Contemporary business environment

Lesson 1

Management of an organization has the responsibility for both establishing and

protecting the overarching purpose, Fundamental values and ethical principles which
govern the actives of the organisation referred as VISION, MISSION, AND GOALS.

VISION: What the organisation aspires to become in the future

MISSION: Reflects the organisations past and present by stating why the organization
exits and what role it plays in society

GOALS: Specific aims to pursue the vision and mission

legal structures

5 main types (each have various tax/liability implications

• Sole trader
• Partnership
• LLP (limited liability partnership)
• Limited company
• Community interest company (CIP)

1. SOLE TRADER

Being a sole trader means you're the boss of your own business, calling all the shots and
enjoying all the profits. It's like being the captain of your own ship in the business world.
This setup oVers simplicity and flexibility, but it also has limitations. Your growth
potential is restricted by your personal finances, and you're personally liable for any
losses your business incurs. So, while you have control, it's a risky game where your
personal assets are on the line.

2. Partnership
A partnership is a collaborative business where owners pool resources and share
profits and responsibilities. Multiple partners can bring diverse skills, enhancing the
business's performance. However, partners face unlimited liability, meaning they're
personally responsible for all business debts. If the business struggles, creditors
can target any partner's personal assets, making it a risky venture.

3. LLP ( limited liability partnership)

In partnerships, there are limited partners who invest but don't engage in daily
operations; their liability is capped at their investment. A general partner manages
the business, sharing similar liabilities to a sole proprietor. Limited liability shields
partners' personal assets if the business fails. This structure is common in
professions such as law and accounting, forming limited liability partnerships
(LLPs).

4. Limited company

A limited company, registered at Companies House, is a separate legal entity from

its owners. It can conduct contracts, manage finances, and is responsible for its
actions and debts. Owners enjoy limited liability, liable only for debts up to their
investments or agreed guarantees. Limited companies can be "limited by shares" or
"limited by guarantee," with one person serving as both owner and director. "Limited
by shares" is preferred for profit-making businesses, ensuring personal financial
protection and profit retention, while "limited by guarantee" is common for non-
profits. Limited liability shields owners' personal assets, limiting risk to their
investments or guarantees, a key benefit of operating as a limited company.

5. CIP (community interest company)

A Community Interest Company (CIC) is a special kind of company made by the UK

government in 2005 for businesses wanting to help the public. To start a CIC, you
need to explain your goals in a "community interest statement," make sure your
assets are used only for social good with an "asset lock," and adopt rules, usually
from templates the CIC regulator provides. You have to get approval from the CIC
regulator to become an oVicial CIC.
 Stakeholders

A stakeholder can be defined as ‘any person or party that has an interest in, or
is aBected by, the activities of an organisation, however strong or weak that
interest may be.

• Stakeholders, as you can see, can be either inside or outside an organization.

Internal stakeholders are those who have a direct connection to the company,
like employees, owners, or investors.
• On the other hand, external stakeholders are not directly part of the company
but are impacted by its decisions and results. This group includes suppliers,
creditors, and various public groups.

Are stakeholders and shareholders the same: While shareholders are indeed a
significant type of stakeholder, they are not the only ones. Other stakeholders
encompass employees, customers, suppliers, governments, and the public. In recent
times, there's been a shift towards considering a broader range of individuals and
groups as stakeholders in a business.

Growth and developments of transnational, international and global

organisations

Globalisation has resulted in many businesses setting up or buying operations in

other countries.

Multinational corporations (MNCs) or transnational corporations (TNCs) are companies

that operate in multiple countries. A prime example is McDonald’s, with over 34,000
restaurants in 119 countries. These corporations play a pivotal role in globalization,
driving it forward by shifting manufacturing to countries with lower labor costs to boost
profits. For instance, automotive giants like Volkswagen, Toyota, Nissan, and General
Motors have established bases in Mexico, leveraging its manufacturing advantages and
exporting vehicles within the NAFTA free trade area. This trend is significant, with the top
500 TNCs accounting for nearly 70% of global trade.

TRANSACTONAL: In a transnational setup, you organize your business across diVerent

areas like where you operate, what you sell, and how you operate. This helps you
manage various business tasks at once. You can customize this structure to suit your
needs, even mixing diVerent models together. For example, one part of your company
might be grouped by location while another focuses on products. This way, you can
better handle diVerent business needs eViciently.

GLOBAL: Becoming a global company goes beyond just having customers worldwide. It
involves actively expanding your presence into other countries and immersing yourself
in their markets. Here's a breakdown to help you understand better:

Understanding Global Company: A global company operates beyond its home country,
engaging in business activities across borders. While few companies have a presence in
every major country, the definition of a global company should be flexible to include
those operating in multiple countries.

Expanding Beyond Borders: To become a global company, you need to expand into at
least one additional country apart from where you originated. This requires significant
research to identify suitable markets and strategies for introduction.

Investing in Expansion: Successful expansion entails more than just shipping products
internationally. It involves sending employees to engage with customers face-to-face,
understand local dynamics, and establish a strong presence in the new market.

Continuous Growth: Once established in one country, global companies often seek
opportunities in other markets, gradually expanding their reach worldwide. This
incremental approach allows them to grow sustainably and adapt to diverse markets.

Long-Term Commitment: Building a global presence is a journey that requires

dedication and continuous eVort. It's not just about selling products internationally but
also about understanding and integrating into diVerent cultures and markets.

In summary, becoming a global company involves proactive expansion into new

markets, investing in research and local engagement, and a commitment to long-term
growth and adaptation.

INTERNATIONAL:
International organizations are established through formal political agreements
between member countries, recognized by law across their member states. They serve
various functions, such as collecting information, providing services, facilitating
negotiations, and resolving disputes. These organizations, like the World Health
Organization or the European Union, oVer platforms for states to collaborate towards
shared goals, fostering cooperative behavior. Additionally, they serve individual states
by legitimizing actions and constraining behavior, often used as instruments of foreign
policy.
Businesses have only begun to be referred to as global fairly recently. However, the
idea of doing business globally and the characteristics of a global corporation aren’t
all that new.

For example:

• Consider Coca-Cola, which, in 1886, was struggling to get by. By World War II,
Coca-Cola was 50 years old and had proudly maintained its price at 5 cents to
enable many people to aVord the beverage. The company would sell its drink to
US soldiers stationed all over the world for 5 cents a bottle, but no more.
• Coca-Cola now sells its beverages in more than 200 countries. Not only does the
Coca-Cola Company sell its popular fizzy drinks such as Coke, Fanta, and Sprite,
it also sells some 3,800 other products, including soy-based beverages that have
been enriched with vitamins. The Coca-Cola Company also sells juices, iced
teas, bottled water and a lot more.
• One of the reasons why Coca-Cola has seen such monumental success in
nearly every country it has established itself is that it never has a standardised
view of all countries. Instead, each country is considered on an individual basis.
The company will make sure it only provides products that fit the local
community’s tastes and culture.