Discussing Issues Concerning Impact of International Business on the Economic - Assignment Example

?Business Environment Table of Contents Briefly Explain How Economic Systems Attempt To Allocate Resources Effectively 3 2.Assess The Impact Of Higher Taxes On Employees (An Instrument Of Fiscal Policy) And Higher Interest Rate (An Instrument Of Monetary Policy) On The Costs Of Borrowing Of A Business 4 3.Evaluate the Impact of Competition Policy and Other Regulatory Mechanisms on the Activities of Cadbury Schweppes 5 4.Explain How In Perfect Competition (An Example of Market Structure) the Pricing and Output Decisions Are Determined 6 5.Illustrate the Way in Which Market Forces Shape Organisational Responses Using a Range Examples 7 6.Judge How the Business and Cultural Environments Shape the Behaviour of McDonald’s 7 7.Discuss the Significance of International Trade to UK Business Organisations 8 References 11 1. Briefly Explain How Economic Systems Attempt To Allocate Resources Effectively The vital economic decisions of a country incorporate problems associated with resource allocation. The country’s decision regarding the resource allocation represents the economic systems that it practices. Normal economic systems range from market economy to command economy. In a planned or command economy, all the decisions are performed by the government. The role played by the government in such economy is related to the economic decisions, which it formulates by taking advices of the top hierarchical bodies. After the decisions have been finalised, they are enforced upon the bodies presented below the hierarchical level. The production process of any country is usually planned, coordinated and organised by the government. A planned economy involves an intensive deal of strategic planning. It has been further observed that governmental planning of allocation of resources is generally organised in such a manner which facilitates to satisfy the requirements of all the citizens dwelling within a country. The greatest advantage of resource allocation under the vigilance of government is equal distribution of wealth (Palacios & Harischandr, 2008). Free market economy refers to the economic system, wherein decisions are farmed by considering the market mechanism. Demand and supply results frame the vital element of the decisions pertaining to resources allocation. Within the free economy, the government does not interfere in any decision-making process. The advantage of resource allocation in free economy is that the goods are sent to that particular area, where it is in demand. Furthermore, in such economy there exists no requirement for any overriding body to interfere in the decision process (Palacios & Harischandr, 2008). Mixed economy incorporates the characteristics of both the economies discussed above. In such economy, a few of the goods and services are produced by the free-market sector, whereas the other products and services are produced by the government. The balance that exists between the government’s provision and the market economy provision is equal. Government plays a vital role in the development of mixed economy. Initiatives taken by the government to perk up the industrial development can facilitate to ensure benefit for the dwellers in the economy at large. Moreover, the other crucial benefits of a mixed economy entail the facet of lesser inequality related to the earned income, balanced growth of regions and freedom of possessing private property among others (Palacios & Harischandr, 2008). 2. Assess The Impact Of Higher Taxes On Employees (An Instrument Of Fiscal Policy) And Higher Interest Rate (An Instrument Of Monetary Policy) On The Costs Of Borrowing Of A Business Rise in the taxation rate lays a greater impact on the employees. When tax is charged on a product, it usually increases the rate of it. This excess rate of the product that includes the economic cost is the ‘excess burden’ of the tax. It has been further ascertained that higher rate of taxation usually decreases the growth along with investment pattern of an individual. Taxes usually disrupt the individuals’ behaviour as their majority of the decisions depend upon the price. In this aspect, when the tax is levied upon the products and the services, it greatly affects their purchasing power. Furthermore, it also has been analysed that higher taxes lays a greater impact on the investment decisions. Higher rate of the marginal taxation usually lowers the willingness of an individual to invest. This scenario relates with the adverse impact of higher taxation on the employees (Palacios & Harischandr, 2008). In keeping with the higher interest rate, it lays an immense impact on many aspects. According to the statement presented by Barack Obama “Cutting taxes creates jobs, and raising taxes destroys them” (Lynch, 2011) it can be clearly viewed that higher interest rate pose negative impact on business scenario. It has been further noted that if the interest rates accelerate, the borrowing cost pertaining to the companies increases. If the cost of borrowing of a company increases, it affects the profitability of the business. This is the reason that share prices of the firms’ change frequently. The increased rate of cost of borrowing of the firms’ hampers their investment and developmental planning (Parrish, 2013). 3. Evaluate the Impact of Competition Policy and Other Regulatory Mechanisms on the Activities of Cadbury Schweppes Competition policy represents a strategic area of reform that is being applicable in many of the countries. This particular policy within a country is necessary for preventing the domestic monopolization and the anticompetitive practices that ultimately lead to inefficiencies. Furthermore, completion policy assists in the economic development of any country. Cadbury Schweppes is recognised to be a merged company which was formed after the merger of Cadbury and Schweppes in 1969. However, in recent years the company split after demerger. In terms of implementation of competition policy within the company’s activities, it can be stated that it will ensure lower competition and domestic monopolization, which will enhance the efficiency of the company (Europolitics, 2013). It has been noted that competition commission has played a major role in clearing the acquisition framed by Coca Cola Company pertaining to Coca-Cola & Schweppes Beverages (CCSB). The commission has allowed the Coca Cola Company by providing an undertaking that the company needs to follow certain restrictive provisions. Furthermore, it is the responsibility of the Coca Cola Company to provide the commission with annual reports that incorporate sales volumes along with the market shares of the individual category of flavour in Britain (Europolitics, 2013). Office of Fair Trading represents a ‘not-for-profit’ and ‘non-ministerial’ government that has been enforced to protect the consumers’ by enforcing Consumer Protection law and also the competition law. Fair trade accreditation frames a major trend within the big food companies. This scenario reflects that Office of Fair Trading lays a greater impact on the activities of Cadbury Schweppes. Implementation of this policy will ensure the quality of the edible product of the company (Renton, 2009). 4. Explain How In Perfect Competition (An Example of Market Structure) the Pricing and Output Decisions Are Determined In a perfect competition based market, there are huge number of buyers and sellers who trade with each other. Moreover, in a perfectly competitive market, no individual seller or buyer has any influence over the market prices. Pricing and the output decisions under the perfect competitive market are affected by the factors such as the price taker and difference between the long run and short run pricing decision. In a perfectly competitive market, the objective of a farm is to maximise the profit being earned along with minimising the losses over the period of short run. The revenue being earned in a perfectly competitive market does not depend upon the quantity of goods being selected. Furthermore, revenue along with cost is considered to determine the profit maximisation pertaining to output choice (Hasan, 2013). 5. Illustrate the Way in Which Market Forces Shape Organisational Responses Using a Range Examples Market forces play a vital role in shaping the organisational responses. It has been observed that the market forces mainly relate the interaction of the two important elements i.e. demand and supply. It has been further noted the organisational responses relate with the reaction that is provided by the company to a business scenario. An organisational response pertaining to the market forces lays an immense and direct impact on the company’s profit and revenue earning figures. As observed, the most successful companies endure market research analysts to understand the impact of the market forces. This facilitates the organisations to take their decisions accordingly. Poor judgement or misinterpretation of the information available might lead to adverse consequences (Chang, 2005). For example, if the demand for a particular commodity of an organisation accelerates, its pricing will also be affected. Thus, the similar scenario is visualised in case of market responses. It has been observed that if the marketers of particular products find decrease in their demand, usually they adapt the methodology of providing free gifts with the products. Thus, it can be ascertained that the marketing strategies change with the alterations in the market forces (Chang, 2005). 6. Judge How the Business and Cultural Environments Shape the Behaviour of McDonald’s McDonald’s has shown an incredible growth and development over the past two decades. Its main strategy is to become an environmentally accountable business. In keeping with the company’s provided information, it has been ascertained that there exist five of the major environmental themes. These environmental themes incorporate restaurants operations, sustainable supply, culture and the communication, advocacy and partnership along with corporate operations. In accordance with the restaurant operations, the company essentially incorporates the strategies pertaining to greenhouse emissions and water usage among others (McDonald's Australia, 2013). In keeping with the corporate operations, McDonald’s entails dual flush toilets and water tanks among others. Sustainable supply entails environmental guidelines for the suppliers to deal with. Advocacy and partnership incorporates the environmental organisations along with the government agencies to establish cooperative relationship. Lastly, culture is an important factor in McDonald and it greatly affects day-to-day decisions of the company. McDonald’s business strategies have evolved over the years wherein it has administered a greater focus on maintaining a set of product offerings that go with the local culture of a nation such as it has customised its product menu in India (McDonald's Australia, 2013). 7. Discuss the Significance of International Trade to UK Business Organisations The UK economy is considered to be a knowledge economy. The UK economy has been designed in a form to operate effectively in the global economy. The international trade primarily signifies the exchange of the products and the services between the countries. This particular strategy plays an important role in the development of a country’s economy. Essentially, the international trade has assisted the UK business organisations to gain accelerated revenue by exporting their local manufactured and grown products to diverse nations. It has also facilitated the UK business organisations to procure required components from outside nations with the aid of imports. This in turn has aided the business organisations to ensure sustained availability of required raw materials as at times they might not be available locally. The international trade also assists the UK organisations to expand their market share in both local and foreign regions through foreign direct investment. Furthermore, export of products accelerates the profit and sales margins of a company. This ensures the greater significance of international trade to the UK business organisations (BIS, 2011). 8. Analyse the Impact of Global Factors on UK Business Organisations Global factors mainly influence the marketing and operational strategies. The strategic decisions usually incorporate the access pertaining to international market and effects on the decision-making related to the existence of the trade blocks. Trade block influences mainly the access to market and also affects the relative cost of trading. Global factors usually provide an access to the international growth and expansion. Global factors mainly include the political, social, economic and technology. The global factors have provided the UK business organisations to enhance their internal expansion mode of operations. The internal relationship has enabled the UK business organisations to enrich the economy by exporting the products to the other countries along with enjoying no competition. The UK endures flexible and effective political, social, technological and economic scenarios that have been changed by the influence of the global factors (Geiersbach, 2010). It has been ascertained that a few of the employment along with the social protections are readily affected by the European Union’s (EU) decisions. The EU decisions have always been an area of controversy in the UK as certain decisions pertaining to EU have laid adverse implications on the UK businesses. The free movement of labour within the UK lays a greater impact on the wages that are being paid to the employees. Moreover, employment directives of EU also lay a major impact on the UK business organisations as there is a vast gap amid these directives implication of employment issues and UK legislation (Parker, 2009). References BIS, 2011. International Trade and Investment - the Economic Rationale for Government Support. BIS Economics Paper, No. 13, pp. 1-165. Chang, R. Y., 2005. What Market Forces Impact Organizational Performance? Richard Chang Associates. Europolitics, 2013. Competition: Commission Clears Coca-Cola/Cadbury Schweppes Licensing Deal. Sectorial Policies. [Online] Available at: http://www.europolitics.info/competition-commission-clears-coca-cola-cadbury-schweppes-licensing-deal-artr166287-10.html [Accessed November 28, 2013]. Geiersbach, N., 2010. The Impact of International Business on the Global Economy. The International Business Imperative, pp. 119-129. Hasan, K., 2013. Price Decision Under Perfect Competition. Scribd Inc. [Online] Available at: http://www.scribd.com/doc/60184571/Price-Decision-Under-Perfect-Competition-Main [Accessed November 28, 2013]. Lynch, D. J., 2011. Raising Taxes Isn’t A ‘Kiss of Death’ for Employment Growth, History Shows. Bloomberg L.P. [Online] Available at: http://www.bloomberg.com/news/2011-06-02/raising-taxes-isn-t-a-kiss-of-death-for-employment-growth-history-shows.html [Accessed November 28, 2013]. McDonald's Australia, 2013. Our Approach. Macca’s & the Environment. [Online] Available at: https://mcdonalds.com.au/learn/responsibility/maccas-and-the-environment [Accessed November 28, 2013]. Parker, E., 2009. Free Movement Of Labour Across The European Union. The New Researcher, Vol. 1, pp. 19-23. Parrish, S., 2013. What Happens If Interest Rates Go Up? Forbes.com LLC. [Online] Available at: http://www.forbes.com/sites/steveparrish/2013/08/20/what-happens-if-interest-rates-go-up/ [Accessed November 28, 2013]. Palacios, M. & Harischandr, K., 2008. The Impact of Taxes On Economic Behaviour. High Taxes Decrease Growth and Investment, pp. 17-19. Renton, A., 2009. Capitalism Chews Over Fair Trade. The Guardian. [Online] Available at: http://www.theguardian.com/lifeandstyle/wordofmouth/2009/sep/16/fairtrade-cadbury-starbucks-nestle-kraft [Accessed November 28, 2013]. Read More