Business Organization and Environments in the Global Context, Essay Example

Published: 2022-04-26
Business Organization and Environments in the Global Context, Essay Example
Type of paper:  Report
Categories: Globalization Business
Pages: 7
Wordcount: 1824 words
16 min read

A business organization is referred to as an entity as a formation that aims at running commercial enterprises. Organizations of this nature are forecast based on the systems of the laws that govern contracts and exchange of property and incorporation. Business organizations are established in different environments are as such affected by the context in which they thrive. An enterprise surrounding is the sum of ecosystem that impacts performance of the business entity.

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The environment for an individual business organization could either be internal or external. The external environment precipitates to further classification as either local environment or the global environment. The local environment involves the immediate factors surrounding a business that affect the operation of the business. These factors, due to the closeness to the business organization, they have a direct influence on the operations of the business. The global business environment, on the other hand, could be defined as the business environment that cuts across different countries with factors that are exogenous, to that of local or home environment (Gordon, Pohl and Bouchard, 2014). The conventional method of categorizing the business depends on the relation of the external condition and internal surroundings. The purpose of the study is to identify how the global environment affects a business organization. Under the global environment, the major focus will be on the political influence to the performance of the business organization. The case study will form the basis of the British Petroleum company.

The British Petroleum company, famously known as BP is known to be among the top five largest oil companies in the world and the largest corporation in the United Kingdom. The founders of the company in the Middle East oil industry made a discovery of the oil deposits in Iran before the onset of the First World War (Wilkins and Bamberg, 1995). This later grew to actively participate in other phases of the industry from exploration to marketing. The British Petroleum BP is famous for the majority of the world's population from the vast service stations currently situated in different parts of the world, totaling to approximately 16,400 in number. BP has also shown a great inclination towards the exploration of oil which contributes to 13 percent of the revenue as well production of chemicals and plastics.

BP Plc. was initially referred to as the Anglo-Persian company, a name that later changed to the Anglo-Iranian Oil Company 1935. This name was finally turned to the British Petroleum Company in 1954 after different partner companies reached a consensus on the ownership of the company (BP, 2017). The current shareholdings of the company stand at 40 percent for the united kingdom, 39 percent for the United States, and the remaining 21 percent spread throughout Europe and the rest of the world. The company has its headquarters based in London, while its operations cut across all continents.

British Petroleum established different oil fields and created refineries in various countries across the globe, and has consolidated genuine premiums in regions like Alaska around the Prudhoe Bay, and the North Sea of the United Kingdom. BP and related associations combine to participate in the discovery, delivery, refinement, transportation, and movement of oil and vaporous oil and the making of chemicals, plastics, and designed strands. From the above factors, that infers that BP opens its decisions to overcome oil spill costs (Harrell, 2016). They can strengthen their cash related resources from current bore oil and create for new powers, for instance, daylight based essentialness in light of the way that for the further examples in the creating business area.

Structure of ownership of the company: Accessed from IMF database 2017.

The ownership structure of BP is best analyzed using the Porters analysis structure. Through the analysis of the shareholder structure, it is possible to identify, comprehend and give the deserved priority to the needs of the company's stakeholders (Jackson, 2006). The analysis illustrates the method applied to identifying the entities that influence the company as well as being influenced by the company. Such outcome will also shade some light on how the different units of the organization engage in the formulation of strategies and the way in which the relations between the units and the effective management of the company.

The four areas of the structure recognize four different types of shareholders within a business. The shareholders categorized at the upper quadrants are more enthusiastic about the performance of the company; however, they hold varied levels of power in the organization (Boyd, 2016). 'Players' pick up from higher power which impacts the affiliation's philosophy, while 'Subjects' still have still a high interest, yet a lower level of effect in affecting the methods. 'Setting setters' are those substances with high control over the inevitable destiny of the affiliation, especially to the extent affecting the setting in which future strategies will work, while 'Gathering' is the quadrant for the people who have low interest and have no power in impacting procedures. Financial specialists are central in immense ventures, for instance, broad oil associations and inside British Petroleum they accept a focal part since they contribute phenomenal measures of capital, which is essential to set up and work a business (Boyd, 2016). In like manner, they get their reward from their offer of the advantages as benefits.

British Petroleum boasts of more than 80,000 workers over the world. As partners, representatives encounter influence by the organization exhibitions. In addition, they impact the manner by which the organization works (Abdelrehim, Maltby,. & Toms, 2015 138). The degree of representatives' sense of duty regarding brilliance and wellbeing and security is a major factor in keeping up British Petroleum's unmistakable position in the area. In addition, resistance can bring about lost renown and a decrease in help from kindred representatives.

Use of PESTEL analysis model

PESTEL analysis, which is an acronym for political, economic, social, technological, environmental and legal environmental factors, is an analytical tool that is used in the marketing sector to carry out an analysis and monitoring of the macro-environment factors that impact business organizations as shown below

The results from the PESTEL analysis facilitate the identification of the strengths and weaknesses of the organization through application of SWOT analysis.

SWOT analysis is one of the key tools in the assessment of the performance of business organizations in the market. Such factors contribute to the emergence of tools that brings out the strengths, weaknesses, opportunities and the threats for an organization in the environment in which it operates (Khan et al., 2015, p. 956). In this paper the main company under scrutiny is the British petroleum company. BP is known as one of the largest oil companies all continents of the word. Bp is a company that has grown over the years spreading its roots of operation in different countries including Denmark, having established its operation process in the 1920s. The SWOT analysis of the BP Company in this paper will mainly focus on the external factors that affect the operation of BP Company and major focus is on the political factors which are known to be global (Bertozzi et al., 2016, P.65).

Political factors

These are factors that point out how and to what extent the government gets involved in the economy of a business organization. The manifestation of government policies enables the state determines economic nature and stability of the currency attributed to politics in the global markets, foreign trade policies, tax policies, tax laws and environmental law (Chaplinsky, 2015, p. 10). All these factors either directly or indirectly have an influence on the operation of any business entity and thus, for effective performance, there is a need for the business organizations to respond accordingly the prevailing and the future legislative, and adjust to the policies of marketing. Political factors play a major role in any organizations business expansion in new markets. The political condition of the country, region or the market has direct effect on the company's outcome there (Kuhns, 2018, p. 55). This is evident in the UK government policies which are dynamic in nature. One of the recent changes in the UK government policies was the increase in the import tax by a 3 percent increment. This had a great impact on the offshore oil industry in the UK. An example of the companies that were affected by the increment was the North Sea industry which as result has been facing many challenges (Grabowski et al., 2017, pp. 7-10).

Analysis of the Business Environment in Denmark

Denmark has been ranked among the most open European country to invest in because of the effective business environment (Bertozzi et al., 2016, P.65). Denmark comes third after New Zealand and Singapore. The first favorable factor is the prevailing political environment. Political elements refer to the government regulations that affect business operations positively or negatively (Brink, 2017). These factors may include current and impending legislation, changes in political stability, protection and decimation laws, and labor laws among others (De Villa, 2015, p. 422). These factors have both direct and indirect impact on the business operations. Political considerations have made the business environment in Denmark to be friendly hence attracting more investments.

A stable currency coupled with reduced interest rates and competitive tax arrangements determines the growth of the business organizations (Mordhorst, 2014, p. 120) characterized Denmark. Other than competing tax arrangements, Danish has favorable laws which promote upstream oil and gas activities. The rules have resulted in simplified licensing procedure hence attracting many entrepreneurs to venture in this field (Ziegler, et al., 2018, p. 1265). Denmark is also more attractive to business people due to its political stability. Political stability is critical especially in the case of business such as Bp, which rate operating on a global scale. Political instability results in a hostile business environment characterized by looting and riots that negatively affects the business operations. The employment laws of the country also help in setting the standard to be met when it comes to workforce recruitment (Hohenthal et al., 2014, p. 66). The real freedom of contract on the Danish labor market makes it favorable for international companies to employ both local and foreign employees. The pay wage and working hours are individually regulated via individual contracts, collective trade union agreements, and not statute (Brown & Knudsen, 2015, p. 182). The initiative was taken by the Danish government to promote and respect transparency in the global value chain also makes the county to be favorable to business entrepreneurs.

Economic environment condition affects both domestic and international business. Some of the economic factors that must be considered by entrepreneurs include interest rates, demand supply, recession, and inflation. Profit maximization by business organization calls for a proper understanding of the economic business environment. Despite the fact that Denmark has faced financial crisis, the country attracts many domestic and international investors. According to Crescenzi, et al., (2016, p.30) the financial crisis is firmly attributed to its high level of openness to intern...

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