Module 2 - Unit 1: The Global Business Environment Flashcards
What sort of techniques would an organisation use to stay aware of changes in the business and risk environment?
Managers will monitor trends and developments in their particular field which might affect the org.
Through industry meetings and conferences, awareness of the latest developments is maintained.
What was the response of RBS to the impact on the bank of a rapidly changing business environment?
RBS developed a flexible approach to risk management and will change and extend their risk categories as risks change over time.
Political disturbances in Ukraine in 2014 increased the risks of higher costs of energy for European countries. Why is this?
It should be borne in mind that changes in the business and risk environment can also offer new opportunities for organisations – taking advantage of ‘upside risk’. Give one example of the ‘upside’ to this event.
Reduced or cut supplies will mean demand exceeds supply, pushing up prices.
An ‘upside’ of this is that new sources of gas and oil will be sought, giving opportunities to other power suppliers.
Why was the vision and strategy of the Body Shop considered to be high risk?
The approach of environmentally conscious and ethical testing was unprecedented and unproven in the marketplace.
What is meant by the expression “risk emphasis”?
Give three features of risk emphasis in the hotel business.
Risk emphasis is the term given to the set of prevailing risks in any particular org.
In the hotel industry these might be brand recognition, pricing policy and guest Health and Safety
The business world is thoroughly linked and woven together, and all organisations are influenced by changes and developments in the global business environment.
Name some of these changes and developments that can influence organisations.
- availability and cost of energy and raw materials
- growth in demand in developing countries
- political stresses in and between countries
- the expanding ‘virtual’ world of e-commerce
Explain the concept of Materiality as it relates to the global business environment.
Give an example.
The materiality of business environment changes varies in tune with the organisation’s operations and objectives.
For example, a medium-sized housing construction company operating in the UK will have a strong interest in the economic environment as it affects employment, confidence in the strength of the recovery, availability of funds to lend to prospective purchases and the cost of construction materials. While all of these factors have a link to the global economy, the main considerations are the local and national economic and business environment developments.
