In a report format, please answer the following questions

1. Assess the impact of scal and monetary policy on business organisations and their activities2. Evaluate the impact of competition policies and other regulatory mechanisms in place on the activities of business organization. 3. Critically evaluate how business and cultural environments would inuence the behavior of a business organization. 4. Discuss the signicance of international trade to UK business organisations. 5. Analyze the impact of global factors on UK business organisation. 6. Evaluate the impact of policies of the European Union on UK business organisations (L04.3)

Impact of fiscal and monetary policy on UK business organizations What is fiscal policy? Fiscal policy is country trying to influence its macro-economic activities by touching areas such as government income, government expenditure, budget and taxation. By that countries trying to fulfill its macro-economic objectives like full employment, economic stability, social equity, Economic

growth, poverty eradication

What is monetary policy? Monetary policy is the other way of government intervention to local economy. The main objective of deploying monetary policy is to regulate the money supply within the economy. This is mainly done through adjusting interest rates, exchange rates and controlling lending of local banking system How does fiscal policy affect to UK business organizations When looking in to UKs economic reports it is seemed to be the fiscal policy is set on in underlining with the Golden Rule states that over the full economic cycle, the government should borrow to invest only for future needs. Current needs should be met by tax revenues. However it can be seen two major tax components whose impact on business organizations is slightly differed, they are 1. Tax on corporate income 2. Tax on consumer goods(VAT) How would corporate tax impact on business organization? Increase on corporate tax means lower profit will be saved for shareholders to distribute as dividends. This pressures owners to find the way of cutting total cost of the organization. In short term they may tend to freeze the recruitments, block new investments, cease philanthropic contributions etc. In long term view point if the government is trying to continue on increased tax rates. Conversely reduction of corporate tax would reverse those decisions. Especially in high unemployment environment government may reduce corporate tax in order to motivate organizations to make more employment opportunities. In long term view point if the government is trying to continue on increased tax rates organizations will have to rethink on their production and other operational activities to eradicate non value adding activities and achieve full efficiency. How would consumer product tax impact on business organizations? The changing of VAT rate is negatively correlated with the demand. Increment in VAT for particular product category will definitely reduce the level of sales and vice versa. This would mean company has to make an extra effort on selling their products and services .Also in UK there are

different VAT procedures are available (standard rate, zero rated, etc) changing of procedures would require different ways of tackling them especially when accounting for the sales. Therefore continuous alert on those matters is essential. How would monetary policy impact on business organizations? As mentioned earlier monetary policy basically involves in controlling money supply within the territory.
Changes in monetary policy will produce both price (substitution) and income effects in return this is vastly affect operations of any organization. If monetary authorities begin a program of expansionary (easy) monetary policy or restrictive monetary policy sequence of events will occur with regard to the price effect. Change of interest rates As an example if government decided to reduce real interest rates then savings become less attractive and people tend to spend more money on buying goods, as well as they become persuaded to take loans and do purchasing. So sales of the companies may rise specially firm is selling durable goods like furniture the effect become high. Conversely public spending would be discouraged if interest rate goes down.

Changes in exchange rates Depending on the exchange rate fluctuations organizational operations can be highly impacted. This is because changing in exchange rates results change the value of imports and exports. Since most of UK organizations are relied on overseas trading happened in any manner change in exchange rates ultimately have an impact on operational cost fluctuation.

2.

Evaluate the impact of competition policies and other regulatory

mechanisms in place on the activities of business organization.

The main objective of competition policy is to promote competition; make markets work better and contribute towards improved efficiency in individual markets and enhanced competitiveness of UK businesses within the European Union single market.

Competition policy aims to ensure Wider consumer choice Technological innovation which promotes dynamic efficiency Effective price competition between suppliers How would completion policies make impact? The impact upon completion policy over UK business organizations are discussed below under the four key pillars of competition policy in the UK and in the European Union 1.Antitrust & cartels: This involves the elimination of agreements that seek to restrict competition including price-fixing and other abuses by firms who hold a dominant market position (defined as having a market share in excess of forty per cent).So in UK government will discourage monopolies in order to give more power for the buyers. 2.Market liberalisation: Liberalisation involves introducing fresh competition in previously monopolistic sectors such as energy supply, postal services, mobile telecommunications and air transport. Therefore entry barriers for the industry become less and more competition would add up to the industry. Its a favoring point for the new and potential players for the particular industry. 3.State aid control: Competition policy analyses examples of state aid measures to ensure that such measures do not distort competition in the Single Market .This continuous monitoring make companies always to comply with the policies. Therefore senior management always have to keep close eye on its strategic business decisions for not to evade policies otherwise company may have to suffer from even penalties. 4.Merger control: This involves the investigation of mergers and take-overs between firms (e.g. a merger between two large groups which would result in their dominating the market).

Roles of the Regulators and impact upon business firms Regulators are to oversee how a market works and the outcomes that result for both producers and consumers. Examples of regulators include the Office of Fair Trading and the Competition Commission. The European Union Competition Commission is also an important body for the UK economy. The EU Competition Commission is an important regulator of business activity in the single market. The main UK regulators (namely the Office of Fair Trading and the Competition Commission) are to merge in 2011 as part of a competition reform by the new coalition government. 1. Standards of customer service: Companies that fail to meet specified service standards can be fined or have their franchise / license taken away. The regulator may also require that unprofitable services are maintained in the wider public interest e.g. BT keeping phone booths open in rural areas and inner cities; the Royal Mail is still required by law to provide a uniform delivery service at least once a day to all postal addresses in the UK 2. Price regulations: With this company will not be able to exploit their monopoly power by charging excessive prices pricing behaviour is highly monitored, and also the rates of return on capital employed to see if there is evidence of unfair profit gathering by the company. Recently the EU Competition Commission made a ruling on the roaming charges of mobile phone operators in the EU and enforced a new maximum price on such charges. 3.Lowering the entry barriers of industries: The aim here is to encourage competition by removing barriers to entry. This might be achieved by forcing the dominant firm in the industry to allow others to use its infrastructure network. A key task for the regulator is to fix a fair access price for firms wanting to use the existing infrastructure. Fair both to the existing firms and also potential challengers. 4.The surrogate competitor: Regulation can act as a form of surrogate competition attempting to ensure that prices, profits and service quality are similar to what could be achieved in competitive markets. Fear of action by OFT and other regulators may prevent anticompetitive behavior and avoid things like dumping. (i.e. there will be a deterrent effect)

Impact of global factors on UK business organisation Under prevailing market condition any business organization is relied on things happened in globally. As a well-developed and exposed economy UK has the effect of global touch more than other economies. Global factors influencing business are legal, political, social, technological and economic. Understanding of these factors is important while developing a business strategy. Political factors - This refers to the changes in government and government policies. Political factors greatly influence the operation of business. This has gained significant importance off late. For example: companies operating in the European Union have to adopt directives and regulations created by the EU. The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. Business must consider the stability of the political environment, governments policy on the economy etc

c. Economic factors - changes in the global economic conditions. A rise in living standards would ultimately imply an increase in demand for products thereby, providing greater opportunities for businesses to make profits. An economy witnesses fluctuations in economic activities. This would imply that in case of a rise in economic activity the demand of the product will increase and hence the price will increase. In case of reduction in demand the prices will go down. Business strategies should be developed keeping in mind these fluctuations. Other economic changes that affect business include changes in the interest rate, wage rates, and the rate of inflation. Incase of low interest rates and increase in demand Businesses will be encouraged to expand and take risks. Therefore, business strategies should have room for such fluctuations. The following graph will demonstrate possible demand with economic fluctuations

a. Social factors - These factors are related to changes in social structures. These factors provide insights into behaviour, tastes, and lifestyles patterns of a population. Buying patterns are greatly influenced by the changes in the structure of the population, and in consumer lifestyles. Age, gender, etc all determine the buying patterns and understanding of such changes is critical for developing strategies which are in line with the market situations. In a global environment it is important that business strategies are

designed keeping in mind the social and cultural differences that vary from country to country. Consumer religion, language, lifestyle patterns are all important information for successful business management.

e. Technological factors - These factors greatly influence business strategies as they provide opportunities for businesses to adopt new innovations, and inventions. This helps the business to reduce costs and develop new products. With the advent of modern communication technologies, technological factors have gained great impetus in the business arena. . Huge volumes of information can be securely shared by means of databases thereby enabling vast cost reductions, and improvements in service. Organisations need to consider the latest relevant technological advancements for their business and to stay competitive. Technology helps business to gain competitive advantage, and is a major driver of globalization. While designing the business strategies firms must consider if use of technology will allow the firm to manufacture products and services at a lower cost. Firms can select new modes of distributions with the help of technology. It has become easier for companies to communicate with their customer in any part of the world.

b. Legal factors - These factors that influence business strategies are related to changes in government laws and regulations. For a successful business operation it is important that the businesses consider the legal issues involved in a particular situation and should have the capability to anticipate ways in which changes in laws will affect the way they must behave. Laws keep changing over a period of time. From the point of view of business it is important that they are aware of these changes in the areas of consumer protection legislation, environmental legislation, health & safety and employment law, etc.

Signicance of international trade to UK business organisations. International trade is the exchange of goods and services between countries. An impact is the United Kingdom purchase of a global or service made overseas. Also export goods and services made within the country. International trade facilitates exchange of complementary assets and skills which would otherwise cannot be produced a lonely. For example growing of tea would not possible in UK with relate to unfitted climatic condition hence this yields the necessity of international trade. The reasons for international trade are really an extension of the reason for trade within a nation. Rather than people trying to be self-sufficient and do everything themselves, it makes sense to specialize. For an individual company, exporting to overseas markets can be attractive for a number of reasons.

In business to business marketing some buyers may operating in a number of overseas countries may require their suppliers to be able to cater for their needs across national boundaries

New market segments available at outside Saturation of its domestic market. Reduce dependency by relying on one specific market. The nature of a firms product may require an organization to become active in an overseas market. Eg: When a bank presence in across the globe it makes their client convenient when they migrate to other countries (HSBC, Standard Chartered).

In order to achieve economies of scale To exploit opportunities offered by developing nations(Tax exemptions, loans)

From perspective of national economies, a number of reasons can identified for the importance of international trade.

Goods and services are traded to exploit concept of comparative cost advantage The removal of many restrictions on international trade Increasing household disposable incomes results is greater consumption of many categories of luxuries, such as overseas travel, which can only be provided by overseas suppliers

Cultural convergence that has resulted from improved communications

The benefits of international trade are often quite clear. When a country, perhaps because of its climate, is unable to produce certain goods at home (or can do so only at a very high cost) it will have to import them from abroad and offer other goods which it produces cheaply in exchange. Britain, for instance, could produce bananas and pineapples, but only at a prohibitively high opportunity cost by growing them in hot houses. Similarly, countries like Japan with little or no natural endowment of resources such as oil, coal and other mineral deposits must buy their requirements from overseas. Nevertheless, the basis for trade is less obvious when, say, the USA, which can produce most goods more efficiently than the rest of the world, imports vast amounts of goods like cars, cameras, TVs and other electronic products from countries such as Japan, Taiwan and South Korea. In this way United Kingdom, business organizations also have huge benefits from the international trade because or that it is very imported to them.