Impact of Business Environment on Retail

This assignment analyzes the profound influence of the business environment on retail companies. It delves into various aspects such as fiscal policies, competitive landscape, and different economic systems, examining their specific effects on retailers. The analysis utilizes academic sources and online resources to provide a comprehensive understanding of this crucial relationship.

Business Environment
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Table of Contents
INTRODUCTION ...............................................................................................................................3
TASK 1.................................................................................................................................................4
1.1 Purposes of different types of organizations..............................................................................4
1.2 Extent to which Debenhams PLC meets the objectives of its different stakeholders................4
1.3 Responsibilities of Debenhams PLC and strategies to meet expectations of stakeholders.......5
TASK 2 ................................................................................................................................................5
2.1 Nature of UK economic system and analysis of its affects on Debenhams PLC at the time of
effective resources allocation...........................................................................................................5
2.2 Impact of fiscal and monetary policy on Debenhams PLC and its activities............................6
2.3 Evaluation of impact of competition policy and other regulatory mechanism on activities of
Debenhams PLC..............................................................................................................................7
TASK 3 ................................................................................................................................................7
3.1 Market structure which determine the pricing and output decision of businesses including
Debenhams PLC..............................................................................................................................7
3.2 Market forces shape Debenhams PLC responses......................................................................8
3.3 Impact of business and cultural environment in shaping the behaviour of Debenhams PLC...8
TASK 4.................................................................................................................................................9
4.1 Significance of international trade to Debenhams PLC.............................................................9
4.2 Impact of global factors on Debenhams PLC..........................................................................10
4.3 Evaluation of impact of policies of the European Union on Debenhams PLC.......................10
CONCLUSION ..................................................................................................................................11
REFERENCES...................................................................................................................................12
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INTRODUCTION
Business environment is a set of conditions for an organization in which it operate its
business. It contains various external and internal factors that create both opportunities and threats
to the company. In the world of globalization, business environment play an important role in
almost all type of businesses (Haidrer, 2010). It assist the organizations to understand internal as
well as external environmental factors. It gives assistance to know more about economic system and
market conditions. Business environment helps the firm's to properly understand the impact of
social, political, legal, economic development etc on the business. It provides a direction of growth
to the organization and help in taking competitive advantages (Alcidi and Gros, 2011). The present
report is based on business environment and for this, Debenhams PLC is undertaking. Objectives
that will cover under the current study are organizational purpose of business, nature of the national
environment in which business operate, behaviour of organizations in their market environment and
significance of global factors that shapes national business activities.
Organization background
Debenhams PLC is a British Multinational retail organization, operating in the formate of
departmental store in the UK and Ireland. It has also near about to 178 franchise stores in other
nations. The products that offer by the company to he customers are clothing, household items and
furnitures. Debenhams PLC is listed on the London Stock Exchange. The following brand is
running its business under licence market entry mode in 26 foreign countries. These are Bulgaria,
India, Armenia, Jordan, Qatar, Russia, Romania, Saudi Arabia, Pakistan, Malta and others. At
present time, Debenhams PLC owns and operates 179 stores in UK, Denmark and Ireland. Stores of
Denmark are trading under the Magasin du Nord brand. Ireland stores are operating by Debenhams
Ireland that is a subsidiary of the organization. The company run own retail websites in the Ireland
and UK. Along with this, website can also be easily access by the customers on their smartphones.
It also operates its mobile application which permit the end users to take experience of online
shopping without visiting the outlets. Further, with the help of Bar Code Reader application,
consumers easily get the complete information about the products by scanning products barcodes.
Debenhams PLC also develops an international website that allows the customers across the world
to shop the products from wide rage of variety. There is also an important and unique facility
provides by organization which is insurance of products and it is give under the brand name of retail
firm. In 2015, revenue of the company is £2322.7 million and net income is £93.5 million.
Moreover, Debenhams PLC also run an loyalty card program for the end users where they can earn
point at the time of buying of beauty and healthy products (About us, 2016).
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TASK 1
1.1 Purposes of different types of organizations
There are various types of business organizations working in the private sector of UK. The
purpose of companies different from each other in terms of mission, goals and strategic objectives.
The comparison between various types of organizations are as follows:
Debenhams PLC: It is public related company of UK and it offers various products to the
customers at the affordable prices. It serves across the world and it delivers good quality of
commodities to the consumers. Mission: To deliver product to the customers on right time by giving value of money. Goal: To meet the consumer satisfaction level.
 Strategic objective: To increase market share, to expand the business in other nations.
KFC: It operates its business on franchising concept where company gives authority to sell
products and services as well as trade under the name of organization in a particular geographical
location. It is world second largest chain of fast food and operate more than 120 outlets across the
glob (Björklund, 2011). Mission: To sell food in friendly and fast environment that can able to appeal to buy the
products by health conscious customers. Goal: To deliver good food for the consumers which can able to bring the smile of their
faces, To meet customer satisfaction level.
 Strategic objectives: To increase market share percentage of fast food market, to improve
existing profit margins and to return right amount of dividend to the shareholders (Craig and
Campbell, 2012).
Transport for London (TFL): It is a local government organization of London that is responsible
to maintain transportation systems and infrastructure such as rail, road and air connectivity etc of
Greater London, England. It is a private limited organization. Mission: Creating value for customers by innovating and high quality solutions. Goal: Managing transportation services in entire London to deliver quality transportation
services to entire community (Galbreath, 2009).
 Strategic objectives: To optimize business processes, improve efficiency of systems and
achieve attractive return on capital.
1.2 Extent to which Debenhams PLC meets the objectives of its different stakeholders
Debenhams PLC is having four major stakeholders: customers, employees, government and
suppliers. These all there connects with the organization with different purpose. Company allows its
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stakeholders to access important information about the business and take part in the decision
making process (Gupta, Clements and Inchauste, 2004). At the time of conducting business
operation across the world, firm has some objectives such as improve gross margin and sales of
services, open new outlets at domestic and international level, increase market share at national and
global level, raise investment level etc. The expectations of the stakeholders vary according to the
objectives of Debenhams PLC. To meet their expectations, organization, takes numerous steps and
actions. In this regards, stakeholders expect that company should maintain the transparency at the
time of decision making and other activities (Haigh and Brubaker, 2010). For example, customers
of Debenhams PLC expect at the time of buying the products that it has to be give value of money
or some kind of extra benefits. To met this expectation, firm takes various actions such as offer
products at reasonable prices, discounts, cash back offers etc. So, by doing these types of activities,
Debenhams PLC meet the objectives of its stakeholders.
1.3 Responsibilities of Debenhams PLC and strategies to meet expectations of stakeholders
There are some responsibilities of Debenhams PLC towards its stakeholders such as treating
staff as an valuable assets, respecting local communities, provide safe working environment to the
employees, avoid discrimination, deliver safe, healthy and quality products to the customers etc. In
this regards, to meet the expectations of stakeholders, Debenhams PLC follow some strategies
(Hamilton and Webster, 2015). For example, community of UK expect that company will provide
them job opportunities with good pay. To meet this expectation, organization open new stores at
different geographical locations and give job vacancy ads in various media. By this strategy, people
gets jobs and raise living of standards in the community. Further, employees expect that Debenhams
PLC will improve their skills and knowledge level so that they can bring the improvement in the
work (Higón, 2012). To meet this expectation, firm organize several kinds of training and
development programs for the staff members. It improve the current knowledge level of them and
make them more skilled. Therefore, by following such type of strategies, Debenhams PLC able to
meet expectations of stakeholders.
TASK 2
2.1 Nature of UK economic system and analysis of its affects on Debenhams PLC at the time of
effective resources allocation
UK economic system can be divided into four categories: free market, transitional,
command and mixed economy. In free market economic system, companies take decisions for
allocation of resources according to their needs (Kunnanatt, 2011). Under this, whatever the firm
charged the prices of the goods, customer have to pay for it. Government does not make any kind of
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control over the resources. So, organizations run by top management and they takes decision about
how to run economy, manage supply chain, determine demand level etc. The affect of free market
economy on Debenhams PLC is organization will be free to take decision regarding how to run
economy, how to manage and expand supply chain, what are the distribution centres etc (Siewiorek
and et.al., 2012).
In transitional economic system, resource allocation based on values and beliefs of
community. Here, production of the goods based on traditions of the society. It minimize the
wastage of resources and maintain the level of resources in environment (Sledge, 2011). The impact
of transitional economic system on Debenhams PLC is the products of the company will be
customized and based on traditions of the community. On the other hand, in command economy,
large part of economy is controlled by a centralized power i.e. government. The effect of this on
Debenhams PLC is firm will be create a good supply of its existing resources and try to minimize
the costs of various business operations. The aim behind this is effective utilization of resources.
Beside this, in mixed market economy, both organization and government keep control over
allocation and use of resource (Gemma, 2014). The affect of this economic system on Debenhams
PLC is it will use the resources as the requirements and develop the services for community.
2.2 Impact of fiscal and monetary policy on Debenhams PLC and its activities
Impact of fiscal policy on Debenhams PLC and its activity: There are two fiscal policies of UK
government i.e. expansionary and tight policy. In expansionary framework, increase government
spending beneficial for the business (Brunot, 2015). Impact of this policy on Debenhams PLC is
increase spending on government increases more job opportunities for the community and it leads
to increase spending power of the customers. It minimize the corporate taxes that is fruitful for the
organization. But in the case of tight policies, government minimize its spending over the retail
companies and increase taxes. Effect of this on Debenhams PLC is it decreases the sales of the
products in the market place which lower down profit level and such kind of effects are long term
for the firm (Ozyasar, 2016).
Impact of monetary policy on Debenhams PLC and its activity:When Federal government change
its monetary policy than it directly impact on interest rates as well as cost of money. For example,
when government increase supply of money in the market then it decrease interest rates. The impact
of this situation on Debenhams PLC is it becomes easy to borrow money for capital investments.
So, this change beneficial for the organization in terms of easy to take loans and expand the
business (Wang and Altinay, 2012). But in case of less supply of money in the market will be create
difficulties for the company to borrow money for raise investment level.
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2.3 Evaluation of impact of competition policy and other regulatory mechanism on activities of
Debenhams PLC
According to Competition policy or act, formation and operation of cartels, abuse of an
organization dominant position either at local or international level and avoid concerted practices.
Impact of this framework on Debenhams PLC is company fix the prices of the goods at different
level such as wholesale and retail level (Competition policy, 2016). Along with this, firm stick on its
promises such as deliver the goods on the fixed time or make transparency in terms of payment. On
the other hand, there are some other regulatory mechanism such as Enterprise Act 2002, Enterprise
and Regulatory Reform Act 2013 etc. As per the Enterprise Act 2002, it detects and minimize abuse
of market dominance behaviour of the companies in the marketplace (Upton, 2010). The impact of
this mechanism on Debenhams PLC is make the business more independent and minimize the
influencing power of politicians to bring alteration in the business. It also gives the right to the
customers to complain about uncompetitive practices of firm to the government. On the other hand,
effect of Enterprise and Regulatory Reform Act 2013 on Debenhams PLC is organization protects
the rights of the consumers and ensure that any unethical activities not happen in the workplace.
Along with this, the application of this policy bring the changes in the working practice of the
company. So, from the discussion, it has been clear that competition policy and other regulatory
mechanisms makes positive impact on activities of Debenhams PLC (Zhang and Huang, 2012).
TASK 3
3.1 Market structure which determine the pricing and output decision of businesses including
Debenhams PLC
Market structure helps in taking the decisions regarding the pricing and production volume.
There are four type of market structures perfect competition, oligopoly, monopoly and
monopolistic. In perfect market structure, companies offer homogeneous services and products to
similar target market (Aras and Crowther, 2011). Here, profit margin is very low with tough
competition. In monopoly market structure, there some companies who are dominating in the
market and it creates a perfect competition situation for the organization. The profit margin is
moderate and it is hard for the new firms to enter into this market. On the other side, in
monopolistic market structure, companies offer those goods and services which are differentiated in
nature. It generates huge amount of profit margin and stay remain the market for the long time
(Aterido, Hallward-Driemeier and Pagés, 2011).
In the case of Debenhams PLC, it operates its business in a retail market where many huge
retail organizations already running their business from the long time. Market structure of the firm
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is perfect competition because its competitors are also offering similar or substitute goods to the
same target market. To remain in the market, company needs to take decisions of price and
production volume according to the market conditions. On the basis of this, for selling the products,
there are different types of pricing strategies such as premium, penetration, economy and price
skimming strategies (Ghannadian, 2006). According to the situation and level of competition in
retail market, pricing strategies can be select and apply.
3.2 Market forces shape Debenhams PLC responses
Market forces affect the business operations of a company either in terms of negative or
positive. There are some forces that shape responses of Debenhams PLC which are as follows:
Demand and supply: The level of supply of goods and its demand in the market affects the actions
of the organization. In UK and other nations, demand of products and services such as clothing,
household items etc increases with the time because of increment in population. It increases the
consumptions of different commodities between the target market (Halbert and Ingulli, 2014). For
this, Debenhams PLC responses in terms of increase volume of production and set some new
distribution outlets to maintain demand and supply in the market.
Elasticity of demand and supply: Elasticity of demand change according to the alteration in
demand and pricing of the goods in target customers. In the case of Debenhams PLC, to increase
the sales of different products in seasonal, it decreases the pricing of them. By doing this, it assist
the organization to develop the new strategies to sales the commodities and increase market share
(Hanning, 2013).
Economic of sales: It is a kind of cost benefits that can be achieve through volume of production,
lot size, sales strategies etc over cost per unit product. In order to achieve economic of sales,
Debenhams PLC response in terms of minimize the wastage of the resources and reducing the
number of unnecessary operational activities from the process that increase costing of product
(Brinkman, Navarro and Harper, 2014).
3.3 Impact of business and cultural environment in shaping the behaviour of Debenhams PLC
Impact of business environment in shaping behaviour of Debenhams PLC
To analyse impact of business environment in shaping the behaviour of Debenhams PLC can
be understand by PEST analysis. Stable political environment of UK assist the organization in order
to rune the business in entire continent in effective manner. Government also supports the retail
organizations because it generates large number of employment for the community which will
decrease unemployment ratio (Groza and Ragland, 2016). On the other hand, social environment of
UK change with the time. People becomes more aware about the fashion and technology items.
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This responses make the impact on Debenhams PLC in terms of increase supply of the goods and
gain huge amount of profit. Further, economic environment of UK is growing in the positive
direction. GDP rate is increasing and Pound gain more strengths. Supply of money in the market
increases with then decrement in interest rate (Björklund, 2011). Due to this, it is easy for cited
organization to borrow money from the market and increase capital investment. Beside this,
technology bring the changes in the consumers life. They start buying the goods from online
without visiting the outlets. Impact of this business environment on Debenhams PLC is firm
develops its own websites and mobile application so that customers can purchase the products from
available wide range of commodities.
Impact of culture environment in shaping behaviour of Iceland Supermarket
With the time, the alteration in culture is taking place with high rate. Now, consumers are
preferring those products which develops on the basis of ethical consideration. In this respect,
Debenhams PLC responses towards this is organization develop some rules and regulations to
ensure about whether any employee follow unethical activity or not at the workplace during work
(Craig and Campbell, 2012).
TASK 4
4.1 Significance of international trade to Debenhams PLC
International trade includes exchange of products, capital and services across borders. UK
government has reduced the trade barriers in the country which have been beneficial for many
organizations (Taylor‐Gooby, 2012). The expansion strategy of Debenhams PLC has been
successful and the business is growing at a good pace. Reduction in trade barriers has helped in the
growth of the economy as well. This change in policy has directly affected many business
organisations in UK. It has increased the variety of products and helped in the better utilisation of
resources in the country. UK business organisations have helped in the development of comparative
advantage. Debenhams PLC have expanded its business to more than 178 locations around the
world (Benefits of International Trade, 2010). the government is also providing support to those
companies which are exporting their goods. The company has recently announced that they will
increase the number of international stores to 150 in the next 5 years. This was not possible without
the permission of international trade in UK. Debenhams PLC can take advantage of the emerging
markets globally like Korea, Turkey, UAE etc. They can sell their products easily to different
markets without any restrictions. Apart form this, the change in EU policy has increased the income
level of the people in UK (Gottheil, 2013). Their personal disposable income has increased and they
are spending more. The rising competition in the global market has improved the profitability and
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the performance of many business.
4.2 Impact of global factors on Debenhams PLC
European Union has changed their trade policies and they have allowed domestic companies
to compete with other international business organisation. It has increased the level of competition
in the country. They have to change their strategy according to the global changes. These factors
include technology, economy, social and legal changes (Alcidi and Gros, 2011). Debenhams PLC
have to invest huge funds in research, development and innovation. Many countries like China,
USA etc. have developed new methods and techniques. They have adopted advanced technologies
in various processes of their business. Debenhams PLC has to take into all the factors and improve
their products. A business unit in UK cannot survive with obsolete technology. Furthermore, the
preferences and taste of people are changing. They are becoming more concerned about the
environment and nature (Aterido, Hallward-Driemeier and Pagés, 2011). It is essential for the
management to ensure that they are changing their polices accordingly. A multinational business has
to deal with the changes in interest rates, exchange rates, economy, demand and supply, cost of
factors of production available in a country etc. These factors have huge impact on the profitability
of the company. The have to make sure that the business comply with all the rules and regulation of
the foreign country as well.
4.3 Evaluation of impact of policies of the European Union on Debenhams PLC
European Union (EU) develops some policies and other frameworks that may be affect
business of UK organization. According to Employment Policy of EU, it company responsibilities
to protect the rights of the employees at workplace. Impact of this policy on Debenhams PLC is
firm has been imposed many types of frameworks that are beneficial for staff (Groza and Ragland,
2016). Along with this, there is not any kind of discrimination made with the employees at any
stage. Company also give the right to the workers to explain their opinion in front of the
management in more effective manner.
Beside this, as per the law of Education and Training Policy of EU, enterprise should deliver
required training and education to the employees so that they can able to perform task in effective
manner. Impact of this framework on Debenhams PLC is it is giving both on the job and off the job
trainings to the workers according to the individual needs and requirements (Hamilton and Webster,
2015). It has bring the improvement in productivity of the staff and enable them to accept the new
changes in workplace. Hence, the evaluation of EU policies shows that it makes the positive
impacts on Debenhams PLC and change working style.
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CONCLUSION
From the above study, it can be concluded that business environment has an important part
of every organization because it assist in analyse impact of internal and external factors on business.
Debenhams PLC has adopted various strategies to meet its stakeholder expectations. Different UK
economic systems have affected the resources allocation of company. Firm has operated its business
in perfect competition market structure. On the other hand, market forces have support the response
of Debenhams PLC to take actions.
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