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The Business Environment
F01_The_Business_Environment-A_Global_Perspective_9e.indd 1 11/02/2023 09:16

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The Business Environment:
A Global Perspective
Ninth edition
Ed Thompson, Ian Worthington and Chris Britton

De Montfort University, Leicester
Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney • Dubai • Singapore • Hong Kong
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First published in Great Britain in 1994 (print)

Ninth edition published 2023 (print and electronic)
© Ian Worthington and Chris Britton 1994, 1997, 2000, 2003 (print)
© Ian Worthington and Chris Britton 2006, 2009 (print and electronic)
© Pearson Education Limited 2015, 2018, 2023 (print and electronic)
The rights of Ed Thompson, Ian Worthington and Chris Britton to be identified as authors of this work have been asserted by them in accord-
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ISBN: 978-1-292-41784-4 (print)
978-1-292-41786-8 (PDF)
978-1-292-41785-1 (ePub)
British Library Cataloguing-in-Publication Data

A catalogue record for the print edition is available from the British Library
Library of Congress Cataloging-in-Publication Data

Names: Worthington, Ian, 1946- author. | Britton, Chris, author. |
Thompson, Edward, 1986- author.
Title: The business environment : a global perspective / Ian Worthington,
Chris Britton and Ed Thompson, De Montfort University, Leicester.
Description: Ninth Edition. | Hoboken, NJ : Pearson, [2023] | Revised
edition of The business environment, 2018. | Summary: “The business
environment is our environment, it is the world we live in and all
aspects of the business environment should be viewed in terms of people.
Business ethics is about fairness in how a business operates; a business
environmental policy is about how we pollute or preserve our own world;
employment and unemployment are about people’s ability to house and feed
themselves. This is a book about all of us and how we interface with the
world and each other, because businesses are just organisations of
people and material things”-- Provided by publisher.
Identifiers: LCCN 2022058060 (print) | LCCN 2022058061 (ebook) | ISBN
9781292417844 (paperback) | ISBN 9781292417868 (ebook) | ISBN
9781292417851 (epub)
Subjects: LCSH: Industrial management--Great Britain. | Great
Britain--Commerce. | European Union countries--Commerce. | Industrial
policy--Great Britain. | Industrial policy--European Union countries. |
International economic relations. | Business.
Classification: LCC HD70.G7 W64 2023 (print) | LCC HD70.G7 (ebook) | DDC
658--dc23/eng/20221201
LC record available at https://lccn.loc.gov/2022058060
LC ebook record available at https://lccn.loc.gov/2022058061
10 9 8 7 6 5 4 3 2 1
23 22 21 20 19
Cover design: Kelly Miller

Cover image: bfk92/iStock/Getty Images Plus/Getty Images
Print edition typeset in 9.5/13pt Stone Serif ITCPro by Straive

Printed by Ashford Colour Press Ltd., Gosport
NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION

For Lindsey, Tom and Georgina, for Rachael, Philip,
Nick and Megan, and for Ramanjeet, Darshan, Sandra
and David – with our love

Brief contents
Contributors xix
Preface to the Ninth Edition xx
Publisher’s Acknowledgements xxii
Guided tour xxiv
Part One INTRODUCTION 1

1 Business organisations: the external environment 3
2 Business organisations: the internal environment 17
3 The global context of business 39
4 De-globalising factors: sovereignty, conflicts and political priorities 55
Part Two CONTEXTS 69

5 The political environment (P) 71
6 The macroeconomic environment (E) 103
7 The demographic, social and cultural context of business (S) 141
8 The resource context: people, technology and natural
resources (T) 163
9 The legal environment (L) 189
10 The ethical and ecological environment (E) 215
Part Three FIRMS 233

11 Legal structures 235
12 Size structure of firms 261
13 Industrial structure 285
14 Government and business 307
Part Four MARKETS 325

15 The market system 327
16 Market structure 351
17 International markets and trade 373
18 Pandemics and Covid-19 399
19 Governments and markets 419
Part Five CONCLUSION 441

20 Strategy and the changing environment 443
Glossary 469
Index 489

Contents
Contributors xix
Preface to the Ninth Edition xx
Publisher’s Acknowledgements xxii
Guided tour xxiv
Part One INTRODUCTION
1 Business organisations: the external environment 3

Learning outcomes and key terms 3
Introduction 4
The business organisation and its environment 4
The general or contextual environment 7
Mini case: The impact of regional economic conditions 8
The immediate or operational environment 9
Analysing the business environment 10
Mini case: Fresh but not so easy 10
Central themes 12
Synopsis 14
Summary of key points 14
Case study: Facing the unexpected 14
Review and discussion questions 15
Assignments 16
Further reading 16
2 Business organisations: the internal environment 17

Introduction 18
The concept of the organisation: an initial comment 18
Understanding the nature of organisations: theories of
organisation and management 19
Other theoretical approaches 23
Organisational structures 23
Mini case: ‘Into the Dragon’s Den’ 24
Mini case: Mergers and competition 27
The virtual organisation 29
Structural change 30
Aspects of functional management 30
Synopsis 35

x Contents
Case study: Reshuffle at Microsoft 36

Case study: Thomas Cook expansion 37
Assignments 38
Further reading 38
3 The global context of business 39

Introduction 40
Globalisation versus internationalisation 40
The role of multinational enterprises 43
Mini case: Transfer pricing 44
Globalisation and business 46
Mini case: Currency crisis in emerging markets 47
Globalisation and the small and medium-sized firm 48
Synopsis 49
Case study: Global financial markets – too big to fail 50
Case study: FDI flows 51
Assignments 53
Further reading 53
4 De-globalising factors: sovereignty, conflicts and

political priorities 55
Introduction 56
What is globalisation? 57
Bretton Woods System (or the ‘New World Order’) 58
The 1970s to the present 59
Isolationism 59
International conflicts 62
Sanctions 63
Case study: Local solutions to global problems 65
Environmentalism 65
Case study: Weetabix – local solutions to global problems 67
Assignments 68
Further reading 68
Part Two CONTEXTS
5 The political environment (P) 71

Introduction 72
Political systems 74

Contents xi
Government in democratic states 76

Mini case: Brought to book 79
The three branches or functions of government 82
Mini case: The power of the purse 83
Checks and balances in democracies 87
A model of the policy process 87
Synopsis 89
Appendix 5.1: A democratic political system in action: UK national
government 90
The executive branch of government 92
The judicial branch of government 97
Appendix 5.2: Subnational government: UK local authorities 97
Appendix 5.3: Other levels of government 99
Case study: The business of lobbying 100
Case study: Political campaign funding 101
Assignments 102
Further reading 102
6 The macroeconomic environment (E) 103

Introduction 104
Economic systems 105
Economies in transition 109
Politico-economic synthesis 110
The macroeconomy 111
Government and the macroeconomy: objectives 117
Mini case: Digging in for the long term 123
Government and the macroeconomy: policies 123
The role of financial institutions 128
Mini case: A new kid on the block: the rise of the credit rating
agency 130
International economic institutions and organisations 131
Synopsis 134
Case study: Austerity 136
Case study: Quantitative easing (QE) 136
Assignments 138
Further reading 139
7 The demographic, social and cultural context

of business (S) 141

Introduction 142

xii Contents
The demographic environment of business 142

The social context 147
Mini case: A new class structure? 148
Lifestyles 151
The cultural environment 153
Mini case: National cultures 155
Application: market segmentation 156
Synopsis 158
Case study: An invitation to ‘tweet’ 159
Case study: Supply and demands – a changing workforce 160
Assignments 161
Further reading 161
8 The resource context: people, technology and

natural resources (T) 163
Introduction 164
People 164
Mini case: Zero-hours contracts 166
Technology 173
Technological change 173
Mini case: The robots are coming 175
Natural resources 180
Synopsis 183
Case study: Agricultural work and Brexit 184
Case study: Fracking 184
Assignments 186
Further reading 187
9 The legal environment (L) 189

Martin Morgan-Taylor
Introduction 190
Classification of law 190
Public and private law 190
Mini case: Verity and Spindler v Lloyds Bank (1995) 191
The legal system: the courts 194
Mini case: Jean-Marc Bosman – a case of foul play? 196
Business organisations and the law 197
Contract law: the essentials 197
Agency 201
Law and the consumer 202

Contents xiii
Codes of practice 209

Synopsis 210
Case study: The sale of goods on the Internet 211
Assignments 213
Further reading 214
10 The ethical and ecological environment (E) 215

Introduction 216
Ethics and business 217
Mini case: Illegal or unethical? 218
Corporate social responsibility 219
The ‘environment’ as a business issue: the emergence of
corporate environmentalism 220
Drivers of ‘green’ business 221
Why and how firms become more environmentally responsible 225
Mini case: Going round in circles: Desso Carpets 226
Another perspective: the ‘outside-in’ view 227
Case study: Doing well by doing good 228
Assignments 230
Further reading 230
Part Three FIRMS
11 Legal structures 235

Introduction 236
Private sector organisations in the UK 236
Mini case: Companies under pressure 242
Social enterprises 245
Public sector business organisations in the UK 246
Legal structure: some implications 249
Franchising, licensing and joint ventures 254
Mini case: Cross-national joint ventures 256
Synopsis 257
Case study: Uber 258
Assignments 259
Further reading 260

xiv Contents
12 Size structure of firms 261

Introduction 262
The size structure of UK industry 262
Organisational growth 263
Methods of growth 264
Mini case: The story of a failed merger 267
Finance for growth 268
Small firms 273
Mini case: ‘Olderpreneurs’ and small firms 274
Multinationals 281
Synopsis 282
Case study: The Scottish National Investment Bank 283
Assignments 284
Further reading 284
13 Industrial structure 285

Introduction 286
The structure of industry 286
Mini case: The end of manufacturing? 290
Mini case: The life cycle model 295
Deindustrialisation 297
Synopsis 300
Appendix 13.1: The Standard Industrial Classification (SIC), 2007 301
Case study: The rise of the public service companies 302
Assignments 305
Further reading 305
14 Government and business 307

Introduction 308
Government and business: an overview 308
Selected urban policy instruments 309
Developments in urban policy: 1997–2010 312
Urban and industrial policy developments in the UK since 2010 313
Local government and business in the UK 315
Business as an influence on government 320
Mini case: A taxing issue 321
Synopsis 322

Contents xv
Case study: Public sector procurement – the Royal Navy 323

Assignments 324
Further reading 324
Part Four MARKETS
15 The market system 327

Introduction 328
The market mechanism 328
Demand 328
Supply 331
Shifts in demand and supply 335
Mini case: The effect of a factory fire on the market for microchips 336
Price controls 337
Mini case: The price of toilet rolls in Venezuela 339
Elasticity of demand 340
Cross-price elasticity of demand 343
Elasticity of supply 343
The importance of the market to business 344
Synopsis 345
Case study: The housing market in the UK 346
Assignments 348
Further reading 349
16 Market structure 351

Introduction 352
Market structures – in theory and practice 353
Porter’s five-forces model 360
Mini case: Open Skies and contestability 363
Mini case: Blizzard, Activision and Microsoft 365
Measuring the degree of actual competition in the market 366
Synopsis 368
Case study: A Porter’s five-forces analysis of the cigarette industry
in the UK 369
Assignments 372
Further reading 372

xvi Contents
17 International markets and trade 373

Introduction 374
International trade – why it takes place 374
Restrictions to international trade 375
Mini case: The cotton dispute 376
The establishment and growth of the European Union 377
‘Brexit’ and Euroscepticism 379
The balance of payments 380
The history of the balance of payments in the UK 383
Mini case: The current account of the balance of payments 385
Exchange rates 388
Exchange rates and business 394
Synopsis 394
Case study: Post-Brexit trade 395
Assignments 397
Further reading 397
18 Pandemics and Covid-19 399

Introduction 400
Pandemics 400
Pandemics in history 403
Global spread 406
Prevention 407
Case study: Covid-19 408
Mini case: FFP2/N95 respirators and surgical masks 408
Mini case: Peloton bikes 409
UK government support measures 411
The future 416
Returning to normal 417
Synopsis 417
Assignments 418
Further reading 418
19 Governments and markets 419

Introduction 420
Privatisation policy in the UK 420
Mini case: Government to the rescue 426
Competition policy 429
Mini case: Accusations of price fixing 431
Government and the labour market 432
Synopsis 436

Contents xvii
Case study: Who leads who? 437

Case study: ‘What a fine mess you’ve got me into’ 438
Assignments 439
Further reading 439
Part Five CONCLUSION
20 Strategy and the changing environment 443

David Orton
Introduction 444
The need to monitor environmental change 445
Analysing the business environment: broad approaches 446
Mini case: Multinational inward investment: a PESTLE analysis 447
Techniques 450
Limitations to environmental analysis 455
Sources of information 455
Synopsis 463
Case study: Scenario planning at Shell 464
Assignments 466
Further reading 467
Glossary 469
Index 489

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Contributors
Authors
Ed Thompson, BA (Hons), MSc, PhD, PGCertHE, CMBE, CMgr, FHEA, FRSA, MCMI is
Associate Professor and Director of Apprenticeships in Leicester Castle Business School
at De Montfort University. His research is focused on organisational behaviour and
crisis management, and is a member of the editorial board of the SGEN Research Review
in the Philippines.
Ian Worthington, BA (Hons), PhD (Lancaster), is Emeritus Professor of Corporate Sus-

tainability at De Montfort University, Leicester, UK. He has published in, and reviewed
for, a variety of academic journals in both the UK and United States and is also author
of a book entitled Greening Business: Research, Theory and Practice.
Chris Britton, BA (Hons), MSc, was formerly a Principal Lecturer at De Montfort

University where her teaching and research interests included industrial economics,
labour markets and executive recruitment. With Ian Worthington and Andy Rees, she
is also co-author of a book on business economics.
Contributors
Martin Morgan-Taylor, LLB, LLM, FHEA, FRAS I, LTM, is an Associate Professor in the
School of Law at De Montfort University, Leicester, where he teaches business and com-
mercial law on a range of undergraduate and postgraduate courses. His research inter-
ests include online trading, consumer protection, and light pollution and nuisance. He
is a legal adviser on the latter to the Campaign for Dark Skies and the British
Astronomical Association.
David Orton, BA (Hons), MSc, is a Senior Lecturer at the University of Derby where he
is programme leader of the MBA Global and MBA Global Finance programmes. His
teaching and research interests lie in the fields of strategic management and crisis and
business continuity management.

Preface to the Ninth Edition
Why study the business environment?

The business environment is our environment, it is the world we live in and all aspects
of the business environment should be viewed in terms of people. Business ethics is
about fairness in how a business operates; a business environmental policy is about
how we pollute or preserve our own world; employment and unemployment are about
people’s ability to house and feed themselves. This is a book about all of us and how we
interface with the world and each other, because businesses are just organisations of
people and material things.
In reading about the business environment you are reading about your world. You
are reading about why the prices of the things you buy might go up or down, or why
at any given time it might be harder or easier for you to get a job. By understanding
the things in this book that make up your world you will better understand how the
world works, what changes mean and the implications they might have on your
organisations (whether they are organisations that we work for, or the organisations
that we have at home). In my own life, understanding the business environment has
helped me make decisions about when and where and how to buy a home, and what
and what not to invest in. Understanding the world allows us to make informed
decisions.
Despite the global pandemic, Brexit, the Russian invasion of Ukraine and increased
international trade tensions, the world keeps on turning. People continue to learn at
home and at universities – and people continue to graduate and find jobs. It will be
sensible for somebody going for an interview to carry out some research on the poten-
tial employer and understand how they might be affected by their business
environment.
The first aim of this book is to set out the way things are in the world today. It will
do this by breaking down everything outside of a business (and cover a little bit inside
as well) into chapters organised in a logical way. In effect, what we mean by external
and internal environments in a global context in which business operates today. The
second part will cover aspects of the business environment as you might find them in
a PESTLE analysis (Political, Economic, Social, Technological, Legal, Ethical/Ecological).
The third part will cover firms and industries, as well as how government regulates
business. The fourth part will consider the importance of markets as a concept, nation-
ally and internationally. Finally, we will consider how the business environment feeds
into strategy making for organisations.
The second aim of the book is to offer you examples and opportunities to apply what
you have learned. The biggest change in this edition of the book has been the inclusion
of specific chapters on the biggest contemporary events – namely the global Covid-19
pandemic and the retreat of some aspects of globalisation, including Brexit. These new
chapters apply some of the content which are introduced elsewhere to give an all-round
perspective on how factors influence one another, and convey the complexity of the
business environment.

Preface to the Ninth Edition xxi
The context
With this edition, like the last, I feel I have to introduce some caveats at this point. A 600-
page textbook takes a while to update. As I write this (in early 2022) the terms of Brexit
arrangements are finalised, but the implications are still being worked out – particularly
at the Irish/Northern Irish boarder. The tide appears to be turning with respect to Covid-
19, with several viable vaccines, countries making progress with their distribution, and
plans for how the developing world will be supported to ensure global protection. How-
ever, things change quickly. While I will address Brexit and Covid-19, the concepts set
out here can be applied to many different contexts; the specific situations will change
over the next two to five years but the concepts will persist. Further afield, when I started
the last edition Russia was considered a friendly nation to Europe; when I started this
edition things were a bit more icy between the two nations. Now things are very different
and Ukraine has been invaded – with things in Ukraine looking increasingly like a proxy
war. . . at any rate, the most significant conflict in Europe for 20 or more years.
The second caveat is with respect to data. I have updated data wherever possible – but
in some circumstances there are simply no more updates. Sometimes data are reported
in a different way, so continuity could not be maintained if the datasets were any more
up to date, and in a few cases data had been collected by agencies which have changed
or been disbanded. As a result, some of the datasets are not as up to date as I would have
preferred, but they are sufficient to illustrate the points made in the book.
My authorship
This book is now in its ninth edition. Ian Worthington approached me to author this
title in a more stable world (2015), a time when pandemic flu was hypothetical and
before Brexit; a time when writing a book on the business environment seemed like a
less troublesome undertaking!
I have quite a broad background in terms of my experience with the business envi-
ronment, having worked for large and small private and public sector organisations.
My first degree in business studies equipped me with most of my foundational business
environment knowledge. Subsequently, I gained a master’s degree in project manage-
ment, and a doctorate in organisational behaviour. In most of my organisational work
I have applied an actor–network theory perspective to how the world works. Actor–
network theory considers all things related, nothing existing in isolation. This has
proven a logical approach writing this book too; the environment is a world of many
connections, some obvious and others less so. I hope through reading this book that
you will come to understand the world in a similar way.
Thanks on behalf of Ian, Chris and myself to a dedicated team from Pearson for their
work on this edition, particularly Archana Makhija, Supervising Producer for UK and
Canada, for her support and encouragement through the development of this edition.
And on behalf of myself, a big thanks to Ian and Chris, who handed over the updating
of the title in the 8th edition. This remains their creation, but as the person responsible
for updates I must insist that errors are my own.
Finally, take it from someone with a British PhD in Organisational Behavior: organi-
sation is spelled with a Z in English English (it’s in the OED). However, to appease my
publishers, it will appear as organisation hereafter.
Ed Thompson

Publisher’s Acknowledgements
Text Credits
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Rights Act 2015, Section 62(4); 208 House of Lords: Director General of Fair Trading
v First National Bank [2001] UKHL 52 House of Lords; 217 Oxford University Press:
Crane, A. and Matten, D., Business Ethics: A European Perspective : Managing Corpo-
rate Citizenship and Sustainability in the Age of Globalization, Oxford University Press,
2004; 237 Parliament of the United Kingdom: The Partnership Act 1890; 262
Office for National Statistics: ‘top 10’ companies in the world in 2022, Fortune;

Publisher’s Acknowledgements xxiii
263 Office for National Statistics: UKBAD01 - Enterprise/local units by employ-

ment size band 2021 data (ONS); 269 European Union: Evaluation of the user guide
to the SME Definition, 2014, http://ec.europa.eu/docsroom/documents/5766/
attachments/1/translations/en/renditions/pdf; 272 Institute for Mergers, Acqui-
sitions and Alliances: Institute for Mergers Acquisitions and Alliances (2022); 274
Department for Business, Energy & Industrial Strategy: Business Population
Estimates, 2021’, Department for Business, innovation and Skills; 289 Office for
National Statistics: Based on Office for National Statistics (2022); 291 Office for
National Statistics: Adapted from EMP13: Employment by industry, Office for
National Statistics, 16 August 2022. Retrieved from https://www.ons.gov.uk/
employmentandlabourmarket/peopleinwork/employmentandemployeetypes/datasets/
employmentbyindustryemp13; 292 House of Commons: Industries in the UK,
House of Commons Library, 21 June, 2022; 292 European Union: Adapted from
Eurostat, 2008, 2013 © European Union, 1995–2014; 293 Office for National
Statistics: ONS, Consumer Trends Data, 2022, Office for National Statistics, 30 June
2022. Retrieved from https://www.ons.gov.uk/economy/nationalaccounts/satelliteac-
counts/datasets/consumertrends; 294 Office for National Statistics: ONS, Con-
sumer Trends Data, 2022, Office for National Statistics, 30 June 2022. Retrieved from
https://www.ons.gov.uk/economy/nationalaccounts/satelliteaccounts/datasets/con-
sumertrends; 298 Office for National Statistics: ONS - International comparisons
of productivity - final estimates 2020, Office for National Statistics, 20 January 2022;
358 Mintel Group Ltd: Adapted from Mintel Report, 2016; 366 The Department
for Business, Energy and Industrial Strategy: Adapted from ‘Sectoral Indicators
of Concentration and Churn 2006–2018’ from the Department for Business, Energy
and Industrial Strategy (BEIS), 2018; 369 The Office for National Statistics:
Adapted from Office for National Statistics, Opinions and Lifestyle Surveys; 369 The
Office for National Statistics: Adapted from Office for National Statistics, Adult
Smoking Habits in the UK 2019; 370 The Office for National Statistics: Adapted
from ONS Consumer Price Inflation Time Series Data (MM23); 375 Organisation for
Economic Co-operation and Development: Adapted from Financial Indicators
– Stocks: Private Sector Debt, http://stats.oecd.org/index.aspx?queryid=34814. OECD.
StatExtracts http://stats.oecd.org/; 381 Office for National Statistics: Adapted
from ONS Balance of Payments, 2021 Q4 Data www.ONS.gov.uk; 383 Office for
National Statistics: Adapted from Balance of payments, various years, www.ons.gov.
uk; 385 Office for National Statistics: Adapted from Office for National Statistics;
386 The Centre d’Études Prospectives et d’Informations Internationales:
Adapted from CEPII - BECI data, 2020; 387 Office for National Statistics: Adapted
from UK Trade ONS.gov.uk; 395 Agriculture and Horticulture Development
Board: Agriculture and Horticulture Development Board - www.AHDB.org.uk; 402
Cabinet Office: Adapted from Samuel Hilton and Caroline Baylon, Risk management
in the UK: What can we learn from COVID-19 and are we prepared for the next disas-
ter?, November 2020, National Risk Register, Cabinet Office, Crown copyright 2017;
406 World Bank: World Bank, Yearbook of Tourism Statistics, International Tourism,
Number of Arrivals (2022); 412 HM Revenue and Customs: HMRC (2022) Error and
Fraud in the COVID-19 schemes; 413 HM Revenue and Customs: ONS (2022), UK
Government Debt and Deficit (March 2022); 415 Office for National Statistics :
Office for National Statistics (2022) Inflation and price indices; 450 Harvard Business
Publishing: Adapted from Branden burger, A. and Nalebuff, B. (1995) ‘The right
game: use game theory to shape strategy’, Harvard Business Review, July–August,
pp. 57–71; 465 Jeroen van der Veer: Quoted by Jeroen van der Veer.

Guided tour
1
Business organisations:
the external environment
Business organisations differ in many ways, but they also have a common
Learning outcomesfeature:
highlight core coverage
the transformation in terms
of inputs of expected
into outputs; learning
it is through outcomes
this process that
2
after completing eachthe
chapter, to helpThis
value is created. students focusprocess
transformation their learning
takes placeand evaluate
against a their
progress.
Business organisations:
background of external influences which affect the firm and its activities. This
the internal environment

external environment is complex, volatile and interactive, but it cannot be
ignored in any meaningful analysis of business activity.
Learning
Having
The readapproach
systems this chapter you
to the should
study be able to:
of business organisations stresses the
outcomes
interaction
● indicate between a firm’s
the basic internal
features and external
of business environments. Key aspects of
activity
the internal context of business include the organisation’s structure and
● portray the business organisation as a system interacting with its environment
functions and the way they are configured in pursuit of specified organisational
● demonstrate the range and complexity of the external influences on business
objectives. If the enterprise is to remain successful, constant attention needs to
activity
be paid to balancing the different influences on the organisation and to the
● identify the
requirement central
to adapt to themes inherent
new external in the study This
circumstances. of the business environment
responsibility lies
essentially with the organisation’s management, which has the task of blending
people, technologies, structures and environments.
Key terms Environmental change Immediate (or operational) Outputs
External environment environment PESTLE analysis
General (or contextual) Inputs Transformation system
Learning Having read this chapter you should be able to:
outcomes environment Open system
Key terms are drawn out at
● outline the the
broadstart of every
approaches chapter
to organisation andand are emboldened
management, paying the first
time they appear in theparticular
text attention
to enable to thestudents
systems approach
to locate information quickly. A full
identify alternative organisational structures used by business organisations
Glossary appears at the end of the book.
●
● discuss major aspects of the functional management of firms

● illustrate the interaction between a firm’s internal and external environments
Key terms Bureaucracy Human relations approach Project team

Classical theories of Human resource Public sector
organisation management Re-engineering
Contingency approach Management Scientific management
Divisional structure Marketing Sub-systems
Downsizing Marketing concept Systems approach
Formal structures Marketing mix Theory X and Theory Y
Functional organisation Matrix structure Theory Z
Functional specialisation Organisation chart Virtual organisation
Hierarchy of needs Private sector Voluntary (or third) sector
Holding company Profit centre
M01_The_Business_Environment-A_Global_Perspective_9e.indd 3 10/02/2023 08:04
Lecturer resources tailored to support the use of this textbook in teaching is available
at go.pearson.com/uk/he/resources.

Guided tour xxv
210 Chapter 9 · The legal environment (L)
Case studies of varying complexity

service customers relate
should expect the
to receive theory
and by represented
encouraging acceptable businessin the chapter to
prac-
tices. In addition, such codes of conduct invariably identify how customer complaints
real-life situations in should
a range of diverse organisations.
be handled and many offer low-cost or no-cost arbitration schemes to help settle
disputes outside the more formal legal process. Case study: The sale of goods on the Internet 211
Whilst codes of practice do not in themselves have the force of law, they are normally
seen as a useful mechanism for regulating the relationship between business organisa-
case
tions and their customers and accordingly they have the support of the OFT, which often
study
The sale of goods on the Internet
advises trade associations on their content. Businesses, too, usually find them useful,
particularly if through the establishment of a system of self- regulation they are able to
The saleavoid the introduction
of consumer of restrictions imposed
goods on the Internet byavailable
cancellation the law. under Article 9, where the buyer
(particularly those between European member states) has a right to cancel the contract for 14 days starting
raises a number of legal issues. And these issues are on the day the consumer receives the goods or
now complicated by the fact that the UK has left services (this was seven days under the Distance
Synopsis Europe, but not stopped trading with EU member

states. First, there is the issue of trust, without which
Selling Directive). This ‘cooling-off’ period is intended
to place the consumer in the position as if they had
the consumer will not buy; they will need assurance seen the goods in store. Failure to inform the
that the seller is genuine,activities,
All business and that they fromwill get
thethe consumerof
establishment of the
this right automatically
organisation extends the
through to the sale of
goods that they have ordered. Second, there is the period to a year and 14 days. Whilst the seller can
the product to the customer, are influenced by the law. This legal environment within
issue of consumer rights with respect to the goods in place the cost of returning goods on the buyer, the
question:which businesses
what rights exist and exist
do theyandvaryoperate
across evolves overrefund
seller must time the and is a key
standard rateinfluence
outgoing on firms of
Europe?all sizes
Last, and ofinenforcement:
the issue all sectors, as illustrated
what by anThe
postage. examination of some
seller is not entitled of the
to deduct any main
costs laws
happensgoverning
should anything thegorelationship
wrong? between a business
as a restockingandfee.its All
customers.
of this places The majority of con-
a considerable
sumer laws are of relatively recent origin obligation
and on the seller;
derive from however, such data should
the attempts by successive
Information and trust stop many misunderstandings and so boost cross-
governments to provide individuals with a measure of protection against a minority of
border trade by boosting consumer faith and
Europe recognises the problems of doing business
firms that behave in ways deemed to beconfidence unacceptable.in non-face-to-face sales.
across the Internet or telephone and it has attempted
Concomitantly, they also provide reputable
to address the main stumbling blocks via directives
Another organisations with a isframework
concern for the consumer fraud. The within
which are which to carry
incorporated out their
into member business
states’ own laws.and, as such, acthas
consumer who aspaid by credit cardto
an incentive willentrepreneurial
be
Summary of key points provides the student with a useful revision aid.
And these activity
European indirectives
market-based date to aeconomies.
time when
protected by section 83 of the Consumer Credit Act
1974, under which a consumer/purchaser is not liable
the UK was a member of the EU, and so they are
for the debt incurred if it has been run up by a third
incorporated into domestic law. The original Distance
party not acting as the agent of the buyer. The
Selling Directive, implemented as the Consumer
Distance Selling Regulations extended this to debit
Protection (Distance Selling) Regulations 2000, has
cards, and removed the ability of the card issuer to
Summary of key points
been replaced by the Consumer Rights Directive
(2011-83/EU). (Note that this is different from the
charge the consumer for the first £50 of loss.
Moreover, section 75 of the Consumer Credit Act
Consumer Rights Act 2015.) The replacement
1974 also gives the consumer/buyer a like claim
Directive is a ‘maximum harmonisation’ measure,
● The legal rules within which businesses exist
against the and
creditoperate are an
card company forimportant
any part of the
meaning that the provisions are binding on, and
misrepresentation or breach of contract by the seller.
external
cannot be modified by,environment
member states.of business organisations.
Both
This is extremely important in a distance-selling
Directives attempt to address the issues of trust in
Laws affecting businesses derive transaction, where the seller may disappear.
distance●sale. In short, the consumer who does not from a variety of sources, including custom, the deci-
buy face to sions
face may oflack
theimportant
courts and legislation.
information,
What quality and what rights?
which they may otherwise have easy access to if they Assignments 259
● Laws
were buying face toareface.sometimes made at international The nextand issuesupranational levelthat
relates to the quality (including
may be Europe).
Article 6 of the Consumer Rights Directive requires expected from goods bought over the Internet.
● Contract,
to abide by regulation (and bear the agency and consumer protection
cost that security? What are three key areas governing
are the advantages and disadvan- the day-to-
inter alia for the seller to identify themselves and an Clearly, if goods have been bought from abroad, the
regulation brings) and dayfind it hard to ofrestructure if tages of this position?
address must be work provided ifbusinesses.
the goods are to be paid levels of quality required in other jurisdictions may
demand changes. Critics argue that this system is 2 What advantages arethis
there to regulated services
for in advance. Moreover, a full description of the vary. It is for reason that Europe has and
attempted to
goods and the final price (inclusive of any taxes) must intention
● Offer, acceptance, consideration, to the
create
issue legal relations and capacity are
unfair on drivers, who earn money for Uber while formal organisations?
standardise of quality and consumer
having none of the protection of employees. Finally,
central
also be provided. Theelements
new directive of bans
contract 3law.
pre-tickedUber has recently with
remedies, launched Uber Connect
the Consumer – a same
Guarantees Directive
where Uber services are less regulated than taxi firms,
boxes (e.g. for insurance), and limits card transaction day parcel pick up andThe
(1999-44/EC). delivery service
Consumer provided
Rights by has
Act 2015
there have been cases where drivers
● Agency have been are a common feature of business practice.
relationships
charges to those of the cost actually incurred by the cyclists on the same non-contractual basis
replaced The Sale and Supply of Goods to Consumeras its
accused of crimes against passengers – and Uber
trader. These provisions will help to cut hidden costs. drivers.Regulations
What other types
2002 in ofimplementing
service and companies
this Directive,
accused of not taking● Thetheserelationship
crimes seriously. between businesses think and of?their customers is governed by a variety of
▼
The seller must also inform the buyer of the right ofcan youwhich not only lays down minimum quality standards
laws, many of which derive from statute.
Questions and assignments
Case study questions
● In addition to the provide engaging
protection provided activities
to consumers by the law,for
manystudents
organisations and lecturers
1 Given the choice, would you rather
operate underwork for a com-
agreed codes of conduct.
in and out of the classroom
pany with employment rights situation.
and responsibilities, orFurther questions on the website help to evaluate
work as a self-employed contractor with limited
their progress. M09_The_Business_Environment-A_Global_Perspective_9e.indd 211 10/02/2023 08:26
Review and discussion questions

1 Numerically, the sole proprietorship is the most popular form of business organisation
throughout Europe. How would you account for this?
2 To what extent is corporate status an asset to a business organisation? Does it have

any disadvantages?
3 Examine the implications of privatising a public sector business organisation.
4 Discuss how the legal status of a business affects its objectives, its methods of finance
and its stakeholders.
5 How would you explain the rise in the popularity of franchising in recent years?
Assignments
1 You have recently been made redundant and decide to set up your own small
business, possibly with a friend. Assuming that you have £25,000 to invest in
your new venture, draft a business plan which is to be presented to your bank
manager in the hope of gaining financial support. Your plan should include a
clear rationale for the legal form you wish your business to take, your chosen
product(s) or service(s), evidence of market research, an indication of anticipated
competition and supporting financial information.
2 You work in a local authority business advice centre. One of your clients wishes
to start a business in some aspect of catering. Advise your client on the
advantages and disadvantages of the various legal forms the proposed
enterprise could take.

Part One
INTRODUCTION
1 Business organisations: the external environment
2 Business organisations: the internal environment
3 The global context of business
4 De-globalising factors: sovereignty, conflicts and
political priorities

1 Business organisations:
the external environment
Business organisations differ in many ways, but they also have a common
feature: the transformation of inputs into outputs; it is through this process that
the value is created. This transformation process takes place against a
background of external influences which affect the firm and its activities. This
external environment is complex, volatile and interactive, but it cannot be
ignored in any meaningful analysis of business activity.

outcomes ● indicate the basic features of business activity
● portray the business organisation as a system interacting with its environment
● demonstrate the range and complexity of the external influences on business
activity
● identify the central themes inherent in the study of the business environment
Key terms Environmental change Immediate (or operational) Outputs

External environment environment PESTLE analysis
General (or contextual) Inputs Transformation system
environment Open system

4 Chapter 1 · Business organisations: the external environment
Introduction
Business activity is a fundamental and universal feature of human existence and yet the
concept of ‘business’ is difficult to define with any degree of precision. Dictionary definitions
tend to describe it as being concerned with buying and selling, or with trade and commerce,
or the concern of profit-making organisations, and clearly all of these would come within the
accepted view of business. Such a restricted view, however, would exclude large parts of the
work of government and its agencies and the activities of non-profit-making organisations – a
perspective it would be hard to sustain in a climate in which business methods, skills, attitudes
and objectives have been vigorously adopted by these organisations. It is this broader view
of business and its activities that is adopted below and that forms the focus of an investiga-
tion into the business environment.
The business organisation and its environment

A model of business activity
Most business activity takes place within an organisational context and even a cursory
investigation of the business world reveals the wide variety of organisations involved,
ranging from the small local supplier of a single good or service to the multi-billion-dollar
international or multinational corporation producing and trading on a global scale.
Given this rich organisational diversity, most observers of the business scene tend to
differentiate between organisations in terms of their size, type of product and/or market,
methods of finance, scale of operations, legal status, and so on. Nissan, for example,
would be characterised as a major multinational car producer and distributor trading on
world markets, while a local builder is likely to be seen as a small business operating at a
local level with a limited market and relatively restricted turnover.
web Further information on Nissan is available at www.nissan-global.com

link
➚ The Nissan UK website address is www.nissan.co.uk
While such distinctions are both legitimate and informative, they can conceal the fact
that all business organisations are ultimately involved in the same basic activity, namely
the transformation of inputs (resources) into outputs (goods or services). This process is
illustrated in Figure 1.1.
In essence, all organisations acquire resources – including labour, premises, technology,
finance, materials – and transform these resources into the goods or services required by
their customers. While the type, amount and combination of resources will vary according
to the needs of each organisation and may also vary over time, the simple process described
above is common to all types of business organisation and provides a useful starting point
for investigating business activity and the environment in which it takes place.
A more detailed analysis of business resources and those internal aspects of organisa-
tions which help to transform inputs into output can be found in Chapters 2 and 8. The
need, here, is simply to appreciate the idea of the firm as a transformation system and
to recognise that in producing and selling output, most organisations hope to earn

The business organisation and its environment 5
Figure 1.1 The business organisation as a transformation system
Inputs Outputs
Land, premises
Materials Goods
Labour BUSINESS Services
Consumption
Technology ORGANISATIONS Ideas
Finance Information, etc.
Managerial skills, etc.
sufficient revenue to allow them to maintain and replenish their resources, thus permit-
ting them to produce further output which in turn produces further inputs. In short,
inputs help to create output and output creates inputs. Moreover, the output of one
organisation may represent an input for another, as in the case of the firm producing
machinery, basic materials, information or ideas. This interrelationship between busi-
ness organisations is just one example of the complex and integrated nature of business
activity and it helps to highlight the fact that the fortunes of any single business organisa-
tion are invariably linked with those of another or others – a point clearly illustrated in
many of the examples cited in the text.
The firm in its environment

The simple model of business activity described above is based on the systems approach
to management (see Chapter 2). One of the benefits of this approach is that it stresses
that organisations are entities made up of interrelated parts which are intertwined with
the outside world – the external environment in systems language. This environment
comprises a wide range of influences – economic, demographic, social, political, legal,
technological, etc. – which affects business activity in a variety of ways and which can
impinge not only on the transformation process itself, but also on the process of resource
acquisition and on the creation and consumption of output. This idea of the firm in its
environment is illustrated in Figure 1.2.
Figure 1.2 The firm in its environment
Environmental influences
Political, social, legal,
cultural, technological, etc.
BUSINESS
Inputs Outputs Consumption
ORGANISATIONS

Figure 1.3 Two levels of environment
‘General’ or ‘contextual’ ‘Immediate’ or ‘operational’

environment environment
Economic Suppliers
Political Competitors
Legal Labour market
Social, etc. Financial institutions, etc.
BUSINESS
ORGANISATIONS
In examining the business environment, a useful distinction can be made between

those external factors that tend to have a more immediate effect on the day-to-day opera-
tions of a firm and those that tend to have a more general influence. Figure 1.3 makes
this distinction.
The immediate (or operational) environment for most firms includes suppliers, com-
petitors, labour markets, financial institutions and customers, and may also include trade
associations, trade unions and possibly a parent company. In contrast, the general (or
contextual) environment comprises those macroenvironmental factors such as eco-
nomic, political, socio-cultural, technological, legal and ethical influences on business
which affect a wide variety of businesses and which can emanate not only from local and
national sources, but also from international and supranational developments. Macro-
environmental factors might be thought of as factors so large that the business cannot
change them.
This type of analysis can also be extended to the different functional areas of an organi-
sation’s activities, such as marketing or personnel or production or finance, as illustrated
in Figure 1.4. Such an analysis can be seen to be useful in at least two ways. First, it empha-
sises the influence of external factors on specific activities within the firm and in doing
so underlines the importance of the interface between the internal and external
Figure 1.4 Environmental influences on a firm’s marketing system
Environmental influences
General
Immediate
Marketing Marketing Marketing

Market(s)
intermediaries system intermediaries

The general or contextual environment 7
environments. Second, by drawing attention to this interface, it highlights the fact that,
while business organisations are often able to exercise some degree of control over their
internal activities and processes, it is often very difficult, if not impossible, to control the
external environment in which they operate.
The general or contextual environment

While the external factors referred to above form the subject matter of the rest of the
book, it is useful at this point to gain an overview of the business environment by high-
lighting some of the key environmental influences on business activity. In keeping with
the distinction made between general and more immediate influences, these are dis-
cussed separately below. In this section we examine what are frequently referred to as the
‘PESTLE’ factors (i.e. Political, Economic, Socio cultural, Technological, Legal and Ethical
influences). A PESTLE analysis (or PEST analysis) can be used to analyse a firm’s current
and future environment as part of the strategic management process (see Chapter 19).
PESTLE examines factors external to the firm; these might represent opportunities or
threats and later can be used in a SWOT analysis (whereas strengths and weaknesses are
internal factors).
The political environment

A number of aspects of the political environment clearly impinge on business activity.
These range from general questions concerning the nature of the political system and its
institutions and processes (Chapter 5) to the more specific questions relating to govern-
ment involvement in the working of the economy (Chapter 6) and its attempts to influ-
ence market structure and behaviour (Chapters 12, 16, 18).
Government activities, both directly and indirectly, influence business activity, and
government can be seen as the biggest business enterprise at national or local level
(Chapter 14). Given the trend towards the globalisation of markets (Chapters 4 and 17)
and the existence of international trading organisations and blocs, international politico-
economic influences on business activity represent one key feature of the business envi-
ronment (Chapters 5, 8 and 17). Another is the influence of public, as well as political,
opinion in areas such as environmental policy and corporate responsibility
(Chapter 10).
The economic environment

The distinction made between the political and economic environment – and, for that
matter, the legal environment – is somewhat arbitrary. Government, as indicated above,
plays a major role in the economy at both national and local level (Chapters 6 and 14)
and its activities help to influence both the demand and supply side (e.g. see Chapter 15).
Nevertheless there are a number of other economic aspects related to business activity
which are worthy of consideration. These include various structural aspects of both firms
and markets (Chapters 11, 12, 13 and 16) and a comparison of economic theory and
practice (e.g. Chapters 15, 16 and 17).

mini case The impact of regional economic conditions
For a company that trades in different markets needed for building more factories and
across the world, macroeconomic conditions (see infrastructure. To support its own steel industry
Chapter 6) in a particular part of its overall market China has been selling steel at less than the cost
can play a key role in determining its corporate European steelmakers can produce it. This is an
sales and profitability. French carmaker PSA example of the slowdown in European and
Peugeot Citroën, for instance, experienced a American economies causing Chinese businesses
significant decline in sales in 2012 as demand fell to act more aggressively, which has eventually led
in Southern Europe on the back of the recession in to the collapse of large parts of the British steel
the eurozone. In response to the problem, the industry such as the (Indian-owned) Tata steel
company announced significant job cuts aimed at works at Port Talbot near Cardiff in 2016.
reducing costs and looked to the French Since market conditions can vary substantially
government for a series of multi-billion-euro loans in different locations, some businesses can
to keep it afloat until trading conditions improved. experience significant variations in performance in
As the global economy slowed, steel industries different parts of their operations. US car giant
have been heavily affected. After a period of rapid Ford, for example, announced significant losses in
expansion (driven mostly by the growth of Chinese Europe in 2012 alongside ‘spectacular’ results in
infrastructure and social development), China’s its North American division. Like Chrysler and
economy has now started to slow as demand from other competitors including GM, Ford was able to
more developed countries who consume Chinese- offset its European losses with stronger sales in
made products has fallen. This has led to a the United States. It also posted pre-tax profits in
dramatic drop in the price of steel as it is no longer its South American and Asian markets.
Further information on the organisations mentioned in this mini case is available at

web
link www.psa-peugeot-citroen.com; www.tatasteel.com; www.ford.com;
➚ www.chrysler.com; www.gm.com
The social, cultural and demographic environment

Both demand and supply are influenced by social, cultural and demographic factors.
Cultural factors, for example, may affect the type of products being produced or sold, the
markets they are sold in, the price at which they are sold and a range of other variables.
People are a key organisational resource and a fundamental part of the market for goods
and services. Accordingly, socio-cultural influences and developments have an impor-
tant effect on business operations, as do demographic changes (Chapters 7 and 8).
The technological environment

Technology is both an input and an output of business organisations as well as being an
environmental influence on them. Investment in technology and innovation is fre-
quently seen as a key to the success of an enterprise and has been used to explain differ-
ences in the relative competitiveness of different countries (Chapter 8). It has also been
responsible for significant developments in the internal organisation of businesses in the
markets for economic resources.

The immediate or operational environment 9
The legal environment

Businesses operate within a framework of law, which has a significant impact on various
aspects of their existence. Laws usually govern, among other things, the status of the
organisation (Chapter 11), its relationship with its customers and suppliers and certain
internal procedures and activities (Chapter 9). They may also influence market structures
and behaviour (e.g. Chapters 16 and 19). Since laws emanate from government (includ-
ing supranational governments) and from the judgments of the courts, some under-
standing of the relevant institutions and processes is desirable (e.g. Chapters 5 and 9).
The ethical and ecological environment

Ethical considerations have become an increasingly important influence on business
behaviour, particularly among the larger, more high-profile companies. One area where
this has been manifest is in the demand for firms to act in a more socially responsible way
and to consider the impact they might have on people, their communities and the natu-
ral environment (Chapter 10).
The immediate or operational environment

Resources and resource markets
An organisation’s need for resources makes it dependent to a large degree on the suppliers
of those resources, some of which operate in markets that are structured to a considerable
extent (e.g. Chapter 8). Some aspects of the operation of resource markets or indeed the
activities of an individual supplier can have a fundamental impact on an organisation’s
success and on the way in which it structures its internal procedures and processes. By
the same token, the success of suppliers is often intimately connected with the decisions
and/or fortunes of their customers. While some organisations may seek to gain an advan-
tage in price, quality or delivery by purchasing resources from overseas, such a decision
can engender a degree of uncertainty, particularly where exchange rates are free rather
than fixed (Chapter 17). Equally, organisations may face uncertainty and change in the
domestic markets for resources as a result of factors as varied as technological change,
government intervention or public opinion (e.g. conservation issues).
Customers
Customers are vital to all organisations and the ability both to identify and to meet con-
sumer needs is seen as one of the keys to organisational survival and prosperity – a point
not overlooked by politicians, who are increasingly using business techniques to attract
the support of the electorate. This idea of consumer sovereignty – where resources are
allocated to produce output to satisfy customer demands – is a central tenet of the market
economy (Chapter 6) and is part of a capitalist ideology whose influence has become
all-pervasive in recent years, the idea being that companies competing is the most effi-
cient way to organise society. Understanding the many factors affecting both individual

and market demand, and the ways in which firms organise themselves to satisfy that
demand, is a vital component of a business environment that is increasingly market led.
Competitors
Competition – both direct and indirect – is an important part of the context in which
many firms operate and is a factor equally applicable to the input as well as the output
side of business. The effects of competition, whether from domestic organisations or
from overseas firms (see Chapter 17, for example), are significant at the macro as well as
the micro level and its influence can be seen in the changing structures of many advanced
industrial economies (Chapter 13). How firms respond to these competitive challenges
(e.g. Chapter 12) and the attitudes of governments to anti-competitive practices (Chap-
ter 19) is a legitimate area of concern for students of business.
Analysing the business environment

In a subject as all-encompassing as the business environment it is possible to identify
numerous approaches to the organisation of the material. One obvious solution would
be to examine the various factors mentioned above, devoting separate chapters to each
of the environmental influences and discussing their impact on business organisations.
While this solution has much to recommend it – not least of which is its simplicity – the
approach adopted below is based on the grouping of environmental influences into three
main areas, in the belief that this helps to focus attention on key aspects of the business
world, notably contexts, firms and their markets.
mini case Fresh but not so easy
A recurring theme in this and previous editions of providing a low-risk method of entry into a large
the book is the need for businesses to monitor and lucrative market, with the focus on providing
and, where necessary, respond to changes in the fresh produce at low prices in competition with
business environment. Equally important is the existing retailers such as Trader Joe’s and Walmart.
requirement for a firm to understand the needs of As a preliminary step, the company sent some of
the customers in the markets in which it currently its senior executives to the United States to live
operates or in which it wishes to expand its with American families for several months in order
operations as a means of growing the organisation. to understand their shopping habits and product
Even some of the world’s largest and most preferences. It also ran a high-profile promotional
sophisticated companies can sometimes get this campaign to support its plans to open up 1,000
wrong. stores in California and neighbouring states before
Take the very well documented case of Tesco launching the brand on the east coast.
PLC’s foray into the US grocery retailing market Tesco’s hope that it would be able to break even
with the launch of its Fresh & Easy stores in 2007– in two years quickly evaporated and the company
8. Initially established in a number of states on the was forced to pump hundreds of millions of
US west coast, the experiment was aimed at pounds into the venture to keep it afloat. Apart

Mini case: Fresh but not so easy 11
from the rather unfortunate coincidence of the high-quality produce. Some consumers also
launch of its brand with the sub-prime crisis and apparently complained that the name Fresh & Easy
subsequent recession in the United States, retail reminded them of a deodorant or a sanitary
analysts have pointed to some fundamental errors product.
in understanding the preferences of US By the time of its withdrawal from the US
consumers. Mistakes are said to have included an market in September 2013, Tesco had reputedly
unclear image; cold and antiseptic stores; the lost more than £1.8 billion. On the positive side,
introduction of self-pay checkouts; using cling film Tesco has made ventures into other markets. Trent
on fresh products; an over-emphasis on ready Hypermarket, owned jointly by Tesco and Tata was
meals; an unwillingness to embrace the ‘coupon formed in 2015 and after a mixed time during the
culture’ that is an important part of the US pandemic was making around £4 million a month
shopping experience; and problems in ensuring in profit by the second quarter of 2022.
web Tesco’s website address is: www.tesco.com

➚ link
Following a basic introduction to the idea of the ‘business environment’, in Part Two
consideration is given to the political, economic, social, cultural, demographic, legal,
ethical and ecological contexts within which businesses function. In addition to examin-
ing the influence of political and economic systems, institutions and processes on the
conduct of business, this section focuses on the macroeconomic environment and on
those broad social influences that affect both consumers and organisations alike. The
legal system and the influence of law in a number of critical areas of business activity are
also a primary concern and one which has links with Part Three.
In Part Three, attention is focused on three central structural aspects: legal structure,
size structure and industrial structure. The chapter on legal structure examines the impact
of different legal definitions on a firm’s operations and considers possible variations in
organisational goals based on legal and other influences. The focus then shifts to how
differences in size can affect the organisation (e.g. access to capital, economies of scale)
and to an examination of how changes in scale and/or direction can occur, including the
role of government in assisting small business development and growth. One of the con-
sequences of changes in the component elements of the economy is the effect on the
overall structure of industry and commerce – a subject which helps to highlight the impact
of international competition on the economic structure of many advanced industrial
economies. Since government is a key actor in the economy, the section concludes with
an analysis of government involvement in business and in particular its influence on the
supply as well as the demand side of the economy at both national and local levels.
In Part Four, the aim is to compare theory with practice by examining issues such as
pricing, market structure and foreign trade. The analysis of price theory illustrates the
degree to which the theoretical models of economists shed light on the operation of
business in the ‘real’ world. Similarly, by analysing basic models of market structure, it is
possible to gain an understanding of the effects of competition on a firm’s behaviour and
to appreciate the significance of both price and non-price decisions in the operation of
markets.

The analysis continues with an examination of external markets and the role of gov-
ernment in influencing both the structure and the operation of the marketplace. The
chapter on international markets looks at the theoretical basis of trade and the develop-
ment of overseas markets in practice, particularly in the context of recent institutional,
economic and financial developments (e.g. the Single Market, globalisation, the euro).
The section concludes with an investigation of the rationale for government interven-
tion in markets and a review of government action in three areas, namely privatisation
and deregulation, competition policy and the operation of the labour market.
To emphasise the international dimension of the study of the business environment,
each chapter of the book concludes with a relevant national and international cases
which draw together some of the key themes discussed in the previous chapters. By exam-
ining specific issues and/or organisations, the aim is to highlight linkages between the
material discussed in the text and to provide an appreciation of some of the ways in
which business activity reaches well beyond national boundaries.
The concluding chapter in the book stresses the continuing need for organisations to
monitor change in the business environment and examines a number of frameworks
through which such an analysis can take place. In seeking to make sense of their environ-
ment, businesses need access to a wide range of information, much of which is available
from published material, including government sources. Some of the major types of
information available to students of business and to business organisations – including
statistical and other forms of information – are considered in the final part of this
chapter.
Central themes
A number of themes run through the text and it is useful to draw attention to these at
this point.
Interaction with the environment

Viewed as an open system, the business organisation is in constant interaction with its
environment. Changes in the environment can cause changes in inputs, in the transfor-
mation process and in outputs, and these in turn may engender further changes in the
organisation’s environment. The internal and external environments should be seen as
interrelated and interdependent, not as separate entities.
Interaction between environmental variables

In addition to the interaction between the internal and external environments, the vari-
ous external influences affecting business organisations are frequently interrelated.
Changes in interest rates, for example, may affect consumer confidence and this can have
an important bearing on business activity. Subsequent attempts by government to influ-
ence the level of demand could exacerbate the situation and this may lead to changes in
general economic conditions, causing further problems for firms. The combined effect
of these factors could be to create a turbulent environment which could result in

Central themes 13
uncertainty in the minds of managers. Failure to respond to the challenges (or opportuni-
ties) presented by such changes could signal the demise of the organisation or at best a
significant decline in its potential performance.
The complexity of the environment

The environmental factors identified above are only some of the potential variables faced
by all organisations. These external influences are almost infinite in number and variety
and no study could hope to consider them all. For students of business and for managers
alike, the requirement is to recognise the complexity of the external environment and
to pay greater attention to those influences which appear to be the most pertinent and
pressing for the organisation in question, rather than to attempt to consider all possible
contingencies.
Environmental volatility and change

The organisation’s external environment is further complicated by the tendency towards
environmental change. This volatility may be particularly prevalent in some areas (e.g.
technology) or in some markets or in some types of industry or organisation. As indicated
above, a highly volatile environment causes uncertainty for the organisation (or for its
sub-units) and this makes decision-making more difficult.
Environmental uniqueness
Implicit in the remarks above is the notion that each organisation has to some degree a
unique environment in which it operates and which will affect it in a unique way. Thus,
while it is possible to make generalisations about the impact of the external environment
on the firm, it is necessary to recognise the existence of this uniqueness and where appro-
priate to take into account exceptions to the general rule.
Different spatial levels of analysis

External influences operate at different spatial levels – local, regional, national, suprana-
tional, international/global – exemplified by the concept of LoNGPEST/LoNGPESTLE
(see Chapter 19). There are few businesses, if any, today that could justifiably claim to be
unaffected by influences outside their immediate market(s).
Two-way flow of influence

As a final point, it is important to recognise that the flow of influence between the organi-
sation and its environment operates in both directions. The external environment influ-
ences firms, but by the same token firms can influence their environment, and this is an
acceptable feature of business in a democratic society which is operating through a mar-
ket-based economic system. This idea of democracy and its relationship with the market
economy is considered in Chapters 5 and 6.

Synopsis
In the process of transforming inputs into output, business organisations operate in a
multifaceted environment which affects and is affected by their activities. This environ-
ment tends to be complex and volatile and comprises influences which are of both a
general and an immediate kind and which operate at different spatial levels.
Understanding this environment and its effects on business operations is vital to the
study and practice of business.
Summary of key points
● Business activity is essentially concerned with transforming inputs into outputs for
consumption purposes.
● All businesses operate within an external environment that shapes their operations and
decisions.
● This environment comprises influences that are both operational and general.
● The operational environment of business is concerned with such factors as customers,
suppliers, creditors and competitors.
● The general environment focuses on what are known as the PESTLE factors.
● In analysing a firm’s external environment attention needs to be paid to the interaction
between the different environmental variables, environmental complexity, volatility and
change, and to the spatial influences.
● While all firms are affected by the environment in which they exist and operate, at times
they help to shape that environment by their activities and behaviour.
case
study
Facing the unexpected
In previous editions of the book we have stressed The same is true when natural disasters occur, as
how the business environment can sometimes the following examples illustrate.
change dramatically and unexpectedly for the worse,
2010 – the eruption of an Icelandic volcano sent a
using the September 11, 2001 attack on the World
cloud of volcanic ash over large parts of Europe,
Trade Center in the United States as an example of
resulting in the grounding of aircraft and weeks of
what is known as an exogenous shock to the
disruption of air travel. Airlines in particular were
economic system.
badly affected and faced additional costs because
Mercifully, events of this kind tend to be relatively
of stranded passengers and cancelled flights.
rare, but when they occur they present a considerable
Beneficiaries included hoteliers who had to
challenge to the businesses and industries affected.

accommodate people unable to travel and had an impact on tourism across Europe, with
alternative transport businesses (e.g. ferry hotel occupancy in London down as a result.
operators). In 2017 the Manchester Arena was bombed during
2013 – sudden and devastating storms in the a concert which had local and national effects on
Burgundy and Bordeaux regions of France how show security was managed.
destroyed swathes of the French wine industry, In 2020–21 Covid-19 radically changed business
resulting in a loss of jobs and income in the across a wide range of sectors.
affected local communities, with a knock-on
impact on local businesses. In China, a heatwave While there is little a business can do to protect
across the central and eastern parts of the country itself totally against events of this kind, many larger
badly affected the farming industry and tempted firms, especially multinationals, tend to put in place
the government to spend millions on artificial steps contingency plans to manage unexpected crises,
to trigger rain. In some areas power failures whether they are caused by human or natural
occurred as the demand for electricity soared as events. A business continuity plan (BCP) can help
individuals and organisations turned on the air- an organisation to respond quickly and effectively to
conditioning. Much warmer conditions were also a negative situation and hopefully to survive the
experienced in parts of Northern Europe, including experience and learn from it. Smaller firms on the
the UK, resulting in increased sales of certain items whole tend to lack the financial and human
(e.g. barbecues, sunscreen) and tempting many resources needed to adopt such resilience
people to holiday at home. Other adverse natural measures and some may not survive an adverse
events in 2013–14 included a super typhoon in the change in the external environment. For other
Philippines, extensive fires in parts of Australia, a organisations such a change may bring with it
major drought in California and severe storms and business opportunities, an unexpected though
flooding in southern England, all of which had possibly welcome gain from an event that has a
major effects on businesses and communities in negative impact on other firms.
the affected areas.
2015–16 – in 2015 terrorists armed with assault Case study questions
rifles and hand grenades attacked a beach resort in
1 Can you think of any other examples of major unan-
Tunisia. The British Foreign Office issued travel
ticipated events in your own country (or areas of your
advice to avoid all but essential travel to the
own country) that have had a serious adverse effect
country, as did many other governments. The
on its firms and/or industries?
result was a 37 per cent fall in foreign spending in
Tunisia, whose economy is 8 per cent dependent 2 Can you think of any businesses that may have ben-
on tourism. In 2016 attacks on Brussels and Paris efited commercially from this event or these events?
Review and discussion questions

1 In what senses could a college or university be described as a business organisation?
How would you characterise its ‘inputs’ and ‘outputs’?
2 Taking examples from a range of quality newspapers, illustrate ways in which business
organisations are affected by their external environment.
3 Give examples of the ways in which business organisations can affect the external
environment in which they operate.

Assignments
1 Assume you are a trainee in a firm of management consultants. As part of your
induction process you have been asked to collect a file of information on an
organisation of your choice. This file should contain information not only on the
structure of the organisation and its products but also on the key external
influences that have affected its operations in recent years.
2 For a firm or industry of your choice, undertake a PESTLE analysis indicating the
likely major environmental influences to be faced by the firm/industry in the next
five to ten years.
Further reading
Daniels, J. D., Radebough, L. H. and Sullivan, D. P., International Business: Environments and
Operations, 14th edition, Prentice Hall, 2012.
Fernando, A. C., Business Environment, Dorling Kindersley/Pearson Education India, 2011.
Hamilton, L. and Webster, P., The International Business Environment, 3rd edition, Oxford University
Press, 2015.
Steiner, G. A. and Steiner, J. F., Business, Government and Society: A Managerial Perspective, 13th
edition, McGraw-Hill/Irwin, 2011.
Wetherly, P. and Otter, D. (eds) The Business Environment: Themes and Issues, 3rd edition, Oxford
University Press, 2014.
Worthington, I., Britton, C. and Rees, A., Economics for Business: Blending Theory and Practice,
2nd edition, Financial Times/Prentice Hall, 2004, Chapter 1.

2 Business organisations:
the internal environment
The systems approach to the study of business organisations stresses the

interaction between a firm’s internal and external environments. Key aspects of
the internal context of business include the organisation’s structure and
functions and the way they are configured in pursuit of specified organisational
objectives. If the enterprise is to remain successful, constant attention needs to
be paid to balancing the different influences on the organisation and to the
requirement to adapt to new external circumstances. This responsibility lies
essentially with the organisation’s management, which has the task of blending
people, technologies, structures and environments.

outcomes ● outline the broad approaches to organisation and management, paying
particular attention to the systems approach
● identify alternative organisational structures used by business organisations
● discuss major aspects of the functional management of firms
● illustrate the interaction between a firm’s internal and external environments
Key terms Bureaucracy Human relations approach Project team

Classical theories of Human resource Public sector
organisation management Re-engineering
Contingency approach Management Scientific management
Divisional structure Marketing Sub-systems
Downsizing Marketing concept Systems approach
Formal structures Marketing mix Theory X and Theory Y
Functional organisation Matrix structure Theory Z
Functional specialisation Organisation chart Virtual organisation
Hierarchy of needs Private sector Voluntary (or third) sector
Holding company Profit centre

18 Chapter 2 · Business organisations: the internal environment
Introduction
Under the systems approach to understanding business activity presented in Chapter 1, the
organisation lies at the heart of the transformation process and tends to be seen as a kind of
‘black box’ which contains a multitude of elements – including structures, processes, people,
resources and technologies – that brings about the transformation of inputs into outputs (see
below). While the study of the business environment rightly focuses on the external context
of business organisations, it is important to recognise that firms also have an internal environ-
ment that both shapes and is shaped by the external context in which they operate and make
decisions. This notion of the interplay between an organisation’s internal and external environ-
ments is a theme that runs through many of the chapters in this book.
As students of business and management will be aware, the internal features of busi-
ness organisations have received considerable attention from scholars researching these
fields, and a large number of texts have been devoted to this aspect of business studies.
In the discussion below, the aim is to focus on three areas of the internal organisation that
relate directly to a study of the business environment: approaches to understanding
organisations, organisational structures, and key functions within the enterprise. Further
insight into these aspects and into management and organisational behaviour generally
can be gained by consulting the many specialist books in this field, a number of which
are mentioned at the end of this chapter. Issues relating to a firm’s legal structure are
examined in detail in Chapter 11.
A central theme running through any analysis of the internal environment is the idea of
management, which has been subjected to a wide variety of definitions. As used in this
context, management is seen both as a system of roles fulfilled by individuals who man-
age the organisation (e.g. entrepreneur, resource manager, coordinator, leader, motivator,
organiser) and as a process that enables an organisation to achieve its objectives. The
essential point is that management should be seen as a function of organisations, rather
than as a controlling element, and its task is to enable the organisation to identify and
achieve its objectives and to adapt to change. Managers need to integrate the various
influences on the organisation – including people, technology, systems and the
environment – in a manner best designed to meet the needs of the enterprise at the time
in question and be prepared to institute change as and when circumstances dictate.
The concept of the organisation: an initial comment

According to Stoner and Freeman (1992: 4), an organisation can be defined as two or
more people who work together in a structured way to achieve a specific goal or set of
goals. Defined in this way, the term covers a vast array of structures in the:
● private sector – that part of the economy where ownership and control of the organ-
isation is in the hands of private individuals or groups and where profit-seeking is a
central goal;
● public sector – that part of the economy under the control of government and its
agencies and where the state establishes and runs the different types of organisation
on behalf of its citizens and for their general well-being;

Another random document with
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The weeks passed, and our preparations for departure to England
proceeded at the soberest pace. In England we were going to stay with my
mother’s brother, a saintly man of some little property who lived a retired
life in London, and whose heir I would in due course be, since he was
himself without wife or children.
My father, never notable for the agreeable qualities of discretion and
reticence, soon spread about the report of his discovery of the green
carnation. He could not resist boasting of it in his cups, of the formula with
which he could always make them, of the fortune he must inevitably make.
Nor did he hesitate to taunt the men of the valley, they who came of
generations of flower-growers, with his own success in an occupation
which, he said, he had never undertaken but at a woman’s persuasion, since
it could be regarded as manly only by those who would describe as manly
the painted face of a Circassian eunuch. Thus he would taunt them,
laughing me to scorn when I ventured to point out that even worms will
turn and cravens conspire. Woe and woe to the dour and high-handed in a
world of polity, for their fate shall surely find them out!
One day, having been to the village to procure some yeast for the making
of a yaourt or yawort, which is that same Bulgarian “sour milk” so strongly
recommended to Anglo-Saxon digestions, I was startled, as I walked up the
path to the door, by the bruit of loud rough voices. Only too soon was my
fear turned to horror. One of the voices was my father’s, arrogant and harsh
as only his could be, with a sneer like a snake running through it. The other
I could not recognise, but could hear only too well that it had not the soft
accents of the men of the valley; and when, afraid to enter, I peered in
through the window, I saw my father in violent altercation with a man his
equal in stature and demeanour—another bearded giant, as fair as my father
was dark, and with the livid eyes of a wolf.
What was my horror on recognising him as Michaelis the comitadji, the
notorious and brutal Michaelis of the hills. The Michaelises and the
Samsonovitch Samsonoffs had always been the equal kings of the banditti
and, in many a fight between Christian and Turk, the equal champions of
the Cross against the Crescent. And now, as I could hear through the
window, the last of the Michaelises was asking of the last of the Samsonoffs
some of his great wealth, that he might arm and munition his troop to the
latest mode.
My father threw back his head and laughed. But his laugh had cost him
dear had I not screamed a warning, for the Michaelis with the wolfish eyes
had raised a broad knife. My father leapt to one side, and taking up the first
thing that came to hand, a heavy bottle of mastique, crashed it down like an
axe on the fair giant’s head; and then, without so much as a glance at the
unconscious man, and massive though the Michaelis was, slung him over
his shoulder, strode out of the house and garden and flung him into the
middle of the roadway, where he lay for long moaning savagely with the
pain of his broken head. I had gone to the aid of the wretch, but my father
would not let me, saying that no Michaelis ever yet died of a slap on the
crown and that a little blood-letting would clear the man’s mind of his
boyish fancies. Ah, if it had!
It was at a late hour of the very next night—for since my mother’s death
my father would loiter in the taverns until all hours—that his hoarse voice
roused me from my sleep; and on descending I found him raging about the
kitchen like a wounded tiger, his clothes in disorder and showing grim dark
stains that, as I clung to him, foully wetted my hands. I prayed him, in an
access of terror, to tell me he was not hurt, for what other protection than
him had I in that murderous land?
“I am not hurt, child,” he growled impatiently. “But I have been driven
to hurt some so that they can never again feel pain.”
They had ambushed him, the cowards, as he came home through the
wood—as though a hundred of those maggots of the valley could slay a
Samsonovitch Samsonoff! My father had caught the last of them by the
throat, and the trembling coward had saved himself by confessing the plot.
It appeared that it was they who had persuaded the Michaelis to visit us the
day before, alluring his fancy with tales of the discovery of the carnation
and of the great riches the Samsonoff had concealed about the house. And
the Michaelis had come to our house not for part of my father’s wealth but
for all he could find, as also for the secret of the carnation, which he might
sell at a great price to some Jew in Sofia—he had come to kill my father!
“And I, like a fool,” cried my father, “only broke the skin of his wolfish
head! Girl, we must be off at once! I have not lived in unwilling peace all
these years to die like a rat; and now that these weak idiots have failed to
kill me Michaelis and his troop will surround the house, and who shall
escape the wolves of the hills? Now linger not for your clothes and fineries.
Grigory Eshekovitch has horses for us at the edge of the wood, and we can
make Philippopolis by the morning. Here is all our money in notes. Take
them, so that you will be provided for should these scum get me. And the
formula—take care of the formula, child, for that is your fortune! Should I
have to stay behind, your mother’s brother in England is a good man and
will probably not rob you of more than half the profits of it.”
And so we came to leave our beloved home, stealing like thieves through
the darkness of a moonless night. How shall I ever forget those desperate
moments! Our farm lay far from any other habitation, and a long sloping
lane joined our pastures to the extensive Karaloff Wood, a wood always
evoked by Bulgarian poets of past centuries as the home of vampires and
the kennel of the hounds of hell.
There, at its borders, Grigory Eshekovitch, a homely man devoted to our
interests, awaited us with two horses; and, although I could not see his face
in the darkness, I could imagine by the tremor of his never very assured
voice how pallid, indeed green, it must have been; for poor Grigory
Eshekovitch suffered from some internal affection which had the effect of
establishing his complexion very uncertainly.
“Have you seen anyone in the wood?” my father asked him.
“No, but I have heard noises,” Grigory Eshekovitch trembled.
“Bah!” growled my father. “That was the chattering of your own
miserable teeth.”
I wonder what has happened to poor Grigory Eshekovitch, whether he
survived that hideous night. We left him there, a trembling figure on the
borders of the wood, while we put our horses into the heart of that darkness;
and I tried to find solace in our desperate situation by looking forward to
the safety and comfort of our approaching life in England. Little I knew that
I was to suffer such agonies of fear in this huge city that I would wish
myself back in the land of wolves!
My dreams were shattered by a low growl from my father, and we pulled
up our horses, listening intently. By this time we were about half-way
through the wood; and had we not known the place by heart we had long
since lost our way, for the curtain of leaves between us and the faint light of
the stars made the place so black that we could not even see the faintest
glimmer of each other. At last my father whispered that it was all right, and
we were in the act of spurring our tired horses for the last dash through the
wood when torches flamed on all sides and we stood as in the tortured light
of a crypt in moonlight.
“Samson Samsonovitch,” cried a hoarse voice, and like a stab at my
heart I knew it for the voice of the Michaelis, “we hope your sins are not
too heavy, for your time has come.”
It ill becomes a girl to boast of her parent; but shall I neglect to mention
the stern fortitude, the patriarchal resignation, the monumental bravery, of
my father, how he sat his horse still as a rock in a tempest and only his lips
moved in a gentle whisper to me. “Child, save yourself,” said he, and that
was his farewell. “I command you to go—to save yourself and my secret
from these hounds. Maybe I too will get through. God is as good to us as
we deserve. Head right through them. Their aim, between you and me, will
be so unsure that we might both escape. Go, and God go with you!”
Can you ask me to remember the details of the awful moment? The
darkness, the flaming torches, the hoarse cries of the bandits as they rode in
on us, my father’s great courage—all these combined to produce in me a
state for which the word “terror” seems altogether too homely. Perhaps I
should not have left my father. Perhaps I should have died with him. I did
not know what I was doing. Blindly as in a nightmare I spurred my horse
midway between two moving torches. The horse, startled already, flew
madly as the wind. Cries, curses, shots seemed to sweep about me, envelop
me, but terror lent wings to my horse, and the shots and shouts faded behind
me as phantoms might fade in a furious wind. Last of all came a fearful
fusillade of shots, then a silence broken only by the harsh rustle of the
bracken under my horse, which, with the livid intelligence of fear, did not
stop before we reached Philippopolis in the dawn.
I was never to see my father again. Until noon of the next day I sat
anxiously in the only decent inn of the ancient town, praying that some act
of Providence had come to his aid and that he might at any moment appear;
when, from a loquacious person, who did not know my name, I heard that
the last of the Samsonoffs had that morning been found in Karaloff Wood
nailed to a tree-trunk with eighteen bullet wounds in his body.
I will spare you my reflections on the pass in which I then found myself.
No young girl was ever so completely alone as she who sat the day through
in the parlour of the Bulgarian inn, trying to summon the energy with which
to arrange for her long journey on the Orient Express to England.
Arrived in London, I at once set out to my uncle’s house in Golgotha
Road, Golders Green. I was a little surprised that he had not met me at the
station, for I had warned him of my arrival by telegram; but, knowing he
was a gentleman of particular though agreeable habits, it was with a
sufficiently good heart that I rang the bell of his tall gloomy house, which
stood at the end of a genteel street of exactly similar houses.
Allow me, if you please, to hurry over the relation of my further
misfortunes. My uncle had died of a clot of blood on the heart a week
before my arrival. His property he had, of course, left to me; and I could
instantly take possession of his house in Golgotha Road. I was utterly alone.
That was four weeks ago. Though entirely without friends or
acquaintance—for my uncle’s lawyer, Mr. Tarbold, was a man who bore his
own lack of easy conversation and human sympathy with a resigned
fortitude worthy of more wretched sorrows—I passed the first two weeks
pleasantly enough in arranging the house to my taste, in engaging a
housekeeper and training her to my ways, and in wondering how I must
proceed as regards the patenting and exploiting of the carnation, the
formula for which I kept locked in a secret drawer of my toilet-table.
At the end of three weeks—one week ago—my housekeeper gave me
notice of her instant departure, saying that no consideration would persuade
her to spend another night in the house. She was, it seemed, psychic, and
the atmosphere of the house, which was certainly oppressive, weighed
heavily on her mind. She had heard noises in the night, she affirmed, and
also spoke indignantly of an unpleasant smell in the basement of the house,
a musty smell which she for one made no bones of recognising as of a
graveyard consistency; and if she did not know a graveyard smell, she
asked, from one of decent origins, who did, for she had buried three
husbands?
Of course I laughed at her tremors, for I am not naturally of a nervous
temper; and when she insisted on leaving that very day I was not at all
disturbed. Nor did I instantly make enquiries for another woman, for I could
very well manage by myself; and the work of the house, I thought, must
help to fill in the awful spaces made by the utter lack of companionship. As
to any nervousness at being left entirely alone in a house, surrounded as it
was by the amenities of Golders Green, I never gave a thought to it, for I
had been inured to a reasonable solitude all my life. And, putting up a
notice of “Apartments to Let” in one of the ground-floor windows, I set
about the business of the house in something of a spirit of adventure
natural, if I may say so, to one of my years.
That, as I have said, was one week ago; and the very next day but one
after my housekeeper had left me was to see my hardly-won peace shattered
at one blow. I do not know if you gentlemen are aware of the mode of life
that obtains in Golders Green; but I must tell you that the natives of that
quarter do not discourage the activities of barrel-organs—a somewhat
surprising exercise of restraint to one who has been accustomed to the
dolorous and beautiful songs of the Balkan cziganes. It is true, however,
that these barrel-organs are played mostly by foreigners, and I have been
given to understand that foreigners are one of the most sacred institutions of
this great country.
The very next morning after my housekeeper had left me I was
distracted from my work by a particularly disagreeable combination of
sounds, which, I had no doubt, could come only from a barrel-organ not of
the first order and the untrained voice of its owner. A little amused, I looked
out of the window—and, with a heart how still, leapt back into the room,
for the face of the organ-grinder was the face of the Michaelis!
I spent an hour of agony in wondering if he had seen me, for how could I
doubt but that he had followed me to England in quest of the formula of the
carnation? At last, however, I decided that he could not have seen me, and I
was in some degree calmed by the decreasing noise of the barrel-organ as it
inflicted itself on more distant streets. London, I told myself, was a very
large city; it was not possible that the Michaelis could have the faintest idea
in what part of it I lodged; and it could only have been by the most
unfortunate combination of chances that he had brought his wretched organ
into Golgotha Road. Nevertheless I took the precaution to withdraw the
notice of Apartments to Let from the window, lest yet another unfortunate
combination of chances should lead him or his minions to search for
lodging in my house.
The next day passed quietly enough. I went out shopping with a veil
over my face, for reasons you can well understand. And little did I dream
that the approaching terror was to come from a quarter which would only be
known to the Michaelis when he was dead.
That evening in my bedroom, in a curious moment of forgetfulness, I
chanced to pull the bell-rope. I wanted some hot water, had for the moment
forgotten that the silly woman had left me, and only remembered it with a
smile when, far down in the basement, I heard the thin clatter of the bell.
The bathroom was some way down the passage, and I had reached the door,
empty jug in hand, when I was arrested by the sound of approaching steps!
They were very faint, they seemed to be coming up from the basement, as
though in answer to the bell! I pressed my hand to my forehead in a frantic
attempt to collect my wits, and I have no hesitation in saying that for those
few moments I was near insane. The accumulation of terrors in my recent
life had, I thought, unhinged my mind; and I must that day have engaged a
servant and forgotten it.
Meantime the steps ascended, slowly, steadily, exactly as an elderly
servant might ascend in answer to the bell; and as they ascended I was
driven, I cannot tell you how, somehow past fear. Maybe it was the blood of
the Samsonoffs at last raging in me: I was not afraid: and, without locking
the door, I withdrew to a far corner of the room, awaiting the moment when
the steps must reach the door. I must not forget to add that the empty jug
was still in my hand.
Steadily, but with a shuffling as of carpet-slippers, the steps came up the
passage: slowly the door was opened, and a gaunt, grey-haired woman in
musty black stood there, eyeing me with strange contempt. Fear returned,
enveloped me, shook me, and I sobbed, I screamed. The woman did not
move, did not speak, but stood there, gaunt and grey and dry, eyeing me
with a strange contempt; and on her lined face there was such an undreamt-
of expression of evil. Yet I recognised her.
I must tell you that my mother had often, in telling me of her brother,
spoken of his confidential housekeeper. My mother was a plain-spoken
woman, and I had gathered from her that the woman had exercised some
vulgar art to enthrall my poor uncle and had dominated him, to his hurt, in
all things. At the news of this woman’s death just before my mother’s tragic
end, she had been unable to resist an expression of relief; and I, on having
taken possession of the house a few weeks before, had examined with great
interest, as girls will, the various photographs of her that stood about the
rooms.
It was from these that I recognised the woman who stood in the
doorway. But she was dead, surely she had died more than a year ago! Yet
there she now stood, eyeing me with that strange contempt—with such
contempt, indeed, that I, reacting from fear to anger, sternly demanded of
her what she did there and what she wanted.
She was silent. That was perhaps the most awful moment of all—but no,
no, there was worse to come! For, sobbing with terror, I hurled the empty
jug at her vile face with a precision of aim which now astonishes me: but
she did not waver so much as the fraction of an inch as the jug came
straight at her—and, passing through her head, smashed into pieces against
the wall of the passage outside. I must have swooned where I stood; for
when I was again conscious of my surroundings she was gone, I was alone;
but, far down in the house, I could hear the shuffling steps, retreating,
descending, to the foul shades whence she had come.
Now I am one who cannot bear any imposition; and unable, despite the
witness of my own eyes, to believe in the psychic character of the intruder, I
ran out of the room and in hot pursuit down the stairs. The gaunt woman
must have descended with a swiftness surprising in one of her years, for I
could only see her shadow far below, on the last flight of stairs that would
take her to the basement. Into that lower darkness, I must confess, I had not
the courage to follow her; and still less so when, on peering down the pitch-
dark stairs into the kitchen, I was assailed by that musty smell which my
housekeeper had spoken of with such indignant conviction as of a
graveyard consistency.
I locked the door of my room and slept, I need scarcely say, but ill that
night. However, in the cheerful light of the following morning, I was
inclined, as who would not, to pooh-pooh the incredible events of the
previous night; and again pulled the bell-rope, just to see the event, if any.
There was; and, unable to await the ascent of the shuffling steps, I crammed
on a hat and ran down the stairs.
The woman was coming upstairs, steadily, inevitably. As she heard me
descending she stopped and looked up, and I cannot describe the effect that
the diabolical wickedness of her face had on me in the clear daylight. I
stopped, was rooted there, could not move. To get to the front-door I must
pass the foul thing, and that I could not summon the courage to do. And
then she raised an arm, as though to show me something, and I saw the
blade of a razor shining in her hand. You may well shudder, gentlemen!
When I came to it was to find myself lying at the foot of the stairs,
whither I must have fallen, and the foul thing gone. Why she did not kill
me, I do not know. God will pardon me for saying that maybe it had been
better if she had, for what miseries are not still in store for me! Trembling
and weak, I reached the door and impelled myself into the clear air of
morning. Nor could the fact that I had forgotten my veil, and the consequent
fear of the Michaelis, persuade me to reenter that house until I had regained
some degree of calmness.
All day long I wandered about, knowing neither what to do nor where to
go. I am not without some worldly sense, and I knew what little assistance
the police could give me in such a dilemma, even had they believed me;
while as for the lawyer, Mr. Tarbold, how could I face a man of so little
sympathy in ordinary things with such an extraordinary tale?
Towards ten o’clock that night, I determined to return and risk another
night in that house; I was desperate with weariness and hunger; and could
not buy food nor lodging for the night, for in my flight I had forgotten my
purse; while I argued to myself that if, after all, she had intended to murder
me, she could without any difficulty have done so that morning when I lay
unconscious on the stairs.
My bravery, however, did not help me to ascend the stairs to my
bedroom with any resolution. I stole upstairs, myself verily like a phantom.
But, hearing no sound in the house, I plucked up the courage to switch on
the light on my bedroom landing. My bedroom-door stood open, but I could
not remember whether or not I had left it so that morning. It was probable,
in my hasty descent. I tiptoed to it and peered in—and I take the liberty to
wonder whether any man, was he never such a lion-heart, had been less
disturbed than I at the sight which the light of the moon revealed to my
eyes.
The Michaelis lay full length on the floor, his great fair beard darkened
with his blood, which came, I saw, from a great gash behind his ear. Across
him, with her back to me, sat straddled the gaunt foul thing, as silent as the
grave. Yet even my terror could not overcome my curiosity as to her
actions, for she kept on lowering and raising her left hand to and from the
Michaelis’s beard, while with her right, in which shone the bloody razor,
she sawed the air from side to side. I could not realise what that vile shape
was doing—I could, and could not admit the realisation. For with her left
hand she was plucking out one by one the long hairs of the Michaelis’s
beard, while with the razor in her right she was slicing them to the floor!
I must have gasped, made some noise, for she heard me; and, turning on
me and brandishing the dripping razor, she snarled like an animal and leapt
towards me. But I am young and quick, and managed just in time to reach
the street-door and slam it against her enraged pursuit.
That was last night. Since then, gentlemen, I have wandered about the
streets of London, resting a little among the poor people in the Parks. I have
had no food, for what money I have is in that house, together with the
formula for the green carnation; but nothing, not death by exposure nor
death by starvation, would induce me to return to the house in Golders
Green while it is haunted by that foul presence. Is she a homicidal lunatic or
a phantom from hell? I do not know, I am too tired to care. I have told you
two gentlemen my story because you seem kind and capable, and I can only
pray that I have not wearied you overmuch. But I do beg you to believe that
nothing is further from my mind than to ask, and indeed nothing would
induce me to accept, anything from you but the generous sympathy of your
understanding and the advice of your chivalrous intelligence. My tale is
finished, gentlemen. And, alas, am not I?
IV
Mr. Trevor is somewhat confused in his relation of the course of events

immediately subsequent to Miss Samsonoff’s narrative. During its course
he had time, he says, to study the young lady’s beauty, which, though of a
very superior order, was a little too innocent and insipid for his taste. His
judgment, however, cannot be entirely fair, for such was the direction of the
young lady’s eyes that Mr. Trevor could judge her by her features only. As
to the story itself, Mr. Trevor says that, while yielding to no one in his
liking for a good story, he could not see his way to considering Miss
Samsonoff’s notable either for interest, entertainment, or that human note of
stark realism which makes for conviction; and while, in the ordinary way, a
murderer was to him like a magnet, he could not rouse himself to feel
irresistibly attracted towards the ghoul of Golders Green. It was therefore
with surprise not unmixed with pain that he heard Mr. Maturin saying:
“Ralph, we are in luck!”
“To what,” Mr. Trevor could not entirely cleanse his voice from the
impurity of sarcasm, “to what do you refer?” But it was not without some
compunction that he heard the young lady sigh miserably to Beau Maturin:
“I am afraid I have wearied your friend. Forgive me.”
“My friend,” said Beau Maturin gently, “is an ass. In point of fact, Miss
Samsonoff, far from wearying us, you have put us under a great obligation
——”
“Ah, you are kind!” the young lady was moved to sob.
“On the contrary,” Mr. Maturin warmly protested, “I am selfish. I gather
you have not been reading the newspapers lately? Had you done so, you
would have read of a murderer who has recently been loose in London and
has so far evaded not only capture but even identification. So far as the
public know through the newspapers this criminal has been responsible for
only two or three murders; but this very night my friend and I have had
private information to the effect that within the last few weeks twelve
mutilated corpses have been found in various parts of London; to which we
must now, no doubt, add a thirteenth, the remains of your late enemy, Mr.
Michaelis. But where your information,” said Mr. Maturin gallantly, “is
especially valuable, is that the police do not dream that the criminal is of
your sex. To my friend and me it is this original point that invests the
pursuit——”
“Pursuit?” Mr. Trevor could not help starting.
“—with,” said Mr. Maturin coldly, “an added charm. And now with your
permission, Miss Samsonoff, we will not only return to you your formula,
as to the financial worth of which I cannot entirely share your late parent’s
optimism, but also——”
“Also,” Mr. Trevor said with restraint, “we will first of all call at Vine
Street and borrow a few policemen.”
“Oh, yes!” the young lady said eagerly. “We will be sure to need some
policemen. Please get some policemen. They will listen to you.”
“I do not find an audience so difficult to find as all that,” said Mr.
Maturin coldly. “The London police, Miss Samsonoff, are delightful, but
rather on the dull side. They are much given to standing in the middle of
crowded roads and dreaming, and in even your short stay in London you
must have observed what a serious, nay intolerable, obstruction they are to
the traffic. No, no, my friend and I will get this murderer ourselves. Come,
Miss Samsonoff.”
“But I dare not come with you!” cried the young lady. “I simply dare not
approach that house again! May I not await your return here?”
“The attacks of ten murderers,” said Mr. Maturin indignantly, “cannot
disfigure your person more violently than being left alone in a night-club
will disfigure your reputation. Bulgarians may be violent, Miss Samsonoff.
But lounge lizards are low dogs.”
Mr. Trevor says that he was so plunged in thought that he did not arise
from the table with his usual agility; and the first notice he had that Mr.
Maturin had risen and was nearly at the door was on hearing him waive
aside a pursuing waiter with the damnable words: “My friend will pay.”
Without, the taxicab was still waiting. Its driver, says Mr. Trevor, was
one of those stout men of little speech and impatient demeanour: on which
at this moment was plainly written the fact that he had been disagreeably
affected by waiting in the cold for nearly two hours; and on Mr. Maturin’s
sternly giving him a Golders Green direction he just looked at our two
gentlemen and appeared to struggle with an impediment in his throat.
Golgotha Road was, as the young lady had described it, a genteel street
of tall gloomy houses. Mr. Trevor says that he cannot remember when he
liked the look of a street less. The taxicab had not penetrated far therein
when Miss Samsonoff timidly begged Mr. Maturin to stop its further
progress, pointing out that she could not bear to wait immediately opposite
the house and would indeed have preferred to await her brave cavaliers in
an altogether different part of London. Mr. Maturin, however, soothed her
fears; and, gay as a schoolboy, took the key of the house from her reluctant
fingers and was jumping from the cab when Miss Samsonoff cried:
“But surely you have weapons!”
Mr. Trevor says that, while yielding to no one in deploring the use of
weapons in daily life, in this particular instance the young lady’s words
struck him as full of a practical grasp of the situation.
“Of course,” said Mr. Trevor nonchalantly, “we must have weapons.
How stupid of us to have forgotten! I will go back to my flat and get some. I
won’t be gone a moment.”
“That’s right,” Mr. Maturin agreed, “because you won’t be gone at all.
My dear Miss Samsonoff, my friend and I do not need weapons. We put our
trust in God and St. George. Come along, Ralph. Miss Samsonoff, we will
be back in a few moments.”
“And wot do I do?” asked the taxi-driver.
“Nothing,” cried Mr. Maturin gaily. “Nothing at all. Aren’t you lucky!”
The house which the young lady had pointed out to them had an air of
even gloomier gentility than the others, and Mr. Trevor says he cannot
remember when he liked the look of a house less, particularly when the
ancient brown door gave to Beau Maturin’s hand before he had put the key
into the lock. Mr. Trevor could not resist a natural exclamation of surprise.
Mr. Maturin begged him not to shout. Mr. Trevor said that he was not
shouting, and, without a thought for his own safety, was rushing headlong
into the house to meet the terror single-handed when he found that his shoe-
lace was untied.
He found Beau Maturin in what, he supposed, would be called a hall
when it was not a pit of darkness. A stealthily lit match revealed that it was
a hall, a narrow one, and it also revealed a closed door to the right, by Mr.
Trevor’s elbow, which he removed. The match went out.
“Quietly,” said Mr. Maturin quite unnecessarily, for Mr. Trevor says he
cannot remember when he felt less noisy. He heard the door to his right
open, softly, softly.
“Is it you opening that door?” he asked, merely from curiosity.
“Ssh!” snapped Beau Maturin. “Hang on to my shoulder-blades.”
Mr. Trevor thought it better to calm Beau Maturin’s fears by acceding to
his whim, and clung close behind him as they entered the room. The moon,
which Mr. Trevor already had reason to dislike, was hanging at a moderate
elevation over Golders Green as though on purpose to reveal the darkness
of that room. Mr. Trevor’s foot then struck a shape on the floor. The shape
was soft and long. Mr. Trevor was surprised. Mr. Maturin whispered:
“Found anything?”
Mr. Trevor said briefly that his foot had.
“So’s mine,” said Beau Maturin. “What’s yours like? Mine’s rather soft
to the touch.”
“And mine,” said Mr. Trevor.
“They’re corpses, let’s face it,” sighed Mr. Maturin. “Making fifteen in
all. With us, seventeen. Just give yours a kick, Ralph, to see if it’s alive.
I’ve kicked mine.”
“I don’t kick corpses,” Mr. Trevor was muttering when he felt a hard
round thing shoved into the small of his back.
“Ow!” said Mr. Trevor.
“Found anything?” said Mr. Maturin.
Mr. Trevor said briefly that there was something against his back.
“And mine,” sighed Mr. Maturin. “What’s yours like? Mine’s rather hard
on the back.”
“So is mine,” said Mr. Trevor.
“They’re revolvers, let’s face it,” sighed Beau Maturin.
“They are,” said a hard voice behind them. “So don’t move.”
“I’ve got some sense, thank you,” snapped Beau Maturin.
“Sir,” said the harsh voice, and it was a woman’s voice, “I want none of
your lip. I have you each covered with a revolver——”
“Waste,” said Beau Maturin. “One revolver would have been quite
enough. Besides, my friend and I were distinctly given to understand that
you were partial to a razor. Or do you use that for shaving?”
“I use a razor,” said the harsh voice, “only when I want to kill. But I
have a use for you two.”
The light was suddenly switched on, a light so venomous, says Mr.
Trevor, that they had to blink furiously. And that must have been a very
large room, for they could not see into its far corners. The light came from
what must have been a very high-powered lamp directly above a table in the
middle of the room; and it was concentrated by a shade in such a way as to
fall, like a search-light, exactly on the two helpless gentlemen. Mr. Trevor
says that Beau Maturin’s handsome face looked white and ghastly, so the
Lord knows what Mr. Trevor’s must have looked like. Meanwhile their
captor leapt from her station behind them, and they were privileged to see
her for the first time. She was, says Mr. Trevor, exactly as Miss Samsonoff
had described her, grey and gaunt and dry, and her expression was strangely
contemptuous and evil as sin. And never for a moment did she change the
direction of her revolvers, which was towards our gentlemen’s hearts. Mr.
Trevor says he cannot remember when he saw a woman look less afraid that
a revolver might go off in her hand.
“Look down,” she commanded.
“It’s all right,” said Beau Maturin peaceably; “we’ve already guessed
what they are. Corpses. Nice cold night for them, too. Keep for days in
weather like this.”
Mr. Trevor could not resist looking down to his feet. The corpses were of
two youngish men in dress-clothes.
“They’re cut badly,” said Mr. Maturin.
“They’re not cut at all,” said the woman harshly. “I shot these two for a
change.”
“I meant their clothes,” Mr. Maturin explained. “Death was too good for
them with dress-clothes like that.”
“Well, I can’t stop here all night talking about clothes,” snapped the
woman. “Now then, to business. These bodies have to be buried in the
back-garden. You will each take one. There are spades just behind you. I
shall not have the slightest hesitation in killing you as I have killed these
two, but it will be more convenient for me if you do as you are told. I may
kill you later, and I may not. Now be quick!”
“Lord, what’s that!” cried Mr. Trevor sharply. He had that moment
realised a strange muffled, ticking noise which must, he thought, come
either from somewhere in the room or from a room nearby. And, while he
was never in his life less conscious of feeling fear, he could not help but be
startled by that ticking noise, for he had heard it before, when timing a
dynamite-bomb.
“That is why,” the woman explained with what, Mr. Trevor supposed,
was meant to be a smile, “you will be safer in the garden. Women are but
weak creatures, and so I take the precaution of having a rather large size in
dynamite-bombs so timed that I have but to press a button to send us all to
blazes. It will not be comfortable for the police when, if ever, they catch
me. But pick up those spades and get busy.”
“Now don’t be rude,” begged Beau Maturin. “I can stand anything from
plain women but discourtesy. Ralph, you take the bigger corpse, as you are
smaller than I am, while I take this little fellow on my shoulder—which will
probably be the nearest he will ever get to heaven, with clothes cut as badly
as that.”
“You can come back for the bodies when you’ve dug the graves,”
snapped the woman. “Take the spades and go along that passage. No tricks!
I am just behind you.”
There was a lot of rubbish in that garden. It had never been treated as a
garden, it did not look like a garden, it looked even less like a garden than
did The Garden of My Grandmother. High walls enclosed it. And over it
that deplorable moon threw a sheet of dead daylight.
“Dig,” said the woman with the revolvers, and they dug.
“Do you mind if we take our coats off?” asked Beau Maturin. Mr. Trevor
says that he was being sarcastic.
“I don’t mind what you take off,” snapped the woman.
“Now don’t say naughty things!” said Mr. Maturin. “Nothing is more
revolting than the naughtiness of plain women.”
They dug, says Mr. Trevor, for a long time, for a very long time. Not,
however, that it was difficult digging once one had got into the swing of it,
for that garden was mostly dug-up soil. Suddenly Beau Maturin said:
“Bet you a fiver I dig a grave for my fellow before you.”
“Right!” said Mr. Trevor.
“And,” said the woman, “I don’t allow any betting in this house. So call
that bet off.”
“What?” said Mr. Maturin.
“Dig,” said the woman with the revolvers.
Mr. Maturin threw down his spade.
Mr. Trevor dug.
Mr. Maturin said: “Dig yourself!”
Mr. Trevor brandished his spade from a distance. He noticed for the first
time that they had been digging in the light of the dawn and not of the
moon.
“And who the deuce,” said Mr. Maturin dangerously, “do you think you
are, not to allow any betting? I have stood a lot from you, but I won’t stand
that.”
“Dig,” said the woman with the revolvers, but Mr. Maturin advanced
upon the revolvers like a punitive expedition. Mr. Trevor brandished his
spade.
“Another step, and I fire!” cried the woman harshly.
“Go ahead,” said Mr. Maturin. “I’ll teach you to stop me betting! And I
hate your face.”
“Oh, dear; oh, dear!” the woman suddenly cried with a face of fear and,
lowering her revolvers, fled into the house.
Mr. Trevor was so surprised that he could scarcely speak. Mr. Maturin
laughed so much that he could not speak.
“What’s there to laugh about?” Mr. Trevor asked at last.
“It’s funny. They’ve had us, let’s face it. Come on, let’s follow her in.”
“She may shoot,” Mr. Trevor cautioned.
“Shoot my eye!” sighed Beau Maturin.
Once in the house, Mr. Trevor stopped spellbound. There were voices,
there was laughter—from the room of the two corpses!
“They’re laughing at us!” said Mr. Trevor.
“Who wouldn’t!” laughed Beau Maturin, and, opening the door, said:
“Good morning.”
“You’ve said it,” said the policeman. “Haw-haw!”
“You’ll have some breakfast?” asked the woman with the revolvers.
“Please do!” said Miss Samsonoff.
“You ought to be hungry,” said the taxi-driver with the Homburg hat of
green plush.
“Look here!” gasped Mr. Trevor. “What the blazes——”
“Haw-haw!” laughed the policeman. “ ’Ave a bit of vealanam-pie?”
“Now, Ted, don’t be rude to the gentlemen!” said the woman with the
revolvers.
“Quite right, mother,” said Miss Samsonoff. “We owe these gentlemen
an explanation and an apology——”
“And if they don’t take it we are in the soup!” miserably said the man in
the Homburg hat of green plush.
“Now, you two, go and get cups and plates for the two gentlemen,” said
the woman with the revolvers to the two corpses in dress-clothes.
“Listen, please,” Miss Samsonoff gravely addressed Mr. Maturin, “my
name isn’t Samsonoff at all but Kettlewell, and that’s my mother and these
are my four brothers——”
“How do you do?” said Mr. Maturin, absently drinking the policeman’s
coffee, but Mr. Trevor is glad that no one heard what he said.
“You see,” said Miss Kettlewell, and she was shy and beautiful, “we are
The Kettlewell Film Company, just us; but of course we haven’t got a lot of
money——”
“A ‘lot’ is good!” said the policeman.
“My brother there,” and Miss Kettlewell pointed to the wretched man
with the Homburg hat of green plush, “was the director of an American
company in Los Angeles, but he got the sack lately and so we thought we
would make some films on our own. You see, we are such a large family!
And the recent murders gave us a really brilliant idea for a film called ‘The
Ghoul of Golders Green,’ which, thanks to you two gentlemen, we have
completed to-night. Oh, I do hope it will be a success, especially as you
have been kind enough to help us in our predicament, for we hadn’t any
money to engage actors—and we did so need two gentlemen, just like you,
who really looked the part, didn’t we, mother?”
“But, my dear child,” cried Beau Maturin, “I’m afraid your film can’t
have come out very well. Trevor and I will look perfectly ghastly, as we
neither of us had any make-up on.”
“But it’s that kind of film!” smiled Miss Kettlewell. “You see, you and
your friend are supposed to be corpses who by some powerful psychic
agency are digging your own graves—— Heavens, what’s that!”
There, at the open door, stood an apparition with a dreadful face. He
appeared, says Mr. Trevor, to have some difficulty in choosing among the
words that his state of mind was suggesting to him.
“And me?” gasped the taxi-driver hoarsely. “Wot abaht me?
‘Angingabahtallnight! ‘Oo’s going to pay me, that’s wot I want to know?
There’s four quid and more on that clock——”
Mr. Maturin swept his empty coffee-cup round to indicate the family
Kettlewell.
“My friends will pay,” sighed Mr. Maturin.
XI: FAREWELL, THESE CHARMING PEOPLE
N OW, at last, the entertainment moves towards its end, the curtain is
atremble for its fall, the affair called May Fair is on tiptoe to make a
last bow and retire forever into those anxious shades where all that is
not of the first excellence must come to the foul embrace of limbo. So let
the curtain fall, that we may get back to the serious business of life. But, oh,
it is easy enough to say that! The rub is, a curtain has to be contrived.
Action is demanded; and all the world loves a climax. In fine, ladies and
gentlemen, those inexorable twin sisters, Finale and Farewell, have still to
be served. And how shall that be done?
It happened that I was in Paris when I was thinking upon this matter with
some urgency. How shall the farewell be contrived, thought I, how indeed?
For, by the waters of the Thames, there never was such a trouble put upon
mankind as this confounded business of leave-taking! Haven’t we all, to be
sure, been sometime harassed by the saying of farewell? by the fumbling of
that pitiful, pitiless occasion? Indeed, find us the man or woman who can
say good-bye with ease, and he or she shall instantly have a clear start to
our friendship. How often we have been distressed by the agonies of
someone’s incapable departure! And you may rifle all diplomacy for ways
and means to help some people take their leave, and still their glassy,
fevered eyes will search your face as though for the ultimate word, still
their aggressive nervousness will not permit you to put them and yourself
out of their agony. While as for those poor wretches whom it is our dread
delight to “see off” at railway stations, what confusion of mind is theirs, and
ours! He is at the window of his carriage, smiling: we on the platform,
smiling: others are nearby, smiling: hands are shaken, good-byes are said ...
and does the train go? It does not. Wouldn’t we then, if we but dared,
implore the departing wretch to withdraw his tormented head from the
window, sit back in his seat, hide himself behind a paper and send us all to
the deuce? We would, but we don’t, and he can’t, so fumble, fumble,
fumble, until at last the train takes him—or her, why not?—from us who
had once thought we were sorry he was going. Oh, no, this business of

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The Business Environment: A Global

Perspective 9th Edition Ed Thompson

Legal Environment of Business, 9th 9th Edition Henry

Our Global Environment A Health Perspective Eighth

Business Law: The Ethical, Global, and Digital

The Untold Story of the Korean Film Industry: A Global

Encyclopedia Britannica 9th Ed 9th Edition

Systems of Psychotherapy: A Transtheoretical Analysis,

Primary Mathematics 3A Hoerst

Global Business: An Economic, Social, and Environmental

F01_The_Business_Environment-A_Global_Perspective_9e.indd 1 11/02/2023 09:16

We combine innovative learning technology with trusted

From classroom to boardroom, our curriculum materials, digital

Every day our work helps learning flourish, and

To learn more, please visit us at www.pearson.com/uk

F01_The_Business_Environment-A_Global_Perspective_9e.indd 2 11/02/2023 09:16

Ed Thompson, Ian Worthington and Chris Britton

F01_The_Business_Environment-A_Global_Perspective_9e.indd 3 11/02/2023 09:16

First published in Great Britain in 1994 (print)

British Library Cataloguing-in-Publication Data

Library of Congress Cataloging-in-Publication Data

Cover design: Kelly Miller

Print edition typeset in 9.5/13pt Stone Serif ITCPro by Straive

F01_The_Business_Environment-A_Global_Perspective_9e.indd 4 11/02/2023 09:16

F01_The_Business_Environment-A_Global_Perspective_9e.indd 5 11/02/2023 09:16

Part One INTRODUCTION 1

Part Two CONTEXTS 69

Part Three FIRMS 233

Part Four MARKETS 325

Part Five CONCLUSION 441

F01_The_Business_Environment-A_Global_Perspective_9e.indd 7 11/02/2023 09:16

Part One INTRODUCTION

1 Business organisations: the external environment 3

2 Business organisations: the internal environment 17

F01_The_Business_Environment-A_Global_Perspective_9e.indd 9 11/02/2023 09:16

Case study: Reshuffle at Microsoft 36

3 The global context of business 39

4 De-globalising factors: sovereignty, conflicts and

Part Two CONTEXTS

5 The political environment (P) 71

F01_The_Business_Environment-A_Global_Perspective_9e.indd 10 11/02/2023 09:16

Government in democratic states 76

6 The macroeconomic environment (E) 103

7 The demographic, social and cultural context

Learning outcomes and key terms 141

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The demographic environment of business 142

8 The resource context: people, technology and

9 The legal environment (L) 189

F01_The_Business_Environment-A_Global_Perspective_9e.indd 12 11/02/2023 09:16

Codes of practice 209

10 The ethical and ecological environment (E) 215

Part Three FIRMS

11 Legal structures 235

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12 Size structure of firms 261

13 Industrial structure 285

14 Government and business 307

F01_The_Business_Environment-A_Global_Perspective_9e.indd 14 11/02/2023 09:16

Case study: Public sector procurement – the Royal Navy 323

Part Four MARKETS

15 The market system 327

16 Market structure 351