Understanding business PDF

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Running a business mainly requires a lot of knowledge and hard work. Understanding the business will help one to get success more quickly. ...

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UNDERSTANDING THE BUSINESS

Contents Introduction:................................................................................................................................................2 1. Why the United States of America is considered a capitalist country?....................................................3 Left wing and Right wing:...........................................................................................................................4 3. Is competition good or bad?....................................................................................................................5 4. Issues that UK may face due to aging people:.........................................................................................6 5. What is Fracking and why people are corned about it:............................................................................7 6. Impact on UK business from Britain after leaving the EU:.....................................................................8 Conclusion:..................................................................................................................................................9 References:................................................................................................................................................10

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Introduction: Running a business mainly requires a lot of knowledge and hard work. Businesses can be privately owned, not-for-profit or state-owned. Understanding the business will help one to get success more quickly. People with strong business understandability can use any explicit or implicit business framework to cope up with any given situation. Besides, business knowledge is also necessary to keep the business activity moving forward.

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1. Why the United States of America is considered a capitalist country? Generally, capitalism means that economic activities are primarily driven by markets and market transactions. It is an economic condition in which country’s trade or business is mainly controlled by private owners for making profit, rather than by the state. Adam Smith presumes that perfect competition is a major characteristic of a capitalist system in his famous work “The Wealth of Nations and Causes of the Wealth of Nations”. It refers to an economic system where there is no government intervention in the legal industries, no insider trading and usually the market forces i.e. supply and demand dictate all things. America’s economy can be defined as capitalist as it is based on the principle of individual rights and private ownership of the means and resources of production and their function is mainly for profit. Though USA’s economic state falls on the definition of capitalism, but not pure free market capitalism as it follows regulations, taxation and subsidization. So, the American economy can be better known as a "mixed" economy, a combination of socialism and capitalism with government providing Social security, Medicaid, and Medicare along with private organizations (Marshall, 2013). For the powerful, it is a fatal cocktail of cronyism but continuous struggle for the powerless.

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2. The concept and example of Left wing and Right wing: The fundamental differences between two ideology of politics i.e. left-wing and right-wing are based on the individual rights and the power of the government. Left wing beliefs can be characterized by progressive nature, believe in equality, broader vision to the future, idealist, supportive towards the helpless people. Job seeker’s allowance and National Health Service are basically left wing ideas. They have belief in taxation for distributing wealth and government role to serve the society best (Wall, 2015). Two main left wing parties are the Labour Party and the Green Party who believe in ensuring laws for protecting women, ethnic minorities as well as gay people against disparity. According to them, more tax should be levied on rich people to support the poor and country-wide taxfunded activity on climate change is also important. Big businesses should be regulated to serve people’s interests. It is also believed that a good welfare system requires healthy and energetic people who are able to contribute in the economy (Forstater, 2007). In contrast, people of the right believe that individual rights are foremost to get the best result for society. They also believe that the role and intervention of the government should be reduced. They give importance to equity, tradition and economic freedom. According to them, there should be no regulations for operating business and people should support themselves for education and health service. The Conservative Party and UKIP are the two main right wing parties who believe that people should buy better education and health services for themselves and businesses should be less regulated. In 2008, 2/3 of Tory MPs didn’t focus on climate change rather on energy security (Marshall, 2013).

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3. Is competition good or bad? No market would survive without competition and it exists in every market. Competition is good because:  It makes the customer service better. Improving customer service will generate loyal buyers and competition forces business to enhance customer service to get comparative advantage.  Competition gives the business room for learning from his competitors which helps to broaden the horizon and grow the brand.  Competition removes complacency by pushing the business out of its comfort zone in order to serve better products (Wall, 2015).  Competition fosters continuous innovation which is incredibly important to grab the market.  Competition helps the business to focus on key customers as they are the sources of more cash inflow.  Competition points out the strengths and weaknesses. Strengths can drive harder to achieve more while weaknesses enable to become better.  Strong competition helps to grow the business and market by providing valuable market insight, and developing fresh product strategies.  Competition also helps the business to identify potential threats by determining which plans, strategies or even products would cause harm to business. Competition has incredibly affected the world. Though it is the crown which makes the business what it is, competition has negative effects also which are:  Competition can incredibly damage businesses through price and production factors, various labor costs (Marshall, 2013).  Competition focuses on how much better the business is compared to competitors rather than focusing on the value that it has added.  Business focuses too much on competitors, instead of its product and service which will make lose the identity and dignity.

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4. Issues that UK may face due to aging people: Due to greater number of aged people than young people, followings are the major issues that may be faced by UK: 1. Rise in the dependency ratio: As the life span increases and the pensionable age rises 67 over time, more people are claiming pension benefits and fewer people are working and paying taxes. As it has a strong relation with countries dependency ratio, UK will face problem to manage the pension fund (Forstater, 2007). 2. Increased government spending: Another problem is that ageing populations are exerting significant pressure on public spending programs i.e. health care and pensions. As the elder persons often need care for feeding, bathing and other basic needs so costs for social care in UK is growing up (UKesaays, 2003). 3. Workforce paying higher taxes: As ageing people are not working, they tend to pay lower income taxes. This leads to pay higher taxes by those in workforce which may create disincentives to work. (UKesaays, 2003). 4. Shortage of workers: The decreasing number of youth may lead to the shortage of workers in near future as more ageing people means fewer youth who is the actual labors in almost all companies. Hence the shortage of workers push up wages causing wage inflation (UKesaays, 2003). 5. Reduction in capital investment: Higher savings for pensions can lower productive capital investment as society is putting a larger percentage of income into pension funds which means lower rates of economic growth. UK Government should urgently take an action plan for ageing population so that everyone can live a healthy and fulfilling life in future.

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5. What is Fracking and why people are corned about it: "Fracking" or "hydraulic fracturing" is another means of getting gas out of the ground which is difficult to reach, yet necessary for modern life. It’s a process by which water, sand and chemicals are injected into the ground by putting high pressures to crack open rock layers and release the oil or gas trapped inside. People are being concerned about fracking which is logical for the following reasons:  Air Quality: Methane is one of the main chemicals used during the fracking process and in terms of trapping heat, it is 25 times stronger than carbon dioxide. It is estimated that almost 4% spreads into the air during extraction which reduces the amount of clean air available for local residents and workers.  Water Pollution: It is estimated that almost 8 million gallons of water is used per fracking which decreases the availability of clean water to surrounding residents. Water is also polluted because of the chemicals used at significant environmental cost (Brooks, 2013).  Harmful for babies: Fracking causes severe threat for the children as chemicals used during the process leads to air pollution, ground-level ozone and acid rain.  Earthquake: As high pressure is used to extract oil and gas from rock and the storage of water supply may cause earthquakes.  Increased heat: Fracking process emit gas i.e. methane and carbon-di-oxide in a large amount which increase the heat on the earth.  Devaluation: The owners of homes are concerned as the values of their prices is falling in areas where it occurs, as their homes being devalued by fracking.  Reduction in investment: Fracking isn't new rather companies have been using this process for decades to extract oil and gas. But it is simply deluding energy firms and governments from investing in renewable sources of energy according to the campaigners (Brooks, 2013).

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6. Impact on UK business from Britain after leaving the EU: The UK which is considered one of the best countries to start a business, could lose its importance due to the effects which may arise through Brexit. Followings are some major impacts: i.

Rise of inflation: Due to Brexit, the level of inflation is expected to rise by the bank of England and it will rise to 2% from 1% (Forstater, 2007). The rate will gradually increase to 3%.

ii.

Decrease in Sterling: After exit from EU of Britain, the value of sterling has decreased in world market. As a result, the business of UK will be affected to a great extent. The export will eventually rise and the import pressure will reduce.

iii.

Concern for UK people residing in EU countries: Brexit has created a huge uncertainty for UK as many UK people are living in different countries of Europe. They are in uncertainty whether they will get citizenship or permanent residence after exit from EU of Britain (Forstater, 2007). The fate of many British people working in EU is also largely dependent on the attitude of UK towards employees of EU living in UK.

iv.

Increased price of raw materials: Due to absence of transaction between UK and EU, price of raw materials will rise. UK will not get any benefit since it has to import with higher price.

v.

WTO rules: The UK is now required to follow World Trade Organization rules on tariffs in the absence of a deal between the UK and the EU.

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Conclusion: America has a capitalism economic system, but its hybrid capitalism is just like a hybrid Republic. This report is mainly on understanding the business. For understanding the different aspects and nature of business and running the business successfully, this discussion can come handy. Additionally, to cope up with extreme competition, a person can apply these knowledge and get success to a great extent (Hastings, 2008).

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References: 

Brooks, M, "Frack on or frack off? Can shale gas really save the planet," New Scientist, August 10, 2013.

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Centner, TJ, "Oversight of shale gas production in the United States and the disclosure of toxic substances," Resources Policy 38, 2013.

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Czinkota, M., Ronkainen, I. and Moffett, M. (2011). International business. Hoboken, NJ: J. Wiley & Sons, Inc.

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Dasgupta, P. (2010). Economics. New York, NY: Sterling.

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Forstater, M. (2007). Economics. London: A. & C. Black.

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Hill, C. and Hult, G. (2017). International business. New York, NY: McGraw-Hill Education.

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Hastings, Rebecca R. "Business Acumen Involves More Than Numbers", SHRM, April 2008.

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Marshall, A. (2013). Principles of economics. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan.

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Wall, S. (2015). International Business. Pearson Education Limited.

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