Business Enviroment

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INTRODUCTION

“Business is the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy the society’s needs” (Pride, Hughes, Kapoor, 2011, p. 54). In this paper, one of the most successful gambling companies in UK will be analyzed, based on its purposes, the fulfilment of stakeholders' expectations, the assumed responsibilities, the economic policies adopted, the strategies implement in a competition environment, the response to market changes, as well as the impact of international trade.

The chosen organisation for this assignment is Gala Coral Group.

In 1926 Joe Coral began his bookmaking business and in 1960 Coral Retail was formalised when UK legalised the bookmaking market.

Gala Coral Group Ltd is an British betting shop and also a bingo and casino operator. The group it’s owned by Candover Investments, Cinven and Permira. Gala Coral Group merged for the first time in 2005 with Coral Eurobet and again in 2015 with Ladbrokes (Galacoral, 2016).

The fact that it’s privately owned makes this business a Private Limited Company.

LO1 AC 1.1

The sole trader is one of the most found forms of business (as in the case of common services as window cleaning, plumbing etc.). The main benefits of the sole trader are: the lack of complicated paperwork, the presence of close contact with customers, as well as with employees, the possibility that all profits could be directed to one person. Disadvantages in the case of sole trader can be: the necessity to take all decisions regarding the evolution of the business, the necessity to provide all the finances and the necessity to assume the whole liability.

Partnership is a business relationship between two or more partners. Advantages in the case of partnership rely on the sharing of skills and workload, as well as the possibility to raise money easier. One of the most important conditions of a partnerships, in order to be successful, it’s setting clear conditions about sharing profits and looses for both or multiple partners.

Companies: there are two types Private Companies (Ltd’s) and Public Companies. In a Private Company shares can be traded only with the permission of the board of directors. The main purpose in this case is the limited liability, the private companies being able lose what they have invested. On the other hand, Public Companies can sale share to public, additionally they trade their share through the Stock Exchange. The purpose of this type of company is raising large amounts of money quick.

Co-operative business is a form of organisation in which all members have the same rights and benefits, for example as in the case of group of farms. The purpose of such a company is that as a group the members have more power and as consequence they can penetrate some markets easily, comparing with other types of business organization.

State owned enterprises represent an entity created by a government, whose purpose it is to make commercial activities on behalf of government. They can be partially or totally be owned by the government.

Charities are non profit organisations (educational, religious etc). The purpose of such organisations is mainly helping people in need.

Franchise is merchandising or different goods under a certain name or brand for what the company considered franchise has paid a license. The franchisee benefits are enjoying of trading of different goods under a well known name, specialized training and sometimes the possibility that the raw material be provided by the franchisor (Williams, Johnson, 2013, p. 49).

My chosen company is Gala Coral Group.

The fact that it’s privately owned makes this business a Private Limited Company.

LO1 AC 1.2

Stakeholders, as an essential element of an organization, represent “any identifiable group or individual who can affect the achievement of an organization’s objectives or who is affected by the achievement of an organisation’s objectives” (Freeman and Reed, 1983, p. 91)

A stakeholders can be any person who has an involvement in a certain business. The stakeholders can be internal, external, individual, another organisation or groups of organizations. Internal stakeholders are represented by managers, workers, owners, while external stakeholders can be lenders, community, suppliers, customers, as suggested in

Figure 1. External and internal stakeholders for an organization (Hill, Jones, 2007, p. 28)

Concisely, different stakeholders in an organization have different objectives and interests. For instance, the owners are mostly interested in the profit of the organization, the suppliers are interested in creating satisfactory transactions with the organization resulting satisfactory revenues from the selling of goods or services to the organization, the manager expects the reach of efficiency target for the organization he/she represents, employees expect for efficient supervision and payment, customers expect for high quality goods or services, as well the creation of value, while the community expects the company to behave as a responsible member, .

Based on their key financial data from the Coral website the Gala Coral Group made a profit of £59,1 million in the financial year 2014 , so from the owners point, 2014 was a profitable year (Galacoral, 2016)

Additionally, managers and workers are interested preserving or improving the efficiency of the organization, as well as in keeping their jobs and having a decent wage. In this case, Gala Coral Group pays his workers above the minimum national wage and has one of the most competitive wages in the betting industry (Glassdoor, 2016).

Customers want to buy good products at low prices. In order to satisfy the need of its customers, as well as potential customers, Coral promotes every day high standards of customer service and a considerable number of promotions and attractive offers every week (Galacoral, 2016).

Suppliers are interested in keeping a profitable partnership and keep delivering their products to the business. The main supplier for Coral’s production of gambling services is their machines supplier SG Gambling, lately signing a partnership related to online gambling (Sg-gambling, 2016).

LO1 AC. 1.3

Similarly to its internal and external structure, including the present of different type of stakeholders, an organization develops interdependent internal and external responsibilities. (Gonzalez-Perez, Leonard, 2013, p. 138). In the case of the internal responsibility, the organization can develop efficient strategies related to employees and management, for instance an efficient management able to stimulate improved wages, higher satisfaction of customers' needs or suppliers' expectations. In the case of external responsibility, the organization has to fulfil the expectations of the community, government or pressure groups, interested to notice the responsible behaviour of the organization as a member of a local or national community.

In the case of the organization analyzed, its activity itself is subject to critical discussions related to its responsible behaviour. Commonly, millions of persons in UK gamble and because betting involves money sometimes they tend to spend too much money the can afford, leading to depression or dependence on gambling. To protect its customers and avoid a negative external approach, Gala Coral Group has developed a number of strategies such as :

A legal background of gambling, as in the slogan “Not just the letter of the law“, meaning the company does not follow just the law, but the spirit of it, being extremely interested in avoiding any legal conflict based on its activity.

The direct implication of its employees in the organization's responsible behaviour, as justified by the slogan “Acting together”. In practice, whenever one of the employees sees the sign of a gambling problem at a customer or a group of customers, he/she will attempt to politely interfere and have a discussion with that customer, in order to avoid a potential negative behaviour such as the physical or verbal aggression of other customers or the destruction of goods as machines or tables. All Coral’s employees are trained to recognise sign of gambling problems and to interact with the customer when is necessary. Coral’s also have a “Think 21” and “Protect children and vulnerable “ policy, which means that any person who looks under 21 will be asked for ID’s when they enter in a Coral shop and people who are under the influence of alcohol or any drugs will not be allowed to be in the shop, to avoid further negative behavior.

The organization admits that its profit is based on the gambling activity, yet it is interested in developing a responsible behaviour of its customers, pointed by the program “Helping customers to stay in control”. Basically, almost everyone who entered in a betting shop hear the slogan “When the fun STOPS, STOP”. The message is that company provides every customers a range of tools (advertisements, leaflets etc) so they can be informed how they can protect themselves from the effects of excessive gambling. They can also ask the duty staff for help, the employees being trained to efficiently react in this situation. Additionally, the company also has a self exclusion policy, as consequence any customer who completes a self exclusion form will not be allowed to bet in that shop and in closest three shops for one year, in order to avoid negative effects such as physical or verbal violence against employees or other customers (Galacoral, 2016).

LO2 AC 2.1

An economic system can be defined as “a set of institutions for decision making and for the implementation of decisions concerning production, income and consumption within a given geographic area” (Gregory, Stuart, 2014, p. 25).

The economic systems can be classified in main categories, as follows:

Traditional economic system, as the oldest economic system and rarely found in our contemporary context. This system is based on trading goods, does not involve money transaction and can be found in some remote location like Amysh community in USA or some pygmies tribes in Africa. Basically, in this type of economic system, there is no clear allocation of resources, each participant to the existing transactions, being interested in his/her direct, immediate benefit, excluding the possibility of investment the income as a resource for further economic activities.

The command economy relies on a strict pattern: all the decisions are made by a single individual or a small group of people. The perfect example for this economy is North Korea, a communist state, where economy is nationalized, as consequence subordinated to the interests of the unique party. The command system implements a clear monitor over the economic resources, supported by police or other regulatory institutions, directing each company to create certain products and services, which will be launched on the market to an unique price. The command system excludes competition, the companies being forced to adopt the regulations established by the coercive party. The existing resources are exclusively coordinated by the political force, generally implemented in megalomaniac investments, with reduced performance, but able to highlight the rightness of the political regime.

The market economy is based on the interaction between supply and demand. Comparing with the previous type of economic system, the market economy is associated with democracy or less totalitarian regimes, as it includes essential concepts to the free development of resources such as private property and markets; limited government involvement as in the laissez faire economic strategy and capitalism as political and social pattern; voluntary exchange; consumer sovereignty; existence of competition on the market, specialization and multiple markets. The market economy is market by a constant and less monitored flow between companies and consumers. Companies freely create goods and services to satisfy the needs of customers, who use their revenues to choose between the multiple versions of goods and services, creating the opportunity for companies to use the profit obtained to supply the production, distribution and sales chain. On both sides, companies and consumers, the flow of resources is free, individuals willingly choose the products or services they need, using their financial resources to pay for them, while the companies constantly improve the use of their resources, in order to obtain increased productivity and based on customers' satisfaction, increased profit. Although market economies seem to be more reliable than the totalitarian type, they include the disadvantage of insecurity for both companies and consumers, as companies might not find the suitable resources to supply their production, while groups of consumers might not afford to pay for the promoted products or services (Gregory, Stuart, 2014, pp. 18-19).

The mixed economy is a mixture of different types of economies, being largely found in multiple states. Analyzing the case of small farm business, it can be considered tradition, considering that it is generally a family business, each member directly participating to the production, distribution or sales of products; a command economy, since multiple regulations coordinate its activity; a market economy, as the family business attempts to promote its products on a competitive market (Gregory, Stuart, 2014, p. 20). In practice, ”the UK economy is a mixed economy. This means that is has a public sector, and a private sector” (BBC, 2016), constantly exchange resources. In some areas, as in the case of RBS, nationalizing policies were preferred as the most suitable strategy, while in the case of British Airways, privatization was preferred, as consequence the command or market economic types are interdependent in the British national economy.

The impact of UK economy on my first chosen organisation, Gala Coral Group, is made mainly through the tax policy and also by the fact that UK government does not allow the monopoly in any type of market from UK, as suggested in the case of Gala Coral Group merging with Ladbrokes, a similar gambling company, but mostly based on online activities: “The group – which is preparing for a 2.3 billion merger with Ladbrokes, excluding its Gala Bingo business – estimated the tax and regulations blow will cost it more than 46 million for the full year. The merger between the two firms is expected to create the biggest network of bookmaker’s shops in Britain, overtaking William Hill, though regulatory concerns may mean it has to dispose of some sites” (Business Reporter, 2016). As consequence, the British regulators admit the decision of the two companies to merge as a free, justified action, yet they analyze the potential impact on the gambling market, being interested to avoid the creation of a monopoly, excluding similar companies as William Hill.

The second organisation analyzed is Tesco, one of the biggest supermarket organisations from UK, which controls almost a third of UK grocery market. The fact that UK economy growth slowed down recently and the fact that the minimum wage will grow from April next year (The Guardian, 2016) can be a negative influence for Tesco. This means that people will have less money to spend, but Tesco will have to pay the same amount or more money to its employees, in order to preserve a suitable workforce for its activities. In order to counterbalance the national economic changes, Tesco can apply discounts for several products, as possible in terms of global profit of company, in order to attract the interest of customers. Additionally, it can implement compensatory strategies for its workers, as reducing the number of hours or offering discounts for buying products in Tesco's network, so they do not perceive the intentions of the company of keeping the salaries at the same level as an incorrect measure. Other impact on Tesco can have the globalisation effects. Other big companies like Lidl, Aldi etc. entered the UK market and their low prices on products can determine Tesco customers to their shops, causing money loses for the analyzed company. An efficient strategy in this case would be preservation of the existing prices and if possible, their reduction, to the level of the prices promoted by competitors. Additionally, Tesco can differ itself from other brands as promoting national economy, justified through the sales of British made products in its network.

LO2 AC 2.2

Monetary policy is defined as “the deliberate effort by the central bank to control the money supply and credit condition for the purpose of achieving certain broad economic objectives” (Somashekar, 2003, p. 24). As consequence, a monetary policy is the method of controlling how much cash money are needed by the economy of a country and how big or low should be the interests of banks from that country. All these details are controlled by the government trough the central bank.

Fiscal policy is considered to be “all deliberate efforts of government to use changes in government expenditure, taxation (including transfers) and government borrowing to influence income, production, prices and the balance of payments” (Frederick, Fourie, 1999, p. 30). Basically, a fiscal policy is a balance between the government expenditure (investments, benefits etc), the government incomes (VAT, taxes etc) and government borrowings. Fiscal policies create the power of a national currency, the value of the money used in a certain state. Fiscal policy can positively influence the creation of jobs, it can support the long term economic growth and it can encourage investments. If taxes are lower, more money are likely to be spent by consumers, as their incomes are increased and they are stimulate by the positive economic climate to consume more goods or services.

The effect of UK fiscal policy on Gala Cora Group is considerable because of a change in how the bookmakers are taxed. From December 2014 the UK government raised the tax to 15% on profits and also modified the rule for the remote gambling duty. This means that even if the organisation it is based outside UK but operates on UK and makes profits from UK residents it has to pay 15% tax on profits to the government. The raise of tax is essential, likely to determine gambling companies to adopt illegal strategies. In the case that they are discovered, they risk to pay 50% tax on profits (UK Government, 2016), which can create the context of bankruptcy or severe economic situation of that company, unable to pay its suppliers or its workers. In the case of the monetary policy adopted for gambling companies, the current inflation estimated at 3.3% is susceptible to create negative effects. In practice, in order to preserve their profit, gambling companies are likely to rais costs, in the context of consumers earning less income. In practice, taxes of services offered in gambling shops will continue to increase, so that companies can cover the effects of the inflation. Consumers might reduce the consumption of gambling services or might orient towards online gambling, which currently is less expensive, based on its flexible structure (reduced number of employees, as well as reduced inventory in terms of tables or machines) (Gbgc, 2016).

In the case of Tesco, one of the major British supermarkets, the fiscal or monetary policies is likely to create less negative effects, based on its economic activity: distribution and selling of food or non-food merchandise. In the case of food products, the impact is rather minimal, as people need basic types of food to satisfy their elementary needs as hunger or thirst. Yet, Tesco is interested to compensate the impact of fiscal policy, by promoting constant prices or implementing discounts in the case of food products, as the minimum wage in UK is still affected by the prolonged global financial crisis. On the other hand, in the case of non-food products, although Tesco implemented attractive strategies as the change of an old fridge with a new one, Tesco supporting a part of the ecological taxes, the company did not manage to stimulate the sales, reducing by 15%, comparing with the last five years. Analyzing the effects of the monetary policy, Tesco is one of the British major companies affected by inflation existing in UK. Similarly to Gala, Tesco started to focus on online activities as online grocery, in order to stimulate potential customers to consume the products promoted by the supermarket (The Guardian, 2016).

Ikea, comparing with the previous companies, managed to adopt suitable strategies to avoid the negative impact of monetary or fiscal policies. Ikea adopted in UK products focusing on the national standards, in terms of reliability and environmental protection. Additionally, its products are promoted at affordable prices, as consequence even the most vulnerable groups of customers can afford to buy useful products for their home from Ikea (The Economist, 2016).

LO2 AC 2.3

The presence of regulatory bodies on the market of most of countries today is essential, as through their monitor and active interference activities, these institutions manage to preserve the market as "a constant, free exchange space" (Vibert, 2014, p. 68). On the British market, there are national, but also European regulators preserving a balanced competition climate, stimulating companies to correctly promote their products, in order to capture the interest of potential customers. At a local level, Gala Coral can be monitored by the Competition Commission, while on a global level, the European Union Competition Commission can suggest regulations for the British company.

In the case of the merge with Ladbrokes, the Competition Commission still analyzes the impact of the operation. The regulator might establish for a short period of time, for instance six months, that the new company formed, likely to preserve the name of Gala Coral or to be added a symbol reminding of Ladbrokes such as Lad Gala Coral, to preserve the former identities of the merging parts. In practice, in this period of time, Gala Coral stores will preserve their physical identity, as well as the stores of Ladbrokes, since the regulator suspects that the free market in gambling will be affected by this merge. Analyzing the impact of the European Union Competition Commission, the European regulator can require Gala Coral already merged with Ladbrokes to adopt the existing framework in EU in the case of gambling, a more responsible approach to gambling dependence, the company being asked to adopt more severe strategies rather than the current communication between employees and the potential aggressive gamer. For instance, the European regulator can expect from Gala Coral to hire a permanent expert (psychologist or other type of therapist) in the gaming rooms, to prevent and effectively manage negative episodes.

LO3 AC 3.1

In practice, the economic relationships between companies and consumers form on four types of markets: monopoly, duopoly, monopsony and oligopoly. The classification is based on the existence of companies promoting similar products on the market, as well as the possibility to operate in a competitive market (Mankiw, 2014, p. 331).

Monopoly is the extreme case of one company operating on the market, as the unique provider or service desired by consumers. For example, the Royal Mail is the only company delivering letters and packages in UK, as in similar countries based on its tradition and expertise. Although it is the larger provider of these services, the Royal Mail is increasingly concurred by small companies performing the same services. A company in the monopoly situation is able to establish a price suitable for its needs, as well as setting barriers for potential competitors. Based on its tradition in gambling, Gala Coral was a monopoly in its first phase of development, being the unique company on the market to offer this type of service. As other competitors emerged on the market, Gala Coral could not establish the price of its services, based on a personal approach, but compared with the pricing strategies adopted by rivals. Additionally, since rivals adopted services able to offer a new opportunity on gambling, as dogs gambles, Gala Coral adopted too, but in a different format, focusing on particular breeds and establishing competitive prices, comparing with the rivals' brands. A similar situation can be noticed in the first years of activity in the case of Tesco or Ikea, the companies being promoters of particular activities on the market: Tesco as retailer of food and non-food merchandise, while Ikea as retailer for affordable decorations for homes. Each of the companies could impose their own prices to the customers interested in their products.

The duopoly is an improved situation on the market, including two similar comparing operating in the same activity, but not a satisfactory one, since traditionally the parts of the duopoly applied incorrect strategies to prevent the entrance of new competitors on the market. Each company can influence the price of the product, generally one of them being the leader on the market, establishing the price, while the other one following its example in close terms. Traditionally, Gala Coral and William Hill were the elements of a duopoly on the gambling market, each of them engaging in challenging strategies, in order to create disadvantages for the rival. Generally, if Gala Coral introduced a certain service, William Hill rapidly implemented too with an attractive price, similarly if William Hill reduced the costs for a particular service, Gala Coral attempted to adopt a similar measure. As Gala Coral will merge with Ladbrokers, an online gambling company, a duopoly situation can form, as Gala Coral and William Hill remain the major operators on the market, being likely for William Hill either to acquire a small operator as Ladbrokers or to independently enter the market of online gambling activities. In several European countries, Ikea created a duopoly situation with Kika, one of its traditional rival, each of them focusing on different customer targets: Ikea mostly on young and mature people, while Kika tending to focus on more mature consumers, aged 30-40. This situation was favourable for both companies, imposing their prices on a suite of products, as well as preserving a constant sales level on the selected targets.

A monopsony situation includes an unique consumer for a particular product, as in the case of novels or films, being able to establish the price of the product, based on his/her personal needs. For instance, if Gala Coral or any of the other gambling providers launches a service focusing on an extremely segmented target, as seniors willing to gamble, but have never done before, they can create a service of monopsony. The seniors have the ability to express their intentions of buying the product in certain price condition, comparing with other customers targets as young gamers, who are likely to accept the prices already established by the company, since they need the service to satisfy their needs and are informed by the offer of other rivals. In order to satisfy the needs of customers on expanding markets, such as in Eastern Europe, Ikea adopted a compromise, creating extremely affordable products to capture their interest, such as vintage chairs, made of local wood, which might not be retrieved in the offer of goods promoted in UK. In this situation, Ikea attempted to enter new markets and to obtain a maximal profit, by addressing to particular targets.

Oligopoly exists when few large companies operate on the market, mutually influencing the position of rival brands, based on their decisions. Currently, the gambling market in UK is similar to oligopoly, including major providers of gambling services as Gala Coral, William Hill and Stanleybet. Small companies as Ladbrokes or Paddy Power are generally bought by major providers, interested to preserve their competitive advantage on the market. In the case of food and non-food retailers, in UK, there is also an oligopoly situation, as Tesco and other major companies such as Asda, Morrison and Sainsbury tend to promote similar products at close prices, preventing the entrance of new competitors or reducing the importance of small ones already existing. The oligopoly situation in the case of these companies can be affected by the entrance of major food and non-food retailers such as Lidl or Kaufland, with a traditional expertise in Europe, as consequence able to impose improved products or reduced prices, to capture the interest of potential customers.

LO3 AC 3.2

Elasticity can be defined as "the willingness and ability of buyers and sellers to alter their strategies on the market, in response to change in their economic circumstances" (McEachern, 2015, p. 111). In practice, companies attempt to establish the price elasticity of demand for their products. Additionally, companies are also interested to a price change in the case of supplies, which will affect the price promoted for the products searched by potential customers.

In the case of Gala Coral, merging with Ladbrokers, customers of both companies expect the implementation of reduced prices, which is likely to stimulate an increased demand of the services. Gambling services can be considered substitutes such as casino games, as consequence unsatisfied customers might search for similar products in the case of rivals. A similar situation can be noticed in the case of Tesco, mostly its non-food products. As the household incomes were affected by inflation, customers might search for small electronics in the networks of Asda, in order to satisfy their needs, if Tesco preserves its existing prices, while Asda implemented discounts. Ikea relies on the collaboration of its experts with potential customers, creating at affordable prices the decorations able to supply their needs, as consequence in the context of increased competition on market, as Kika or newly Jysk promote similar products, particular at reduced costs, Ikea focus on the creation of new products, based on an expected good price, managing to preserve the loyalty of an essential part of its customers.

In terms of supply elasticity, companies need more supplies, in order to face the rise of prices related to goods or services. Gambling industry relies on technology supporting its activity, in the case of Gala Coral entering the online gambling based on its merge with Ladbrokers, the company will adopt the existing infrastructure of the merging part, yet it is likely to invest in the new direction, increasing its costs with technology, by acquiring services, sites administrators, antivirus solutions and other elements needed for the online activities of gambling. The relation between the evolution of supplies and prices is suggested through figure 1:

Figure 1. Law of supply

As Gala Coral spend more money in acquiring supplies required for its production of gambling services, the prices of its products are likely to increase, so that the company can obtain the financial resources to support its activities, potentially acquiring more supplies to offer improved services. Similarly, as the price of a service promoted by Gala Coral rises, the quantity of the supply required for its production also rises. In the first case, Gala Coral needs the suitable equipment for online gambling activities like servers, encryption solutions, which can cost $10 per 10 units in a certain moment of time as suggested in the first parameter of Price, but in a future moment, the supply required has a bigger quantity as in 40 units in Supply parameter, as consequence Gala Coral is likely to pay $20 per 40 units, which will be reflected in the final price promoted to its customers. In the second case, as the price of a service promoted rises, as being requested by customers, the company is likely to increase the quantity of Supplies, in order to support its production. For example, if the online gambling activities developed by Gala Coral prove to be popular among its customers, willing to buy it, the company is likely to invest more in this area, as consequence increasing the costs related to supplies.

On the other hand, as the price of one of Gala Coral services falls, the quantity demanded by customers is likely to rise. The law of demand, as suggested in Figure 2 can be applied by the company in the case of its old, unpopular services, before acquiring Ladbrokers, that need to be reconfigured, in order to be profitable for the company. For example, bets on dogs, which became extremely popular in UK, being used by competitors with less affordable costs, can become subject to discounts, that will increase the interest of potential customers for this service.

Figure 2. Law of demand

As suggested, when the price of the service promoted as dog contests is the lowest on the market as in unit 20 in parameter Price, the demand of customers is likely to be at highest level, as in unit 40 in parameter Quantity.

Ideally, the relation between demand and supply should be balanced, as in the case of one price promoted for a service at which the quantity of demanded resources equals the quantity supplied. For example, in the case of online gambling activities, Gala Coral spends the required quantity of supplies to generate the maximal results, to satisfy the demand. In practice, there are two possibilities occurring: excess supply and excess demand.

In the case of excess demand, as suggested in figure 3, a service is required in a certain quantity, at a give price, over its supply at that price, generating a higher price.

Figure 3. Excess demand

For example, when Coral Gala introduced its casino service, few competitors on the market promoted it, as consequence the company benefit of excess demand, as noticed between points A and B, customers willing to buy it, in increased quantities.

In the case of excess supply, the amount of material or resource obtained exceeds the amount required for production, causing a surplus.

Figure 4. Excess supply

For example, Gala Coral was interested to promote bingo services, acquiring more logistic than necessary, as the service did not manage to obtain a profitable interest of customers, as consequence the company gained a surplus of resources that could not be possibly used for other services, for example tickets for bingo cannot be used for dog contests.

In terms of elasticity, I will analyze the evolution of demand and supply.

Price elasticity of demand suggests the quantity demanded to produce changes in its price, being inelastic or elastic. When the price elasticity of demand is elastic, as in figure 5, the coefficient of elastic (Ed as a report between % change in quantity demand and % change in price) is higher.

Figure 5. Elastic demand

Basically, in elastic demand, price change causes a great change in demand, for example Q2 suggests more customers are interested by a certain product promoted by Coral Gala, as consequence the company created P2, a price able to satisfy their needs.

When the price elasticity of demand is inelastic, as in figure 6, the coefficient of elastic (Ed as a report between % change in quantity demand and % change in price) is below

Figure 6. Inelastic demand

Inelastic demand supposes that price change causes little change in demand. For example, if Coral Gala preserve the price of a service or promotes an unsatisfactory value for customers, the quantity of the product requested by customers will be affected as presented in parameter Q2.

A particular category is the cross elasticity of demand focusing on the degree of responsiveness of the quantity demanded by a certain service to the changes occurring in the price of a similar one. Generally, the cross elasticity of demand for substitute goods is likely to be positive, as the demand for product A increases, if the price of product B raises, as suggested in the figure 7

Figure 7. Cross elasticity of demand in the case of substitutes

For example, if Gala Coral's cost of a product raises (product B), it is likely for a substitute (product A) represented as P2 and Q2 to become more popular, as an affordable alternative.

In the case of cross elasticity focusing on complements, an increase in the price of the product Y, leads to a decrease in demand for product X, as represented in figure 8

Figure 8. Cross elasticity of demand in the case of complements

In the case of Gala Coral services, cross elasticity of demand focusing on complements is rare, as the company competes with other gambling companies on the market, as consequence its services can be substituted for improved version of the rival brands.

In the case of supply elastic, elastic and inelastic elasticity can be encountered. The price elasticity of supply (Pes) is a report between % change in quantity and % change in price.

Elastic supply supposes that change in demand can be completed without a rise in price, as in figure 9

Figure 9. Elastic supply

For example, Gala Coral can gradually increase supply, in order to produce the required services, with slight differences of costs, having a little influence on the price promoted to customers.

Figure 10. Inelastic supply

Inelastic supply presumes that supply is relatively unresponsive to changes in demand. For example, Gala Coral can apply a certain increase in the price of its services, that will generate a smaller change in demand, as in the case of self betting terminals that are perceived as a brand of the company. Although the price might be increased, the customers willing to buy this type of service, are likely to continue using it.

Tesco, as other food retailers in UK, rely on the efficient agriculture production, that can be easily affected by weather changes. If the production of a certain vegetable is reduced, the retailer is likely to raise costs associated with purchase and distribution, in order to face the change that will be reflected in the final price promoted to the customer. In the case of Ikea, the company is interested in acquiring the most suitable and cheaper forms of supplies on the market as wood or plastic, textile ornaments in order to create its personal products. If Ikea founds affordable supplies, the created products are likely to be promoted at affordable costs for its final customers.

LO3 AC 3.3

In the case of Gala Coral, the Pestle Analysis suggests a mutual connection between factors, able to positively or negative influence the evolution of the company.

Political/Legal factors:

Legislation related to gambling can be reinforced, in order to protect certain groups of potential customers such as young people, reducing the profit of the company. For instance, if all persons aged under 25 are prohibited to enter a gambling shop, the company will be affected

Since Gala Coral will enter the online gambling, the regulators might ask it to implement ethical measures related to gamblers, such as additional security strategies related to people hiding their age, in order to illegally gamble

As gambling is considered a potential dangerous activity for the moral standards of any society, Gala Coral and other gambling companies can be affected by the potential strategies implemented by the Conservative Party, determine to focus on the moral aspects of their economic activities

b. Economic factors

– Based on the constant inflation in UK estimated at 0.1%, gambling has been seriously affected, similarly to other entertaining activities, as potential customers tend to focus on necessary products as food or clothes

– The increased level of unemployment might determine potential gamblers to consider companies as Gala Coral temporal oasis of relax, stirring the critical reaction of society, considering that gambling activities make their profit on immoral criteria

– In the context of some European countries, where Gala Coral might be interested to expand its activity, gambling activity is considered illegal or almost illegal, local authorities imposing barriers

c. Socio-cultural factors

– Since its emergence, gambling activities were considered immoral by communities, especially based on religious perspective. It is essential for Gala Coral to avoid any potential conflict, based on an inherited opinion that gambling destroys families or individual personalities

– Gambling activities is mostly popular in subcultures as immigrants, associated gambling with personal perspective as risking every money for substantial revenue. It is essential for Gala Coral to impose a responsible use of its services in the case of this particular group of customers, in order to avoid social or legal critics

d. Technology factor

– By acquiring Ladbrokers, Gala Coral is determined to use the advantage of online gambling. The decision is justified by increased use of internet among adults, 77% in the first quarter of 2014. Basically, for potential customers unable to reach a gambling shop, Gala Coral can offer a similar, virtual experience

– As combining physical and online gambling activities, Gala Coral can constantly innovate its products and use in a more efficient way the existing resources. For example, in physical stores customers can be encouraged to also gamble online, while in the online stores they can be encouraged to visit the concrete stores of the company

E. Environment factor

– Although the activity of Gala Coral does not rely on a direct contact with environment, it is recommended for the company to preserve a friendly-environment attitude, efficiently recycling and supporting green programs, to prove itself as a reliable member of the community.

LO4 AC 4.1

International trade can be defined as the exchange of goods or services, surpassing regional or national borders. As its name indicates, international trade aims for a global market, creating greater competition between multiple products, promoted to selective customers, interested to obtain the most affordable costs (Hinkelman, 2005, p. 10).

In the case of Gala Coral, the context of international trade can be positive impulse to expand its activity in Europe or other continents, similarly to Stanleybet. A similar perspective can be adopted in the case of Tesco, while Ikea is already present in several European countries, susceptible to expand on additional markets. As companies operate in more than one country, they can reduce their costs, for instance Gala Coral can hire IT experts from other countries than UK, paying them with a reduced wage, comparing with a local IT expert. Tesco can open new stores, using local workforce, reducing costs related to human resources, as well as Ikea. Companies can use local markets to find supply, for instance Coral Gala can find cheaper gambling machines in Eastern Europe, as well as Tesco can buy cheaper food from local markets, while Ikea can expand its policy to use local materials for its global production. Based on a positive image for both customers and suppliers, Coral Gala and Tesco can become widely known in Europe, similarly to Ikea, already assimilated as an European standard for decorations.

Additionally to benefits, there are also limitations regarding to international trade for the selected companies. For example, Coral Gala and Tesco have to comply to local and national agreements, which might support local producers instead of international one, in terms of local economy stimulation. Infrastructure might be reduced in the markets aimed for expansion, as consequence companies have to invest in transportation or communication solutions, a similar situation being noticed in the case of first phase of Ikea expansion in Europe, the company strategically investing in stores located in major cities, mostly belonging to former decoration provider or providers that decided to merge with Ikea. Workforce is cheap and mostly available on international markets, but needs to be trained, in order to comply to the companies' standards. Additionally, the companies have to take in account cultural habits, as not working in certain days of the year, considered as days of celebration.

LO4 AC 4.2

Based on the impact of globalisation, the companies analyzed can create an improved wealth. As expanding on new markets, Gala Coral, Tesco and Ikea are able to promote their products and services to new customers, as consequence increasing their opportunities for profit. Home decorations, food or non-food products, as well as gambling services can be produced by local or national companies, yet the already mentioned companies have the advantage of a long expertise and positive customer experience in their homelands. For instance, Ikea surpassing the borders of Sweden, was already considered the most reliable producer in its area in its homeland, admitted as a potential trustworthy brand by countries in the area. Based on efficient promotion of innovative decoration at affordable prices, Ikea managed to become an European brand, able to apply the same or improved strategies for other markets. Tesco and Gala Coral might encounter multiple local rivals, but have to provide a positive experience to potential customers, in order to create a competitive advantage on new markets and increase their wealth.

As local markets are interested in supporting the entrance of foreign investors, the companies analyzed can use in their benefit the possibility of inward investment and foreign currency. Perceived as serious investors, based on their expertise in homelands, Gala Coral, Tesco and Ikea can obtain beneficial loans or facilities, in order to be stimulated to invest and continue their investments in the new markets. Physical investments as the acquisition of infrastructure are supported by local authorities, as well as non-tangible investments as the implication of these companies in social responsibility programs, stimulating the positive evolution of the community.

Focusing on a new market, companies have to share ideas, in terms of cultural understanding. For instance, while entering on Eastern European market Ikea understood the connection of local communities with certain types of materials as oak wood and use it for the majority of products promoted on the market, gradually implementing few of these products on other markets as the costs of production were reeduced. A similar perspective can be adopted by Gala Coral, focusing on local habits as gambling on Sunday as free of work day or celebrations and offering special promotions for these occasions, while Tesco can benefit of local expertise in cultivating and preserving in good condition food, in order to apply for the local products promoted in its network.

Awareness of global warming and climate change represent a major challenge for local communities, as well for central authorities. The companies have to support as possible the intention of these parts, in order to preserve their positive image. Tesco is one of the ecological agriculture, reducing the use of pesticides or other stimulators in agriculture, while Ikea focuses on the efficient use of wood, as forests are considered essential provider of oxygen. In the case of Gala Coral, its activity is not directly connected with climate change, but can imply in ecological projects as recycling water, electricity, garbage, in order to prove its awareness in this area.

Technology related impact is rapidly adopted by companies worldwide, despite their size or activity type. It is essential to be online, in order to be remarked, as consequence social media can be used as a communication and promotion tool. Gala Coral, Tesco and Ikea can use their websites, social media accounts or dedicated blog to preserve a constant dialogue with customers, as well as to inform them about the new products or services promoted. In terms of contemporary life, most of young and adults spend more time using gadgets rather than one decade ago, based on the affordable internet rates and the impossibility to arrive to a concrete store. The advantage of the social media is enormous, as customers are assured that the companies are interested by their opinions and shopping preferences through online purchases.

LO4 AC 4.3

EU established a suite of common strategies to be applied in essential activities, such as employment, agriculture or environment, state members as UK being required to nationally implemented.

In the case of Tesco, focusing on food distribution, the EU agriculture strategy substantially influences its activity. Tesco is determined to implement sustainable farming, based on the European framework, meaning the encouragement of local production of vegetables, the correct payment of farmers, as well as an efficient distribution chain, able to maintain in good condition the ecological products. Additionally, the company adopted the EU recommendation related to worker's rights, any type of discrimination being monitored, the workers being paid for their extra activities, as well as stimulating job satisfaction.

Ikea stimulated the EU perspective related to competition, in terms of customer's right to refund or to use for free certain samples. Based on its personal strategy to grant 90 days to be refunded or try-at-home programs for 90 days, the European authorities established as a common rule that providers should allow customers to evaluate and return the purchased products in terms of 30 days. In each country, where an Ikea store is located the 90 days strategy is applied, despite the reason for return, damaged or undamaged good, while local providers might impose limits regarding refund or testing products. Ikea applied to EU regulations related to employment, providing decent wages, based on the national performance of economy to all its employees, as well as constant training and compensatory programs for leisure. Ikea is partner is local programs related to sexual or racial discrimination. Additionally, Ikea supports environmental programs, considering as the EU that a greener environment is a durable investment for future generations.

In the case of Gala Coral, the company adopted the European regulations related to the protection of personal data of its customers, protecting their identity in gambling rooms or virtual rooms, as well as birth data, credit card information, home address, email address, phone number or other personal data. In the case of justified urge of authorities to reveal these data, the company agrees to support the legal procedures. In terms of competition, Gala Coral signed the Gambling Act, assuring European authorities that its activity will not interfere with the free creation of rival gambling companies, but the merge with Ladbrokers is intensively analyzed by local and European authorities as a breach to existing competition regulations.

All in all, analyzing the evolution of Gala Coral, Tesco and Ikea, essential ideas about business environment were highlighted. In the general framework of types of organizations, efficient models were presented, as well as the existence of major stakeholders and the responsibilities assumed by different organizations. Coral Gala is a private company, focusing on gradually obtaining profit to support its activity, comparing with other types of business forms. In its evolution, Coral Gala relied on an organization structure including multiple internal and external stakeholders, as follows: owners, managers, workers on an internal level, as well as suppliers, customers and the community on an external level. Each stakeholder influences in a certain degree its business activities. In the case of the selected company, its particular activity as gambling business was analyzed in terms of responsibilities assumed for both internal and external stakeholders, focusing on the moral implications of correct approach to gambling.

Secondly, economic systems substantially influence the development of an organization, as well as the current fiscal and monetary policies or the regulatory mechanisms. Coral Gala is an element of market economy, its activity being influenced by the supply and demand existing on gambling market. As the market environment is a dynamic structure, organizations tend to adopt the most suitable strategies for fixing prices or making other organizational decisions as in the case of supply or demand. The selected organization, Gala Coral, debuting as a monopoly and currently competing with similar companies on the market, was analyzed according to PESTLE pattern, while the last part of the paper analyzed its potential evolution in terms of international trade, highlighting the advantages or limitations of expanding on new markets, as well as the impact of EU's regulations.

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