UNIT 19: EXTERNAL BUSINESS ENVIRONMENT

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LO1 Understand the impact of socio-economic change on the development of
commercial organisations in a business and services industry context
Structure and operation of UK economy: market structure; perfect/imperfect competition;
oligopoly; duopoly and monopoly; national/local factors; determinants of free-market economy
Government economic policy: aims and influence; effects on employment policy; inflation;
balance of payments; economic growth in industry sector; current issues Income, wealth,
employment and occupational distribution: structure and composition of business and services
industry; patterns of demand for business and services; the socioeconomic framework of
demand; labour demand in industry sector Demographic trends: geographical pattern of labour
demand; nature of employment in business and services industries; employment profiles eg
age, sex Social structures: types of people employed; geographical variations; self-employed;
unemployed; labour turnover; levels of pay Industry context: contexts eg hospitality and
catering,

hairdressing

and beauty therapy, sports

and leisure,

travel

and tourism

LO2 Understand the effect of legal and political environments on business and service
industries
Structure, operation and influence of local government: structure; areas of control; limits of
authority; interface with national government; powers affecting business and services industries
Role and influence of the EU: history of the EU; relationship with national and local government;
influence of the EU directly/indirectly on business and services industries Pressure groups: role;
types; political influence; why they emerge; reasons for existence; memberships; influence of
pressure groups on government; national and local issues; overall impact Legal framework
within the UK: role of legislation within the UK; regional variations; English system versus
Scottish system; legal influences directly affecting business and services industries; impact of
national parliaments/assemblies Legislative process: the structure of the legal system; the
legislative process in relation to national and local government; the legislative process and the
individual
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UNIT 19: EXTERNAL BUSINESS ENVIRONMENT

LO3 Understand the statutory requirements for establishing and developing a business
and services operation Business and services
operations: types eg private ownership, partnership, companies, public, private, limited by
shares, limited by guarantee, unlimited companies, business names Registered companies:
formation; structure; processes; dissolution; memorandum of association; articles of association;
statutory declaration; statutory list; responsibilities and control eg agents, directors, senior
executives,

different

types

of

company

meetings,

voting

rights

UNIT 19: EXTERNAL BUSINESS ENVIRONMENT

Learning outcomes and assessment criteria
Learning outcomes
On successful completion of this unit a learner will:
LO1 Understand the impact of socio-economic change on the development of
commercial organisations in a business and services industry context
Assessment criteria for pass
The learner can:
1.1 discuss the structure and operation of the UK economy
1.2 analyse current government economic policy and its effect on business and services
industries
1.3 discuss income, wealth, employment and occupational distribution in relation to the
provision of business and services operations
1.4 assess the demographic trends that influence employment patterns in business and
services industries
1.5 analyse the social structures of people employed in business and services industries
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LO2 Understand the effect of legal and political environments on business and service
industries
2.1 discuss the structure, operation and influence of local government
2.2 evaluate the role and influence of the EU, and its impact on business and services industries
2.3 assess the role of pressure groups and their political influence in relation to national and
local issues
2.4 analyse the legal framework within the UK, identifying the main differences between the
English and Scottish systems
2.5 evaluate the legislative process as it affects business and services industries at both local
and national level
LO3 Understand the statutory requirements for establishing and developing a business
and services operation
3.1 assess the different types and characteristics of business that operate within the business
and services sector
3.2 discuss the legal processes necessary for formation and dissolution of a registered
company
3.3 analyse the structure and processes which determine the responsibilities and control within
a registered company

UNIT 19: EXTERNAL BUSINESS ENVIRONMENT

Guidance
Links
This unit can be linked with a number of units, including: Unit 3: Customer Service Unit 18:
Facilities Operations and Management.This unit also links to the following Management NVQ
units
A2: Manage your own resources and professional development
A3: Develop your personal networks

B2: Map the environment in which your organisation operates

B8: Ensure compliance with legal, regulatory, ethical and social requirements
B9: Develop the culture of your organisation
F12: Improve organisational performance.
Essential requirements
The section on legal and political environments will require formal input to present a
comprehensive summary of issues, such as the structure, operation and influence of local
government and the role and influence of the EU. Support from local political networks will be
useful, but must be handled sensitively to avoid any risk of political bias. Once this has been
achieved, further discussion and debate will extend learners thinking and enhance their
approach to the development of knowledge and understanding. Statutory requirements will
require formal input to establish the frameworks for different types of businesses and the
procedures for establishing and dissolving businesses. Visiting speakers can be drawn from
legal advisers such as solicitors and other sources of advice such as business counsellors and
banking experts, as well as local business people who have direct experience of such activities.
Debate and discussion can highlight advantages and disadvantages of different approaches.
Most clearing banks offer business packs which would serve as a useful teaching resource.
Additionally, Learning and Skills Councils and Chambers of Commerce can provide a wealth of
information to complement learning activities.

UNIT 19: EXTERNAL BUSINESS ENVIRONMENT

Employer engagement and vocational contexts
Visiting speakers from national and multinational organisations will help to put this unit into
context. Other invited speakers could include representatives from industry-led groups such as
the Sector Skills Councils or the Learning and Skills Council. Tutors should develop links with
appropriate local businesses, that can be used to provide real supporting materials to underpin
various issues. Appropriate case study material will enhance delivery. For those learners with no
previous knowledge of the appropriate industry, the unit will be more relevant if it is delivered
following a period of industrial work experience. Learners will benefit from exposure to business

and services commercial operations. Wherever possible, a practical approach should be

adopted with the use of appropriate case studies.
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