Business Environment for (HND BM) Gihan SandaruwanPage 1
Business EnvironmentBusiness Environment
Business Environment
Business Environment
Name – V.K.Gihan Anuruddha SandaruwanSubject – Business EnvironmentBatch - 33 9/6/2014Name – V.K.Gihan Anuruddha SandaruwanSubject – Business EnvironmentBatch - 33 9/6/2014
Name – V.K.Gihan Anuruddha Sandaruwan
Subject – Business Environment
Batch - 33
9/6/2014
Name – V.K.Gihan Anuruddha Sandaruwan
Subject – Business Environment
Batch - 33
9/6/2014
Acknowledgment
I express my sincere gratitude to all the following individuals those contributed towards the success full completion of my Business environment assignment.
At the very beginning my gratitude goes to my parents as they provide necessary guidance and other facilities to follow my program. Then my gratitude goes to Mrs. Ganga lecture in Business environment as she gave all necessary guidance in friendly manner.
Finally I would like to thank to staff of ESOFT as they provide necessary support during the period of assignment.
Executive Summary
The beginning of the CPC was made as a state enterprise act No:- 28 of 1961 at the parliament in Sri Lanka.
The main objective of CPC is to provide continuous fuel supply to fulfil sri Lankan needs.
To do the above successfully, CPC has to import oil from foreign countries.
An also, CPC import some part of oil as crude oil and convert them into various petroleum products at the refinery at Sapugaskanda.
The main stakeholders of the CPC are;
Ceylon Electricity Board
Port Authority
Ceylon Transport Board
Ceylon Government Railway
To attend all the things properly, CPC has to consider the environment factors, safety and welfare of the employees.
Finally, CPC should attend to the duties by following the conditions mentioned in factory ordinance
Table of Contents
Task 01 (1.1) 6
Private sector companies 6
Sole trade 6
Public Limited Company: 7
Advantages: 7
Disadvantages: 7
Voluntary organization 9
Charitable organization 9
Government organization 10
Cooperative 10
Task 01 (1.2) 11
Stakeholders are: 12
Customers and supplies. 12
Stakeholders 13
Who are they 13
How to Meeting stakeholders' needs in CPC 14
Task 01 (1.3) 14
Task 02 (2.1) 17
Different types of economies: 18
The Free Market Economy: 18
Command economy: 18
The Mixed economy: 18
Transitional economies: 18
Economic Approach of China 19
Type of economies 20
Task 02 (2.2) 21
Impact of fiscal and monetary policy: 22
Impact of fiscal policy on ZONG: 22
Impact of monetary policy on ZONG: 23
Task 02 (2.3) 24
Key issues in competition policy 25
Task 03 (3.1) 26
Perfect Competition 26
Imperfect Competition 27
Monopoly 28
EQUILIBRIUM OF A FIRM 28
Task 03 (3.2) 32
Market Forces Shape Organizational Responses 35
Task 03 (3.3) 36
Economic environment in Sri Lanka 38
Social and cultural environment in Sri Lanka 39
Technological environment in Sri Lanka 39
Environmental factors in Sri Lanaka 39
Legal environment in Sri Lanka 40
Task 04 (4.1) 40
Task 04 (4.2) 42
Task 04 (4.3) 43
Employment policy: 43
2. Regional policy: 44
3. Inflation policy: 44
4. Education and training policy: 44
5. Taxation policy: 44
6. International policy: 45
7. Establishing the rules 45
European Union 45
Task 01 (1.1)
Private sector companies
The part of an economy in which goods and services are produces and distributed by individuals and organizations that are not part of the government or state bureaucracy
A variety of legal structures exist for private sector business organization, depending on the jurisdiction in which they have their legal domicile. Individuals can conduct business without necessarily being part of any organization.
The main types of businesses in the private sector are:
Sole trade
Partnership, either limited or unlimited liability
Private limited company or LTD-limited liability, with private shares
Public limited company – shares are open to the public. Two examples are:
Franchise – business owner pays a corporation to use their name, receives spec for the business
Workers cooperative – all workers have equal pay, and make joint business decisions
Private companies may issue stock and have shareholders. However, their shares do not trade on public exchanges and are not issued through an initial public offering. In general, the shares of these businesses are less liquid and the values are difficult to determine.
Public Limited Company:
It is one whose membership is open to general public. The minimum number required to form such company is seven, but there is no upper limit. Such companies can advertise to offer its share to genera public through a prospectus. These public limited companies are subjected to greater control & supervision of control.
The standard legal designation of a company which has offered shares to the general public and has limited liability. A Public Limited Company's stock can be acquired by anyone and holders are only limited to potentially lose the amount paid for the shares. It is a legal form more commonly used in the U.K. Two or more people are required to form such a company, assuming it has a lawful purpose.
A limited company grants limited liability to its owners and management. Being a public company allows a firm to sell shares to investors this is benificial in raising capital.
Advantages:
The liability being limited the shareholder bear no rick & therefore more as make persons are encouraged to invest capital.
Because of large numbers of investors, the risk of loss is divided.
Joint stock companies are not affected by the death or the retirement of the shareholders.
Disadvantages:
It is difficult to preserve secrecy in these companies.
It requires a large number of legal formalities to be observed.
Lack of personal interest.
Different between public company and the private company
Minimum number of members: Minimum number of members required to form a private company is 2, whereas a Public Company requires at least 7 members.
Maximum number of members: Maximum number of members in a Private Company is restricted to 50; there is no restriction of maximum number of members in a Public Company.
Transferability of shares : There is complete restriction on the transferability of the shares of a Private Company through its Articles of Association , whereas there is no restriction on the transferability of the shares of a Public company
Issue of Prospectus: A Private Company is prohibited from inviting the public for subscription of its shares, i.e. a Private Company cannot issue Prospectus, whereas a Public Company is free to invite public for subscription i.e., a Public Company can issue a Prospectus.
Number of Directors: A Private Company may have 2 directors to manage the affairs of the company, whereas a Public Company must have at least 3 directors.
Consent of the directors: There is no need to give the consent by the directors of a Private Company, whereas the Directors of a Public Company must have file with the Registrar consent to act as Director of the company.
shares : The Directors of a Private Company need not sign an undertaking to acquire the qualification shares, whereas the Directors of a Public Company are required to sign an undertaking to acquire the qualification shares of the public Company
Commencement of Business: A Private Company can commence its business immediately after its incorporation, whereas a Private Company cannot start its business until a Certificate to commencement of business is issued to it.
Shares Warrants: A Private Company cannot issue Share Warrants against its fully paid shares, whereas a Private Company can issue Share Warrants against its fully paid up shares.
Further issue of shares: A Private Company need not offer the further issue of shares to its existing share – holders, whereas a Public Company has to offer the further issue of shares to its existing share – holders as right shares. Further issue of shares can only be offer to the general public with the approval of the existing share – holders in the general meeting of the share – holders only.
Statutory meeting: A Private Company has no obligation to call the Statutory Meeting of the member, whereas of Public Company must call its statutory Meeting and file Statutory Report with the Register of Companies.
Special privileges: A Private Company enjoys some special privileges, which are not available to a Public Company.
Voluntary organization
A voluntary association or union (also sometimes called a voluntary organization, unincorporated association, or just an association) is a group of individuals who voluntarily enter into an agreement to form a body (or organization) to accomplish a purpose.
Many voluntary organizations are working in this district for socio economic development of rural people and for promotion and dissemination of art, culture & sports.
Charitable organization
A charitable organization is a type of non-profit organization (NPO). The term is relatively general and can technically refer to a public charity (also called "charitable foundation," "public foundation" or simply "foundation") or a private foundation. It differs from other types of NPOs in that its focus is centered on goals of a general philanthropic nature (e.g. charitable, educational, religious, or other activities serving the public interest or common good)
The legal definition of charitable organization (and of charity) varies according to the country and in some instances the region of the country in which the charitable organization operates. The regulation, tax treatment, and the way in which charity law affects charitable organization also vary.
Charities and voluntary organizations share many features. They are generally:
Set up for charitable, social, philanthropic, religious, political or similar purposes.
Required to use any profit or surplus only for the organization's purposes.
Not a part of any governing department, local authority or other statutory body.
Voluntary organizations have a legal structure or status, being an unincorporated association, or a trust or company limited by guarantee.
Government organization
Government company" means any company in which not less than fifty one percent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company"
Cooperative
Cooperative, organization owned by and operated for the benefit of those using its services. Cooperatives have been successful in a number of fields, including the processing and marketing of farm products, the purchasing of other kinds of equipment and raw materials, and in the wholesaling, retailing, electric power, credit and banking, and housing industries. The income from aretail cooperative is usually returned to the consumers in the form of dividends based on the amounts purchased over a given period of time.
Modern consumer cooperatives, usually called co-ops in the United States, are thought to have begun in Great Britain in 1844, with the Rockdale Equitable Pioneers Society the society created asset of organizational and working rules that have been widely adopted. They included open membership, democratic control, no religious or political discrimination, sales at prevailing market prices, and the setting aside of some earnings for education.
The cooperative movement developed rapidly in the latter part of the 19th century, particularly in the industrial and mining areas of northern England and Scotland. It spread quickly among the urban working class in Britain, France, Germany, and Sweden and among the rural population of Norway, the Netherlands, Denmark, and Finland.
In the United States, attempts at consumer and agricultural marketing cooperatives were made at the beginning of the 19th century. Although most U.S. cooperatives developed in rural areas, consumer and housing cooperatives spread substantially in metropolitan areas in the late 20th century.
Cooperatives were introduced in Latin America by European immigrants in the early 1900s; later they were often fostered by state action in connection with agrarian reform. Marketing and credit cooperatives have been important in many African nations, especially since World War II. During the Soviet era, marketing cooperatives of the U.S.S.R. and Eastern Europe functioned as part of a centrally controlled purchasing network for farm produce. Cooperative farms in those countries were modeled on the Russian artel, in which all land was pooled and worked in common and income was distributed according to work performed.
Task 01 (1.2)
Stakeholder a person, group, organization, or system that affects or can be affected by an organization's actions.
A stakeholder is any individual or organization that is affected the activities of a business. They may have a direct or indirect interest in the business, and may be in contact with the business on a daily basis, or may just occasionally.
Stakeholders are:
Shareholders (not for a sole trade or partnership though) – they will be interested in their dividends and capital growth of their shares.
Management and employee – they may also be shareholders - they will be interested in their job security, prospects and pay.
Customers and supplies.
Banks and other financial organizations lending money to the business.
Government – especially the Inland Revenue and the customers and excise who will be collecting tax from them.
Trade unions – which will represent the interests of the workers.
Pressure groups – who are interested in whether the business is acting appropriately towards their area of interest.
Stakeholders
Who are they
Objectives
Owners
They invest capital in the business and get profits from the business
Profits, growth of the business
Workers
Employees of the business who give in their time and effort to make a business successful
Job security, job satisfaction and a satisfactory level of payment for their efforts
Managers
Employees of the business who manage a business. They lead and control the workers to achieve organizational goals
High salaries,
Job security,
Status and growth of the business
Government
Government manages the economy. The government charges a tax from the business and also monitors the working of businesses in the country
Successful businesses, employments to be created, more taxes, follow laws
The community
Community is all the people who are directly or indirectly affected by the actions of the business.
.
They expect more jobs, environmental protection, socially responsible products and actions of the business
How to Meeting stakeholders' needs in CPC
Combine high levels of performance with responsibility for all stakeholder groupings. The company recognizes that its long-term development depends on maintaining a balance between the needs of customers, employees, shareholders and the environment. This involves not only considering the 'individual benefit' of a particular stakeholder grouping, but also the 'collective benefit' of all the groups.
Task 01 (1.3)
Company stakeholder responsibility requires that companies be committed to a stakeholder approach to management on the following four levels.
Level 1 - Basic Value Proposition At this most basic level, the entrepreneur or manager needs to understand how the firm can make the customer better off, and simultaneously offer an attractive value proposition to employees, suppliers, communities, and financiers.
Level 2 - sustained stakeholder cooperation
The competitive, macro-economic, regulatory, and political environments are so dynamic they necessitate constant revision of the initial stakeholder arrangements. Each revision upsets the delicate balance struck in the basic value propositions to various stakeholders. Managers must have a deep understanding of how these trade-offs affect each stakeholder, the amount of sacrifice a given stakeholder will accept, and how these current sacrifices can be compensated.
Level 3 - An understanding of broader societal issues
Today's managers must recognize and respond to a rising number of international issues, without the moral compass of the nation, state or religion as a guide. Managers may need to take positions on issues that apparently are not purely business related. A pro-active attitude is necessary towards all stakeholder groups, both primary, i.e., those that have direct business dealings with the company, and secondary, such as NGOs and political activists, who can affect the operations of the company.
Level 4 – Ethical leadership
Recent research points to a strong connection between ethical values and positive firm outcomes such as sustained profitability and high innovation.7 Proactive ethical leadership is possible only if there exists a deep understanding of the interests, priorities, and concerns of the stakeholders.
Bring stakeholder interests together over time.
The very idea of managing for stake-holders is that the process of value creation is a joint process. Companies need to show returns to its shareholders, meet obligations to debt holders, banks, and others. Profits don't conflict with other stakeholders—they are a scorecard indicating how well the company is managing the whole set of stakeholder relationships. Managers must keep these stakeholder interests in balance, hopefully mutually reinforcing each other.
The online auction firm eBay constantly updates its user interface and back office processes to meet the expectations and desires of multiple stakeholder groups—in particular, people who use the site to buy and sell goods. The company's ability to consistently meet the needs of a broad range of consumers and sellers—from small startups to leading national retail operations—has also been of great benefit to the firm's shareholders, with the stock price increasing roughly 400% from 1999 to 2006.
Recognize that stakeholders are real and complex people with names, faces and values.
We often make assumptions that business people are only in it for their own narrowly defined self-interest. Most human beings are more complicated. Most of us do what we do because we are both self-interested and interested in others. Business works in part because of the urge to create things with others and for others.
Seek solutions to issues that satisfy multiple stakeholders simultaneously.
Issues and problems come at managers from many sources, in many forms. Managers need to find ways to develop programs, policies, strategies, even products and services that satisfy multiple stakeholders simultaneously. The first step in that process is to actually recognize the need to look for simultaneous solutions.
The responsibility of an organization is to serve.
Every company, business, department has a duty and remit to provide a service.
An organization must operate within the boundaries of the law. Reputation and trust are everything, and a consumer can't have trust or faith in your ability to deliver if you can't prove and guarantee you're legitimacy.
An organization must also have strict financial control. Taking a gamble is acceptable but sloppy mathematics in a budget isn't. Inadequate financial management is more likely than not going to result in bankruptcy and closure, losing investors a hefty sum of money.
Recruitment is vitally important. You need reliable workers who have enthusiasm but also intelligence; workers that are able to be creative but also to take advice and critique from management. Poor recruitment can result in a lack of progress or the inability to develop a rapport with prospective clients and consumers. Human Resources comes into effect here too, because a successful workforce is a happy workforce, and vice versa. Finding out what the employees expect of management and in terms of support and acting upon this will generate positive momentum. A popular place to work quickly becomes a popular place to do business with. Structured management is obvious. There needs to be a boss who hires and fires, who has the respect of the employees and keeps the management in check. There also needs to be managers along the way down to the base level, to act in the same manner and make sure the workforce meets their targets that their complaints or ideas are heard, and that can provide ideas for growth or improvement.
Marketing is the final point and is vital. People can't consume what they don't know about. A good campaign is critical. Depending on the organization's function and aims you will choose a medium and manage where these advertisements appear and are linked in so as to be relevant and enticing.
Stakeholders the value of a business to society is the wealth and employment it creates and the marketable products and services it provides to consumers at a reasonable price commensurate with quality. To create such value, a business must maintain its own economic health and viability, but survival is not a sufficient goal. Businesses have a role to play in improving the lives of all their customers, employees and shareholders by sharing with them the wealth they have created. Suppliers and competitors as well should expect businesses to honor their obligations in a spirit of honesty and fairness. As responsible citizens of the local, national, regional, and global communities in which they operate, businesses share a part in shaping the future of those communities.
Task 02 (2.1)
An economy consists of the economic system of a country or other area, the labor, capital and land resources, and the economic agents that socially participate in the production, exchange, distribution, and consumption of goods and services of that area.
Land – all the natural resources of the earth. That includes the fish in the sea, all the minerals found in the earth, metals, sand, stones, rocks, timber, food form the soil and so on. Economists have a name for the reward for the income form 'land' which is rent.
Labor – all the human mental and physical effort that goes into production, this will include people who work as street cleaners, people who are interior designers, teachers, the police, doctors, bricklayers, architects and so on. The reward for labor is referred to as wages.
Capital – all the equipment, machinery and buildings that is not used for its own sake but for the contribution it makes to production. This includes things like office desks and chairs, computers, Lorries, cranes, specialist machinery in a factory, the humble office coffee machine and so on. The 'price' of acquiring capital is referred to as interest.
Enterprise – the skills needed to organize other resources into some form of production. Some people would put enterprise as a specialist skill within labor but enterprise does have some distinctive characteristics that merit its own category. The return for enterprise is called profit.
Different types of economies:
There are different types of economies and different countries use their different types
The Free Market Economy
Command Economy
The Mixed Economy
The Free Market Economy:
This approach is also known as capitalism. In this type of economy the supply and demand of the goods and services are determined totally by market values rather than the government. This is a type of economy where price, supply or demands are distorted by the regulations of government.
Command economy:
Also known as controlled economy. This is an economy where both the supply and price are controlled by the government rather than the market forces. Government decides which good or service should be produced, how should it be produced and for whom it shall be produced.
The Mixed economy:
This economy is controlled both by the government and the market. Free public hospitals are controlled by the government as it has a social motive where as the industries are controlled by the market as it is for profit motive but government still influences to some extent. Most of the developed countries use this type of approach.
Transitional economies:
A transition economy or transitional economy is an economy which is changing from a centrally planned economy to a free market. Transition economies undergo economic liberalization, where market forces set prices rather than a central planning organization and trade barriers are removed, privatization of government-owned enterprises and resources, and the creation of a financial sector to facilitate the movement of private capital. The process has been applied in china, the former soviet union and communist bloc countries of Europe, and many third world countries.
Economic Approach of China
China was first a Command economy but in 1990's they released majority of sectors to enterprises. China then started to approach the free market economy. This is the type of economy where the market economy is based upon an ideology that assumes that consumer choice will influence market forces to ensure an optimum allocation of resources with no need for interference from the government. The only role of government is to ensure that the invisible hand of market forces is free to operate via the price mechanism or forces of supply and demand.
Some problem with this approach is that there is inequality of power in marketplace, Barriers restricting entry to the market place and the immobility of factors of production and Producers may ignore externalities
Consumers and producers take prices as a symbol in a free market. When the product prices raises as compared to another product on the customer behalf. The purchased products should be rationed by the consumer. In other words, every product should be treated dearly due to higher cost at which they are purchased. A great revenue opportunity is gained by the producers when the price of specific products goes higher. By the government there is low intervention in the market in the free market economic system which causes waste of market forces. China has the world's successful economy. In china allocation of resources is done mostly by the private sector, the producer sets the price of their products according to the demand of their product and the chinies government does not enforce restrictions on the prices.
In china resources are allocated according to the demand. In short, the Free Market leads to an efficient allocation of resources because prices are continually fluctuating, demonstrating scarcity and surplus through the actions of millions of individuals.
Economic systems
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An economic system is one that a society attempts to meet people's material needs and wants through the production of goods and services. From the country's point of view, production of goods and services is influenced by the limited supply of such elements as labor, land and natural resources and capital. The scarcity of supply of resources means that the Government has to decide the allocation of these limited resources among competing claims, given the opportunity costs associated with the decision of producing a certain products and services within the economy systems instead of others.
Type of economies
- Different approaches or economies systems are adopted by different countries. In a free market economy, government intervention is kept to the minimum while supply and demand and the ability to pay influence decision making. Most decisions are based on market mechanism. The profit motive of the free market economy, however, give rise to question of who will provide not-for-profit goods and services and infrastructures necessary for the country to meet the needs of the Public. On the other hands, in a command economy, resources are centrally planned and controlled by the government. This, however, means that no freedom for individuals to choose what they produce and what they consume. Most, if not all, countries adopt a mixed economy today. That is, a mixed economy combines elements of both free private enterprises and intervention, in varying guises, by the state.
Effective use of resources
-i. The extent to which the mix economies, for effective allocation of resources, between the government intervention and private enterprises varies from countries to countries. Government interventions are usually in the form provision or prohibition, subsidies or tax and regulation. For example, public goods are priced low or zero to maximize consumption and increase social benefits. Merit goods are encouraged by subsidies to increase consumption whereas the de-merit goods are taxed heavily to reduce social costs. Most government has subsidized heavily education of children to ensure the less fortunate are not left out from the main stream.
Sri Lanka has a mixed economy, which are some main organizations such as main banks, transport services, electricity board, water board, and telecom. And there are some private organization for other products and services.
According to the four main resources Sri Lanka has enough lands to use for businesses, but there are limited numbers of lands in high residential arias, considering about the labor, Sri Lanka has labor more than the demand in that case Sri Lankan labor cost is very low, considering about Capital – Sri Lanka has very limited capital to invest. Because most of investors they don't like to invest in Sri Lanka because of the unstable political background, inflation and the high taxation in Sri Lanka. Final resource is enterprise. Enterprise in Sri Lanka is in very good level but there are some difficulties to do those thing in Sri Lanka, such as inflation, politics, interest rates and the taxation.
Task 02 (2.2)
In economic, fiscal policy is the use of government expenditure and revenue collection to influence the economy. Fiscal policy can be contrasted with the other main type of economic policy, monetary policy, which attempts to stabilize the economy by controlling interest rates and the supply of money. The two main instruments of fiscal policy are government expenditure and taxation.
Fiscal policy: Fiscal policy is basically used for the betterment of a society or a country or a nation, it works for the development of the economy of any state .it generates its own funds via taxation and the revenue generated by the government is spent on the state in its different fields like education ,employment ,constructions and medications etc. . The amount of revenue collected is less than the amount budgeted, the country is said to be running at a deficit and issues debt (notes and bonds) to make up the difference. There are three types of fiscal policy which are mentioned below
1. Neutral fiscal policy: this is undertaken when economy is in equilibrium. Here the government spending is completely funded by the taxes.
2. Expansionary fiscal policy: this is undertaken in recession. This is when the government spending increase than the taxes collected.
3. This is used to pay the debt taken by government. This occurs when the tax revenue exceeds the government spending
Monetary policy: The change in supply and demands of any states economy is known as the monetary policy of that state. The interest rates given by any states increases or decrease by the need of their money which makes the money available easily. Due to the availability of money the economic activities of the state increases or decreases.
Monetary policy is the process a government, central bank, or monetary authority of a country uses to control (i) the supply of money, (ii) availability of money, and (iii) cost of money or rate of interest to attain a set of objectives oriented towards the growth and stability of the economy.
Impact of fiscal and monetary policy:
The impact of fiscal and monetary policy is straight on nation's economy which is being implemented by the government of the nation. In fiscal policy money is first collected through taxation and then spent on the nation's development and its welfare, while in monetary policy the money is directly proportional to the supply and demand. These both policies have a huge impact on any business organization. Here I have selected ZONG cellular network company to show the impact of these policies how they affect any business organization.
Impact of fiscal policy on ZONG:
Fiscal policy has its own impacts on the ZONG cellular network company, ZONG is affected by the fiscal policy in the form of double taxation which is there by implemented by the government in which the ZONG company have to pay its tax and after that the employees have to pay their individual tax too. If the government raises tax rates then the customer are also directly affected by face higher rates of the product. This policy also affect the company and as well as the national economy in the form of less investment and also less employment.
Impact of monetary policy on ZONG:
Monetary policy has its own impacts on the ZONG cellular network company, ZONG is affected by the monetary policy in the form increase or decrease in investment, it also affects the supply and the demand of the product .if supply is in huge quantity and there is no demand it would also affect the company growth and if there is more demand in the market and there is lack of supply due to investment which cannot be provided in time it would cause lack of opportunity for the company.
The monetary policy have a huge effect on the overall economy of any nation it all also effects business organizations by lacking them to have an opportunity to avail credits for their further investments. in contractionary monetary policy it higher the interest rates which reduces the supply of money and it gets harder for any business organization to be financed by other sources, where as in expansionary monetary policy it provides lower inters rates so for any business organization it gets easier to be financed by other sources and the organization can avail a lot of new opportunities.
In fiscal policy the government either changes the level of taxation or the level of spending. If government increases the level of taxation so people will be left with little disposable income so they will spend less. As a result spending in the economy will fall. Raising taxes will also affect the producers as well because when taxes are raised people pending falls this means the demand for products falls and thus the revenue falls. However if the tax is reduced and the government spending is increased people will have more money this will increase the aggregate demand in the economy in order to cope with this high demand producers increases their operations for this they hire more labors so with this the unemployment rate also falls. Expansionary fiscal policy also decreases exports.
In monetary policy the monetary authorities control the money supply by often varying the rate of interest. If government increases the interest rate so people will not borrow money from banks for the purpose of starting new businesses or buying house etc. this is because they know that when they'll return the loan they will have to pay a higher interest rate so as a result new entrepreneurial activities stops.
There will be also downward pressure on spending in the economy. This will hit the producers as well because they will face a fall in demand and thus fall in revenue. High interests will also attracts great inflows of money because people from outside will put money in banks of that country in order to get higher rate of return on it. Same will be the case with domestic people they also will put money in banks for high return and this again will decrease the spending in the economy. However if the interest is lowered so people will start taking loans from the banks and they will start investment, this also will increase the spending and producers or firms will experience an increase in their demand. As a result the unemployment rate will also fall because the producers will hire more labors in order to cope with the demand.
Task 02 (2.3)
Different types of organization have different purposes. According to Draft R. L. all organizations exists for a purpose this purpose may be referred to as the overall goal, or mission. Organizations can be categorized according to several categories. Firstly it can be divided to public and private sector organizations. Usually public sector organizations have more non-financial objects than the financial objectives.
Private companies can be divided into many organizational types like sole traders; private limited companies (Ltd), partnerships, public limited companies (PLC).These have mainly financial objectives. However, nowadays all organizations understand the importance of introducing non-financial objectives to their portfolio.
Modern Organizations especially large multinational companies set their objectives not only in economical perspective, but also concentrate on social, environmental and customer perspective &etc. Triple bottom line is a criterion for measuring organizational success in economical, ecological, and social aspects. Anglo American's objectives too involve triple bottom line. Anglo American have six guiding values and SMART objectives which help them to achieve its business strategy which focuses of sustainable development. Therefore Anglo American similar to any other multinational companies in the modern world.
The motivation and design of Italy's competition policy have made it a strong foundation for market-oriented regulatory reforms. This role for competition policy institutions is particularly significant, in light of the magnitude of the challenge that Italy faced in improving market functioning. Its traditional policy framework for market regulation took little note of competition principles, and thus competition policy faced a host of constraints imposed by the government itself.
Key issues in competition policy
The nature of the competition policy problems Italy faces has evolved, along with its institutions.
Today these include:
A multitude of controls on entry and market conduct, through concession and licensing Requirements and other regulations, especially in services and professions;
Devolution of responsibilities to local governments, which apply many of these constraints, and which are responsible for delivering services in traditionally monopolized sectors, but which are not always sympathetic with the objectives of competition-based reform;
Delayed reform of retail distribution, as regional governments have stalled the process of implementing national legislation, with the effect of maintaining constraints on new entry;
Reform of local utilities and public services, through legislation now being developed. Implementing details need to be worked out carefully, to ensure that local and regional government action does not dilute the success of large-scale infrastructure reforms;
Occasional direct interventions in markets, by laws controlling prices or market shares, suggesting doubt about the commitment to market methods;
Completing the restructuring of traditional infrastructure monopolies;
Developing enforcement capacities to deal with secret cartels.
Task 03 (3.1)
The popular basis of classifying market structures rests on two crucial elements, (1) the number of firms producing a product and (2) the nature of product produced by the firms that is whether it is homogeneous or differentiated. The price elasticity of demand for a firm's product depends upon the number of competitive firms producing the same or similar product as well as on the degree of substitution which is possible between the product of a firm and other products produced by rival firms. Therefore, a distinguishing feature of different market categories is the degree of price elasticity of the demand faced by an individual firm.
Perfect Competition
As is evident from the above Table, Perfect Competition is said to prevail where there is a large number of producers (firms) producing a homogeneous product. The maximum output which an individual firm can produce is relatively very small to the total demand of the industry product so that a firm cannot affect the price by varying its supply or output. With many firms and homogeneous product under perfect, competition no individual firm is in a position to influence the price of the product and therefore the demand curve facing it will be a horizontal straight line at this level of the prevailing price of the product in the market, that is price elasticity of demand for a single firm will be infinite.
Imperfect Competition
Imperfect competition is an important market category wherein individual firms exercise control over the price to a smaller or larger degree depending upon the degree of imperfection present in a case. Control over price of a product by a firm and so the existence of imperfect competition can be caused either by the fewness of the firms or by the product differentiation. Therefore, imperfect competition has several sub-categories. The first important sub-category of imperfect competition is Monopolistic competition. In monopolistic competition a large number of firms produce somewhat different products which are close substitutes of each other. The second sub-category is oligopoly without product differentiation which is also known as pure oligopoly. Under it there is competition among the few firms producing homogeneous or identical products.
The fewness of the firms ensures that each of them will have some control over the price of the product and the demand curve facing each firm will be downward sloping which indicates that the price elasticity of demand for each firm will not be infinite. The third sub-category is called differentiated oligopoly. It is characterized by competition among the few firms producing differentiated products which are close substitutes of each other. The demand curve under this kind of oligopoly is downward sloping and so firms would have control over the price of their individual products.
Monopoly
Monopoly means the existence of a single producer or seller which is producing or selling a product which has no close substitutes. And as such it is an extreme form of imperfect competition. Since a monopoly firm wields a sole control over the supply of product, which can have only remote substitutes, the expansion and contraction in its output will affect the price of the product. Therefore, the demand curve facing a monopolist is downward sloping and has a steep slope.
EQUILIBRIUM OF A FIRM
Firm is said to be in equilibrium when it has no tendency either to increase or to contract its output. Firm's equilibrium level of output will lie where its money profits are maximum. Now profits are the difference between total revenue and total cost. So in order to be in equilibrium, the firm will attempt to maximize the difference between total revenue and total cost.
An old method of explaining the equilibrium of the firm is to draw the total revenue and total cost curves of the firm and locate the maximum profit point. But, with the appearance of Marginality Revolution, equilibrium of the firm is explained with the aid of marginal revenue and marginal cost curves.
Equilibrium of the Firm by Curves of Total Revenue and Total Cost Profit is the difference between total revenue and total cost. Thus the firm will be in equilibrium at the level of output where the difference between total revenue and total cost is the greatest. Figure 8.1 depicts short-run total revenue and total cost curves of the firm. As a firm starts from zero output and increases its production of the good, in the very initial stages, total cost is greater than total revenue and the firm is not making any profit at all. When it is producing OL level of output, total revenue just equals total cost and the firm is therefore making neither profits, nor loss, that is, the firm is only breaking even. Thus the point S corresponding to OL output is called break-even point.
When the firm increases its output beyond OL, total revenue becomes larger than total cost and profits begin to accrue to the firm. It will be seen that profits are rising as the firm increases production up to output OM. At OM output, the distance between TR and TC is the greatest and so the profits will be the maximum. Thus the firm will be in equilibrium at the OM level of output. The firm will not produce any output larger than OM since after it the gap between TR and TC curves goes on narrowing down and therefore, the total profits will be declining. At OH level of output TR and TC curves again intersect each other, which means that total revenue is equal to total cost at output OH. Thus point Q is again a breakeven point.
Equilibrium of the Firm by Marginal Revenue and Marginal Cost
The firm will be making maximum profits by expanding output to the level where marginal revenue is equal to marginal cost. If it goes beyond the point of equality between marginal revenue and marginal cost, it will be incurring losses on the extra units of output and therefore will be reducing its total profits. Thus, the firm will be in equilibrium when it is producing the amount of output at which marginal revenue equals marginal cost. It will be earning maximum profit at the point of equality between marginal revenue and marginal cost. Therefore, the condition for the equilibrium of the firm is that the marginal revenue should be equal to the marginal cost. In Fig. 8.2 firm's marginal revenue curve MR is sloping downward and firm's marginal cost curve MC is sloping upward and they cut each other at point E which corresponds to output OM. Up to OM level of output MR (Marginal Revenue) exceeds MC (Marginal Cost) and at OM the two are just equal to each other. The firm will be maximizing its profits by producing OM output.
The equality between marginal revenue and marginal cost is a necessary but not a sufficient condition of firm's equilibrium. The second order condition requires that for a firm to be in equilibrium marginal cost curve most cut marginal revenue curve from below at the point of equilibrium.
Only at the equilibrium price, wishes of both the buyers and sellers are satisfied. If prices were greater or less than the equilibrium price the buyers, and sellers' wishes would be inconsistent. If prices were greater than the equilibrium price, quantity supplied would exceed quantity demanded. It means some of the sellers will not be able to sell the amount of the goods they wanted to supply. These sellers would try to dispose of the unsold goods by bidding price down. The price will go on declining till the quantity demanded equals quantity supplied. On the other hand, if prices were lower than the equilibrium price, the quantity demanded would exceed quantity supplied. Some buyers would not be able to obtain the amount of the goods they wanted to purchase at the prevailing price. They will therefore bid price up in their effort to get all that they desired to buy. The price will go on rising till the quantity demanded and quantity supplied are again Equal. The market period is a very short period in which the supply is fixed, that is no adjustment can take place in supply conditions. In other words, supply in the market period is limited by the existing stock of the goods. In this period more goods cannot be produced in response to an increase in demand. The price prevailing in the market period is called market price which changes with the nature of the commodity many a time within a day or a week or a month. In reality, market price is that price which is determined by the forces of demand and supply in the market at a point of time. The determination of market price can be explained separately for the perishable and the durable goods.
Determination of Short-run Price
In the short period, price is determined by the forces of demand and supply. The point of equilibrium is located where demand and supply curves intersect. In the short period the firms will keep on producing even if they are not able to cover the average total cost but are able to cover only the average variable cost. If they stop production they will be losing their fixed costs. It is only when these firms do not get the price sufficient enough to cover their variable costs that these firms stop production. The equilibrium price in the short period is called the short period normal price, which is determined by the intersection of the short period normal supply and normal demand curves.
Determination of Long-run Normal Price
Long-run price is also known as normal price. Long-run price or normal price is determined by long-run equilibrium between demand and supply when the supply conditions have fully adjusted to the given demand conditions. Given the demand, a price will tend to prevail in the long-run when supply has fully adjusted and that price is known as long-run price or normal price.
Task 03 (3.2)
There are varieties of market forces may need to be addressed by your organization; there are three common ones that affect businesses today; customer responsiveness, information demand and cost pressure.
Quickness in anticipating and responding to customer demands will continue to be an important ingredient of competitive advantage. Even today, many organizations are eager to collect your payments for the purchase of products or services, but when it comes to returning those products to terminating those services, they make it a challenge to receive a refund-sometimes requiring extensive submissions of paperwork, long delays to receive a check back by mail or limiting the return/refund period to a short timeframe.
The relationship between demand and supply underlie the forces behind the allocation of resources. In market economy theories, demand and supply theory will allocate resources in the most efficient way possible.
Market forces shape organizational responses through a very basic economic principle: Supply and demand.
A company or organization will always try and predict demand for its product or service, and ensure that demand is met by implementing a cost effective strategy.
Market forces, by definition, can have an effect on that demand - and as such, will have an affect on the supply chain and strategy used by an organization.
We could make a never ending list of market "eventualities" and examine how they impact supply and demand, but actually it's safer to just stick to the well-established concept of Porter's Five Forces:
likelihood of new entry,
powers of customers,
power of suppliers,
degree of rivalry
substitute threat
Market forces describe the interaction between supply and demand within a market. Organizational response is the reaction given by a company or business to an economical or business circumstance. An organization's response to market forces is key in any circumstance as it will have a direct impact on the company's profits and reputation. In terms of supply and demand the most successful companies will have appropriate market research and analysis in place to ensure that they are able to supply a product or service to meet the demands of its customers.
If a company has judged the market demand for their product correctly then they will keep their customers happy by ensuring they supply the product or service requested by their customers in the appropriate quantities. It will also increase profits as the company will have judged their margins correctly to be able to supply and sell as much of their product as possible, without over stocking, bringing added finances to the business. Poor judgment could lead to a misinterpretation of market forces, either leaving customers empty handed as not enough product has been supplied, or leave their business overstocked as customers do not want the quantities supplied. In both scenarios a company's profits would be greatly affected, and the organization's reputation may be tarnished.
The relationship between market forces and organization response is therefore paramount in terms of business success and customer satisfaction. For this reason, market research is key in order to determine market forces so that an organization can respond correctly to the market they are operating in. It is also important to continue in monitoring market forces to ensure that an organization can respond to any changes in market conditions. More or less product may be needed to match customer demand during different market seasons.
Market Forces Shape Organizational Responses
Countries that use Economic Systems
The Economy of England are the largest economy of the four countries of the United Kingdom. England is a highly industrialized country. It is an important producer of textiles and chemical products. Although automobiles, locomotives and aircraft are among England's other important industrial products, a significant proportion of the country's income comes from the City of London.
Since the 1990s, the financial services sector has played an increasingly significant role in the English economy and the City of London is one of the world's largest financial centers'. Banks, insurance companies, commodity and futures exchanges are heavily concentrated in the City. The British pound sterling is the official currency of England and the central bank of the United Kingdom, the Bank of England, is located in London. United States
The US has abundant natural resource, a well-developed infrastructure, and high productivity. It has the world's sixth-highest per capita GDP (PPP). The U.S. is the world's third-largest producer of oil and second- largest producer of natural gas.
It is the second-largest trading nation in the world behind China. It has been the world's largest national economy (not including colonial empires) since at least the 1890s. China
the Socialist market economy of People's Republic of China (PRC) is the world's second largest economy. It is the world's fastest-growing major economy, with growth rates averaging 10% over the past 30 years. China is also the largest exporter and second largest importer of goods in the world. It is the world's fastest- growing major economy, over the past 30 years. China is also the largest exporter and second largest importer of goods in the world.
Task 03 (3.3)
When considering CPC activities in Sri Lanka, CPC should adopt to below mention criteria.
Political factors in Sri Lanka
Economic factors in Sri Lanka
Social cultural factors in Sri Lanka
Technological factors in Sri Lanka
Environmental factors in Sri Lanka
Legal factors in Sri Lanka
Political environment in Sri Lanka
Political environment can affected any business in the country, especially countries like Sri Lanka. Sri Lanka has very unstable political parties in that case Sri Lanka can't enter in to international agreement. In this case Sri Lanka doesn't have petroleum in that case Sri Lanaka has to import everything. Other thing is Sri Lanaka doesn't have any barging power because Sri Lanka is a very small buyer when comparing with other countries.
In Sri Lanaka CPC control by the government in that case political changes are directly affect to CPC.
"The end of armed conflict provides Sri Lanka with a historic opportunity to achieve a dual transition from a low income country in conflict to a middle income country in peace," the bank's latest economic update on the country said.
"For longer-term stability needed to bolster the investment climate it would be necessary to address minorities' underlying grievances."
Government forces defeated Tamil Tiger separatists in May, ending the 30-year ethnic war, and creating anticipation of an economic revival.
But underlying Tamil grievances on sharing political power that triggered the war remain unresolved leading to fears Tamil Tiger extremists might try to revive the conflict.
The World Bank report said that in terms of devolution of power to provincial councils, the Sri Lankan government has announced further devolution will only be considered after the forthcoming elections.
Parliamentary and presidential polls are anticipated next year.
The World Bank said that preliminary estimates suggest that Sri Lanka's long-term potential growth rate is around six percent.
"The post-conflict boom may help Sri Lanka to return relatively rapidly to growth rates in this range, but is unlikely to significantly increase the long-term potential growth rate, unless a significant structural policy agenda is implemented."
The bank said that prospects for enhanced foreign direct investment inflow would depend on an improvement in the overall investment climate, elimination of the security threat, improvement in debt sustainability prospects and continuation of low inflation.
"In the short-to-medium term, prospects for the Sri Lankan economy look positive," the report said.
"First, there are increasing signs that the global economic crisis is bottoming out.
"Prospects of a global recovery would provide enhanced growth impetus through recovery in exports, increase in tourism and possible greater FDI inflow."
In a low-inflation environment, the real effective exchange rate can be expected to support export competitiveness, the World Bank said.
"The tourism sector is already showing signs of reaping the end-of-conflict dividend, with July and August arrivals having risen substantially."
But the bank said that sustaining the positive investor sentiment will be a key challenge in the coming months.
"A still-weak global economy, uncertainty about the continuation of the preferential access for Sri Lankan exports to the EU market under the GSP+ scheme and persistently high fiscal deficits are risks to the outlook."
On the other hand, the World Bank said, reconstruction spending in the war-affected north is expected to provide a short-term stimulus, while the lagged effects of the recent monetary stimulus would also act as a fillip.
"In the longer term, movement towards a sustainable political solution to the underlying causes of the conflict will be key, as will decisive moves on the structural policy agenda to unleash Sri Lanka's full growth potential."
Economic environment in Sri Lanka
Sri Lanka has a monopoly economy to petroleum business in that case CPC doesn't have any competition in their business.
Sri Lanka is one of the fastest growing economies in the world and an emerging investment hotspot. Over the last two decades, substantial steps have been taken to diversify the economy, and open it up to trade. The Government's 10-year development plan envisages the key role in promoting economic growth, with a focus on harnessing resources to the less developed regions. Key policy documents advocate infrastructure development and livelihood support in rural areas.
The economy grew by 8.3 per cent in 2011, the highest in Sri Lanka's post-independence history, following a growth of 8 per cent in 2010. Improved consumer and investor confidence arising from the peace dividend, favorable macroeconomic conditions, increased capacity utilization, expansion of infrastructure facilities and renewed economic activity in the Northern and Eastern provinces underpinned this growth. The expansion in economic activity was reflected in the unemployment rate, which declined to the lowest level of 4.2 per cent in 2011.
Social and cultural environment in Sri Lanka
When considering social and cultural environment in Sri Lanka, mainly there are four religions in the country such as Buddhist 69.1%, Muslim 7.6%, Hindu 7.1%, Christian 6.2%, other 10%. But in Sri Lanaka the Buddhist is the main religion. In that case when considering social and the cultural environment probably Buddhist cultural will be apply to the most of the situation. And there are nine provinces in Sri Lanka, such as Northern provinces, central, north central, northern, eastern, north western, southern, uva, sabaragamuwa, western, according to the province there are some social and cultural attitudes will be apply.
Technological environment in Sri Lanka
Technological environment in Sri Lanka is very low comparing with the other countries. Because in Sri Lanka charge lot of taxes on everything in that case people doesn't like to move to new technology because it takes lots of money.
Environmental factors in Sri Lanaka
Sri Lanka's main income is agriculture. Sri Lanka's income base on their agricultural income. In that case Sri Lanka has to maintain good environment to do agriculture. Sri Lanaka has to reduce the environmental pollution. In CPC business CPC has to import high grade oil to Sri Lanaka. But now also CPC import very low quality diesel to Sri Lanka, is euro standard 2, but most of the countries they use euro standard 4 diesel. Using those kind of low quality material is directly affected to Sri Lanaka environment.
Legal environment in Sri Lanka
According to the Sri Lanaka law no one can't enter in to the CPC businesses. That is a good advantage to the CPC. There are some rules in Sri Lanaka law, CPC should follow those rule when doing their day today activities. Such as
1. Employee law, under employee law if the any employee who working as a permeant employee CPC should give EPF, ETF, funds to the employee and as a basic salary CPC should pay at least the minimum salary amount. And employee who is working more than the working hours CPC should pay the overtime to the employee.
2. Government pricing control. CPC should follow the government pricing control. CPC can't apply their own pricing.
3. Business registration. CPC should be under Sri Lankan government and government control. CPC can't privatize.
According to the PESTEL analyze this is the six types of environment CPC should face in Sri Lanka.
Task 04 (4.1)
One of the biggest challenges for business organisations in the UK is learning how and where to trade overseas. In an interdependent world, international trade is an economic necessity. However, there are marked differences between trading in a national economy with known markets and known parameters, and trading on an international basis. Business organisations require support to enter markets as well as to sustain their activities.
This case looks at British Trade International and its aim to help UK firms compete successfully overseas.
British Trade International is the joint Department of Trade and Industry/Foreign and Commonwealth Office operation which has lead responsibility within the Government for trade promotion and development.
British Trade International helps businesses make the most of global trading opportunities. With over 800 staff in the UK and over 200 diplomatic posts overseas, British Trade International supplies various information, from basic advice - such as for a small business which may be a first time exporter to Dublin - to highly specific niche market information, i.e. a small specialist market.
Within the UK, British Trade International provides dedicated market support including:
advice/information services for initial market research
professional help from export promoters who have widespread export experience
information on various methods of conducting business in a specific country
help with meeting language and cultural requirements
assistance in bringing key contacts to the UK
Helping UK organizations market themselves overseas, including grants for visiting countries and exhibiting at international trade shows.
Services tailored for each organization's needs are provided by British Trade International's overseas offices, which can supply direct support for each exporter.
British Trade International's Export Market Information Centre possesses an extensive range of publications and statistics relating to businesses worldwide. It may be accessed in person, by telephone, fax or e-mail. Making the most of IT and the Internet is another major step in improving services to UK businesses.
A new Internet service, Trade UK, provides information on sales leads gathered by overseas offices. This is instantly fed into the system so UK companies can respond more rapidly than their competitors to new business opportunities.
UK businesses can obtain details of all the leads together with full details of five leads free every month. To access Trade UK, a business has to be part of the National Exporters' Database. This is a free Internet-based directory of UK firms, with 54,000 exporters on it at present. Posts are able to search Trade UK to answer enquiries from potential customers, as can those with Internet access who search the database themselves. The aim of this service is to provide global exposure.
A presence in overseas markets will help business organizations to achieve:
increased growth leading to the benefits of economies of scale -
larger production runs reduce costs
a competitive edge - exposure to intensive competition, new products and ideas, more efficient technologies and better working practices
higher earnings where margins in some markets exceed those in the domestic one
the ability to spread risks – while sales in the home market may be in decline those in overseas markets may be booming.
The size of the business does not matter, nor does the product sector. What is important is:
the product meets local demands
regular training of overseas sales teams
developing long-term relationships
establishing new markets to compensate for less buoyant ones
good marketing and customer service
Having a quality product strong enough to compete within overseas markets.
Task 04 (4.2)
Politics, economy, society, and technology are the 4 key global factors that influence UK businesses.
The impact of global factors on the UK economy and UK business can actually be explored by breaking down the various strategies businesses in the United Kingdom employ, and then looking at the factors that influence and affect those strategies.
To start, we can look at the following UK business strategies that have a reliance on international and global markets:
- Export to foreign markets
- Association with trade blocs
- Partnering with strong international markets
- Establishing overseas competitiveness
The following are seen as factors that can influence the success rate of the aforementioned strategies:
Politics
Society and culture
Economic stability
Technology
These are known by the acronym PEST, and are a well-established group of factors that can impact not only UK business organizations, but also the economy of any sovereign state that takes part in international trade or the free market.
Task 04 (4.3)
Employment policy:
Governments play a major part in trying to stimulate employment. For example, the present government is keen to encourage business efficiency so that UK businesses are competitive in international markets and therefore create jobs. For those who have difficulty finding work, the government has created what is termed 'The New Deal', offering people the opportunity of developing training and experience on government funded and sponsored employment programmers.
2. Regional policy:
At European Union level, funds are made available to support regions of high unemployment and social deprivation such as large areas of Southern Italy and rural France, as well as the Highlands and Islands of Scotland. Regional policy sets out to compensate for the fact that with the development of the more prosperous parts of the European Union, jobs have been lost in other areas.
3. Inflation policy:
The government seeks to make sure that there are no sudden general rises in prices. They do this through the Monetary Policy Committee (MPC) of the Bank of England which sets interest rates. Interest rates are put up if there is a danger of people borrowing and spending too much, thus pushing prices up. Raising interest rates makes it more expensive for businesses to borrow money. It also makes it more expensive for consumers to borrow money. They then have less to spend, which helps to force down prices.
4. Education and training policy:
Education and training is seen in the UK as having a valuable contribution to make to business life. The government plays an important part in forcing through education and training changes, for example by creating more Vocational Subjects in the school curriculum.
5. Taxation policy:
Businesses can make a valuable contribution to the community by the taxes they pay. In return, the government can help businesses by spending money on projects like airports, roads, aid to developing countries and many other items.
6. International policy:
The government can promote trade, encourage sales of British goods abroad (exports), or discourage goods coming in from other countries (imports).
7. Establishing the rules
Many of the laws of this country have been in existence for a long time. Others are much newer. New legislation can be made at a European Union, national or local level. These laws set out how people can and should behave towards one another, and particularly, how business should be conducted. They are very important in setting 'the rules of the game'.
European Union
The European law making it compulsory for coach passengers to wear seatbelts was costly for bus companies because it forced them to fit safety belts - but it also makes passengers a lot safer.
European Union regulations are directly binding on all Member States without the need for national legislation to put them in place.
European Union directives bind Member States to the objectives to be achieved within a certain time-limit, but leave national authorities to decide on how to implement them. Directives have to be implemented in national legislation.
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