0273704249_COVER.qxd 18/4/06 08:46 Page 1 fifth edition The Business Environment Ian Worthington and Chris Britton T h A vibrant and contemporary introduction to the business environment, Worthington and Britton e comprehensively examine how external influences affect B the decisions and operations of today’s organisations. u s What roles do culture, diversity and ethics play in the dynamic world of business i today? How do unpredictable political and economic conditions affect an n organisation? What are the impacts of globalisation, social and technological change on e fifth edition business decisions? s The Business Environment s Using well-known examples and case studies from the public and private sectors, this fifth edition of The Business Environment addresses these key questions and many more. E Ian Worthington and Chris Britton Encouraging students to consider the challenges and opportunities that managers face in the n business environment, it provides a strong basis from which to build an overall understanding of v the context of business. i r o n Key Features m e (cid:2) Learn about the latest issues in business: technology n and e-business, corporate responsibility, and socio- cultural influences t (cid:2) Apply theory to practice through diverse cases and examples, such as Amazon, Toyota and the mobile fifth phone market edition (cid:2) Study online! Test your knowledge through self-assessment questions,and find useful weblinks at www.pearsoned.co.uk/worthington. a W n d o r Bt h r itin Ian Worthington is a Reader and Chris Britton a Principal tog nto Lecturer in the Department of Strategy and Management at n Leicester Business School, De Montfort University. ISBN 0-273-70424-9 Additional student supportat www.pearsoned.co.uk/worthington 9 780273 704249 www.pearson-books.com Additional student supportat An imprint of www.pearsoned.co.uk/worthington BUEN_A01.QXD 4/4/06 2:58 pm Page i The Business Environment Visit the The Business Environment, fifth edition, Companion Website at www.pearsoned.co.uk/worthingtonto find valuable studentlearning material including: (cid:2) Self-test questions for every chapter (cid:2) Links to articles and resources on the Internet (cid:2) Searchable online glossary BUEN_A01.QXD 24/4/06 1:46 pm Page ii We work with leading authors to develop the strongest educational materials in business, bringing cutting-edge thinking and best learning practice to a global market. Under a range of well-known imprints, including Financial Times Prentice Hall, we craft high quality print and electronic publications which help readers to understand and apply their content, whether studying or at work. To find out more about the complete range of our publishing please visit us on the World Wide Web at: www.pearsoned.co.uk BUEN_A01.QXD 4/4/06 2:58 pm Page iii fifth edition The Business Environment Ian Worthington and Chris Britton Leicester Business School, De Monfort University, Leicester BUEN_A01.QXD 4/4/06 2:58 pm Page iv Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE United Kingdom and Associated Companies around the world Visit us on the World Wide Web at: www.pearsoned.co.uk First published in Great Britain in 1994 Second edition 1997 Third edition 2000 Fourth edition 2003 Fifth edition 2006 © Ian Worthington and Chris Britton 1994, 1997, 2000, 2003, 2006 The right of Ian Worthington and Chris Britton to be identified as authors of this work has been asserted by them in accordance with the Copyright, Designs, and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without either the prior written permission of the Publishers or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London W1P 0LP. ISBN-13: 978-0-273-70424-9 ISBN-10: 0-273-70424-9 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. Library of Congress Cataloguing-in-Publication Data A catalogue record for this book is available from the Library of Congress. 10 9 8 7 6 5 4 3 2 1 10 09 08 07 06 Typeset in 9.5/13 pt Stone Serif by 30. Printed and bound by Mateu Cromo Artes Graficas, Spain. The publisher’s policy is to use paper manufactured from sustainable forests. BUEN_A01.QXD 4/4/06 2:58 pm Page v For Lindsey, Tom and Georgina and for Rachael, Philip, Nick and Megan, with our love BUEN_A01.QXD 4/4/06 2:58 pm Page vi BUEN_A01.QXD 4/4/06 2:58 pm Page vii Brief contents Full contents ix Contributors xviii Preface to the first edition xix Preface to the second edition xx Preface to the third edition xxi Preface to the fourth edition xxi Preface to the fifth edition xxii Guided tour xxiv Part One INTRODUCTION 1 1 Business organisations: the external environment 3 2 Business organisations: the internal environment 18 Part Two CONTEXTS 39 3 The political environment 41 4 The macroeconomic environment 80 5 The demographic, social and cultural context of business 120 6 The resource context 145 7 The legal environment 171 Part Three FIRMS 197 8 Legal structures 199 9 Size structure of firms 231 10 Industrial structure 262 11 Government and business 289 Part Four MARKETS 313 12 The market system 315 13 Market structure 341 14 International markets and globalisation 367 15 Governments and markets 402 Part Five ISSUES 429 16 The technological environment: e-business 431 17 Corporate responsibility and the environment 447 18 Monitoring change 471 Glossary 496 Index 513 BUEN_A01.QXD 4/4/06 2:58 pm Page viii BUEN_A01.QXD 4/4/06 2:58 pm Page ix Contents Contributors xviii Preface to the first edition xix Preface to the second edition xx Preface to the third edition xxi Preface to the fourth edition xxi Preface to the fifth edition xxii Guided tour xxiv 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: A healthy business? 7 The immediate or operational environment 9 Analysing the business environment 10 Mini case: Levi Strauss: jean therapy? 10 Central themes 13 Synopsis 14 Summary of key points 14 Case study: A shock to the system 15 Review and discussion questions 16 Assignments 16 Further reading 17 2 Business organisations: the internal environment 18 Ian Worthington and Zena Cumberpatch Learning outcomes and key terms 18 Introduction 19 Approaches to organisation and management 19 Organisation structures 23 Mini case: Change at Deutsche Bank? 23 Mini case: Royal Dutch Shell 28