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P4 3 P2 BTEC Business Level 3 Unit 1 Exploring Business.
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P4 3 P2 BTEC Business Level 3 Unit 1 Exploring Business.
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BTEC Business Level 3 Narges AhmadiUnit 1: Exploring Business
Learning Aim C:
To examine the environment in which businesses operate.
Task 1 (P4) – Discuss the internal, external and competitive environment of a given
business
Task 2 (M3) - Assess the effects of the business environment on a given business
The Environment (P4)
In this section to examine the environment which businesses operate, I will be discussing
External, internal and competitive environment.
External Environment
External environmental variables are factors outside the business that can have an overall
effect on the performance of businesses. The PESTLE analysis entails for the external
environment. The PESTLE analysis accounts for Political, Economic, Social,
Technological, Legal, and Environmental.
, Internal Environment
The internal environment is a part of the business that influences the performance of
companies. This could include staff, executives and more. Corporate culture, CSR and ethics
are often considered in the internal setting.
Corporate culture refers to the attitudes and practices that decide how the personnel and
management of an organization communicate and perform external business transactions.
Corporate culture is always inferred, not explicitly specified, and evolves from the collective
characteristics of the people the organization hires organically over time. The culture of an
organization will be expressed in its dress code, working hours, workplace configuration,
employee compensation, turnover, hiring decisions, customer service, and customer loyalty.
Corporate social responsibility (CSR) is a business strategy of self-regulation that allows an
organization to be socially responsible for itself, its stakeholders and the public. Companies
should be mindful of the type of effect they have on all facets of society, including economic,
social and environmental aspects, by exercising corporate social responsibility, also called
corporate citizenship.
In relation to arguably contentious issues such as corporate governance, insider trading,
bribery, sexism, corporate social responsibility and fiduciary obligations, business ethics
relates to the enforcement of effective business policies and practices. Business ethics is
always guided by the law, but business ethics at other times offer a clear guideline that
corporations may choose to obey to achieve public acceptance.
Competitive Environment
The competitive environment applies to any company selling within a market the same or
similar goods. John Lewis & Partners and Tesco, for instance, are Marks and Spencer's rivals.
,External Environment (M&S)
The external environment of M&S can be addressed by using PESTLE, I will be using all 6
factors to assess Marks and Spencer.
1) Political factors (P4)
The two political factors affect Marks and Spencer are Corporation tax and the National
wage.
1.1 Corporation Tax. (P4)
A corporate tax is a levy on a company's income. Taxes are charged on the net income of a
company, which is income minus the cost of products sold, expenditures of general and
administration, sales and marketing, research and growth, depreciation, and other operating
costs.
The
UK's
income
tax remains at 19 percent. Corporate tax was strong in 2010, sitting at 28 percent. This meant
corporations were losing more money, and because of the corporate tax rates, others were
unable to keep their profits steady. Investors were motivated by the corporate tax to invest in
firms.
After 2010, the income tax was dropped to help corporations recover after the recession of
2008/9 and to get their revenues back up. There have been a lot of results since the fall in the
corporate tax rate. Company is making money again, policy reforms have been made that
raise sales, and loss limits have been implemented.
, The Labour Party reveals how it aims to raise corporate tax to 26 percent in 2019. In their
platform, one of their proposals is to raise income tax to 26pc. For companies that produce an
annual turnover of under £ 300,000, their price would be 21pc.
Assessment on the effect on M&S (M3)
Today, the reform in corporate tax could have a much more positive effect on M&S than on
the Labour Party. The corporate rate currently stands at 19%, which is relatively low,
meaning that now Marks and Spencer's will make more profit than they were when the
corporation tax was higher. However, they will boost the corporate tax rate if the Labour
Party wins, and M&S can make less profit since they will be taxed higher.
Company typically measures its performance through sales and profit. Corporation tax rates
shifting overtime M&S may be affected either positively or negatively. If tax taxes raise the
total income of companies, which means that businesses will need to increase their revenue,
they can do so by providing more discounts or encouraging more. Businesses would also
have to consider cutting expenses by firing workers. By attracting more customers by
providing more sales deals, they would need to boost their sales. Both of these can affect the
overall benefit of Marks and Spencer.
As a consequence of the global pandemic, the Government has expended an additional GBP
200 billion on the economy and the latest lockdown would add another £40 billion. The
government is paying for this by using the money they have earned from taxation. These
taxes shall include income tax and corporate tax. They can however, earn more tax from
corporate tax. Therefore, income tax could be high to ensure that the government has enough
money to cover unforeseen costs.
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