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Reading 19 & 20 & 23, 24, 25 - Coggle Diagram
Reading 19 & 20 & 23, 24, 25
Reading 19: The external Business Environment
Dimensions of the external business environment
Political Factors - actions by government, political events - wars etc. New/changes to laws and regulations eg smoking regulations hurt tabacco industry
Economic factors - rise in cost of raw materials, taxes/interest rates change. Important to always consider these factors. Divided into different areas.PEST/STEEPLE
Macroeconomic Environment: national and international economic situation - in which business operates as a whole. recession, or economy growing?
Microeconomic environment - economic factors specifif to a particular firm operating in its own particular market. christmas decoration manufacterer have quiet months whereas potato merchant all year.
Social/cultural factors: social attitudes and values, working condition, working hours, equal oppotunities, purity of products, cruelty free, average age of population, ethical issues, environment, image protrayed
Technological factors - how business organised, managed, rapid growth, how customers shop etc
Environment (ecological) factors - becoming more of a political issue, firms taking a greener approach, extra costs but a better look
Legal Factors - industry regulations, product safety standards, governing prices
Ethical factors - socially responsible attitude, CSR - working conditions, dafety of products, truthful advertising, environment attitudes, concern of local residents,
Globalisation and the changing business environment
External business environment is becoming global - international trade grown much faster than countries output
Cross border investment
Many companies see whole world as market and try to source cheapest methods
Integrated and interdependent economy - influenced by STEEPLE
Social/Cultural - include frowing influence of western consumerist culture (mcdonalds, nike etc) all worldwide
Technological - communications through internet customers and suppliers, small and powerful chips, use of plastic over metal, products more light-weight
Economic factors - have to be more competitive, interest rates, influation
Environmental and ethical - worldwide burning of fossil fuels, depletion of fish, pollution (land, sea and air), human rights
Political and legal - development of trading blocks - EU, NAFTA - policies across the world, need to meet certain regulations
Reading 20: The biotechnology Industry
Its business environment
biotechnology very controversial - raises ethical issues
Biotechnology refers to the application of knowledge about living organisims and their components to make new products and develop new industrial processes.
USA denominates this sector
dominated with small and medium businesses
form geographical clusters typically around key universities and research institutes
majority of funding come from venture capital
Many biotech companies on stock exchange.
Reading 23: Responding to employers 0 labour shortages and immigration policy
The issue: Are migrant workers needed o fill "labour and skills shortages" and "to do the jobs that British workers cannot or will not do"?
Contriversial topic - in economy boom many employers need and want migrants to fill in skills gaps and jobs residents don't want to do, also opportunity for emplyers to exploit migrants, and not imporove employee welfare or wages.
During recession it is said the policy doesn't meet the requirements the sae way as during a boom
UK immigration policy has rules
job neds to meet the criteria
job needs to be advertised withing british & eu market for crertain length of time
intra-company transfers (international company)
Shortages ad skills are slippery concepts that are difficult to define and measure
No universal description of labour
supply and demand issue interchanging
Why some employers prefer migrant workers
What do empployers want from migrant workers (skills, competencies and attributeS) - wjat do they THINK they can get
may expect migrants to have lower expectations - about wages and employment conditions
characteristics and restrictions tied to immigration status
high-quality worker, low skill/wage work - migrants likely to accept lower skilled work
Alternatives to immigration
responding to staff shortages in different ways - increasing wages, bettering work conditions, changing production process, swithcing commodities, employing migrant workers offshore
Many types of work can not be off-shored (hospitality, health care etc)
hiring migrants to fill gaps can be beneficial in short term but long term can cause problems for industry, including keeping wages lower across the board.
creating training programs to build skills of locals
Mind the gap: labour immigration and public policy
important to understand what constitutes "skills" and "shortages"
consider public and policy debate
important to factor all aspects in when deciding the best way to handle shortages - whether this be migrants or internal changes
Reading 24: Outsourcing onshore or offshore?
The growth of outsourcing
More and more departments being outsourced - recruitment, HR, fleet management, fcilities management, engineering, legal payroll etc
Top reasons
reduce costs
improve focus
increase variable cost element
access to skills
grow revenue
improve quality
conserve capital
innovate
If no strategic benefit from doing something in house makes sense to outsource for lower costs
can be some risks - politicians, world leaders - if it feels that there has been exploiting of third world countires
The risks of offshoring
obvious risk is distance - if an emergency call out can be difficult to respond quickly
currency and exchange rates
Legal system - different laws and regulations, tax, licences, visas,
political or economic instanility
quality and reliability of services - call centre problems in customer service
Language and culture - interpretation, translators can cause barriers - mixed messages
risk of damage to the brand - quality of service or product could change
The assessment
shouldnt base decision of the location of outsouring based soley on costs
important to consider all advantages and risks
Many businesses will assess risk and may try to outsource closer to location of core business
Reading 25: International Trade - commerce among nations
International outsourcing can benefit multiple countries - extra jobs
When buying from international business the "domestic" business loses out
Why countries trade
Trade driven by "comparative" rather than "absolute" costs
companies can be double productive but still be reviewed as comparative - produce more items in same time at same quality
Why trade reform is difficult
Trade continues to global efficiency. When a country opens up to trade,
capital and labour shift toward industries in which they are used more
efficiently. That movement provides society a higher level of economic
welfare. However, these effects are only part of the story.
Trade brings dislocation to those firms and industries that cannot cut it. Firms may face difficult ajustment as foreign producers lobby against trade. - taxes, quota of import
Trade policies
tarrifs higher in certain secotrs eg agriculture
other barriers - transportantion, communication, financial sector
some countries are affected more by trade barriers - less developed countries who tend to have low skills.
WTO - world trade organisation