Introduction to Organization Functions

Organization functions are influenced by external and internal factors. It’s working and operations are affected with fluctuations and changes occurring in outside scenario. Each business entity caters to consolidate larger stream of customers by providing them with optimum level of services. Turbulence in market demands that organization is well versed with the way to handle the effect of these factors by the use of effective strategies and methods. Political factors such as policies framed by Government, economic situations, legal aspects, social structure and technological advancements affects its working are referred as external factors. Further, internal factors such as customer preferences, employees related issues; coordination with suppliers, mergers and acquisitions plays a vital role in framing policies and strategies. Report is prepared to elucidate the overall scenario of the organization. For that purpose, British Airways is taken into account. Report throws light on the operation of organization in order to accomplish its vision, mission and objectives.

TASK 1

1.1 Purposes of organizations

On the basis of ownership and vision as well as mission statements, purposes of different organization vary.

Iceland Supermarkets

Type of organization: Private company

Iceland supermarket is the British supermarket chain that sells frozen food, dry goods, diary and other non-frozen goods (Aula, 2010). It is a privately owned company head-quartered at Wales having significant share of 1.8% in food market. Private company functions under the sole proprietorship or in partnership. Their aim widen customer base and maximizes profitability by providing good customer service and quality products.

KFC

Type of organization: Subsidiary company

Kentucky fried chicken is the largest fast food fried chicken chain in the world. It is the subsidiary company of Yum brand. Subsidiary of an organization function under the control of parent company to comply with the taxation, regulation and liability. Aim of KFC is to provide quality fast food by creating fast, friendly environment keeping the prices economical (Aterido, Hallward-Driemeier and Pagés, 2011).

Transport for London (TFL)

Type of organization: Public Body

Transport for London is a government body that manages traffic system of London and frames strategies to improve structure to provide better passage to countrymen (Aula, 2010). Along with Government and other legislative bodies there are many organization which functions under the control of government with any shareholders to improve living conditions of people. Powers of these organizations are defined by the act of parliament. They are created to provide public services in different sectors.

Cancer Research

Type of organization: Voluntary organization

Cancer research is a voluntary organization which works for prevention, diagnosis, treatment and cure. It is a charitable organization in which research activities are carried out at all the centers throughout nation. It is world's largest independent cancer research institute that caters in reducing the number of deaths of cancer patients by providing information about it and running campaigns (Björklund, 2011). Charitable organizations are funded by public, government bodies or private organizations.

1.2 Extent to which organization meets objectives of stakeholders

No organization functions in isolation. It works under influence of different stakeholders. Stakeholders are those entities which are directly or in directly linked with the working of organization. Some way or the other way they support management of organization to accomplish their goals and achieve short term or long term objectives. Major stakeholders that significantly affect working and strategic formulation are their customers, employees and staff members, their suppliers and Government bodies.

Customers: Iceland supermarket since its establishment has been committed to provide the best quality of food to their customers. They always ensure safe, healthy and ethically sourced food (Budhwar and Debrah, 2013). Realizing the importance of healthy food, organization always focuses on freshness along with the health value. Pioneered the elimination of preservatives and artificial colors in food to retain the nutritional value along with the flavor. All the components of operations are taken care such as the working areas of harvesting, transport and storage is handled by the expertise and specialist in the field who are endowed with thorough knowledge of work. Freezing techniques are used which helps in capturing tastes and texture along with the levels of essential requirements in body such as vitamins and other minerals. Further, at the back of pack, the list of ingredients and nutritional value is labeled.

Employees: Employees are the central part in the organization. Iceland supermarket plc is the large family of employees in which it is believed that working culture has to be healthy and resourceful in all respect (Chavis, Klapper and Love, 2011). For that purpose sincere efforts are been made. There is healthy communication between employees at different levels. Subordinates are delegated their duties and responsibilities effectively realizing their strengths, management seek opinions and views in many areas and responded back and also their performances is recognized and rewarded on the frequent basis.

Suppliers: Organization sells wide range of products in different sections such as frozen vegetables, fish and sea food, meat and poultry and other many non frozen and dry products. For that purpose, organization is consolidated with larger number of suppliers. It believes in sourcing the food from the authentic and licensed source of supply. Only recognized sources are kept into consideration. Among the three important component, harvest, storage and storage. Transport and harvest plays very vital role. While harvesting, special care is taken. Further, the transport section is always tried to make punctual and precise. To assure freshness, punctuality and accuracy is prerequisite.

Government: Government and other legislative bodies keep a check on the working and functioning of the organization. Various rules and regulations are laid related to their field of working (Craig and Campbell, 2012). Iceland supermarkets are working in the retail industry which is having significant share in GDP. Realizing the importance and wide domain of operations, some rules and formats have been imposed to monitor it. Products sold by the organization are checked on the account of retention level of essential minerals and vitamins in food, the authenticity of sources from where it is harvested and also complying all laws and legal aspects such as it is assessed that such as fish and other sea foods are caught withing the sustainable limits. Further, it deals in the meat and other poultry products, it assesses that organization adheres to strict animal welfare policy.

1.3 Various responsibilities of an organization

Being an established organization, it complies with all the responsibilities in different aspects towards its linkages. The extent of responsibilities abides by the organization is assessed on the basis of carol's pyramid (Gecevska and et.al, 2010).

Economic responsibility: Business entities caters to maximize the domain of working by expanding its operations. Its fundamental aim is to maximize the customers base by increasing sales. Sales expansion leads to the escalation of profits and revenue generation (Hamilton and Webster, 2015). This organization has different shareholders linked to it and it intends to give maximum returns to them. By adopting several methods and strategies such as cost minimization, profit maximization, cost leadership and many other as per their suitability, enhances company's revenue generation and profitability to comply with economic responsibility.

Legal responsibilities: It states that for any organization it is very essential to abide all the laws and regulations imposed by different authorities that keeps a check on various aspects. Laws are imposed related to protection of consumer, employees related issues, supply chain management related laws, regulations imposed in reference to the environment and other related. In respect to the protection of consumer, suitable prices and fares are charged for the products and quality products are offered (Hill and Hernández-Requejo, 2011).

Ethical responsibilities: It refers to the avoidance of questionable practices and minimizing the harm to stakeholders. Iceland supermarket fulfill all the contractual obligations ratified with the traders and suppliers. It is committed to the principles of sustainability. Its focus is always on the elimination of artificial colors and removing artificial trans fats along with the prohibition in the use of preservatives. In-spite of having a part in sales of alcohol it keeps a check through CCTV against under age alcohol browsing. It ensures animal welfare and care (Iskanius, Page and Anbuudayasankar, 2010). Further, Iceland supermarket comply with their ethical responsibilities by labeling composition and ingredients used in their meals.

Philanthropic responsibilities: Iceland supermarket has been engaged in philanthropic activities by organizing many events such as establishment of Iceland foods charitable foundation, partnership with Alzheimer's research, supporting children food trust, national youth advocacy service, when you wish upon a star and many more. Iceland supermarket is collaborated with several organizations to bring awareness about the health and fitness, minimum use of preservatives and artificial colors, campaigning about some health related issues and to suggest methods to resolve them.

TASK 2

2.1 Different types of economic systems

The economic system involves those institutions which in an organized way provide means through which a state or nation allocates its resources and assign goods and services in the national community. Basically, it deals with the three main question: What to produce, how to produce and for whom to produce. The following are different economic systems present:

Transition Economy- The traditional economies incorporate with the historic strength of the social customs. It is the one in which the new generation retains the economic positions of its parents and grandparents. As the economic system are not dynamic more experimental strategies denied which hinders retail business of leading Iceland Company. Countries like South America, Africa and Asia are examples of some traditional economies (Björklund, 2011).

Command Economy- All economic activities are dealt by its own government refers to command economy. Command economies are less flexible than other economic systems leading slow changing consumer purchasing patterns. Though this economy is not favorable for Iceland supermarket to function because of the rigidity and lack of opportunities to explode. Cuba is considered among the government directed economy i.e, command economic system.

Free Market Economy- Market economies determine resource allocation and distribution of goods on the basis of unshackled interactions of companies and individuals in the market area. The market trends and products generate the demand of goods to be produced (Hamilton and Webster, 2015). Though no truly free market economy subsist in the world therefore Iceland supermarket too, partially adopts this economy pattern. If Iceland supermarket shapes into this economy, it has maximum powers to take decision with reference to pricing and output creation. With the least amount of involvement of Government, mentioned organization is entitled to make chages and take decisions.

Mixed Economy- The combination of market and command economy results in mixed economy. Theoretically, the mixed economy runs with the right proportion of government controls and market forces. Today the United Kingdom is an eminent follower of this type of economy. Also, it is a plausible economic system for Iceland supermarket, the demand and supply forces work on market forces and limited government control enhances the process.

2.2 Impact of fiscal and monetary policy on organization

Fiscal Policy- The economic decisions taken by the government to control and stabilize a country's economy are known as fiscal policies. Now, following are the impact of fiscal policies over the Iceland supermarket:

Under this policy, high taxes lowers consumers net income which in turn limits their expenditures (Hill and Hernández-Requejo, 2011). While low tax leads to more money in the hands of Iceland customers to spend retail offers of the company. When the fiscal policies results in higher interest rates for the company it attracts foreign investors and gives more purchasing power to retailers. The government introduction to tax credits or incentives for business expansion or to hire and train employees automatically boosts the confidence opening of new outlets for the company. Lastly, competitiveness is another element which effects Iceland strategies in order to increase the sales the cost cuts or sales are to be planned at intervals to retain the consumers' preference for the retail products of Iceland (Iyer and Henderson, 2012).

Monetary Policy- It is the policy to promote price stability, full employment and economic growth in the nation's money supply. If inflation is too high the monetary authority sell bonds in the open market and when unemployment raises it buys bonds and lower the discount rate with its reserve ratio. The impact of these policies on eminent supermarket company Iceland is as follows:

Monetary policies are framed and governed by the Monetary Policy Committee. According to this policy, changes in short- term interest rates influences long-term interest rates. Low the interest rates lower will be the interest expenses for businesses and high disposable for consumers resulting higher business profits. On the contrary, high rates have opposite impact on the company-higher interest rates, mow sales and lower profits. Thus, fiscal and monetary policy changes affect the Iceland directly or indirectly along with management execution and competitive factors.

2.3 Impact of competition policy and other regulatory mechanism on Iceland Supermarket

In order to promote competition and make the markets a better place to business the competition policies are framed. It improves efficiency in individual market and intensify competitiveness of businesses. Some tools and techniques adopted in the competition policies of Iceland supermarkets are -deregulation, privatization, tough laws on anti-competitive behavior and reduction in import controls (Moutinho, 2011). Market liberalization is held by the authorities to suppress the enforcement of monopolistic approach in the industry. Investigations of mergers and take-overs between Iceland and other firms are checked frequently. Various state aid measures are taken by the company to ensure that such measures do not misrepresent the level of competition in the single market. There are strong laws and penalties against cases evolving price fixing or collusion.

While, the regulatory bodies oversee how a market works and the output obtained for producers and consumers. The main competition regulatory bodies which monitors the undertakings carried out by the given supermarket are Competition and Markets Authority(CMA), European Union Competition Commission, Office of Fair trading(OFT), Business Innovation and Skills(BIS). Companies act policy function to prevent the unfair trade practices. It also checks if the company is hegemony in the market due to having large share in market. Iceland supermarket abides all the norms to bring fair trade and promote healthy competition. Here OFT aims at making supermarket accessible for the consumers, fair competition among its rivalries and prohibiting unfair practices like scams and cartels if any performed by the company (Welford, 2013). While, CMA investigates mergers made by the company and other queries related to it. Food act policy framed with reference to the protection of consumer that abides organization to bring ethically sourced food in market and make the fares and charges feasible. Comply with this policy Iceland supermarket source raw material and food from licensed suppliers and label all the ingredients and composition on the back of product which brings complete transparency with the consumers. The Business Innovation and Skills(BIS) enables and makes sure to built healthy competition between Iceland and it competitors to benefit the customers effectively. The above mentioned regulators therefore are appointed to provide proper legally equipped business environment for the company. Moreover, all these efforts provide a consumer friendly conditions for Iceland chain of retail outlets.

All these organizations impacts the working and strategy formulation of Iceland supermarkets in the area of working.

TASK 3

3.1 Impact of market structures on pricing and output decisions

Along with the external and internal factors, there are many factors that impact the working and functioning of the organization. One such crucial factor is the market structure in which it is operating (Iyer and Henderson, 2012). It has the direct influence on the pricing and output decisions undertaken by it. Different market structure posses different characteristics, hence influences vary.
Perfect competition: Market system in which there are large number of buyers and sellers and whose prices and outputs are decided by the demand and supply forces of the products sold by the organization, is referred to as the perfect competition. In this type of structure, organization has no control in decision making (Lin, Vassar and Clark, 2011). For instance Iceland supermarket working in perfect competition, is not entitled to decide its fares and charges of the products it sells.

Monopoly: Market structure in which there is only one seller and large number buyers is termed as the monopoly. In this seller has large amount of power to decide the prices and output quantum of the products offered by it. In this situation seller keeps it profits margin high due to lack of competition. Though this type of market do not exist as working in an economy brings with it certain regulations (Moutinho, 2011).

Monopolistic competition: With many sellers and large number of buyers, monopolistic market structure has the environment of fierce competition. Prices of the products offered by different organization vary with the difference in nature and additional features added by them such as if Iceland supermarkets shapes into the monopolistic competition it caters to provide the distinguished products with varied features and contents. As keeping health perspective in mind, organization has pioneered the elimination of artificial colors and preservatives in food make it different.

3.2 Way in which market forces shape Iceland supermarket responses

Business entity operating in the turbulence in market, significantly gets affected by the market forces prevailing in the outside environment. It is very essential for an organization to have a complete knowledge about the changes and fluctuations occurring in environment and need to be endowed with the ways to handle them (Nickels, McHugh and McHugh, 2011).

Supply and demand: Market forces refers to the forces of demand and supply that represents the influence of buyers and sellers on the price and quantity of the goods and services sold by the organizations. These forces influence the strategic management to decide the competitive prices to consolidate larger number of customers with them. When there are many fluctuations in markets it trickles down to the changes in pricing structure. Further, interest rates and bank rates in market also affect it. When there are changes in interest rates it influences the financial health by attracting or contracting investments.

Elasticity of demand: Elasticity of demand refers to the changes in the demand of consumers with the changes in prices. Organization has to changes it pricing structure due to many reasons such as changes in monetary policy of the imposition of new law. Iceland supermarket have its operation in different areas (Porter and Rivkin, 2012). In keep its price competitive in the segment where elasticity of demand is high whereas where elasticity of demand is low, prices are kept high.

Economies of scale: When an organization is operating in different fields, it imparts significant impact on other areas of working. Economies of scale refers to the positive impact. Iceland supermarkets sells food in different sections and areas hence, the profits and revenue generation in one area leads to the use of that finance in research and development in other segment. For instance, it is essential to come up with better freezing techniques keep it fresh along with sealing taste, texture and nutrition (Siewiorek and et.al., 2012).

Customer perception and action: Working in a customer oriented industry makes an organization to come up with the product and service with respect to the need and preferences of customers. Special care is taken about the changing needs and choices. As in the recent time, due to increasing health awareness people are very conscious about there diets hence organization brings wide range of healthy options in products. Plus harmful elements such as preservatives, artificial colors and Trans fats are eliminated from the products.

3.3 Impact of business and cultural environment

Business and cultural environment shapes the strategic formulation of organization. It encompasses into it all the segments such as the political scenario prevailing in the country. When there is unrest in the economy it affects the smooth execution of strategies and hinders the growth. Economic situation affects the profitability and sales structure. When country experiences progress, organization also experience development with the increase in sales and revenue generation (Smallbone and et.al., 2010). Inflation makes organization to increase the prices and fares of products and services. Social environment refers to the views and opinions of country in which it is operation. With the change in perception and demand organization also make changes in the features of products it provides. Technological advancements in country leads to the use of better technology in operations and high tech equipment. It makes the working precise and more effective. Further, legal aspects of country brings changes as with the imposition of any law, organization has to alter or make changes such as government imposes any law with respect to the value content of any nutrition in food, Iceland supermarket alters its techniques to abide the law.

TASK 4

4.1 Significance of International trade

With the increase in the Globalization and internationalization, boundaries between countries and entities has been reduced to the great extent. It accrues lucrative results to the organization in different aspects (Solomon and et.al, 2014).

Market Expansion: As organization introduces its products in different countries, it markets area gets expanded. With the expansion of the stream of customers, sales get escalated to the significant extent. It considerably benefits the organization by revenue generation and profit ratio.

Brand awareness: With the introduction of products across the border, and establishing centers and ventures in different countries increases the awareness among people about the products (Tayur, Ganeshan and Magazine, 2012). With the expansion in the contacts and relational constructs with trading partners of different nation, Iceland supermarket get recognized in foreign market as well.

Better technology: Each country is endowed with different technology and infrastructure. Widening the working area and domain of operations enhances the network and connectivity of organization in the considerable way. It leads to the introduction of better technology and techniques and methods to process the methods. Such as Iceland supermarket's opening of its venture in island countries leads to the adoption of last technology in sea caught of fish and other ocean foods.

Minimize risk of failure: When product and services in different segments of markets, it reduces the risk of failure. Different strategies are adopted in varied market segments. As per the suitability strategies are adopted. Due to the increased domain of working organization experiences low competition. There are certain areas where it has competitive edge over the working (Teece, 2010).

4.2 Impact of global factors

At the time of working in different countries, organization encounter different situation in varied areas. Internationalization leads to the growth along with increased engagement with the wide range of factors. These factors affect all the dimension of company.

Economic situation: Biggest factor that has the impact on the working of origination is the prevailing economic situation in markets of different countries where it has its operations. As different inflation rates, bank rates and other macroeconomic factors exist in global market, Iceland has to comply with all this situation and make strategies accordingly to accrue maximum benefits and advantages. Different tax regimes and tariffs in countries affect the pricing structure (Welford, 2013).

Protectionism: Protectionism refers to the steps and methods adopted by organization such as WTO in order to protect the growing trade entities. Emerging economies such as India, Brazil, China and Japan are becoming the biggest threat for the organizations from other countries willing to enter the Global market. With the enhanced protection given to these countries, competitions has become fierce in nature.

International organizations: Many organization functions to regulate the proceedings and working or organization so that they comply with the trade and business laws. They ensure that trade practices of these organizations are legal in nature. Further, organizations such as World bank and IMF helps in the growth and development of organization with the increased investment (Wild, Wild and Han, 2014).

Trading Blocs: Trading blocs are formed to enhance the trade between member countries. Similar economic situation, employment conditions, exchange rates encourages trade agreements between countries and entities which trickles down its benefits to organization (Xue, Shen and Ren, 2010).

4.3 Impact of European Union policies

European union is an international organization that works to improve the situation and condition of countries in different aspects such as economic, social, technological, environmental and legal. For that purpose it has laid rules and regulation for every organization working in their related fields.Iceland supermarkets working in the economy has to abide all the laws. Two of these policies are mentioned below.

Consumer protection: It refers to the pricing of products as per the quality provided.

Supply chain management: Employees working in the logistic section have the significant share in total employees number working. In order to maintain the working conditions and situation various laws have been laid such as ensuring working condition and their protection (Yu and Ramanathan, 2012).

Food department: Organization sells frozen food and items in varied segments. EU has laid rules and regulations with respect to the maintaining of nutritional value of food frozen and sealing the required freshness and essential minerals and vitamins.

Conclusion

Report has been prepared to throw light on the operation of organization under the influence of external and internal factors. This report is on the analysis of Iceland supermarket. Working in different location, management build the effective strategies and become successful in accrue benefits. It complies with all the laws and regulations laid by Government and other legislative bodies. Further, it fulfills its responsibilities in every area such as economic, philanthropic, legal and ethical. It has its engagement with charitable trusts complying with responsibility towards community. It always caters to provide quality products and good customer services. With no use of harmful elements and preservatives in food and using better freezing techniques, it ensures high quality food.

References

  • Aterido, R., Hallward-Driemeier, M. and Pagés, C., 2011. Big constraints to small firms’ growth? Business environment and employment growth across firms. Economic Development and Cultural Change.
  • Aula, P., 2010. Social media, reputation risk and ambient publicity management. Strategy & Leadership
  • Björklund, M., 2011. Influence from the business environment on environmental purchasing—Drivers and hinders of purchasing green transportation services. Journal of Purchasing and Supply Management.
  • Budhwar, P.S. and Debrah, Y.A., 2013. Human resource management in developing countries. Routledge.
  • Chavis, L.W., Klapper, L.F. and Love, I., 2011. The impact of the business environment on young firm financing. The world bank economic review.

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