organisations • Organisation structure and information systems • centralised systems _holding and processing data in a central place • decentralised systems_have the data/information processing carried out at several different locations

49. Impact of technology on organisations • Other effects of IT on organisations • routine processing • Digital information an record keeping • Employment issues • Technological change • Customer service • Information markets • Developments in communications • IT and the employee/employer relationship

50. Impact of technology on organisations • Homeworking and supervision • Employee do tasks at home • Keyed –in data be sent over telecommunications link to head office • Some firms benefits in employing services of pool of freelance workers