Primark's Business Environment Analysis

This assignment requires a comprehensive analysis of Primark's business environment. Students need to examine various factors such as the competitive landscape in the fast-fashion industry, macroeconomic trends impacting consumer spending, government regulations and policies, and ethical considerations related to Primark's supply chain and labor practices. The analysis should also include an assessment of Primark's strategies for navigating these challenges and opportunities.

Business and the business environment
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Introduction
Business environment is the sum total of the external as well as internal factors
that affect the overall functioning of company that further includes employees,
consumers, management as well as business regulations (Baron, 2012). The present
study has thus made an attempt to study the business environment of Primark as well
as Department of Health (DH) UK. Primark is a Dublin based Irish Clothing and
accessory company that has a presence of 320 stores in 11 nations that are spread
over Europe and America (About us, 2016). Department of Health (DH) is a ministerial
department that has been rendering health care services so as to ensure that people
live longer, get the necessary care/support as well the treatment needed by them
(Department of Health, 2017). The present study has thus made an attempt to
understand the wider environment in which the operations of Primark and DH, UK are
carried out. Focus will be given on purpose, structure and size, Internal, external
factors, SWOT analysis of both the firms so as to understand there operations in a
better manner.
P1 Background of each organization and there purpose
Background and Purpose of Primark
Primark is a private limited company whose shareholders have a presence of
limited liability and in incorporated under laws of England, Wales, Scotland and Ireland.
The shares of a private limited company may not be given to general public as they are
not in the stock exchange market. The firm opened its first store in Dublin (Ireland) in
the year 1969 with the name Pennys and now it has around 38 stores in Ireland under
the brand of Penneys (About us, 2016). Its first store in UK was opened in the year
1973 at Derby and now it has 174 stores within United Kingdom in total. It offers
products and services such as accessories, kids and new born clothing, women and
men’s wear, footwear, underwear as well as hosiery for females. It also provides
products such as beauty goods and confectionary items (Company Overview of Primark
Stores Limited, 2017).
Primark is known for providing amazing as well as trendy clothes at reasonably
low prices that are in fast fashion trend. In terms of purpose the company is a private
sector one and hence its major purpose is of maximizing its overall profits and sales
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figure for shareholders followed by maintain an overall transperancy in the financial
reporting (Prajogo, 2016).
Background and Purpose of department of health UK
Department of health is a public sector firm in UK and a ministerial organization
that is supported by 15 arm length bodies as well as a number of other agencies of
which is the largest is NHS England. The department is further led by secretary of state
for health, state ministry as well as 4 Parliamentary Under-Secretaries of State. It was
formed in the year 1988 through the transfer of functions (Health and Social Security)
Order (About us, 2017). The firm majorly does the work of funding the healthcare and is
accountable to the parliament of United Kingdom.
Department of health UK being a public sector firm has the main purpose is to
increase shareholder value by generating maximum amount of profit. However, this firm
has also started to balance the primary objective with other social and environmental
goal that aids to pacify shareholders and also ensure that profits are attained (Belas and
et.al. 2015). The department of health is there to aid in people to live longer through the
provision of various services such as supporting the integration of health care system by
providing funding so that quality services can be delivered (Department of Health,
2017). It further supports research and technology so that highest quality of care can be
given to masses through the principles of innovation and improvement. Its major role is
to encourage all the staff members of health care firm to understand and learn from
experience of patients and apply it in their daily working for provision of better services
(Worthington and Britton, 2014).
P2 The size and scope of their operations
Primark opened its very first store in Dublin and today it has a presence of
around 320 stores that are spread in 11 nations of Europe and United States of
America. The largest store of Primark is in Manchester that occupies a retail space of
155000 square feet that are spread over three floors. It further runs concessions in
Manchester, Birmingham as well as Selfridges (About us, 2017). The company has a
presence of more than 70000 employees that are working in above mentioned nations.
The annual report of Primark for the year 2016 shows that it was able to generate an
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overall revenue of 5.9 billion dollars and has been a observing a substantial growth
since the year 2007. The firm has the presence of highest penetration in United
Kingdom with 171 stores in 2016 and 41 in Spain. But it is still required to make its
presence feel in western European nations like France and Germany where it has a
presence of just 8 and 20 stores respectively. Butler, 2017 in her report has revealed
that the sales figure for the year 2017 till November has been £7.05bn and its
underlying operating profit also climbed by 7% to £735m for 2017 which is £150m more
as compared to Marks and Spencer (Butler, 2017).
In terms of staff number, the department of health of UK has employed 2160
employees that are spread over large number of locations that are spread in entire
United Kingdom. The total current expenditure of healthcare in UK for the year 2017 is
9.9 percent of GDP which is quite higher than median for member states of
Organization for Economic Co-operation and Development. The organization further
pooled 5.8 billion pound of budget in health and social care fund. A booking of 1.1
million patients took place in the year 2016-2017 (Department of Health, 2017). The
department has further set a goal for NHS England to ensure that 95 percent of patients
that attend Emergency department must be treated, discharged or admitted within four
hours. The firm has been able to attend the ratio of 87.6% between the time span of
January and March 2017 (About us, 2017).
P3 Relationship between the various functions and there link to structure and
objectives
There is a presence of varied functional activities in Primark as well as
department of health, UK. All of them have played a key role in attainment of
organizational objectives and are further linked to the structure. The human resource
team has done the work of selecting dedicated operational, sales and finance staff in
Primark while experienced nurses, care workers and doctors in Department of health
(Palmer and Hartley, 2011). The quality staff members have thus ensured that
consumers feel welcomed, comfortable and safe in stores of Primark which is its major
objective. Same applies to DH which has aided in provision of quality care to patients.
Operations manager of Primark has trained the employees so that they are able
to render there best services for organization. They have also kept the staff motivated
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so that they fulfill Primark’s objective of creating loyal consumer base who provide for
repeat purchases to the company. In the same lines, operations department of DH has
encouraged the staff members in every health care firm of UK so that safest as well as
highest quality healthcare services can be provided to the patients (Wild, Wild and Han,
2014).
The marketing department of Primark and DH has done the work of managing
and defining the brand value of the organization not only in Ireland and UK respectively
but also all over the world. This has ensured that both the firm are able to attain its
mission of acquiring a competitive edge over clothing retailers in the entire world so as
to promote the culture of value for money products (Weatherley and Otter, 2012). In the
same lines, marketing department of DH has showcased the company as the one that
supports and cares for the people as well as provides them the necessary treatment
thereby aided in fulfilling the objective of helping the people to live longer and better.
Finance department of both the firms has been providing right information about the
performance of Primark and DH. It has been following the principles of transparency in
the area of business accounting and financial statements. This has assisted Primark in
providing those products to consumers that are not only cheap but are also value for
money (Bah and Fang, 2015). In case of DH the finance department has assured
continuity and proper delivery of services as well as accounting to parliament in such a
manner that it showcases the best interest of patients, public as well as taxpayer.
P4 identify the impacts (positive and negative) of the macro environment upon
the business operations with examples
There is a presence of varied environmental factors that put an impact on business
operations of Primark which is one of the most reputed firm in private sector of UK.
1. Political – There has been a presence of political uncertainty on account of
Britain’s voting from EU that negatively impacted the operations of Primark.
However the existence of free trade agreements has favored growth of the
company.
2. Economic – There has been a presence of inflation all over UK on account of fall
in value of pound after Britain decided to leave the European union that has
resulted in decreased demand for goods and services which has put a negatively
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impact on sales of Primark (Worthington and Britton, 2014). There has further
been an immense slowdown in wage growth that impacted its overall operations
in a negative manner. But as UK is known for tourism hence operations of
Primark will be impacted in a positive manner in a short course of time ( Wild,
Wild and Han, 2014). Moreover, in response to negative economic conditions
Primark has not raised the prices of its offering in clothing segment and hence
thus gained an edge over the rival firm.
3. Social – Rising obesity has been a big social trend in UK and the country has
been referred to as fat man in Europe (NHS, 2015). This social trend has been
responding positively by Primark as it offers plus size clothing to both the males
and females. The clothes are in hug demand due to obese culture which is a
positive sign for Primark. Other than this, there is also a presence of online
shopping trend which has provided a growth opportunity to the company (Belas
and et.al. 2015). UK population and labor dynamics will be showing a trend of
ageing in the near term future which may put a negative impact on the number of
staff members. But on consumer front, ageing population is positive as well
because it may offer business opportunities to the company as people have more
disposable income in there hand and hence may spend more (Bah and Fang,
2015).
4. Technological – The reports of UK retail sector suggests that there has been a
surge in online sales in the recent years that approximates to around 16 percent.
This has been beneficial for Primark as it provides online shopping options to its
technology savvy consumers (Belas and et.al., 2014). The ever increasing
technology in retail operations requires Primark to be in tune with it and train its
staff members for the same.
5. Environmental – Primark has started adhering with the concept of
environmentally friendly clothing and introduced its sustainable clothing line in
the year 2017 (Ekall, 2017). As of line it is just in Pajamas but it has big plans for
coming future as well. Primark is further required to abide with environmental
regulatory norms so as to be in tune with environmental polices of government.
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6. Legal - Various laws has been enacted by UK that are in form of right to
consumers, use of renewable energy resources etc. which is being adhered by
Primark. One of the most recent employment regulation introduced by UK is of
the new Workplace Pensions legislation that had made compulsory for all the
firms to contribute 3 percent of employees workplace pension for suitable British
employees (Bah and Fang, 2015).
P5 Conduct internal and external analysis to identify strengths and weaknesses
Internal analysis (SWOT of Primark)
Strengths
Extensive range of product offering especially in
the area of apparel that also offers plus size
and environmental friendly variants (Wild, Wild
and Han, 2014).
Strong presence all over Europe
An year on year increase in profitability and
sales figures
Main focus on world of mouth publicity
(Menychtas and et.al., 2014).
Value for money product offering that suit the
needs of all income consumers
The brand has been greatly adored by fashion
fans and value seekers (Worthington and
Britton, 2014).
It has established itself as a brand that provides
clothes with latest looks.
It is the member of independent Ethical Trading
Initiative since the year 2006 and has held top
leadership position since 2011.
Weakness
As Primark does not advertise much
hence their competitors have an
advantage
Consumer perceives the brand to be
basic one that does not offers trendy
and stylish clothes (Belays and et.al.
2015).
Opportunities
Primark should lay emphasis on opening more
Threat
Due to increased focus on Europe, its
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stores in Asia, Middle east as well as African
nations as well
Sportswear can act as a fastest growing
segment for Primark.
It can provide high quality clothing to the
fashion conscious people (Bah and Fang,
2015).
It should investment more in the development of
website so that consumers can be reached,
engaged as well as converted into buyers
(Belas and et.al. 2015).
sales are dependent on economy of
EU
High competition from Zara, H and M
as well as Marks and Spencer’s
Recession and inflation in UK
spending power of consumer which
now acts as a threat for Primark
(Wild, Wild and Han, 2014).
The weakening of Euro is still a main
source of threat for Primark
The presence of unstable political
landscape of middle east nations may
impact its future plan to start stores in
those nations.
Increased terrorist attacks in London
are impacting the consumers thereby
making spending on Primark a low
one (Bah and Fang, 2015).
Porter’s five force analysis of Primark
The retail clothing industry often demands for high cost step up in form of store opening,
branding etc. which has kept threat of new entrants low for Primark. Primark being a
huge brand does not rely on just one supplier which reduces the overall bargaining
power of suppliers. There is a presence of high competitive rivalry for Primark as there
are many number of players such as ASDA, Marks and Spencer who are offering
similar product lines. There is also a presence of high threat of substitutes as Primark is
offering same kinds of products on low price and it is thus easy for the consumers to
switch from one to other product (Worthington and Britton, 2014). The degree of buyer
power is also high one as there is a presence of multiple players within the market and
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consumers have also shown increased sensitivity towards price so they compare prices
before making a final decision which increases there overall switching cost.
P6 Explain how strengths and weaknesses interrelate with external macro
factors
The strength of Primark is a good presence in European and US markets which
has benefitted the firm in political and legal terms. The company is most likely to face
least amount of issue in case it wishes to expand in other American nations as well.
This is as the government of those nations will be aware of its reputation and hence the
management will not face issues in terms of joint venture, licensing etc (Belas and et.al.
2015). The company has been recognized as a value for money brand by most of the
consumers which has resulted in increased satisfaction for the buyers. This has favored
social factors as consumer show loyalty towards the brand. The firm has been showing
increase in profit and sales figure on a yearly basis which has ensured that government
supports its overall working. It has also held leadership position as a member of
independent Ethical Trading Initiative which showcases the firm as a responsible one.
This is enough to ensure increased consumer purchase and enhanced governmental
support (Wild, Wild and Han, 2014).
In terms of weaknesses, Primark has shown a huge reliance on UK market and
has no international operations other than US. This weakness is linked to economic
factor as recession or high inflation rate in UK may put an impact on the overall
spending capacity of consumers which may decrease the overall sales and profitability
figure in long run (Bah and Fang, 2015). This is not at all beneficial for the overall future
sustanability of the company and the need here is to start investing in foreign market
through the process of widespread international expansion. The consumer perception of
Primark as being basic one that does not offers trendy and stylish clothes may be
detrimental for the comps by in the long run and is likely to affect consumer confidence
and loyalty when it comes to social factors. Hence the management team at Primark is
required to work on its weakness so that company can maintain its place in European
clothing market as well as overseas nations. It should also ensure that brand value is
maintained by it so as to ensure towards future sustainability (Worthington and Britton,
2014).
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Conclusion
It can be concluded from above report that there is an existence of both internal as well
as external factors that put an impact on overall functioning of private as well as public
sector be it Department of Health UK or Primark. The impacts can be seen in positive
and negative manner. The need on part of organizations is to develop an understanding
about their strengths, weakness, opportunities and threats and then respond to PESTLE
factors accordingly. This will aid in ensuring that fruitful decisions can be taken by
management for betterment of the company.
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References
Journals and Books
Bah, E.H. and Fang, L., 2015. Impact of the business environment on output and
productivity in Africa. Journal of Development Economics. 114. pp.159-171.
Baron, P., 2012. Business and its Environment. London: Prentice Hall.
Belás, J. and et.al., 2014. Significant attributes of the business environment in small and
meduim-sized enterprises. Economics & Sociology. 7(3). p.22.
Belás, J. and et.al., 2015. The business environment of small and medium-sized
enterprises in selected regions of the Czech Republic and Slovakia. E+ M
Ekonomie a Management. (1). p.95.
Menychtas, A. and et.al., 2014. 4CaaSt marketplace: An advanced business
environment for trading cloud services. Future Generation Computer Systems.
41. pp.104-120.
Palmer, A. and Hartley, B., 2011. The Business Environment. 7th Ed. Maidenhead:
McGraw-Hill.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business
environment in delivering business performance. International Journal of
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Weatherly, P. and Otter, D., 2014. The Business Environment: Themes and Issues in a
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Wild, J.J., Wild, K.L. and Han, J.C., 2014. International business. Pearson Education
Limited.
Worthington, I. and Britton. C., 2014. The Business Environment. 7th Ed. Harlow
Pearson.
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