Understanding The Business Environment

Published Date: 02 Nov 2017

Understanding the Business Environment

Course Title

HND Business

Assessment Code

HNDBUSCoreUnitI/Jan2013/Part

Hand Out Date

I st March 2013

Hand Out Date

I st March 2013

Lecturer (s)

Internal Verifier

Jonathan Cartmell

Sources of information

Courses notes

Recommended learning textbooks; Learning media (2012) Human Resource Development and Employee Relations, BPP, London

Student Name

Lecturer

Student ID

Group (e.g. BDM019)

TABLE OF CONTENT

PART A

Task 1

1.1

1.2

1.3

Task 2

2.1

2.2

2.3

Task 3

3.1

3.2

3.3

Task 4

4.1

4.2

4.3

PART

B

Merit criteria

References

PART A

Company Name: Samsung Group

Description: Samsung Group has made appearance in 1938 in South Korea as a commercial company with 40 employees, the business headquartered were in Seoul. The main activity of the company is to contract manufacturing of electronic and IT products.

The Korean language "Samsung" mean "three stars". The business went well until 1950 when the Communist invasion brought big losses. In 1951, Lee Byung-Chull has reopened his business and founded Samsung Group again, this time in the city of Suwon. Until 1953 the business prospered and has increased 20 times, making him, Lee Byung-Chull, to decide to open a sugar refinery. No doubt the business prospered again, Samsung's founder, Lee Byung-Chull's wish was that his company to be the market leader in any industry in which was active.

The company has expanded its activities in the insurance field, also in 1970 making loan and makes its appearance in the field of mass communication with the production of radio and television stations. Subsequently, the regime of Park Chung-Hee helps Samsung Electronics (Samsung Group) by supporting large companies and restricting foreign companies to sell electronic products in South Korea.

Moreover, Samsung Electronics had permission to invest in foreign companies, but was not be allowed that foreign investors to invest in the company, what made that Samsung Electronics to grow very much in the internal market.

In 1987, following the death of Lee Byung-Chull, the founder of the Samsung Group, Samsung Electronics is divided into four large groups: Samsung Group, Shinsegae Group, CJ Group and Cheong Lai Kum Group.

Samsung activates also with industrial subsidiaries include Samsung Electronics (the world's largest information technology company), Samsung Heavy Industries (the world's second-largest shipbuilder), and Samsung Engineering (the world's 35th engineering company )and Samsung C&T (respectively the world's 72nd-largest construction companies). Other subsidiaries include Samsung Life Insurance (the world's 14th-largest life insurance company), Samsung Everland (operator of Everland Resort, the oldest theme park in South Korea), Samsung Techwin (an aerospace and defense company) and Cheil Worldwide (the world's 19th-largest advertising agency).

In 1995 designed the first liquid crystal display and then was when Samsung Electronics equaled the technology of Sony company.

TASK 1

1.1

Samsung Group is a private public limited company because is based on private properties and manifests its activity through individual businesses in different industry markets.

According to this information: 188,000 employees, 185 offices and stretches in 65 countries, 8 major business divisions (advertising, constructions, entertainment, financial services, hospitality, information and communications technology services, medical services and retail) 1,200 billion woni (national currency of South Korea) income that represents 20% of the country GDP (gross domestic product) we can say that Samsung Group is a large business.

We also can say that Samsung is a multinational company if we count the fact that is World Wide company that activates even in United Kingdom.

Being a large business has a lot of advantages, let`s see a few of them below:

The advantage of working with professionals-the big company chooses staff to be some of the finest. Due to the company's employees Samsung has the best projects and the best productions.

The variety of goods-producing goods in different branches, the company works with employees trained in various fields that reach improvement. It's no secret that Samsung is an innovative company in the field of mobile phone and Ipad.

Low prices- we all know that in the economic branch we need to offer good product or service with good price. This is what Samsung done all the time. Thank to its professional employees, the company always amazed its customers with the best product and low costs.

1.2. The objectives of the Samsung company are:

The mission of Samsung Group is to be the best digital company. Over the years the company has gone step by step on all the steps needed to reach first place in the digital domain. There is no need to recall that in parallel entered in other industries where also was the market leader. Very well thought out projects released products increasingly better and better, has not ceased to amaze its clients and attract other ones new. Through this route and has been demonstrated that the company is a strong, willing to fight to get the best and keep it off on the spot.

The goals of the company are the maximization of the profit and the growth of sales. If at the beginning when the company was founded it was interested only by the maximization of the profit, the company`s history shows us that in the moment when entered in the international market and in other industries the company was also interested to gain more customers and to grow the sales.

Being on the market for a period of 70 years and became one of the innovative companies, Samsung Group could not do this without having good objectives, all the more as it crossed a period of recession. It is known the fact that in the period of recession the companies change their objectives from the ones that are for growing in those to resisting in the respective period.

The stakeholders of the company are:

The government – the Government is one of the more interested that Samsung to be a successful company and to grow because the company pays taxes. When the company grows more taxes will be collected, more people will work and the rate of unemployment will decrease. Also we should mention that the Government will collect taxes also from the employees too.

The employees- between the company and its employees is a continuing collaboration. As long as employees give proof of professionalism the company develop and they will not worry about the job and the salary.

The customers- Customers can be of two types:

1. direct customers, those who buy directly from Samsung;

2 . the "indirect" customers, stores who collaborates with Samsung to sell the company's products. They are directly interested in their profit although it is true that to have Samsung products in stores must pay for them.

The local community- as well as the Government, takes taxes from the citizen for improving them the facilities. The bad fact that could affect the community can be the noise pollution, and we don`t speak only about one area in the UK, we can refer to all the country, because Samsung sells goods in all its territory.

1.3

Samsung is a great company involved in various industries. In order to be a success it needs guidance. Samsung's strategy is based on the following structure:

Performances- by its own history demonstrates, if we remember the fact that the company has started from a simple business with 40 employees and ended up getting into the various industries becoming a real brand, we can see that performance gave proof in just 70 years of activity.

Superior business performance – the strategy applied by Samsung is to satisfy customers and creating products for increasingly better prices.

Increasing the market share - ever since started to penetrate into other industries and other markets had as its objective to increase market share growth, which helped to increased profits and easier business development. Like this the company could become a multinational one.

Increasing of the innovation- on this chapter Samsung also worked hard, we shouldn`t forget the success from 1995, when Samsung designed the first liquid crystal display and equalled the technology of Sony company.

The company`s slogan is: "Inspire the World, Create the Future."

TASK 2

2.1

There are three economic systems:

1.Free market system- a free market system is when the Government does not intervene in the market through its decisions. The market is free in this type of economic system, the exception being when there is a contract of the property. The free market is required to defend the property without government interference.

2.Planned economy- is the economy in which the Government is involved in any market. The Government is the one who controls everything, from the production process, continuing with distribution and even with price fixing. We can easily say that in this system, the Government is in fact the rightful owner.

3.Mixed economy- this type of economy is the one where the two types of economy above mentioned collaborates. Samsung is a originally Korean company that activates in the United Kingdom`s territory. As we know, UK has a mixed economy, but the fact that Samsung is a large company and brings big profit for the country through the taxes(the taxes that the company is paying and the ones that its employees are paying), the Government doesn`t involve in Samsung`s economic decisions.

2.2

Fiscal and monetary policy are the two tools of the economic system to influence the economy of a country.

Fiscal policy- fiscal policy is controlled by the Government, it is which brings money to the State budget through the fees applied. In this case, due to the development of the company, who has a fairly high number of employees both worldwide and in the UK. If the Government wants to grow the demand for products is the one who can take the decision to lower the income tax so that employees can get higher income. This revenue may increase demand for commodities because employees will have more money available to spend.

Monetary policy- the inflation is the one that decides if the Samsung products are "a need" or "a want". How decides that? If the inflation is big, the national currency doesn`t have so much value, the customers can`t buy so many goods and the Samsung products become "a need". We can`t say the same thing when the inflation is small, this time the national currency is powerful, the people can afford to buy what they want and this is the time when the Samsung products become "a want". How we control the inflation? The Central Bank is responsible with this aspect, is the one who needs to take care that the amount of money on the market to be proportional with the needs of the economy so we can have a small inflation.

2.3.

The competition of Samsung is Apple Inc.

TASK 3

3.1.

In the economic system fair competition does not exist. Please find below examples of economic market. The market can be:

Monopoly- Is the type of market where Samsung should be the only company offering a type of products. We don`t have this type of market in the UK because there are other companies that compete with Samsung and they have the same type of products as Samsung.

Monopsony - is the type of market where exists only one buyer for the products. We don`t have again this type of market in the UK because there are a lot of individual customers and a lot of shops that buy Samsung products.

Oligopoly- this type of market is the one in which there are a few big competitors and the decision of one of them can influence the other ones. For example, if another competitor in the UK market will try to sale a phone that has almost the same structure as one product of Samsung, but the price is lower, this decision can influence Samsung. But everything depends by the company`s customers that already tried Samsung product, the brand and the fact that Samsung is the company number in the market.

3.2.How market forces influence the organizational response.

PESTLE analysis shows us how the market forces influence in the organizational response:

Political- in my opinion, Samsung is the company that is prepared for every change of policy because has professional employees who helped the company be the best one on the market that is activating in. I am sure that has ones of the best managers that know to take the best decision for the well being of the company. Like back in the time when the company tried other industries and was a success, now proper decisions can be taken.

Economic- almost from the beginning, the founder of Samsung Group borrowed money from foreign companies so that can expand its activities in other industries. As I said above, Samsung Group demonstrates that has the economic strength only when we see that 20% from South Korea GDP is produced by this company.

Social- over the years, changes appeared in the structure of Samsung Group. Some of them are the fact that the company started to produce goods and services on different markets and the fact that the company had divided in groups, each group working in different market. The social factor can be included in the cultural factor, we saw above how the government helped Samsung Group with its decisions.

Technology- being a company that does technological product, is clear that we don`t need to worry for this aspect. Although we need to say that the company offers training period for its employees so that they know to work properly and safe.

Legislation- because Samsung activates also in the United Kingdom`s market, the company needs to follow the British law that has a lot of legal regulations in respect of the way how a company should work on its territory. Also Samsung needs to follow the law because like that has a good image, is a trusted company and like this shows to its employees that appreciates their work and dedication.

Environmental- Samsung is a company that produces goods or provides services in the UK as well. We should have in mind the appearance of environment pollution. Every company, regardless of its activity influences the environment. We said that the company also active in construction of ships industry. To produce the required pieces it takes factories that pollute the environment. To avoid this, the cars used in the factories mentioned must be some as powerful as pollution can be as low.

3.3.

For being able to speak of cultural environment we should make a distinctive between organizational culture and the social culture. Organizational culture refers to the culture of an organization mean while social culture refers to the culture of a company.

Organizational culture shows us company's way of being, its actions, credibility in the marketplace, people working in the company, its achievements. To be a company with a culture of integration must be very attentions regarding the decisions because not all people see decisions taken on how we see ourselves, we must have an ethics and a moral to be successful on this side. People often judge before understand a situation or a decision that was taken, it is very easy to do that and everybody knows it.

Samsung has demonstrated with the help of its actions that is a company in continuous development, it is a company working with professionals, it has not disappointed its customers in any way, the company fought for the place that owns at this moment in the market and in the industry, has struggled to stay on top and why not, the fight continued to climb in the rankings.

Above I mentioned also the social culture, this speaks about the culture of a country or a society. Here we do not speak about a company's culture, this culture is outside of the company and has nothing to do with the company. This type of culture refers to religion, socio-economic groups, Government policy and the list doesn't stop there.

TASK 4

4.1

Definition

If you want to give a definition of the international trade we say that is the place where the exchange of goods, capital and services meet within the territory of other countries.

With the help of the international trade, both the company and the customers gain. The company gains competitors and more profit in the market, the customers gain more products with best prices.

We have to admit that the globalization has a word to say and the countries are collaborating more with the help of the import and export of goods and services. The import and the export developed, new projects have made the emergence of multinational companies.

Samsung is a multinational company that has good products with good prices. Why has good prices? Because it makes the products in countries with big unemployment rate what means the production cost is low, people care about the job and they work professionally(this is one of the secret why multinational companies have good products on best prices).

4.2.

We need to show also that the difference between international trade and domestic trade is not very large, international trade has other costs like the cost of additional transport fees paid at borders, if it happens that the product to stay longer at the border, delays come as result and additional cost appears, knowing the legal system of the country with which it cooperates is necessary, example can the language and culture. This requires even more effort.

We mentioned the are global factors that influence in international trade, these factors are:

The Government- can action through: rules and laws, banning investment in a given country, trade sanctions, foreign relations, controlling the tariffs.

Organizational forms of international business- gives us information that has to do with: merger , joined ventures, import, export licenses.

The business environment in the host country-this involves: trade agreements (NAFTA, regional: I, APEC Asia-Pacific Economic Forum Corporation; bilaterally: mutual understanding between the two countries), currency values, language and culture, transportation costs.

4.3.

In 1958 the European Union was founded and also the Community law in the same time with it. The Community law represents the European Union`s legislation.

Below are some of the laws from the economic system:

-free movement of goods;

-free movement of services;

-free movement of capital;

-taxation;

- policy in the field of competition;

-company law;

-industrial policy;

-financial control;

-financial and budgetary provisions.

The directives are documents establish only mandatory targets for Member States, with their discretion how to achieve them. The directives apply to them directly only in the Member States, they are applied only after the expiry of the deadline for transposition.

Apart from their own law, the Member States of the EU need to obey also the EU law.

The European Union was founded to help the economic stability, globalization and a better grounding point in the field of taxation.

Samsung was allowed to go easier on the market in EU member countries and to open their own branches because this company is very serious, respects the law and its products are very good. The company also must comply with the legislation of industry were activates specified by the European Union`s law.