Edexcel Btec Business Environment Section Assignment

Edexcel Btec Business Environment Section Assignment Words: 3057

Gina Dilapidating and Miss Hiawatha Knackery, because without them, we won’t be able to follow this program. Must also thank all my friends, specially Shania Gasmen, who helped me to make this assignment a successful. Table of Contents Acknowledgment 2 Introduction 4 Different types Of organizations and their purposes 5 Stakeholders and their objectives 10 Internal Stakeholders of Shell 10 External Stakeholders of Shell 12 Responsibilities of an organization and strategies employed to meet them 15 Economic Systems and how resources are allocated effectively 19 Economic System 19

Impact of Fiscal and Monetary policy on Shell and its activities 23 Fiscal policy 23 Effect of fiscal policy on Shell 23 Monetary Policy 26 Impact of Competition Policy on Shell 29 Conclusion 31 References 31 Introduction The first section of this assignment presents the different types of business organizations that are present and their purposes. Then, by taking Shell company as the organization to discuss the rest of the tasks, it is analyzed how Shell meets the objectives of different stakeholders.

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The third section includes in general about the responsibilities of an organization and more specifically, the strategies used by Shell to meet those responsibilities are discussed further. The next part of the report presents in general about how economic systems attempt to allocate resources effectively. Subsequently the impact of fiscal and monetary policy on Shell and their activities are presented in this report. The body of this report ends by the impact of competition policy and other regulatory mechanisms on the activities of Shell. Different types of organizations and their purposes There are different types of business organizations.

A business can have one wine or many owners. So a business have different types of ownership depending on the aims and objectives of the owners. The main objective of any business is usually to obtain a profit. Although in some businesses even if their main objective was not obtaining profits, they still have to make profits in the long run in order to survive. The main types of organizations are Sole Trader, Partnership, Public Limited Companies, Private Limited Companies, Cooperatives, Franchises and public Sector. (NAGS). The purposes, aims and objectives of each of the above mentioned types of organizations are discussed below.

Sole Trader Sole Trader is a business that is owned by only one person but there can be several employees working for that organization. At the start of a sole trader business, they may not have specific aims or objectives. The main aim of a sole trader business is to survive or sustain in the market and become stable. Then they will try to achieve the breakable point, so that they will have no loses. Later on their purpose will be to obtain profits and in the mean time they will try to expand their business to a Partnership or Private Limited company where there will be at least two people funding to the business.

Then again their main purpose will be to obtain profits, if they have already achieved the breakable point. They will always try to provide good service to the customers. Advantages of a sole trader business are; * No taxes to be paid * Profits can be kept by the owner himself * Total control of the business is with only the owner * Can start/end easily and cheaply * Can have the pride ownership * Can retain profit for the development of the business Partnership Partnership business is a type of business organization where there are TV’0 or more owners of the business.

Usually there can be two partners to twenty, UT there are exceptions such as major accountancy firms where there are hundreds of partners. The partners equally share the profits or losses that are made by the business and usually the partners manage the business but sometimes the work is delegated to the employees. There is a Deed of Partnership for each partner of a business which states the amount of capital each partner should invest in the business and it also States how the profits, losses and responsibilities are divided among the partners.

Partnership businesses exist or their main purpose is to provide the general public with a arrive/goods. They also try to be in the blue ocean by being innovative and competitive. Later on the partnership objectives develop to capture more market share and in the meantime, another purpose of the partnership businesses are to satisfy their stakeholder interests. Obtaining profits is not highly stated as a main aim, but it is obviously a motivating factor to achieve the objectives of a partnership business. Mostly partnership business aim to maximize their profits while reducing the overhead costs and increasing their sales.

They also monitor the growth of the business to observe how much heir business has developed relative to previous years and also to their major competitors. Advantages of partnership businesses are; * Special taxes need not be paid * Losses and responsibilities are shared among the partners * Risk is spread among the partners * Lot of financial resources are available * Management is shared (therefore burden is shared among the partners) * Has longer survival than sole proprietorship businesses * Credibility increased with potential customers and suppliers. That is the potential customers and suppliers will see that it is less risky to have business deals tit partnership businesses than sole trader businesses). Limited Companies Limited companies are business organizations where the shareholders of a particular business are the owners of that business. These businesses are usually run by directors who can also be shareholders. Directors are responsible to shareholders and therefore its their duty to act in the interests of shareholders. Limited companies can be divided into ;o; 1. Private Limited Companies [(PET) LTD] 2.

Public Limited Companies (Plus) Private Limited Companies I Public Limited companies I Shares are not traded On stock exchange. I Shares are traded on stock exchange. I Shares can only be bought by friends or family. I Shares can be bought by the general Public. I The initial value of shares that is put on sale may vary (does not need to be greater than a certain value) The initial value of shares that is put on sale for the general public must be greater than EYE,OHO. Private Limited Companies These companies can be owned by a minimum of two shareholders.

The shares can be bought only by friends or family and they receive profits as dividends from the company. Shareholders have limited liability. Private Limited Companies must have the word “Limited” or the letters Ltd in its name. The main purpose of a private limited company is to provide maximum return (dividends) to their shareholders and therefore they try to maximize their profits. The long term objective of a private limited company is to maximize their market share and to expand the business. An aim of a private limited company is to maintain their business at a high standard.

Advantages of Private Limited Companies are; * Limited liability to the shareholders * Can obtain money by selling shares * Family members and friends have the chance of buying shares Accounts are private Public Limited Companies The shares are available for the general public and the shareholders have limited liability. The business is managed by a Board Of directors that is appointed from the votes of the shareholders. The main purpose of Public Limited Companies are to increase liquidity for the shareholders. Their long term objectives are to expand the company operations into other markets or to diversify.

Their aims are to survive in competitive markets by being competitive, innovative and increasing the market share and limiting liability for the shareholders. Advantages of a Public Limited Company are; * Can sell shares to the general public * Can motivate the employees because shares can be bought by them Co- operatives Co-operatives are business organizations that are formed by people who wants to work together. The minimum number of members required for a co- operative is two. Unlike the Limited company, here the members have unlimited liability. Profits made by the business is shared equally among the members.

The share values do not vary. The primary purpose of a co- operative is to satisfy the members by providing goods and services to them. Therefore this helps to obtain increased income, savings and productivity as well. The main aim of a co-operative is to provide maximum economic benefits to its members. The short term objectives are to start co-operative practices and long term objectives are to make the lower income groups increase their ownership in the nation ‘s wealth. Franchises Franchises are where large companies give small businesses to use their company name.

Some of the examples are, Mac Donaldson, Pizza Hut and Subway. There is a franchiser and a franchisee for every franchise. Franchiser is the person who gives their business name to other small genuineness for an agreed period of time. He also provides materials, training and advice. Franchisee is the person who takes another business name and operates that business. But in order to do so, the franchisee must provide money to Start their business. Franchisee must also give payments to the franchiser during the period of time they are using the name.

The main purpose of a franchise is profitability. Since franchises are large corporations, they need to be profitable in order to sustain in the business. So the objectives they have to support this purpose is to provide quality products to heir consumers at a price that meets consumer’s demands. The medium term to long term objective of a franchise is quality service. They aim to offer quick, efficient products at a reasonable price. Advantages of a franchise are; * The franchiser will provide financial advice and assistance. * The franchisee owns the business. Well recognized name to the business. * The franchiser will provide management and marketing assistance. Lower failure rate. Public Sector Public sector business organizations consist of Government departments, Local Authorities, Health Trusts and Public Corporations. The main purposes of a public sector business organization is to increase economic grog”the and they also try to create the necessary infrastructure for the development of the country. One of the main aims for a public sector business is to promote fair distribution of income and wealth.

The short term objectives off public sector organization is to create employment opportunities, to assist the development of small business organizations and to avoid the limitations of the private sector. Stakeholders and their objectives A stakeholder of an organization can be defined as any individual or group ho is interested in that organization in any way and who can affect or is affected by the achievements of the organization’s objectives. Will be using Shell as my organization to answer the questions 1. 2, 1. 3, 2. 2 and 2. 3.

There are many different stakeholder groups for large organizations. These stakeholders can be either internal such as the senior management or external, such as the Government. Shell is one of the largest and most profitable multinational companies in the world. Its head quarters is situated in the Netherlands and Shell is an Anglo-Dutch company. 2. 5% of the world’s IL and 3% of its natural gas is provided by Shell. Oil and gas can be considered as resources that are in fixed or limited supply but they have a continuously increasing demand.

For a day, 16 million cars are fueled by Shell’s petrol and diesel and 34 million homes are powered around the world by the liquefied natural gas sold by Shell. Around the world, there is an increasing trend of using energy which is because of higher standards of living and also due to the growing world population. Therefore there is an increasing demand for other energy sources as well. (other than oil and gas). Internal Stakeholders of Shell The main internal stakeholders of Shell are; 1. Shareholders 2. Employees 3.

Suppliers Shareholders Shareholders are the owners of large businesses like Shell, Virgin, M;S and etc. They are the providers of capital to set up and run the business. As a return for the capital they invested in the business, they get a share Of the profits, known as dividends. Board of Directors is chosen by the shareholders and they give a specific direction to the company. So these Board of Directors make a long-term plan (or strategy) to go in the direction. Shareholders are mainly interested upon he profit growth, share price growth and dividends. They have the power of electing the Directors.

Employees There are more than 100,000 people worldwide, working for Shell. Some of the job titles are Senior International Mangers for finance. Marketing sales, oil and gas exploration and etc. There are also Geologists, Site Engineers, Oil Platform Workers, Business Analysts and etc. The operation of Shell affect the employees, as stakeholders. Employees need to maintain the proper standard of work, their commitment to health and safety and excellence. These are also the important factors that are required o maintain the position of Shell as the leader in the energy field.

So any mistake will harm the company reputation and also the livelihood of other employees. One of the core values of Shell is to respect people. The employees always try to remain within Shell and they are motivated to work due to the good and safe working conditions and employment been competitive in Shell. Employees are mainly interested upon the salaries and wages, job security, job satisfaction and motivation. They can influence Shell upon these factors; staff turnover, industrial action and service quality. Suppliers Suppliers are another internal stakeholder group.

They are important for the effective and efficient production activities. Every activity of Shell is centralized upon these core values. Shell will be using suppliers, contractors or other partners in the supply chain, only if they also show these core values. External Stakeholders of Shell External stakeholders do not play a role in the business, but however they have an interest Of what the business does and influence the decision-making of Shell. External stakeholders of Shell are; 1. Customers 2. Local communities 3. Interest Groups Customers Customers are the reason for the existence of a business.

Shell therefore has a major objective, that is to win and maintain their customers by offering value in terms of price, safety, environmental impact and quality for the products and services they provide. Customers are mainly interested upon the reliable quality, value for their money, product availability and customer service. It can be seen that Shell’s objectives matches with the interests of their customers. Shell achieve this objective by conducting a research process to find out customer wants and to mind out the best Ways to produce and provide the best products.

The research and development process mainly studies about the safety and environmental impact. Customers these days are concerned about pollution and environmental damage and they want cleaner and more efficient fuels such as befoul. Collectively, people in the whole world have an interest in liquid blissful for transport as people tend to travel more. Local Communities Local Communities are mainly interested upon the environment, local jobs and the impact of the business on the community. Shell respond to these interests by always aiming to create economic and social developments in its operation of oil and gas.

At the same time Shell tries to minimize the negative impacts as well. Shell major invest to provide lasting benefits for the community. Some of these benefits include; * Create jobs for local people * Use local contractors * Development of local facilities (for example, health and education) * Investment in the Community The local communities who live close by to the oil refineries have raised issues over their safety. Shell responds to this by gaining the trust of those coal communities by taking all the required safety measures.

These safety measures include, operating the plants safely and making people aware about the emergency procedures they have to follow. Interest Groups There is a range of interest groups that Shell needs to deal with. They are decision makers and opinion formers. Organizations and people who can influence Shell make decisions and form opinions so as to influence Shell and its activities. These include academics, government, non-government organizations (Nags), media, business leaders and the financial community. 1 . Governments – Shell operates in many countries across all regions of the world.

Shell show these governments that they operate in the right way, to gain approval. Right way means creating jobs, paying taxes and provide the country with important energy supplies. Shell also promote the necessity to have effective regulation on Carbon Dioxide emission by working with the governments. 2. Media – Competitive companies like Shell require the positive opinions from media. They need the positive press coverage from newspapers, television and magazines. This will reinforce the position Of shell in the market ND gain new customers by the positive reputation. 3. Nags- They influence in the decision-making process of Shell.

As an example, Shell had to postpone their drilling work in British Columbians sacred Headwaters by listening to the concerns of many organizations who protested the drilling in order to protect the Headwaters and the wild salmon (in the water) and other natural resources as well. 4. Competitors (or other oil companies) – Shell build up partnership projects with other oil companies including their competitors BP and Texaco. These projects include activities for building new Oil and gas supply lines and new finesses. 5. Business Community – Shell buy and supply to many other businesses.

Pressure groups are groups of people who have specific aims and interests and who influence major decision makers and raise public awareness about those issues. In order to overcome these barriers, Shell continuously discuss with its major pressure groups (such as friends of the Earth and Green Peace) about the main issues such as to how to dispose old oil rigs in such a way that it causes minimum damage to the environment. Shell directly deals with all the specific pressure groups that campaign on coal issues such as the preservation Of plant and animal life on a specific region.

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