Marco Di Grazia SSBM Geneva 2022

Assignment: Business Environment

Task 1 of 1 Portfolio:

a. A table differentiating the purpose of public and private sector organisations

Public sector organisations Private sector organisations

Serving interests tax payers
Provide goods and services benefiting community
Provide education to all citizens
Provide quality healthcare
Provide welfare
Preserve national natural resources
Protect the environment
Administer state institutions and resources
Reducing unemployment
Stabilizing the economy and national currency
Support the legal system and enforce the law
Profit maximisation for shareholders and investors
Focus on entrepreneurial activities
Research & development
Be competitive
Be efficient and effective
Be innovative
Grow market share and customer base
Maximize productivity and reduce costs
Minimize risks related to business
Stay ahead of competitors
Spread company values

b. A mind map showing the main stakeholders of an organisation and their objectives,
including government, regulatory bodies, competition, etc.
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c. A table showing the impact of fiscal policies and monetary policies on businesses

Impact of fiscal policies Impact of monetary policies

Increasing/cutting taxes Impact on interest rates
Increasing/decreasing government spending Cost of debt
Business purchasing power/cost of doing business Impact on inflation
Investments levels and decisions Consumer spending
Customer demand and spending Investments
Funding (subsidies) Currency appreciation/depreciation
Cost of goods (VAT) Cost of goods imported (supply/input goods)
Competitiveness (Protectionism measures) Cost of goods exported (goods sold abroad)

d. A table showing how resources are allocated in a Capitalist, a Mixed and a Socialist 
economy

Determinants Capitalism Mixed Socialism

What, when & where Consumer’s preferences Both by consumer Government’s interest
to produce preference & government
How to produce Producers seeking profit Both producers seeking Government & its
profit & government employees
For whom to Purchasing power Both purchasing power & Government’s interest
produce government
How much to Market dynamics (S&D) Both businesses & Government’s interest
produce government
Price of products Price mechanism, Both businesses & Government’s decision
competition government

e. A diagram showing the impact of supply and demand on the market
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f. A diagram explaining Michael Porter’s forces

CUSTOMER
BARGAINING
POWER

SUPPLIER
THREAT OF
BARGAINING
SUBSTITUTES
POWER
INDUSTRY
RIVALRY

COMPETITION THREAT OF
AMONG NEW
INDUSTRY ENTRANTS

g. A table explaining the effect of market decision (Good/service, cost, distribution,
promotion) on business policies

Good/service Cost Distribution Promotion

Good and service The pricing strategy Distribution refers to the These are the promotional
refers to what a for the products and processes involved in activities you use to make
business is selling, services is one of the delivering your products customers aware of the
including all of the most important and services to the company’s products and
features, advantages business decisions customer. Having a good services, including
and benefits that because of its effect distribution in place advertising, sales tactics,
customers can enjoy on customers. It is ensures that it is possible promotions and direct
from buying these crucial to identify to repeatedly deliver the marketing. This is part of
products or services. how much customers same standard of service the marketing strategy and
When marketing a are prepared to pay,
to customers. It allows plan. Research is done
good and/or service, how much mark-up
also to save time and that details market
it is necessary to find is required to cater
money by increasing research, segmentation,
out about the key for overheads, profit
features and benefits margins and efficiency. budget and which form of
customers want or payment methods, It is necessary to communication to use.
need, including (but and other costs. regularly assess the Large companies might
not limited to) Discounts and company’s distribution plan to do a national
styling, quality, seasonal pricing are capabilities. The campaign, especially if
repairs, and examples of the distribution should also the brand is already
accessories. strategies to attract support optimally the familiar to the consumer.
customers and retain different marketing goals Smaller businesses, with
your competitive and objectives. fewer resources, might
advantage discounts prefer using direct selling
and seasonal pricing. until they have a larger
budget for advertising.
Marco Di Grazia SSBM Geneva 2022

h. A table showing the impact of various element of culture on business

Culture element Business impact

Values & attitudes Values and attitudes can impact the customers and
public’s reaction to a product. For example, Pepsi
Co lost its dominant market share to Coke in South
East Asia when Pepsi changed the colour of its
vending machines and coolers from deep "Regal"
blue to light "Ice" blue as Light blue is associated
with death and mourning in South East Asia. Thus,
if a company wants to expand internationally and
succeed on foreign markets, it is necessary to
understand the differences in values and attitudes
in different countries.

Religion Religion is one of the strongest and most ancient

type of societal and cultural values. The religion of
a country will have massive influence on the way
companies are doing business in important aspects
such as working hours, holidays, preferences and
tastes. As not all countries practice the same
religion, organisations can have different
constraints on business over their various branches
across the world. Too many international
companies ignore the influence of religion. It is
important to identify how different religions and
believes, for example in Islam, Buddhism, or
Christianism, can impact the business. A good
example of the effect of religious beliefs on
international marketing is the interdiction of pork
products and alcoholic beverages in most Muslim
countries (like in the majority of the Middle East).

Education Knowing the education system is an important

component that international companies need to
know. The level and style of education can have a
major impact on the receptiveness of consumers to
foreign marketing activities and products.
Education plays also a big role regarding the local
enrolling of employees and work expectations and
wages.

Language Among the most important barriers that

organisations can face on the path of
internationalization is differences in local
languages. This language specificity has been
known to create issues for firms when deploying
marketing campaigns and their products on foreign
markets. It is crucial to understand how language
and words are used and interpreted inside the
society of the targeted market. I will go over some
of the most well-known past examples where
companies learned the lesson the hard way
(especially American or European companies
going into Asia). When Pepsi started marketing its
products in China, they translated their slogan,
"Pepsi Brings You Back to Life" literally. The
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Political and law tradition
Social organisation
Technology and material culture
SSBM Geneva 2022
slogan translated in Chinese meant, "Pepsi Brings
Your Ancestors Back from the Grave." Also in
Chinese, the Kentucky Fried Chicken slogan
"finger-lickin' good" came out as "eat your fingers
off." Or there was the American slogan for Salem
cigarettes, "Salem-Feeling Free", which when
translated in Japanese meant "When smoking
Salem, you will feel so refreshed that your mind
seems to be free and empty." These marketing
missteps can really irritate and frustrate the
customer base and stigmatise the company has one
that does not respect or care about local customs
and traditions. These mistakes should really be
avoided because of the bad impression it can give
and the resulting negative image on the brand
locally as well as internationally.
Certain elements in the political and legislative
environment can be very significant for
international companies. In countries, such as
Lebanon or Brazil, which lately have had
relatively unstable governments policies and
regulations, there are always probabilities of
dramatical changes if new leaders come into
power and decide to reform the whole system (e.g.
nationalization of resources and companies). Some
countries have little tradition of democracy, and
thus it may be difficult to fight these changes and
loss of property. In addition, when an organization
is breaching into a foreign market, it is crutial to
analyse carefully the ownership regulations, the
employment law, the legal system, health and
safety regulations, financial laws and patent
protection.
The social organisation is different in every
country, e.g. the family structure, the social
stratifications, social classes, the interest groups
and the importance of certain communities. Social
organisation can also have a major impact on the
work environment and how businesses interact
with their employees.
Historical and current technology and material
culture can steward how the economic activity is
organized in a country or society. When importing
products in a foreign market, it is important to
look at the existing technological infrastructure
and assess how much of an investment will have to
be made in order to customise and adapt the
products to the specific state of technology and
material level of the country. A failed market
penetration by General Mills in the 1960s into the
Japan market is a good example of the importance
of the importance of material culture for
international organisations. Indeed, they tried to
sell cakes from the Betty Crocker brands, but there
was one problem, there were no ovens in the
homes (Knight, 1995). General Mills then started
Marco Di Grazia SSBM Geneva 2022

to look for a way for the Japanese housewives to

make the cakes using the rice cooker, which is in
every Japanese household (Knight, 1995). They
were successful in the cake trials, and the product
was launched with the name Cakeron (Knight,
1995). The new product was not getting repeat
sales for two reasons: rice is eaten in Japan with
every meal, and rice is also considered sacred
(Knight, 1995). Soon after its launch, General
Mills withdrew Cakeron from Japan (Knight,
1995). Another good illustration is the potential of
the internet user, which also can be limited by
technological infrastructure. The knowledge of
this important element is critical for a company
that plans to expand their products internationally.

i. A graph showing the value of international market to UK business over the last 70 
years

Source: Based on OECD data

Marco Di Grazia SSBM Geneva 2022

j. A diagram showing the global factors on UK business

International Economics Technology

Economic globalisation Level of global technological infrastructure
Global economic state Industry-specific technological
breakthroughs
Stock & bond markets fluctuations
Innovation
Commodity prices
Development of communication means
WTO and World Bank decisions
Access & use of internet

Laws & Regulations

Tariffs and barriers between the UK and Environmental protection
other countries Global warming and climate change
Global cyber and data protection rules International treaties to fight global
and regulations warming and climate change (e.g. COP26)
Changes in cross-country employment International organisations and ONG
and health and safety laws Initiatives on environmental protection
Global copyright, patent and intellectual Public perception of companies impact on
property disputes the environment
International and national climate
objectives

International Politics Societal factors

Global political stability Shifts in religions and believes
Current geopolitical situation (e.g. current
war in Ukraine)
GLOBAL Importance of traditional values (i.e. in
communities or families)
United Nations initiatives
Level of bureaucracy in international affairs
FACTORS ON Global trends in popular culture
Global immigration and movement of
Threat of international terrorism
Trade negotiations and disputes UK BUSINESS populations
Increasing mobility between social classes
Greater concern for minorities in society

k. A diagram showing the impact of EU policies on UK business

Industry Brexit impact

Fishing
Food & Agriculture
Manufacturing
Pharmacenticals
Financial Services

Energy
Trade and prices in gas and
UK Labor Market
electricity Qualification and services
Environment objectives and Less EU Workers
agreements (COP26) Immigration regulations
Development of renewables Broader talent pool
and subsidies

EU POLICIES &
BREXIT IMPACT
ON UK BUSINESS Public Finances
Higher deficit
No EU budget contribution
Data Transfer No more access to EU funding
EU’s General Data Protection programmes (like for
Regulation (GDPR) agriculture, regiional
National cyber security development, research and
innovation)
Trade & Investment Changes in customs revenues
More opportunities in other
markets
Less EU restrictions
Trade regulations
Tarrifs on British exports
Less access EU market
Dirsruption supply chain
New trade agreements
outside EU
Marco Di Grazia SSBM Geneva 2022