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In this assignment, business environment combination of internal and external forces that affect the operating situation of a business enterprise. It include forces such as customer and suppliers, competitors and suppliers, progresses in technology, laws and government actions; and market, social, political and economic developments. Some forces are directly and some are indirectly operating of the business.


LO 1.1 Identification of different types of Organization

An organization is a social arrangement which pursues goals, which controls its own performance and which has boundary separating it from its environment. Boundaries can be physical or social. For a company, organization or being organized is a means to achieve its goals, which are to create value for its (stockholders, employees, customers, suppliers, community).The ultimate purpose of being organized in any which manner that is most feasible, is to generate profits.

Sector companies

The part of an economy in which goods and services are produces and distributed by individuals and organizations that are not part of the government or state bureaucracy

A variety of legal structures exist for private sector business organization, depending on the jurisdiction in which they have their legal domicile. Individuals can conduct business without necessarily being part of an organization

The main types of business in the private sector are;

Sole trade

Partnership, either limited or unlimited liability

Private limited company or LTD- limited liability, with private shares.

Public limited company –share open to the public. Two examples are:

Franchise – business owner pays a corporation to use their name, receives spec for the business

Workers cooperative – all workers have equal pay, and make joint business decisions

Private companies may issue stock and have shareholders; however their shares do not trade on public exchanges and are not issued through an initial public offering. In general, the shares of these businesses are less liquid and the values are difficult to determine.

Public limited company:

It is one whose membership is open to general public. The minimum number required to from such company is seven, but there is no upper limited. Such companies can advertise to offer its share to genera public through prospectus. These public limited companies are subjected to greater control and supervision of control.

The standard legal designation of companies which has offered shares to the company public and has limited liability .A public limited company’s stock can be acquired by anyone and holders are only limited to potentially lose the amount paid for the shares. It is a legal from more commonly used in the U.K Two or more people are required to from such a company, assuming it has lawful purpose.

A limited company grants limited liability to its owners and management .Being a public company allows a firm to sell shares to investor this is beneficial in raising capital.

Voluntary organization

A voluntary association union (also sometimes called a voluntary organization, Unincorporated, or just an association) is a group individual who voluntarily enter into an agreement to form a body (or organization) to accomplish a purpose.

Many voluntary organizations are working in this district for socio economic development of rural people and for promotion and dissemination of art, culture and sports.

Charitable organization

Charitable organization is a type of non – profit organization (NPO). The term is relatively general and can technically refer to a public charity (also called “charitable foundation,” “public foundation” or simply “foundation” or simply “foundation” or a private foundation. It differs of from other types of NPOs. In that its focus is centered on goal of a general philanthropic nature (e.g. charitable, educational, religious, other activities serving the public interest or common good)

The legal definition of charitable organization (and of charity) varies according to the country and in some instances the region of the country in which the charitable organization operates. The regulation, tax treatment, and the way in which charity law affects charitable organization also vary.

Charities and voluntary organization share many features. They are severally:

Set up for charitable, Social, Philanthropic, religious, or similar purposes.

Required to use any profit or surplus only for the organization’s purposes.

Not a part of any governing department Local authority or other statutory body.

Voluntary organizations have a legal structure or status, being an unincorporated association, or a truest or company limited by guarantee.

Government organization

“Government Company “means any company which not less than fifty one percent of the paid up share capital is held by the central Government, or by any state Government or Governments, or partly by the central Government and partly by one or more state Governments, and includes a companies which is a subsidiary company of such a Government company.”

Cooperative organization

Cooperative, organization owned by operated for the benefit of those using its services. Cooperatives have been Successful in a number of fields, including the processing and marketing of farm products, of purchasing of other kinds of equipment, and raw materials, and in the wholesaling, and housing industries. The income from retail cooperative is usually returned to the consumers in form of dividends base on the amounts purchased over given period of time.

LO 1.3 Responsibilities of CPC to meet the stakeholders’ objectives and the strategies it uses to fulfill them

OWNERThey invest capital in the business and get profits from the businessProfits, growth of business
WORKERSEmployees of the business who give in their time and effort to make business successfulJob security, job satisfaction and a satisfactory of payment for their efforts
MANAGERSEmployees of the business who manage a business. They lead and control the workers to achieve organizational goals.High salaries, job security, status and growth of the business.
GOVERNMENTGovernment manages economy. The government charges a tax from the business and also monitors the working of business in the countrySuccessful business,emplyments to be reated,more taxes, follow laws
THE COMMUNITYCommunity is all the people who are directly or indirectly affected by the action of the businessThey expect more jobs, environmental protection ,socially responsible products and action of the business

Organizational responsibilities are to ensuring the organizational efficiently and benefits of the people. All organizations are implements for the achievement of their objective. It can be based on the organization which it responsibilities these are –

One of the first organizational responsibilities is that the structure model is based on information and control to run and growth. The structure identifies laws and regulations that help the organization to maintain compliance. It includes to establishing responsibilities. Allocation of duties is to maintain organizational structure and give to individuals in the organization to commit responsibilities. Leaders of the organization allocate duties to employees. The management of boards, Seminars, allocation of funds and other benefits to keep the organization must be coordinated. Coordination is associated to knowledge and defines the performance of the organization. The organizational responsibility of coordination is to achieve organizational objectives and hire of the effective employees. Operation is an essential to organizational responsibilities success of the organization. Operation goals to contribute the purpose of the organization. An organization requirement is to develop its goals. Developing an organizational strategy is to require for the desired change o take for the desired change to take place. Organizational strategies employees to focused purpose is to describing short- term purpose, ensuring operation is accurate, allocation the benefits of all shareholders. Future perception is to describing long-term benefits all shareholders, providing establishment for decision-making. Strategic improvement is to competitive improvement is to developing an organizational strategy, completive improvement by all shareholders, employees is to supported the organizational strategy.

A brief overview of Ceylon Petroleum Cooperation


The beginning of the CPC was made as state enterprises act NO: 28 of 1961 at the Parliament in Sri Lanka.

The main objective of CPC is to provide continuous fuel supply to fulfill Sri Lankan needs.

To do the above successfully, CPC has to import oil from foreign countries.

An also CPC import some part of oil as crude oil and convert them into various petroleum Products at the refinery at Sapugaskanda.

The main stakeholders of the CPC;

Ceylon Electricity Board

Port Authority

Transport Board

Ceylon Government Railway

To attend all the things properly, CPC has to consider the environment factors, safety and welfare of the employees.

Finally, CPC should attend to the duties by following the conditions mentioned in factory ordinance.

LO 1.2 The way of CPC manages objectives of the various stakeholders

Stakeholder a person, group, organization, or system that affects or can be affected by an organization’s action.

A stockholder is any individual or organization that is affected the activities of a business. They may have direct or indirect interest in the business, and may be in contact with the business on a daily basis, or may just occasionally.

Stakeholders are:

Shareholders (not for a sale trade sole trade or partnership though) – they will be interested in their dividends and capital growth of their shares.

Management and employee – they may also be shareholders – they will be interested in their job security, Prospects and pay.

Customers and supplies

Banks and other financial organizational lending money to the business.

Government especially the Inland Revenue and the customers and excise who will be collecting tax from them.

Trade unions – which will represent the interest of the workers.

Pressure group – who are interested in whether the business is acting appropriately towards their area of interest.

LO 2.1 There are different types of economies and different countries use their different types.

The free market economy

The free market economy is regarded as the most acceptable economy, where the market values of goods and services are determined through the intersection of supply and demand curve. Government intervention is avoided here, where it is assured that without government legislations, the economy can be fair to all.

Transitional economy

A transitional economy is that type of economy, which is undergoing a set of structural transition in order to develop the market based organizations. Macroeconomic stabilization through institutional reforms and restructuring along with privatization are main components of transitional economy.

Command economy

Command economy is where the government is the determining or decides the supply of the products and services along with the pricing. The government solely takes production or marketing decision.

Mixed economy

The mixed economy is the econmy where both the government and the market are the decision makers for the proper allocation of resources. Mixed economy is the combination of free market economy and command economy.

LO 2.2 Assess the impact of Fiscal and monetary policy on business organization.

In economic, fiscal policy is the use of government expenditure and revenue collection to influence the economy fiscal policy can be contrasted with the other main type of economic policy, monetary policy which attempts to stabilize the economy by controlling interest rates and the supply of money. The two main instruments of fiscal policy are government expenditure and taxation.

Fiscal policy: Fiscal policy is basically used for the betterment of a society or a country or a nation, it works for the development of the economy of any state. It generates its own funds via taxation and other revenue generated by the government is spent on the state in its different fields like education, employment ,constructions and medications etc.. The amount of revenue collected is less than the amount budgeted, the country is said to be running at a deficit and issues debt (notes and bonds) to make up the difference. There are there types of fiscal policy which are mentioned below.

Neutral fiscal policy: this is undertaken when economy is in equilibrium .Here the government spending is completely funded by the taxes.

Expansionary fiscal policy: this is undertaken in recession. This is when the government spending increase than the taxes collected.

This is used to pay the debt taken by government. This occurs when the tax revenue exceeds the government spending.

Monetary policy: The change in supply and demands of any states economy is known as the monetary policy of that states increases or decrease by the need of their money which makes the money available easily. Due to the availability of money the economic activity of the state increases or decreases.

Monetary policy is the process a government, central bank, or monetary authority of a country uses to control,

(1) The supply of money

(2) Availability of money, and

(3) Cost of money or rate of interest to attain a set of objective oriented towards the growth and stability of economy.

LO 2.3 Impact of competition policy and other regulatory mechanisms on CPC

Competition policy is to make business complete. It inspires business effectiveness for customer and helps reduce costs and develop quality. Impact of competitive of CPC Following-

Low price is to gain a high market share; in a competitive business, price are down ; competition is inspires business to improve their quality of products and services to attract more consumers and enlarge market share; in a competitive business, business make their products that offer the balance between price and quality to customers; to provide and produce better products, business need to innovative in their product models, plan manufacture procedures, services etc.; to held their better competitors in global markets. Economic regulation and strategy to examining the impact on business performance and contribute both to developed economic performance and to impact on business performances and contribute both to develop economic. Economic performance and to poverty decreases. Developing a technique for evaluating the impact regulation which can process of regulatory policy is to making and contributes to better regulatory policy. To develop the role of regulation in improving economic performance and poverty improvement ;to contribute better regulation policy making over the spreading of research .

LO 3.1 Different market structures determine the pricing and output decisions of businesses.

Perfect competition

Perfect competition is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many substitutes. Perfect competition means there are few, if any, barriers to entry for new companies, and prices are determined by supply and demand. Thus, producers in a perfectly competitive market are subject to the prices determined by the market and do not have any leverage. For example, in a perfectly competitive market, should a single firm decide to increase its selling price of a good, the consumers can just turn to the nearest competitor for a better price, causing any firm that increases its prices to lose market share and profits.

A monopoly

Monopoly is a market structure in which there is only one producer/seller for a product. In other words, the single business is the industry. Entry into such a market is restricted due to high costs or other impediments, which may be economic, social or political. For instance, a government can create a monopoly over an industry that it wants to control, such as electricity. Another reason for the barriers against entry into a monopolistic industry is that oftentimes, one entity has the exclusive rights to a natural resource.

Monopolistic competition

Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes. In monopolistic competition, a firm takes the prices charged by its rivals as given and ignores the impact of its own prices on the prices of other firms. In the presence of coercive government, monopolistic competition will fall into government-granted monopoly. Unlike perfect competition, the firm maintains spare capacity. Models of monopolistic competition are often used to model industries. Textbook examples of industries with market structures similar to monopolistic competition include restaurantscereal, clothingshoes, and service industries in large cities.

  • There are many producers and many consumers in the market, and no business has total control over the market price.
  • Consumers perceive that there are non-price differences among the competitors’ products.
  • There are few barriers to entry and exit.
  • Producers have a degree of control over price.

The long-run characteristics of a monopolistically competitive market are almost the same as a perfectly competitive market. Two differences between the two are that monopolistic competition produces heterogeneous products and that monopolistic competition involves a great deal of non-price competition, which is based on subtle product differentiation. A firm making profits in the short run will nonetheless only break even in the long run because demand will decrease and average total cost will increase. This means in the long run, a monopolistically competitive firm will make zero economic profit. This illustrates the amount of influence the firm has over the market; because of brand loyalty, it can raise its prices without losing all of its customers. This means that an individual firm’s demand curve is downward sloping, in contrast to perfect competition, which has a perfectly elastic demand schedule.


There are only a few firms that make up an industry. This select group of firms has control over the price and, like a monopoly; an oligopoly has high barriers to entry. The products that the oligopolistic firms produce are often nearly identical and, therefore, the companies, which are competing for market share, are interdependent as a result of market forces.

It can be identified that Ceylon Petroleum Cooperation (CPC) operates under Monopoly market structure. Because there is only one seller for the particular product and there are lot of barriers to entry such as getting permit from Sri Lankan government.

3.2 Impact of Market forces on CPC.

The marketing decisions that organizations make are based upon a number of forces. The company has to meet the standards that are enforced by the government and the quality standards that are expected of the product by the customers. Since most markets are perfect competition, the price is determined by the price that has been previously negotiated as the accepted norm in the market by the forces of demand and supply. The quality of the product in relation to its competitors, its price and its market visibility, all go into determining its success. Developments in the market have subsequent impact on the dynamics by which the market functions. The situation of a large supplier going defunct would leave a lot of space for other suppliers to capture the freed-up share of the market. For this they would need to sell the most quality and cost efficient product in the market according to their respective market target segments

Market forces shape organizational responses through a very basic economic principle: Supply and demand.

A company or organization will always try and predict demand for its product or service, and ensure that demand is met by implementing a cost effective strategy.

Market forces, by definition, can have an effect on that demand and as such, will have an affect on the supply chain and strategy used by an organization.

  • Change in quantity demanded or supplied of a change in the existing price. Change in the demand and supply is a change in a related factor other than the existing price. Consumer and producer surplus is that the executive can use price discrimination and economic prices. The producer can use with the supplier over the surplus exceeding minimum cost of producing the products. Market equilibrium is that supply equals demand and there is no excess or shortage. It supports to determine equilibrium price and quantity. Market disequilibrium is that supply and demand are not equal at any

Each of these has a tangible and obvious impact on supply and demand.

price in the market, an excess (quantity supplied exceeds quantity demanded) or a shortage (quantity demanded exceeds quantity supplied). It supports to determine the size of shortage or excess.

We could make a never ending list of market “eventualities” and examine how they impact supply and demand, but actually it’s safer to just stick to the well-established concept of Porter’s Five Forces:

  • likelihood of new entry,
  • powers of customers,
  • power of suppliers,
  • degree of rivalry
  • substitute threat

LO 3.3 Sri Lankan culture and prevailing business environment of CPC

Responsible persons should care the behavior of Ceylon Petroleum Cooperation members’ progresses and employee behavior is formed by social communication. Cultural environment is to influence on related persons when making a decision. The organizational culture of Petroleum is to define the set of principles, rules and values which are protected by employees’ behavior that symbolizes the features of Petroleum. Operation is affected by an organizational culture, direction and management style of environmental changes as employee inspiration. In a culture is to require new employee behaviors. Business and cultural environment form the organizational behavior of Petroleum are opinion, behavior and emotions of employees, ethics, attitudes and effects in the work, pressure in the work, inspiring self and to the employees, organizational honesty in the work, working in groups, communication with the employees, rule and policies of the organization.

LO 4.1 The significance of international trade to a country, giving special emphasis to Sri Lankan business organizations

International trade is the exchange of capital, goods, and services across international borders or territories, which could involve the activities of the government and individual. In most countries, such trade represents a significant share of gross domestic product.

Cons of International Trade

  • Natural disasters and international conflicts may cause delays and breakdowns in supply chains.
  • Competition will be increased.


Most of peoples are tend to buy vehicles for their personal usage and it is becoming an emerging thing in Sri Lankan context. Therefore demand for the fuel arising day by day. In order to that it provides additional opportunities for the particular organization. Not only that but also most of production companies are running on fuel. Therefore demand for the fuel consumption is increasing day by day.


  • Fuel is considered as a limited resource and it cannot be produces more to satisfy needs of all demanders.
  • As a limited resource it can be increased the price level of the particular good with the high demand.
  • It has to be respect on related organization’ rules and regulations when buying and using fuel due to such things can be badly impact on the nature.
  • Due to this kind of businesses are depending on international agreements it needs to respect on their conditions.
  • limits in some instances due to lack of proper infrastructure facilities, such as piggable cross country transfer pipeline systems, lack of terminal piping systems having positive isolation for different products, lack of foolproof operating systems which could minimize human error and due to negligence of operators. Such contamination of products beyond the acceptable limits of specifications can occur when operating multi product terminals, which is a loss to the owners of the products such as the Ceylon Petroleum Corporation. This is also a contributing factor in the consumer prices which could be minimized through proper infrastructure, qualified & experienced manpower and proper procedures.

LO 4.3 Impact of policies made by European Union on the CPC

The European Union is the single largest market in the world and this means that all members of EU can freely conduct business and trade practices throughout other member states. Naturally, the scope for business activities for UK businesses has increased significantly by IKs membership in the UK. Benefits like reduced or abolished selling tax and freedom from other restrictive fiscal measures and policies means that the businesses can enjoy higher profits and operate more freely without having to deal with frequent government intervention. Another important aspect of EU membership is that while companies from other areas of the world are still bound by the regulations and policies of respective European nations, businesses belong to UK and other member states are not. Thus they have a decidedly higher profit margin and success rate within the EU. EU policies have also ushered a liberalization of policies and hence many products which were prohibited from being traded can now be freely traded across different EU nations.

EU is always concern on its member countries and Sri Lanka is one of them. It means EU is helps to such countries for the survival of the businesses and it bringing rules and regulations to protect businesses as well as consumers.

Not only that but also EU is liable on protecting Society and the environment from bad effects which can be arisen through businesses. As a fuel related organization CPC has to follow up many rules and regulations which all of the fuel related organizations have to follow up. Accordingly, specifications for the parameters there were prepared comparing the world standards being currently used, such as the worldwide fuel charter, Euro Standards for fuels and specifications were adjusted to suit the requirements for the country. As an example EU has imposed a rule reduces the emission of Toxic fumes such as sulphur, oxides, of nitrogen and black smoke, as to protect the environment.

The EU’s competition policy ensures that the market competition remains free and that companies work to provide the best products to customers at the best prices. This ensures that no company is able to create a market situation wherein it profits at the expense of other companies. Thus, the chances of surviving and doing well, particularly for small scale or emerging companies, is enhanced. The policy for violation being rather stiff, this rule is followed to the letter and monitored zealously by concerned agencies. On the flipside, these policies can be somewhat restrictive for large businesses which can potentially reduce or inhibit expansion. EU’s trade policies with other parts of the world are binding on all members and while this gives certain advantages in bargaining to EU member states it can also be a problem as this restricted individual members from freely stating their preferences and forming agreements accordingly.


Through this paper I have discussed regarding the Ceylon Petroleum Corporation (CPC) which is the market leader of the Petroleum Industry and it has been serving the people more than 50 years In order to that it has clearly mentioned about objectives, responsibilities of the particular organization and strategies the organization utilizes to meet them. Not only that but also as a Sri Lankan organization it has allocated resourced effectively and the particular organization survive according to monetary and the fiscal policy of the Sri Lankan Government. Evaluation of competition policy and other regulatory mechanisms related to the organization is comprehensively discussed. It can be identified that Ceylon Petroleum Cooperation (CPC) operates under Monopoly market structure. Furthermore I realized that Economic forces and culture of the Sri Lankan business context is highly impact on the survival of the CPC. There is no longer survival in the business field if such company does not respect on such things. Not only the Sri Lankan government but also variety of countries and organizations are looking at the behavior of the CPC whether the practices are ethical or not. Specially, impact of the European Union on this organization is deeply discussed through the paper. Ultimately I realized that, as a business organization CPC is doing a vital service to the country while facing many of challenges and limitations.


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