Business Environment and Entrepreneurship Analysis

This assignment provides a comprehensive analysis of the business environment in various countries, including the Czech Republic, Slovakia, and the UK. It covers topics such as entrepreneurship, mergers and acquisitions, and strategic management, providing insights into the key drivers of business success in these regions.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
a. Usage of Porter 5 forces model to analyse and identify the current environmental influences
on Arcadia within UK economy.............................................................................................3
b. The usage of Value chain model to analyse the internal business environment of Arcadia
within UK's economy.............................................................................................................5
c. Appropriate adaptions that an organisation can undertake in order to provide suitable
response to forces in external environment forces.................................................................7
d. Reflection on Usefulness and limitations of Porter 5 forces model...................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
There is an increasing demand of fast fashion clothing in United Kingdom. People today
are inclining more towards clothing that satisfies their needs and wants rather than quality and
better material. The report showcases the business environment of United Kingdom's clothing
retailer Arcadia. It explores various analysis and issues that impact the organisations macro and
micro environment. Along with it, with the usage of Porter's five forces model it identifies and
analyses the current environmental influences on the company with the economy of UK. It also
explores the value chain model, the appropriate adaptations that can be undertaken in response to
external business environmental forces, and understands the business environment while
describing its potential limitations.
TASK
a. Usage of Porter 5 forces model to analyse and identify the current environmental
influences on Arcadia within UK economy
The porter five forces analysis evaluates the competitive strength and position of a
business organisation. Developed in 1979 the analysis includes five forces which helps to
identify the power that lies in a business environment. Below mentioned is the porter analysis of
Arcadia group showcasing the five forces within its business environment:
Bargaining power of Suppliers: Arcadia group tends to have suppliers which are mostly
British. The company also outsource its raw materials which has made its suppliers to become
weak. The company's focus is on private label which gives Arcadia power on external suppliers.
The company is having a number of raw material suppliers in United Kingdom as well. These
suppliers creates pressure on the company when their product demand is high. This is where
company looses its strength when its comes to earn a better profitability. Suppliers sometimes
increase their prices when they see Arcadia is having a high product demand(Fabuš, 2017). To
deal with this, Arcadia keeps changing its suppliers on long term basis and outsources its raw
materials from different countries in Europe.
Bargaining power of buyers: The bargaining power of buyers make the company weak
when a number of buyers ask for discounts and low prices for the products sold by the company
in the market. The buyers are very much associated with the company's product range and
Arcadia cannot refuse the demands of buyers in large quantity. This is where the company loses

its profitability and market share as well. Along with it, these buyers also lead towards
company's profitability when their demand is high and the company's production cost is
low(Sharma and Singhal, 2016). The competitors of Arcadia is also making good customer
relationships which is making the company's produced clothing less preferred and inclining its
customers to retailers such as Marks and Spencer etc.
Threat of new entrants: The threat of new entrants are one of the major threats faced by
clothing retailer Arcadia. They tend to produce clothing which is better than Arcadia in terms of
quality and cheap as well. It makes the company perform less good in the markets of United
Kingdom. Clothing retailers such as Marks and Spencer and Morrisons constantly keeps track on
what's new in the market and produce their clothing as per the needs of their consumers and
markets. This make Arcadia's business suffer and the company face profitability issues. Along
with it, there is an increasing demand of fast fashion products and Arcadia produces high-end
clothing for its customers. The fast fashion demand makes the consumer shift towards apparel
providers which produces cheap clothing in United Kingdom and Arcadia tends to lose its
market position.
Threat of substitute products: Arcadia manages to innovate continuously to keep itself
updated in the market while providing the best products and services to its consumers. The threat
of its substitute products come along when the company tries to produce apparels which are as
per the demand of UK's consumers. This makes the company to do constant research on the new
trends of the markets and understand the new demands of consumers. These demands needs to be
fulfilled immediately and as fast as possible before its competitors launch the desired apparels
and services demanded by its consumers. Substitute products such as the same variety of trousers
and shirts or the material type used in making of its clothing by the company is used by rivalry as
well.
Intensity of competitive rivalry: In United Kingdom, competition has seen to be very
strong in retail sectors. Along with it, the competition is growing into online markets as well
where consumer select fast buying options. Arcadia has successfully created a good place in the
online marketplace within United Kingdom which helps the company to lead in online sales.
Clothing retailers such as Marks and Spencer and Morrisons hold a better online presence which
makes Arcadia to do better marketing and promotion to keep its hold online(Břečková and
Havlíček, 2015). An increase in competition online and offline makes Arcadia suffers in terms of

earning good business profitability and a wider market presence. Arcadia used Strategies such as
better market promotion, providing better consumer services, etc. to deal with the competitive
rivalry in United Kingdom.
b. The usage of Value chain model to analyse the internal business environment of Arcadia
within UK's economy
Human Resource Management: The Human resource management team supports each
of the brand of Arcadia with specialists which covers rewarding, resourcing, employee relations
and organisational development. Along with it, the company is having 950 employees working
in group functions which makes Arcadia having one of the largest employee bases in United
Kingdom(Edelman, 2015). This makes the organisation stand apart from its competitors and
helps it to provide the best of the services to its consumers.
Technology: The Information Technology team of Arcadia provides the organisation
with the required support and computer wizardry for the entire group. This makes the company
to run its business functions smooth and efficient. Along with it, the team also develops online
stores of the company which creates a great presence for the overall organisation and its products
Ill
ustration 1: Value chain analysis of Arcadia within the economy of United Kingdom
Source: Strategy: Arcadia Group, 2014

in the online marketplace. Arcadia with its better online presence in UK performs better in the
market and earns good profitability.
Procurement: The team of Arcadia brings 225 million units from 55 countries across the
globe. This makes the company one of the largest raw material procurers in the economy of
United Kingdom. The produced clothes are later sold in the markets of United Kingdom where
the company is having 1500 stores. The large procurement activity makes the company earn
large profits as well and keeps the organisation's functioning efficient.
Inbound Logistics: Arcadia brings 225 million units from 55 different countries across
the globe with the usage of air, sea, and road. It keeps the overall organisation's production
efficient and smooth. These units are of raw materials which later are turned into goods and sold
within the United Kingdom. Along with it, the company has seen a good consumer demand
which is making the organisation to increase its procurement services to serve this new consumer
base.
Operations: The operation's department ensures that the right raw materials are being
transformed into the final products which are going to be sold in the market. The department also
ensures that the production is going on as per the markets needs and requirements.
Outbound Logistics: The outbound logistics department of Arcadia ensures that the products
are reaching to the selected stores in country properly. To maintain the regular flow, the logistics
department constantly keeps a track on the products which are deployed in its warehouses and
are later sent to the stores.
Marketing and Sales: The marketing and sales helps the organisation to represent the brand
under the brand's different name. Such as selling the clothes of Dorothy Perkins under the name
of Arcadia. This makes the company's fame reach to its consumers with the fame of the brands
which comes under it. Along with it, the marketing team tends to create better advertising and
promotion strategies to make the company's reach to its desired consumer markets. Arcadia with
the help of its marketing team ensures better promotions and brand's success(Omoye and
Aniefor, 2016).

Services: Providing better customer service on behalf of all the other brands that comes under
the name of Arcadia is what the organisation tries to excel at. Along with it the company
provides its consumers with fast and efficient consumer services that makes it one of the best
clothing retail companies in the United Kingdom.
From the above value chain analysis it has been observed that Arcadia is having one of
the best value chain than its competitors. The company offers 225 million units of distribution
across the UK and worldwide(Adeola and Ezenwafor 2016). Along with it, the firm is having
2500 stores in the United Kingdom and 500 stores internationally which adds ups to its value
within the organisational environment.
c. Appropriate adaptions that an organisation can undertake in order to provide suitable response
to forces in external environment forces
Arcadia is the popular fashion stores in UK. Business entity operates business in retail
sector. An organisation has franchise in different countries due to which firm might have to face
various issues or challenges because of changes in external environmental forces. Pestle analysis
is considered to be as the best strategical techniques which can assist management in addressing
those factors which can have significant effect on the business operations of company
(Mohapatra and Sahu, 2018.). It is a technique which will help manager in developing a suitable
plan or strategies which can be applied in order to provide response to changes in external
variables.
Political factors: This variable includes changes in the rules and regulation related to the
industry. It also involves political condition in the nation which might have negative impact on
business. For instance, the political instability in the country due to Brexit has highly effected
the retail sector (Adegbite, Simintiras and Ifie, 2018). Due to unfavourable political situations
firms in Apparel Retail sector has to face various issues in smooth running of business. Political
instability in the country has highly effected the sales and profitability of Arcadia and other
companies in apparel retail industry.
But after Brexit, removal of trade barriers has provided Arcadia group a chance to expand
business and enter into new market. Arcadia company can deal with the political risk can utilise
scoring system for evaluating the chances of threats in the particular nation. In addition to this,
insurance is considered to be as one of the best strategic option for dealing with the political risk.
It is required by manager in Arcadia company needs to develop exit strategies and evaluate

alternative investment options on an ongoing basis as this will assist business entity in providing
suitable as will as quick response to changes in external environment Factors.
Economic factors: These variables involves increase or decrease in prices of products,
income level of customers, fluctuations in exchange rates etc. Changes in economic factors have
direct as well as significant effect on the profitability of company. It also has significant
influence on financial performance as well as plans of business entity (Moutinho and Phillips,
2018). Adoption of the discounted pricing policies by competitors have direct and great effect on
the profitability and sales of Arcadia.
Decrease in the currency rate by the UK government has provided organisation a chance
to gain translational benefit. It is required by Arcadia company to adopt the flexible pricing
strategy, as this plan of action will assist them in reducing the negative effect of changes in
economic factor on its profitability. In addition to this, business entity need to concentrate on
providing the quality goods or services to the clients, a strategy will assist them in retaining the
customers for long time. As changes in economic variables also have great effect on buying
power of firm, it is required by organisation to make bulk purchases at the time when there is
favourable economic situations or at time when the prices of raw material are low. In addition to
this, business entity need to keep some amount of profit as a reserve so that it can be utilised for
meeting the business requirements in the future (Hamilton and Webster, 2018). Keeping the
reserve strategy will help an enterprise in preventing the situation of liquidation.
Social factors: It includes changes in trends, taste and preferences of customers etc.
Changes in the social factors have direct as well as significant effect on the demand for products
or services offered by organisations. Due to continuous changes in the trend and preferences of
customers, Arcadia company is facing difficulty in maintaining the balance between demand as
well as supply. It is required by marketing manager in an organisation to conduct market
research at regular interval of time, as this tactic will support management in keeping themselves
update with the latest trend which is very much essential for maintaining the position in an
industry (Zindiye, 2018). In addition to this, business entity should develop innovative products,
as this will provide firm an ease in providing suitable response to changes in social factors.
Technological factors: Advancement in technology has provided an organisation an
opportunity to bring improvement in business procedures, system products and services. At the
same time advancement in technology has contributed to increase in level of competition among

the company in apparel retail sector (Vollrath, Gehlhar and MacDonald, 2018). Change in the
shopping pattern by customers has lead to the declines in sales of Arcadia . It is required by
organisation to mark online presence and use social media or other digital tools for promoting
the products. As this digital strategy will help an enterprise in increasing sales and profitability.
Legal factors : Amendments in laws have great effect on the business policies and plans.
It also has great effect on the sustainability of firm in the market. It is required by organisation to
get themselves about the changes in norms and to comply with the same, as this will aid them in
eliminating the legal issues.
Environmental factors: Industry in which Arcadia company is operating is highly competitive.
Business entity need to concentrate on providing high value proposition to customers, as this
strategy will help an enterprise in gaining the competitive advantage.
d. Reflection on Usefulness and limitations of Porter 5 forces model
Porter five force model is considered to be as an effective strategic technique which can
be utilised by manager in Arcadia group for developing the understanding about the factors
which shapes competition in industry. In this part of the project have focus on identifying the
usefulness as well as limitation of five force model.
Porter five forces model is useful for making the adjustment in the existing business
strategy which is very much important in order to remain competitive. Porters five force analysis
is very much useful as well as helpful in determining the forces which might affect the business
and profitability of company. In addition to this, porter five force analysis helps management in
analysing the way bargaining power of suppliers and buyers effect potential of companies to
increase or decrease the prices of products or services. It has been suggested to manager in
Arcadia group to use porter five force model as this will help them in developing the suitable
strategy which can be useful in providing response to changes in external business environment.
The Biggest limitation of porters five force model is that this hypothesis is based on only the
idea of competitions. In addition to this, other biggest limitation of porters five force model is
that it is based on the assumption that porter five force model is inherently in static, it only
represents aspects of present day. One of the major limitation of porter five force model is that
this hypothesis is not designed to be utilised by smaller organisation. It has been analysed that
porter five force analysis is based on the assumptions that competition is zero based game
(Wagner, Chen and Zeng, 2018.). This hypothesis also assumes that potential to earn profit by an

organisation is fixed. It has also been experienced that there is high complexity in industry
drawing conclusion from the porters five force model can be quite difficult
It has been concluded from the above that porters five force model is the best tool for
determining the forces which has given rise to the competition in the industry. It has been
concluded that porters five force model is an effective strategic tool which is very much useful as
well as helpful in context of developing the strategies for gaining the competitive advantage. The
other thing which has been concluded that after developing the understanding about porter five
force model that considering continuous as well as quick changes in business environment this
model is less useful.
CONCLUSION
It has been concluded from the report that porters five force model is the best tool for
analysing the factors which is effecting the profitability of apparel retail sector in UK. The other
facts which has been found during the study is that changes in external environment factors have
direct as well as significant imp[act on the growth as well as profitability of firm. It has been
concluded from the report that Value chain is the best model for analysing the internal business
environment. The other thing which has been concluded from the assignment that major
limitation of porter fie force model is based on various assumption for instance, the potential of
industry to generate profit is fixed. It has been concluded from the project that porters five force
is less useful considering the complexity of different sectors.
The various strategies have been suggested in the report which can be used by
organisation for dealing with the changes in external environment.

REFERENCES
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