Hnd Judge How the Business and Cultural Environments

Only available on StudyMode
  • Topic: Lloyds Banking Group, Bank, Lloyds TSB
  • Pages : 15 (4745 words )
  • Download(s) : 1848
  • Published : April 22, 2013
Open Document
Text Preview
HND Business

Birmingham Metropolitan College

Mathew Boulton Campus

Riddle of the day
A woman shoots her husband.
Then she holds him under water for over 5 minutes.
Finally, she hangs him.
But 5 minutes later they both go out together and enjoy a wonderful dinner together. How can this be?

3.3 judge how the business and cultural environments
shape the behaviour of a selected organisation
This builds to answer;
Judge how Lloyds TSB has been behaviour has been affected by political, economic, social, technical, legal, and environmental pressures.

Industrial concentration
Over the last 100 years the size of firms has generally been increasing. 50 years ago in the UK most shops were privately owned and supplied the local area, however over time larger shops have become more and more important. Tesco for instance is a huge employer in the UK and now serves millions of customers with an estimated one in every seven pounds spent on retail being spent in Tesco, it has now extended well beyond the UK and is operating in many different companies. In 2002 Walmart was the biggest earning firm in the world, with an annual revenue of $219 billion. This was a higher figure than the GDP of many countries. As a general rule different industries are dominated by a smaller number or larger firms. This trend is referred to as industrial concentration. How has industrial concentration been achieved?

It has happened in a number of different ways, primarily many of the firms have naturally gained in size, e.g. opened more and more stores, or built bigger and bigger factories. However it has also been achieved through mergers, where firms combine themselves together And

By takeover where one firm will buy out another firm

Why grow in size?
One of the major reasons or advantages of growing in size is to achieve economies of scale.

Merger as a method of growth
Mergers offer firms a great advantage because over night they can grow substantially, they can become more secure, gain great economies of scale and have greater diversity. Case study Barclays
In 2003 Barclays Bank was looking for a major European Bank to merge with. It started looking at mergers for three main reasons Barclays had previously been a target for a takeover, by being a larger organisation it is a lot harder to become a target for takeover The bigger it becomes the greater the economies of scale it could gain It allowed Barclay’s access to European markets, far more easily than setting up its own branches abroad. Merging gave Barclays overnight access to a large customer base that was already established, additionally it gave Barclays technical experience of Europe. What economies of scale do you think Barclays gained from expanding abroad? ………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….

Vertical mergers
Vertical mergers are mergers of firms in the same chain of production, for example a brewer merging with a farmer (producing the raw ingredients hops) or a brewer merging with a pub. Both of these are examples of vertical mergers because they are in the same chain of production e.g. beer The brewer merging with the farmer would be a vertical backwards merger, because the brewer is merging with someone at an earlier stage in the production chain. From the farmers point of view merging with the brewer would be a forward vertical merger, because he is merging with someone at a later stage of production. Motives for vertically backward mergers

Firms can gain a number of advantages by vertically merging backwards these might include Economies of scale
Guaranteed supply
Not supplying competitors without knowledge (might mean not supplying any competitors) Motives for vertically forward mergers
Most manufacturers never sell directly to the public, they rely on retailers to do it for them, by merging...
tracking img