HND level 4 Business Environment

Topics: Supply and demand, Monetary policy, Economics Pages: 34 (8482 words) Published: December 3, 2013

“Business environment encompasses all those factors that affect a company's operations; including customers, competitors, suppliers, distributors, industry trends, substitutes, regulations, government activities, the economy, demographics, social and cultural factors, innovations, and technological developments. It may also be referred to as Operating environment.”

(Quantum3, 2012)
“The definition of business environment means all of the internal and external factors that affect how the company functions including employees, customers, management, supply and demand and business regulations.”

(Yourdictionary, 2013)
“Importance of business environment can be assessed by the fact that a business cannot be run properly without a proper setup for its support. When an investor decides to start a business in a country or region he/she first analyzes the prevalent conditions with respect to the businesses. If these conditions are congenial to it he/she would waste no time to start the business. Otherwise he/she explores other countries or regions to set up new business there. The importance of business environment cannot be overlooked either one has to start a big business or smaller one. Establishing any size of the business one has to see whether one’s business would earn profit or not. All the other considerations are of the secondary importance. For example if in a country raw material is so cheap but the wages are quite high it means lower cost of one factor of production would be offset by the other. The importance of business environment can also be judged by the widely growing off-location global industry of information technology. In South Asian and African countries wage rates in IT industry are so cheap. But their business environment is not so much congenial. Therefore, global IT giants hire the manpower from there and make them work from their home. This is called off-location IT business. In this way physical uncertainties can be warded off by hiring the off-location IT professionals.” (Team Editorial, 2012)

This assignment explicates four major topics to provide a better understanding about business environment and here is an in-depth within each to explanation in each topic. These are the following topics:


Understand the organizational purposes of businesses


Understand the nature of the national environment in which business operate


Understand the behavior of organizations in their environment


Be able to assess the significance of the global factors that shape national business activities

Understand the organizational purposes of businesses

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There are various legal structures in current business environment, in what a business can decide to operate depends on the perspective owners desires. In more details, legal structures and types could be the following:

Private companies: The main characteristic of these type of operations that the business is privately owned by one or more individuals (in certain cases could be owned by both individuals and other business organization). This private ownership allows owners to practice full control and uninfluenced decision making. Private companies can have shareholders if they issue stock. However shares cannot be traded on public stock exchange and issued privately instead of through public offering. The values of these shares are hard to determine and they are less liquid. We distinguish three different types of private companies. The purpose of an organization easily explained through a company’s mission, vision statement, aims, goals and objectives.

Mission statement: Explains the overall purpose of the organization captures everything about the business, defines everything the company does well and will be doing in future. Vision statement: States the inspiration of the business.

Goals and objectives: These are precisely stating the aim or purpose of the business. Goal is a concrete description of what...

References: Accessed: 3rd of July, 2013 accessed 03/08/13
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