Analysis of Primark's Business Model and Market Performance

The assignment provides a detailed analysis of Primark's business model, including its organizational structure, legal structure, and key functions. It also compares Primark's performance with other companies in the UK clothing market, highlighting its strengths and weaknesses. The assignment uses various resources such as academic articles, research papers, and industry reports to provide a comprehensive understanding of Primark's business model and market performance.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Background of the various kinds of organisation with their legal status and purpose.........1
P2. Size and Scope of the Organisation......................................................................................4
..........................................................................................................................................................5
P3. Relationship between the organisational functions with their structure and objective.........7
TASK 2............................................................................................................................................8
P4. Impact of macro environment on the business operations....................................................8
P5. SWOT analysis of Marks and Spencer. .............................................................................10
P6 Relation of the strengths and weaknesses with the external environment. .........................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment comprises of the elements which impact the functioning of a
business. It is the business situation which has important role in determining the functioning of
business. Activities which are part of the business are done so that through their outcome profit
can be generated but for that it is necessary that the business environment should be favour of the
company (Drucker, 2017). There is existence of different types of organisation and these are
categorised on the basis of size, scope and their functions. Everyone of them holds a value in the
society and it is on their actions which defines their future path. This report will be emphasising
on the understanding the factors and their impact on the organisation like Primark. There will be
deep evaluation on the strengths and weaknesses of the company and their relation with the
external environmental factors.
TASK 1
P1. Background of the various kinds of organisation with their legal status and purpose.
Private Sector Organisation
These are kind of organisation who perform their activity with the objective of attaining
the profit. The ownership of such organisation is with the individuals and they look for the
personal gains through their institutions. They always look for opportunities where they can
increase the market share. There can be small, family owned, individuals owned, partnership
companies can be part of this sector (Bryman and Bell, 2015). One of the example of this sector
is Primark which is an Irish clothing and accessories company.
It is a Dublin based company and is a subsidiary of AB Foods. The first store of the
company was founed by Arther Ryan on behalf of the Weston Family in June 1969 on 47 Mary
Street, Dublin. After the success in Ireland the company thought of expanding their business to
United Kingdom. Following this, they debuted with opening a large store in Belfast City Centre
in 1971.
Primark offers a diverse range of products starting from newborn babies and children
clothing, women's wear, men's wear, home ware, accessories, footwear, beauty products and
confectionery. They sell the clothes at low prices below the average market prices. As compared
with the competitors like Zara and H&M, they contribute to the contemporary fast fashion trend.
They offer trendy clothes at amazing low prices and now they have also came with the cosmetics
1

line called “PS Pro”. This has been appreciate by various experts due to its high quality and low
prices.
Illustration 1: Private Sector Legal Structure
The aims and objectives of Primark is to deliver people goods, products and less price
and they want to spread a message that just because they offer products at cheap prices that does
not mean they are not of good quality (Hamilton and Webster, 2015). This message they want to
achieve by having their products made by the individuals that know what they are doing and test
them to check the quality. To ensure that they sell the products at suitable prices so they a variety
in the cloths. They believe in friendly and helpful towards the consumer and employees.
2

Illustration 2: Primark Organisation Structure
Public Sector Enterprise
In the business environment there are also organisation which is owned and managed by
the government of the country. The purpose of these firms is to serve the public through
delivering the goods and services which comes in the basic necessity of the individuals. It is
observed those organisation who are part of this segment deal in banking, health, media,
communication, defence and education etc. Although they cannot be called as fully profit
making as their first priority is to serve the people of nation. National Health Service (NHS)
comes in the category of public sector organisation (Cavusgil and et. al., 2014).
NHS was formed after the World War 2 in 1948 and it is part of the Scottish
Government, Welsh Government, Northern Ireland Executive and UK government. They
provide various services of the citizens of UK and these services are related to emergency care,
treatment of the infectious diseases and all these health services are free of cost. Their main
3

purpose of these is to provide health care services which are up to the quality and normally they
provide services to those who are poor or who cannot afford the health treatment. Although they
charge for prescriptions, dental and other services.
Illustration 3: Legal Structure of Public Sector
P2. Size and Scope of the Organisation.
Primark:
It has build a large empire and still they are continuing with their growth. Their market can be
estimated through the fact that they have employed 68000 people and these are all working at
different locations where they are operating their business (Sekaran and Bougie, 2016). When it
comes to revenue generation every year they see a new hike and in 2016 their turnover reached
up to approx. £5.949 million.
Primark has over 352 stores all around the world and its largest store is on Market Street,
Manchester, England. In UK they have 185 stores which is the largest as compared to the other
countries. Other than this they have market share in Spain, Ireland, Germany, Netherlands,
France, Portugal, United States, Austria, Belgium and Italy.
4

Illustration 4: Comparison of the Turnover.
After ASDA Primark is the second biggest player in the UK in clothing market. It
constituents 21.8% of the total market share. Primark is looking forward to open 300 stores in
Europe in coming years. Most of the stores are there in UK only so to expand the market share in
other countries they have decided this thing (Zott, Amit and Massa, 2011). There is scope of
opening most of the stores in Germany as this market has potential and is appropriate as per the
existing retail infrastructure.
5

National Health Services (NHS):
As it is publicly funded national healthcare system so all there services are diverted to the
citizens of UK. It is the largest and oldest single payer healthcare system in the world. Normally
all the doctors and nurses in England are employed by the NHS and work in NHS run hospitals.
Through a survey, it was founded that they have employed 1.7 million staff and comes on the
fifth position in the list of the world's largest employers.
Nurses Doctors
319845 113508
The total budget of Department of Health in England in the year 2013 was £110billion
and out of which £13.8 billion was spent on the medicines. Most of their services are free of cost.
Hospital inpatient and outpatient services are free, both medical and mental health services
(Chesbrough, 2010). The operations which they carry out is with the help of the funds which
they get through general taxation. To be eligible for the services of NHS it is compulsory that the
person should be resident of UK or any overseas student who is there to study can avail the
services.
6
Illustration 5: Clothing Market Share of Different
Companies in UK.

P3. Relationship between the organisational functions with their structure and objective.
Interrelationship between different functions is considered as beneficial for the
organisation as because of this coordination, synchronising can take place without repeating any
operation. If there will be functional relationship between the operations then this can give them
productive results thus assisting them in achieving the their goals and objectives in proper
manner (Wirtz, Schilke and Ullrich, 2010). It is the structure of the organisation which highlights
the way in which various functions are related with each. Different functions and there
contribution in the objectives of the organisations are as follow:-
Human Resource:- The main work of human resource is to ensure that there is enough
human capital and along with this there is also development at the workplace. Human resource
department make sure there is proper utilisation of the human resource and no one is facing any
issue in the company. The goals and objectives of Primark can only be attained if they have the
sufficient resources to carry out the business activities. They recruit and hire new people
according to the organisational needs.
Illustration 6: Key Functions of a business
Finance:- This is one of the important function as without ability of adequate funds the
organisation cannot carry out the business activities in better manner nor they can survive for a
longer period of time. If any organisation has sufficient funds they can use it to give salary to
7

their staff, cover the operational costs and repay the loan which they have taken from any
financial institutes. It is the duty of the finance department of Primark to make sure that each and
every task is done in right manner (Dahan and et. al., 2010). In the case of NHS they look at look
at the objective which they have to achieve and after that prepare a budget thus acting as a
outline of finance required to achieve those objectives. If Primark have to open their stores in
other European countries they will try to arrange finance for this.
Marketing and Sales:-These are the functions which plays an important role in the
organisation's success. Marketing role is to convince the people to buy the products of Primark
and know what are the demands of the customers (Elliot, 2011). On the other hand selling is only
restricted to ensure that there is availability of the product in the market according to the
demand. They have to fulfil the targets. Marketing function of Primark is to bring out an
effective marketing strategy through which the objective of disseminating the message can be
completed.
Production:- Everything starts with this function and this is the main core function of the
business. The production function looks at the objective thus highlighting the production they
have to do to reach the those goals but to achieve the targets they have act according to their
structure. Primark looks for the new ways through which they can bring efficiency in their
production system so that there is increase in the profit margins.
TASK 2
P4. Impact of macro environment on the business operations.
A PESTLE can be performed to study the impact of the external environment and it is
necessary to carry out this activity as Primark have to expand into the new markets.
Political Environment:-
It has to do with the operations and activity concerned with the government decision. It might
happen that the government can bring both positive and negative depending upon different
situations. As UK has decided that they will be no more part of the EU thus bringing a negative
impact on the per capita income of the country (Lueg, Pedersen and Clemmensen, 2015). Due to
the open market there is great chances that they can face downfall in the market share to the new
people who are coming this business. With the free trade policy among the EU countries will
bring benefit to the Primark as they don't need to worry about the unwanted expenses.
8

Economic Environment:- There are lots of chances that during the recession Primark
may face the decrease in the sales thus they have to stop the operational cycle. Other than this
there is also a great impact on the demand if any variation on the interest rates comes (van
Tonder and Roberts-Lombard, 2013). Due to recession they have to adopt cost cutting concept so
for that they have terminated many employees because they were finding it difficulty in feeding
the demand of the employees. Today spending ability has increased so is good sign for Primark
as they can now increase the sales.
Social Environment:-It has to do with the interest of society and the values and briefs
which prevail at that place. It has been observed that they believes in the concept of selling the
quality clothes at low prices so middle class people are continuously gaining new hikes in their
revenues (Seebach, Beck and Denisova, 2013). But they lacks the market share in the household
products which is there weaknesses. To make sure that they reach to the old age citizens they
have starting the e-commerce concept where they are selling their products through online mode.
Illustration 7: PEST Analysis
9

Technological Environment:- For surviving in today's business environment it is
necessary that there is should regular modification in the technology so that Primark can gain
competitive advantage. The introduction of the online store has seen a great response from the
customers thus resulting into increase in the sales number and on the other hand the biggest
disadvantage they have faced is that to maintain the recent technology they needs lots of funds,
employees and time.
Legal Environment:- It includes the laws and policies faced by the government regarding
the business. Any law concerned with employee training, health and safety and standards wages
have to be taken care by the Primark so that they don't face any legal suit (Roberts and Fuller,
2010). The positive aspect of this factors is that if any organisation abide the laws then there
increase in the brand value.
Environmental:- Primark adopts the concept where they believes that with their
operation no environment should be affected so they try to use best ways and technology to
reduce the effect of harmful chemicals. They also make sure that they there is minimum wastage
of the materials. The other side of the external factors is adoption of the renewable sources of
energy at their workplace.
P5. SWOT analysis of Marks and Spencer.
Through this there can be knowledge about the strengths, weaknesses, opportunities and
threats.
Strengths:- They are the abilities of the organisation which makes them unique in the
market thus these can be called as the potential factors. Following is the strength of the
organisation:-
 Brand Value
 Vast product portfolio
 Large supply chain
 Potential workforce
Through these they can better perform in the market thus gaining competitive advantage.
Weaknesses:- They act as inhibitors who prevents the Primark in attaining their business
goals.
 In UK market they are facing tough competition from the various players like Asda,
Marks and Spencer, H&M and other small players who are coming with the unique
10

strategies. It has been observed that Asda who holds the largest market share has faced a
rise in their market share.
 Their has been complaints about the duplicacy of the original product by Primark.
Opportunities:-These are the chances or the growth assistance which assist in increasing
the market share and expanding the business (Harris and Rae, 2010).
 They can look forward to expand their business in the Asian countries where people
prefer buying low cost products.
 They have to make them introduce into the big markets and malls thus opening new retail
stores.
 Primark have to more focus on looking for the opportunities in the e-commerce concept.
Threat:- These are the unwanted conditions and factors which can hamper the growth of
the Primark company in negative way. Following are some of the elements which bring negative
impact to the organisation.
 There is sudden increase in the small scale competitors
 There is availability of the products at suitable prices
 There can be downfall trend in the market share
These listed factors holds the potential to impact the business operations in the negative
way. With increase in the number of competitors and they are using the same stratgey as adopted
by the Primark thus making their market down.
P6 Relation of the strengths and weaknesses with the external environment.
It can be said that the strengths and weaknesses of the company is directly concerned
with the factors which prevail in the external environment. The strengths and weaknesses of an
organisation is impacted by the external elements in bigger way.
Political Factor:-The elements of macro environment takes the taxation and political
stability in the operating environment. These are the two factors which influences the strengths
and weaknesses of the organisation (Arvaniti, 2010). In the case where there is increase in the
import duty by any of the EU country then it will become the weakness for the Primark as this
will directly reduce the profitability.
Economic Factor:- It is the condition of the market which impacts the strengths and
weaknesses of the firm. In the case if there hike in the FTSE than there will be increase in the
11

sales of Primark but in the case where inflation rate is high will decrease the purchasing power of
the customer. This becomes weaknesses for the company.
Social Factors:- This can be considered a key point in highlighting strengths and
weaknesses of a firm. It Primark gain success in knowing the beliefs and values of the society
than it might become their strengths as they know what to deliver to the customers (Popa and
Salanta, 2014).
Technological Factors:- Adopting new technology at the workplaces has become their
strengths as due to this their sales as went up. The biggest weaknesses about this is that they are
facing the technical loopholes in this thus decreasing their brand image. The training which they
have to give the staff to handle operation made them invest lots of money and this way their
profit margins has been impacted.
Legal Factor:- There is no option available with the Primark other than abiding the laws
framed by the organisation. Having the knowledge and following laws can be there strengths as
through this they increases their brand image (Aithal, 2016). But there are some time when some
of the laws are overlooked thus becoming weaknesses and describing their production process.
Environmental Factors:- Through focusing on development of the local communities
where they are operating their business has made this as their strengths of the organisation. They
follow the concept of recycling of the the waste product.
CONCLUSION
From the above report it can be stated in the business environment there prevails a lot of
elements which can impact the business of an organisation. These factors might be either present
in the internal environment or in the external environment so it is necessary that the firm should
have knowledge about all these and for that there can be SWOT and PESTLE analysis
respectively. Although the internal factors are controllable but the company needs to adapt
according to the external factors. There should be a relation between the organisations structure
and their functions and objectives.
REFERENCES
Books and Journal
12

Aithal, P. S., 2016. Study on ABCD analysis technique for business models, business strategies,
operating concepts & business systems. Browser Download This Paper.
Arvaniti, C., 2010, January. The Evolution of E-Business Environment in Fashion Sector.
In Intelligent Systems, Modelling and Simulation (ISMS), 2010 International
Conference on (pp. 443-449). IEEE.
Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.
Cavusgil, S. T and et. al., 2014. International business. Pearson Australia.
Chesbrough, H., 2010. Business model innovation: opportunities and barriers. Long range
planning. 43(2). pp.354-363.
Dahan, N. M and et. al., 2010. Corporate-NGO collaboration: Co-creating new business models
for developing markets. Long range planning. 43(2). pp.326-342.
Drucker, P. F., 2017. The Theory of the Business (Harvard Business Review Classics). Harvard
Business Press.
Elliot, S., 2011. Transdisciplinary perspectives on environmental sustainability: a resource base
and framework for IT-enabled business transformation. Mis quarterly. 35(1). pp.197-
236.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Harris, L. and Rae, A., 2010. The online connection: transforming marketing strategy for small
businesses. Journal of Business Strategy. 31(2). pp.4-12.
Lueg, R., Pedersen, M. M. and Clemmensen, S. N., 2015. The role of corporate sustainability in
a low‐cost business model–A case study in the Scandinavian fashion industry. Business
Strategy and the Environment. 24(5). pp.344-359.
Popa, M. and Salanta, I., 2014. Corporate social responsibility versus corporate social
irresponsibility. Management & Marketing. 9(2). p.137.
Roberts, J. and Fuller, T., 2010. International business: Past, present and futures. Futures:
Journal of Policy, Planning and Futures Studies. 42(9). pp.901-909.
Seebach, C., Beck, R. and Denisova, O., 2013. Analyzing social media for corporate reputation
management: How firms can improve business agility. International Journal of
Business Intelligence Research (IJBIR). 4(3). pp.50-66.
Sekaran, U. and Bougie, R., 2016. Research methods for business: A skill building approach.
John Wiley & Sons.
van Tonder, E. and Roberts-Lombard, M., 2013. A theoretical framework for managing CSR
plans and related initiatives in the modern business environment. Journal of Business &
Economics Research (Online). 11(12). p.503.
Wirtz, B. W., Schilke, O. and Ullrich, S., 2010. Strategic development of business models:
implications of the Web 2.0 for creating value on the internet. Long range
planning. 43(2). pp.272-290.
Zott, C., Amit, R. and Massa, L., 2011. The business model: recent developments and future
research. Journal of management. 37(4). pp.1019-1042.
Online
Organisation Chart of Primark. 2013. [Online]. Available through:
<https://creately.com/diagram/example/huvk6dmc3/primark>.
13

BHS under Sir Philip Green. 2016. [Online]. Available through:
<https://publications.parliament.uk/pa/cm201617/cmselect/cmworpen/54/5404.htm>.
Deep Dive: UK Value Clothing Market—Pure Plays Drive Market Growth. 2017. [Online].
Available through: <https://www.fungglobalretailtech.com/research/deep-dive-uk-
value-clothing-market-pure-plays-drive-market-growth/>.
14