The Business Environment: A Global Perspective, Eighth Edition
By Ian Worthington, Chris Britton and Ed Thompson
Contents
Contributors xviii
Preface to the eighth edition xix
Acknowledgements xxi
Part One INTRODUCTION
1 Business organisations: the external environment 3
Ian Worthington
Learning outcomes and key terms 3
Introduction 4
The business organisation and its environment 4
The general or contextual environment 7
Mini case: The impact of regional economic conditions 8
The immediate or operational environment 9
Analysing the business environment 10
Mini case: Fresh but not so easy 10
Central themes 12
Synopsis 14
Summary of key points 14
Case study: Facing the unexpected 14
Review and discussion questions 15
Assignments 16
Further reading 16
2 Business organisations: the internal environment 17
Ian Worthington
Learning outcomes and key terms 17
Introduction 18
The concept of the organisation: an initial comment 18
Understanding the nature of organisations: theories of
organisation and management 19
Other theoretical approaches 23
Organisational structures 23
Mini case: ‘Into the Dragon’s Den’ 24
Mini case: Mergers and competition 27
The virtual organisation 29
Structural change 29
Aspects of functional management 30
Synopsis 35
Summary of key points 35
Case study: Reshuffle at Microsoft 36
Case study: Thomas Cook expansion 37
Review and discussion questions 37
Assignments 37
Further reading 38
3 The global context of business 39
Chris Britton
Learning outcomes and key terms 39
Introduction 40
Globalisation versus internationalisation 40
The role of multinational enterprises 43
Mini case: Transfer pricing 44
Globalisation and business 46
Mini case: Currency crisis in emerging markets 48
Globalisation and the small and medium-sized firm 49
Synopsis 49
Summary of key points 50
Case study: Global financial markets – too big to fail 50
Case study: FDI flows 51
Review and discussion questions 52
Assignments 52
Further reading 53
International business in action: The global car industry
and the changing business environment 55
Part Two CONTEXTS
4 The political environment 61
Ian Worthington
Learning outcomes and key terms 61
Introduction 62
Political systems 64
Government in democratic states 65
Mini case: Brought to book 69
The three branches or functions of government 72
Mini case: The power of the purse 73
Checks and balances in democracies 76
A model of the policy process 77
Synopsis 78
Summary of key points 79
Appendix 4.1: A democratic political system in action:
UK national government 79
Appendix 4.2: Subnational government: UK local authorities 86
Appendix 4.3: Supranational government: the European Union 88
Case study: The business of lobbying 94
Case study: Political campaign funding 95
Review and discussion questions 96
Assignments 96
Further reading 97
5 The macroeconomic environment 99
Ian Worthington
Learning outcomes and key terms 99
Introduction 100
Economic systems 101
Economies in transition 105
Politico-economic synthesis 106
The macroeconomy 107
Government and the macroeconomy: objectives 113
Mini case: Digging in for the long term 119
Government and the macroeconomy: policies 119
The role of financial institutions 124
Mini case: A new kid on the block: the rise of the credit rating agency 126
International economic institutions and organisations 128
Synopsis 131
Summary of key points 131
Case study: Austerity 132
Case study: Quantitative easing (QE) 132
Review and discussion questions 134
Assignments 134
Further reading 134
6 The demographic, social and cultural context of business 135
Ian Worthington
Learning outcomes and key terms 135
Introduction 136
The demographic environment of business 136
The social context 141
Mini case: A new class structure? 142
Lifestyles 145
The cultural environment 147
Mini case: National cultures 149
Application: market segmentation 150
Synopsis 152
Summary of key points 152
Case study: An invitation to ‘tweet’ 153
Case study: Supply and demands – a changing workforce 154
Review and discussion questions 154
Assignments 155
Further reading 155
7 The resource context: people, technology
and natural resources 157
Chris Britton
Learning outcomes and key terms 157
Introduction 158
People 158
Mini case: Zero-hours contracts 160
Technology 168
Mini case: The robots are coming 169
Natural resources 174
Synopsis 177
Summary of key points 178
Case study: Agricultural work and Brexit 178
Case study: Fracking 179
Review and discussion questions 181
Assignments 181
Further reading 182
8 The legal environment 183
Martin Morgan-Taylor
Learning outcomes and key terms 183
Introduction 184
Classification of law 184
Mini case: Verity and Spindler v Lloyds Bank (1995) 185
Sources of law 186
The legal system: the courts 188
Mini case: Jean-Marc Bosman – a case of foul play? 190
Business organisations and the law 191
Contract law: the essentials 191
Agency 195
Law and the consumer 196
Codes of practice 203
Synopsis 203
Summary of key points 204
Case study: The sale of goods on the Internet 204
Review and discussion questions 206
Assignments 207
Further reading 207
9 The ethical and ecological environment 209
Ian Worthington
Learning outcomes and key terms 209
Introduction 210
Ethics and business 211
Mini case: Illegal or unethical? 212
Corporate social responsibility 213
T he ‘environment’ as a business issue: the emergence of
corporate©environmentalism 214
Drivers of ‘green’ business 215
Why and how firms become more environmentally responsible 219
Mini case: Going round in circles: Desso Carpets 220
Another perspective: the ‘outside-in’ view 221
Summary of key points 221
Case study: Doing well by doing good 222
Review and discussion questions 223
Assignments 223
Further reading 224
International business in action: Migration 225
Part Three FIRMS
10 Legal structures 229
Ian Worthington
Learning outcomes and key terms 229
Introduction 230
Private sector organisations in the UK 230
Mini case: Companies under pressure 236
Social enterprises 239
Public sector business organisations in the UK 240
Business organisations in mainland Europe 243
The public sector in mainland Europe 246
Legal structure: some implications 247
Franchising, licensing and joint ventures 252
Mini case: Cross-national joint ventures 255
Synopsis 255
Summary of key points 256
Case study: Uber 256
Review and discussion questions 257
Assignments 257
Further reading 258
11 Size structure of firms 259
Chris Britton
Learning outcomes and key terms 259
Introduction 260
The size structure of UK industry 260
Organisational growth 261
Methods of growth 262
Mini case: The story of a failed merger 265
Finance for growth 266
Small firms 271
Mini case: ‘Olderpreneurs’ and small firms 273
Multinationals 281
Synopsis 281
Summary of key points 282
Case study: Gazprom, the Russian giant 282
Review and discussion questions 283
Assignments 284
Further reading 284
12 Industrial structure 285
Chris Britton
Learning outcomes and key terms 285
Introduction 286
The structure of industry 286
Mini case: The end of manufacturing? 292
Mini case: The life cycle model 299
Deindustrialisation 301
Synopsis 304
Summary of key points 304
Appendix 12.1: The Standard Industrial Classification (SIC), 2007 305
Case study: The rise of the public service companies: the case of Serco 306
Review and discussion questions 308
Assignments 308
Further reading 308
13 Government and business 311
Ian Worthington
Learning outcomes and key terms 311
Introduction 312
Government and business: an overview 312
Regional policy 313
Regional aid within the European Union 316
Mini case: The EU and state aid 319
UK urban policy 319
Selected urban policy instruments 321
Developments in urban policy: 1997–2010 323
Urban and industrial policy developments in the UK since 2010 324
Local government and business in the UK 326
Business as an influence on government 331
Mini case: A taxing issue 332
Synopsis 333
Summary of key points 333
Case study: Public sector procurement – the Royal Navy 334
Review and discussion questions 334
Assignments 335
Further reading 335
International business in action: A lot of bottle 337
Part Four MARKETS
14 The market system 341
Chris Britton
Learning outcomes and key terms 341
Introduction 342
The market mechanism 342
Demand 342
Supply 345
Shifts in demand and supply 349
Mini case: The effect of a factory fire on the market for microchips 350
Price controls 351
Mini case: The price of toilet rolls in Venezuela 353
Elasticity of demand 354
Elasticity of supply 357
The importance of the market to business 358
Synopsis 359
Summary of key points 359
C ase study: The housing market in the UK 360
Review and discussion questions 362
Assignments 362
Further reading 363
15 Market structure 365
Chris Britton
Learning outcomes and key terms 365
Introduction 366
Market structures – in theory and practice 367
Porter’s five-forces model 374
Mini case: Open Skies and contestability 377
Mini case: The success story of Prosecco 379
Measuring the degree of actual competition in the market 381
Synopsis 383
Summary of key points 383
Case study: A Porter’s five-forces analysis of the cigarette
industry in the UK 384
Review and discussion questions 386
Assignments 387
Further reading 387
16 International markets and trade 389
Chris Britton
Learning outcomes and key terms 389
Introduction 390
International trade – why it takes place 390
Restrictions to international trade 391
Mini case: The cotton dispute 392
The establishment and growth of the European Union 393
‘Brexit’ and Euroscepticism 394
The balance of payments 395
The history of the balance of payments in the UK 399
Mini case: The current account of the balance of payments 401
Exchange rates 404
The single European currency 410
Exchange rates and business 411
Synopsis 412
Summary of key points 412
Case study: Eurozone crisis 412
Review and discussion questions 415
Assignments 415
Further reading 416
17 Governments and markets 417
Ian Worthington
Learning outcomes and key terms 417
Introduction 418
Privatisation policy in the UK 418
Mini case: Government to the rescue 424
Competition policy 427
Mini case: Accusations of price fixing 429
Government and the labour market 435
Synopsis 439
Summary of key points 440
Case study: Who leads who? 441
Case study: ‘What a fine mess you’ve got me into’ 441
Review and discussion questions 443
Assignments 443
Further reading 443
International business in action: Working with the grain of the market 445
Part Five CONCLUSION
18 Strategy and the changing environment 449
David Orton and Ian Worthington
Learning outcomes and key terms 449
Introduction 450
The need to monitor environmental change 451
Analysing the business environment: broad approaches 452
Mini case: Multinational inward investment: a PESTLE analysis 453
Techniques 456
Mini case: Bucking the trend 458
Limitations to environmental analysis 461
Sources of information 462
Synopsis 469
Summary of key points 470
Case study: Scenario planning at Shell 470
Review and discussion questions 473
Assignments 473
Further reading 473
Glossary 475
Index 495