The Business Environment: A Global Perspective, Ninth Edition
Ed Thompson, Ian Worthington and Chris Britton
Contents
Contributors xix
Preface to the Ninth Edition xx
Publisher’s Acknowledgements xxii
Guided tour xxiv
Part One INTRODUCTION
1 Business organisations: the external environment 3
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
Minicase : Fresh but not so easy 10
Central themes 12
Synopsis 14
Summary of key points 14
C a se study : Facing the unexpected 14
Review and discussion questions 15
Assignments 16
Further reading 16
2 Business organisations: the internal environment 17
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
M ini case : ‘Into the Dragon’s Den’ 24
M ini case : Mergers and competition 27
The virtual organisation 29
Structural change 30
Aspects of functional management 30
Synopsis 35
Summary of key points 35
C a se study : Reshuffle at Microsoft 36
C a se study : Thomas Cook expansion 37
Review and discussion questions 37
Assignments 38
Further reading 38
3 The global context of business 39
Learning outcomes and key terms 39
Introduction 40
Globalisation versus internationalisation 40
The role of multinational enterprises 43
M ini case : Transfer pricing 44
Globalisation and business 46
M ini case : Currency crisis in emerging markets 47
Globalisation and the small and medium-sized firm 48
Synopsis 49
Summary of key points 49
C a se study : Global financial markets – too big to fail 50
C a se study : FDI flows 51
Review and discussion questions 52
Assignments 53
Further reading 53
4 De-globalising factors: sovereignty, conflicts and
political priorities 55
Learning outcomes and key terms 55
Introduction 56
What is globalisation? 57
Bretton Woods System (or the ‘New World Order’) 58
The 1970s to the present 59
Isolationism 59
International conflicts 62
Sanctions 63
C a se study: Local solutions to global problems 65
Environmentalism 65
Summary of key points 66
C ase study: Weetabix – local solutions to global problems 67
Assignments 68
Further reading 68
Part Two CONTEXTS
5 The political environment (P) 71
Learning outcomes and key terms 71
Introduction 72
Political systems 74
Government in democratic states 76
Mini case: Brought to book 79
The three branches or functions of government 82
Mini case: The power of the purse 83
Checks and balances in democracies 87
A model of the policy process 87
Synopsis 89
Summary of key points 89
A ppendix 5.1: A democratic political system in action: UK national
government 90
The executive branch of government 92
The judicial branch of government 97
Appendix 5.2: Subnational government: UK local authorities 97
Appendix 5.3: Other levels of government 99
Case study: The business of lobbying 100
Case study: Political campaign funding 101
Review and discussion questions 102
Assignments 102
Further reading 102
6 The macroeconomic environment (E) 103
Learning outcomes and key terms 103
Introduction 104
Economic systems 105
Economies in transition 109
Politico-economic synthesis 110
The macroeconomy 111
Government and the macroeconomy: objectives 117
Mini case: Digging in for the long term 123
Government and the macroeconomy: policies 123
The role of financial institutions 128
M ini case: A new kid on the block: the rise of the credit rating
agency 130
International economic institutions and organisations 131
Synopsis 134
Summary of key points 135
Case study: Austerity 136
Case study: Quantitative easing (QE) 136
Review and discussion questions 138
Assignments 138
Further reading 139
7 The demographic, social and cultural context
of business (S) 141
Learning outcomes and key terms 141
Introduction 142
The demographic environment of business 142
The social context 147
Mini case: A new class structure? 148
Lifestyles 151
The cultural environment 153
Mini case: National cultures 155
Application: market segmentation 156
Synopsis 158
Summary of key points 158
Case study: An invitation to ‘tweet’ 159
Case study: Supply and demands – a changing workforce 160
Review and discussion questions 160
Assignments 161
Further reading 161
8 The resource context: people, technology and
natural resources (T) 163
Learning outcomes and key terms 163
Introduction 164
People 164
Mini case: Zero-hours contracts 166
Technology 173
Technological change 173
Mini case: The robots are coming 175
Natural resources 180
Synopsis 183
Summary of key points 183
Case study: Agricultural work and Brexit 184
Case study: Fracking 184
Review and discussion questions 186
Assignments 186
Further reading 187
9 The legal environment (L) 189
Martin Morgan-Taylor
Learning outcomes and key terms 189
Introduction 190
Classification of law 190
Public and private law 190
Mini case: Verity and Spindler v Lloyds Bank (1995) 191
The legal system: the courts 194
Mini case: Jean-Marc Bosman – a case of foul play? 196
Business organisations and the law 197
Contract law: the essentials 197
Agency 201
Law and the consumer 202
Codes of practice 209
Synopsis 210
Summary of key points 210
C a se study : The sale of goods on the Internet 211
Review and discussion questions 213
Assignments 213
Further reading 214
10 The ethical and ecological environment (E) 215
Learning outcomes and key terms 215
Introduction 216
Ethics and business 217
M ini case : Illegal or unethical? 218
Corporate social responsibility 219
T he ‘environment’ as a business issue: the emergence of
corporate environmentalism 220
Drivers of ‘green’ business 221
Why and how firms become more environmentally responsible 225
M ini case : Going round in circles: Desso Carpets 226
Another perspective: the ‘outside-in’ view 227
Summary of key points 228
C a se study : Doing well by doing good 228
Review and discussion questions 229
Assignments 230
Further reading 230
Part Three FIRMS
11 Legal structures 235
Learning outcomes and key terms 235
Introduction 236
Private sector organisations in the UK 236
M ini case : Companies under pressure 242
Social enterprises 245
Public sector business organisations in the UK 246
Legal structure: some implications 249
Franchising, licensing and joint ventures 254
M ini case : Cross-national joint ventures 256
Synopsis 257
Summary of key points 258
C a se study : Uber 258
Review and discussion questions 259
Assignments 259
Further reading 260
12 Size structure of firms 261
Learning outcomes and key terms 261
Introduction 262
The size structure of UK industry 262
Organisational growth 263
Methods of growth 264
Mini case: The story of a failed merger 267
Finance for growth 268
Small firms 273
Mini case: ‘Olderpreneurs’ and small firms 274
Multinationals 281
Synopsis 282
Summary of key points 282
Case study: The Scottish National Investment Bank 283
Review and discussion questions 283
Assignments 284
Further reading 284
13 Industrial structure 285
Learning outcomes and key terms 285
Introduction 286
The structure of industry 286
Mini case: The end of manufacturing? 290
Mini case: The life cycle model 295
Deindustrialisation 297
Synopsis 300
Summary of key points 301
Appendix 13.1: The Standard Industrial Classification (SIC), 2007 301
Case study: The rise of the public service companies 302
Review and discussion questions 304
Assignments 305
Further reading 305
14 Government and business 307
Learning outcomes and key terms 307
Introduction 308
Government and business: an overview 308
Selected urban policy instruments 309
Developments in urban policy: 1997–2010 312
Urban and industrial policy developments in the UK since 2010 313
Local government and business in the UK 315
Business as an influence on government 320
Mini case: A taxing issue 321
Synopsis 322
Summary of key points 322
C a se study : Public sector procurement – the Royal Navy 323
Review and discussion questions 324
Assignments 324
Further reading 324
Part Four MARKETS
15 The market system 327
Learning outcomes and key terms 327
Introduction 328
The market mechanism 328
eDmand 328
uSpply 331
Shifts in demand and supply 335
M ini case : The effect of a factory fire on the market for microchips 336
Price controls 337
M ini case : The price of toilet rolls in Venezuela 339
Elasticity of demand 340
Cross-price elasticity of demand 343
Elasticity of supply 343
The importance of the market to business 344
Synopsis 345
Summary of key points 345
C a se study : The housing market in the UK 346
Review and discussion questions 348
Assignments 348
Further reading 349
16 Market structure 351
Learning outcomes and key terms 351
Introduction 352
Market structures – in theory and practice 353
Porter’s five-forces model 360
M ini case : Open Skies and contestability 363
M ini case : Blizzard, Activision and Microsoft 365
Measuring the degree of actual competition in the market 366
Synopsis 368
Summary of key points 368
C a se study : A Porter’s five-forces analysis of the cigarette industry
in the UK 369
Review and discussion questions 371
Assignments 372
Further reading 372
17 International markets and trade 373
Learning outcomes and key terms 373
Introduction 374
International trade – why it takes place 374
Restrictions to international trade 375
Mini case: The cotton dispute 376
The establishment and growth of the European Union 377
‘Brexit’ and Euroscepticism 379
The balance of payments 380
The history of the balance of payments in the UK 383
Mini case: The current account of the balance of payments 385
Exchange rates 388
Exchange rates and business 394
Synopsis 394
Summary of key points 394
Case study: Post-Brexit trade 395
Review and discussion questions 396
Assignments 397
Further reading 397
18 Pandemics and Covid-19 399
Learning outcomes and key terms 399
Introduction 400
Pandemics 400
Pandemics in history 403
Global spread 406
Prevention 407
Case study: Covid-19 408
Mini case: FFP2/N95 respirators and surgical masks 408
Mini case: Peloton bikes 409
UK government support measures 411
The future 416
Returning to normal 417
Synopsis 417
Assignments 418
Further reading 418
19 Governments and markets 419
Learning outcomes and key terms 419
Introduction 420
Privatisation policy in the UK 420
Mini case: Government to the rescue 426
Competition policy 429
Mini case: Accusations of price fixing 431
Government and the labour market 432
Synopsis 436
Summary of key points 436
C a se study : Who leads who? 437
C a se study : ‘What a fine mess you’ve got me into’ 438
Review and discussion questions 439
Assignments 439
Further reading 439
Part Five CONCLUSION
20 Strategy and the changing environment 443
David Orton
Learning outcomes and key terms 443
Introduction 444
The need to monitor environmental change 445
Analysing the business environment: broad approaches 446
M ini case : Multinational inward investment: a PESTLE analysis 447
Techniques 450
Limitations to environmental analysis 455
Sources of information 455
Synopsis 463
Summary of key points 463
C a se study : Scenario planning at Shell 464
Review and discussion questions 466
Assignments 466
Further reading 467
Glossary 469
Index 489