Impact of Business Environment on Micro-Firms

This assignment explores the influence of the business environment on micro-firm management. It delves into concepts like resource-based view, external environment theory, and the impact of factors such as government regulations, competition, and technological advancements on micro-firms. The assignment encourages critical analysis of academic sources to understand the challenges and opportunities faced by micro-businesses in navigating the complex business landscape.

Businesses Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Types of organisation and their purpose..........................................................................3
1.2 Extent of PRIMARK to meet objectives of stakeholders.................................................4
1.3 Responsibilities of Primark as organisation and strategies to meet them........................5
TASK 2............................................................................................................................................6
2.1 Different types of economic systems in different countries.............................................6
2.2 Impact of fiscal and monetary policy...............................................................................7
2.3 Competition policy and their impacts on the organisation...............................................7
TASK 3............................................................................................................................................8
3.1 Pricing and output decisions for different types of markets.............................................8
3.2 Market forces shapes organisation response....................................................................9
3.3 Business and culture environment shape the behaviour of a organisation.....................10
TASK 4..........................................................................................................................................11
4.1 Significance of international trade to UK business organisations..................................11
4.2 Impact of global factors on UK business organisations.................................................12
4.3 Impact of European Union policies on UK business organisations...............................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Surroundings of an organisation is having effects on the business activities and making a
compulsion factor for them to make modifications in their actions(Kelliher and Bernadette
Henderson, 2006). Adoption of environmental factors can makes organisations better for
competition available in the market. External and internal are the part of an environment. Internal
environment is a part of an organisation and they can make their control on it. Another is
external which works like a force on the company. This report is having focus on the PRIMARK
which is deals in the clothings. They are having their suppliers in the ASIA and EUROPE, so
they are having huge impact of business environmental factors like; political, economical, social
and technological. So they have to make changes in their organisation and make regular
development in their organisation according to these. Organisations are having different business
structures like; partnerships, public sector, charity and cooperative and they are having difference
in their businesses surroundings. Stakeholders are having a huge impact on the internal business
environment and the company have to manage their stakeholders to manage proper internal
environment of work(Technology, 2008). Each nation is having their economic system which
makes a direct influence on financial activities of PRIMARK and as cited business entity is
working in the international market they have to aware about economical systems where they are
working and having their affairs. Company have to adopt different price strategies for different
types of market. This report is having different types of organisation and economical systems of
different countries.
TASK 1
1.1 Types of organisation and their purpose
Primark, an Irish company is a private organisation which started in Dublin and deals in
fashion clothing. It started as Pennys but had to change it's name to Primark when it expanded
outside the country as another company was operating under the same name already.
As a private company, it is not listed on any stock exchange for trading and it's shares are
not open for public trading unlike public companies. It only has a few shareholders who are it's
members and securities are also held by only a few members(Kang and Han, 2008). The main
purpose of a private organisations are profit generation but Primark provides good quality

products at the lowest prices possible for all the people to buy their affordable goods. They even
perform different test checks for the quality of the products before selling.
a) Public Sector Company; A public company is the one which offers it's shares to public for
trading and they are considered as owners of the company. Bromfield school can be covered in
public sector which is providing education to pupils. The main purpose of this organisation is to
education to each and every child in the UK which is their right, they are having excellent
teachers which is providing best education.
b) Charity organisation; Save the children is a NGO working for the child rights and providing
relief and help in the developing countries(Johnson, Lenartowicz and Apud, 2006). It was
initially started in London during World War I to help the children starving in Germany and
Austria. It even worked through World War II in Europe for malnourished and refugee children.
Charity organisation is having single purpose of social services.
c) Cooperative organisation; The Royal London Mutual Insurance Society Ltd. Is the largest
mutual insurance company of the country including it's subsidiaries. Cooperative organisation is
having purpose of mutual concerns of cooperative members. It started as a friendly society to
serve the interest of it's members. In 1908 it became a mutual life assurance society and today it
has become the largest insurance company in UK and giving products protection in Ireland.
1.2 Extent of PRIMARK to meet objectives of stakeholders
This essential to fulfil the expectation and objectives of the stakeholder by making
decisions in the PRIMARK. Stakeholders the part of the organisation and they are having their
own interest in the company(Johanson and Vahlne, 2009). These are having direct effect from
the company and changes done by them. Stakeholder can be divided in the two part internal and
external and these both are having their own objects in which PRIMARK is making help to
attain;
Customers; PRIMARK is dealing in the clothing and home ware products, they are having a
large range of it. Consumers are having a huge impact by making changes from PRIAMRK in
the products. Most of the customers wants fully completed and errorless products, this is the
responsibility of the company to make these types of clothes which is made in superior quality
and having perfect fitting in each sizes. So whenever company is making changes in their
products they have to make their focus on the customer and their demands. They can help by this
act in attain customers objectives by their efforts(Gardner and Laskin, 2011). Customer wants

total satisfaction by their buying products and company can help them by providing these types
of clothes which is having satisfactory elements for each type of customer. The company is
having objective to provide satisfaction in their products and make their products better.
Employees; PRIMARK is having a more then 70000 employees and they are making their
efforts to manage the success of the PRIMARK. They are having expectation against their efforts
in the favour of the company, they wants a perfect remuneration and healthy working conditions
to create their business activities. As the company is having their retail chain in the and they are
having skilled employees in each of them. They wants proper facilities in their outlets to perform
their activities like; selling, accounting etc(Hawken, 2007). Company has to give them all
facilities which they want. PRIMARK is having an objective to give all the basic facilities to
tehir employees in their working conditions.
The above mentioned stakeholder are having a large expectation form the company and company
have to fulfil their expectation by their acts.
1.3 Responsibilities of Primark as organisation and strategies to meet them
An organisation besides earning profits has many other responsibilities towards the
society and community it is working in. A public organisation operates under the government
rules therefore has to comply with the responsibilities as stated but a private organisation is not
guided the these rules but still has responsibilities. It can be legal responsibilities, environmental
duties, ethical issues, charter compliance, etc. Legal responsibilities- Legal issues such as consumer legislation, employees legislation,
equal opportunities and anti-discriminatory legislation. Primark has to have some laws
regarding the protection of it's consumers from fraud practices as well as for employees
to face any discrimination or any other such act(Ferreira, and et. al., 2009). It has
included in the code of conduct of the company regarding these policies practised in the
company which do not allow anyone to breach them and work against the company or it's
employees. It also adheres to the all the legal responsibilities as a firm to operate business
in every location it is registered at. Malpractices and ethical issues- Primark has strict policies regarding the malpractices
in the company anywhere in the world as per the provisions of
ILO standards. It does not involves in child labour or forced labour, in fact it provides to
the policies and programmes which involve in prevention of these practices(Enshassi,

Al-Hallaq and Mohamed, 2006). No forced labour is practised in the firm and rules
against it are abided.
 Environmental duties- Primark is stated as Detox leader by Greenpeace. It not only
includes in environmental issues it also takes initiative address new issues and work for
them such as employment for women, better and sustainable farming methods, helped in
opening bank accounts for the workers for first time, etc.
TASK 2
2.1 Different types of economic systems in different countries
Each country is having their own economical system which helps them to allocate their
resources in different sectors. A country can distribute their resources, products and services in
different sectors like manufacture, educational and service. Each country is having limited
resources e.g. capital, information, labour, entrepreneur and physical resources so they have to
make proper allocation of them to manage a proper development of nation(Dong, Wu, and Hou,
2009). Here is some example of different types of economical systems which is adopted by
different countries;
CUBA; This is a Caribbean island which is using planned economy, this is a type of
decentralized economy which is emphasis on direct allocated inputs. Mostly industries and
manufacturing industries are controlled by the government and employees which are working in
theses are managed by the state government. This is planned economy which allocates their
resources as per the needs of different sectors. Service, agriculture and industry, these are the
three main sectors in which helps in the GDP of CUBA. Service sector is most supporting in the
national GDP and government of CUBA is having their focus on service sector because they can
resolve unemployment problem by providing jobs in the emerging sector(Dollinger, 2008.).
CUBA is having lesser resources and more manpower so they are using this economical system
to allocate their manpower in different sectors.
UNITED KINGDOM; The UK is using free market economic system which is giving
supporting them to allocate their resources. Government is not having their control on resources,
products and services, consumer and producers are determine the price and quantity of these
resources, demands and supply factor is having a huge impact of resource allocation and price
determination. So in this economic system manufacturers and consumers rules in the market and

their needs consider the resource allocation. The UK is having so huge capitalist which can lead
on government to make their favour in the market competition so the legislation provide the
solution to allocate their resources by this economics system.
CHINA; Their leaders has create their own economic system which is known as socialist market
economy. CHINA is the second largest economy in the world and it is a proof that they are using
their economic system perfectly which is helping them to be developed country(Chi, Kilduff and
Gargeya, 2009). Social ownership and democratic control helps divide their products and
services in divisions.
2.2 Impact of fiscal and monetary policy
Chancellor of UK and Bank of England is controlling on the economic system of the UK
and they are managing and governing on different types of policies to manage proper level in the
inflation rates and employment ratio. The UK government can use their policies as a tool to
regulate perfect economical conditions in the country(Chesbrough, Vanhaverbeke and West,
2006). Here is a brief about these policies and their impacts on the farming and housing;
Monetary policy; It is made by the Bank of England to manage a profitable level in their
economy. They are making changes in the interest rates to manage inflation rates in the market.
Monetary policy is having huge impact on the farming and housing industry because these both
sector is having high investments of farmers and buyers. Most of the times buyers wants to buy
new house in those times where economical conditions are favourable for them. Demands
increased on that time when banks are having low interest rates on home loans. Farmers are
having huge investments in their fields and they have to make expenses to grow crop in the
fields. Most of the undeveloped area in the UK is used in farming and low interest rates is
making them motivated to make their activities in more finer by machinery.
Fiscal Policy; Tax rates and government expenditure covered in this, national government
determinants tax rates for a particular financial year and it dominates on the market. It makes
impacts on the prices of products and services which are available in the market. It makes change
in the prices of farming machinery and houses, dominates on the demands(Cantwell, Dunning
and Lundan, 2010). Government can increase or decrease their tax rates as per the needs. It
makes a sudden impact on customers and it controls on the purchase power of the customers for
a limited time period.

2.3 Competition policy and their impacts on the organisation
Each organisation is having adopted a competition policy to reveal competition in the
market, here is a brief for different type of competition policies with a suitable example;
De-Regulation; Competition is a beneficial factor for the company and as well as the consumer
for products and service and development. The UK government has remove their control on the
market and organisations are free to sale their products and services in the open market(Beck and
Demirguc-Kunt, 2006). Royal mail is a perfect example for this, now they are making their
services in the open market and they reduce the market competition by making mergers with
other competitor companies.
Privatization; This is a competition policy is used by the UK government, in the recent times
government is having ownership on railways but it is having a huge investment to enlarge their
services as per the demands. They had permitted to some private business entities to make their
services in the railway(Ayyagari, Beck and Demirguc-Kunt, 2007). But it makes a competition
for them and at last UK government have make privatisation and now they are taking revenues
with these private companies.
Anti competitive behaviours; Some of the organisations like; AUDI is just focus to make their
cars and manage a qualitative work in their cars so they are just focusing on their work. So this
competition policy is making them better to give a satisfaction in their products and services.
Price Based competition policy; Most of the companies are using this policy to compete in the
market and this one is work for regular products. Organisation like KFC is using this policy to
make sale of their products and they are competing with the Mac Donald and they have a little
difference in their prices.
Service Based Competition policy; Manufacturer companies like TESCO is using this
competition policy and they are focus to deliver after sale services(Anand, and et. al., 2006).
They are giving better after sale services for a long time period for their products and it helps
them top attracts customer towards them.
TASK 3
3.1 Pricing and output decisions for different types of markets
Pricing and output decisions for a company are the most basic decision for the firm to
start it's production and form strategies based on that. These decisions depends on the market as

well as business structure of the firm. The pricing and output decisions in perfect competition,
monopoly, oligopoly and duopoly market structures are taken as follows:
a) Perfect competition- This is the situation in which market has many firms to offer same
product and many customers for the same. In this market structure the firm determine their prices
according to the demand and supply in the market(Wu, 2009). The firms cannot decide the prices
as there are a large number of substitutes in the market but they can control the supply. The
demand and supply curve gives the average revenue which decides the prices for the product.
Examples of this structure are Primark and Tesco.
b) Monopoly- This is the market situation where there is only one seller of a product in the
market and no substitutes are available. In this structure the supplier decides the price of the
product to maximize his profit. The marginal revenue of the firm is equal to marginal cost which
enables the monopolist to increase the profits. Example of this structure is Windows software of
Microsoft.
c) Oligopoly- This structure consists of a few firms in the market and large number of buyers.
The price and output derisions are similar to that of monopoly(Wild, Wild and Han, 2014). The
firms decide to maximize the profits where marginal revenue is equal to marginal cost. The
production is lower as compared to monopolistic market as more firms as there but the prices are
higher comparatively due to limited competition and product differentiation. Sprint Nextel,
Verizon, AT&T and T-Mobile are the examples of oligopoly in mobile phone market.
d) Duopoly- This market includes only two firms selling similar products which can be
substitutes of each other. They decide the pricing by dividing the market equally or deciding a
price by mutual agreement or merging and forming a monopoly. Due to perfect substitute present
of the product the firms engage in tough competition leading to lower prices and making profits
only by cost reduction. Examples includes Unilever and Proctor & Gamble for detergents.
3.2 Market forces shapes organisation response
The main market forces comprises of supply and demand which helps in shaping the
organisational responses to them. Supply the units of goods produced by the firms in the market
and demand is the unit of goods desired by the consumers in the market(Ullah and Lai, 2011). At
some point they both become equal that point is called equilibrium. It is regarded as the ideal
point in the market for any business. Supply and demand have a reverse relationship, when
supply of a product increases demand decreases and vice versa.

Source; Demand and supply,2017
Primark is the biggest fashion retail store chain for in the market. It deals with the change in
demand and supply frequently. It offers a wide range of products for different section which
makes it difficult to keep up with the demand and supply equilibrium(Trkman, 2010). It has its
stores and customers all over the world which makes it difficult to predict the future market
responses. Theses market forces direct the production of the company and the prices for a
product.
Primark being the biggest firm in the field can determine it's prices if the demand
increases but when the demand decreases it has to lower the prices to maintain it's market
position. It helps the company to attain the profit level required for it to operate. This shows the
intensity of the impact of market forces on the organisations.
3.3 Business and culture environment shape the behaviour of a organisation
Business and cultural environment involves the internal as well as external factors that
affect the organisation. Internal factors involve business ethics, working policies, etc. which
affects the business processes. External factors are political, economic, technological, legal and
cultural which drive the market forces for a company.
Primark, a fashion clothing retail company has internal forces which guides the business
processes of the organisation and helps to attain the company goals(Teece, 2010). Safe working
environment and coordinating subordinates contribute to the working of the firm and keeps the
workers motivated. In festive season and mostly in Christmas time company is having a big
Illustration 1: demand and supply

demand Santa clothes relevant products so they have to make these products in advance to fulfil
demands by supply. As for external environment, the cultural environment has the major impact
on the supply and demand of the products during a period of time. If there is a cultural event
celebrated on a large scale or a festive season, the products and specially clothing demands
increases in the market. This trend is very helpful for Primark as it deals in fashion clothing for
everyone, women, men and children(Ruff, 2006.). It helps the company to be prepared
beforehand for such occasions to deal with heavy demand during the time.
TASK 4
4.1 Significance of international trade to UK business organisations
An organisation which is delivering their products and services in various countries
having a status of international company, they are making a high quality products. UK
government is concern about their organisations and they are supporting them to enlarge their
business activities. They are making these types of policies to enlarge their business activities. It
is not possible for every country to have all types of products in their nation so they have to
make exchange their products with another countries. For example GULF countries are know for
petroleum and they are having this product in excess so they are exchanging it with another
countries which are having the same product which they need(Moutinho, 2011). This helps and
supports to international trade. Here is some points are described which have a potential to
clarify significance of international trade for UK business organisation;
Production cost; When a company is having affair in the international trade, they focus on their
production cost. UK companies can make their production cost lesser by making trade in the
international market.
Qualitative work; Manufacture companies can increase their quality of production when they
have a contract in international trade. They have to meet international level in quality, their
products and services have to more finer and satisfactory for their customer.
Increase of position; UK organisation can make their better positions in their nations. This not
possible for each organisation to be in international market so which organisation is having
potential to deal in the international market can increase their market position by making trade in
the international trade(Monks and Minow, 2008).

Profits; This is beneficial for both UK nation and UK companies, international trade giving a
chance to increase their profits by enlarging their market. This support to company and as well as
to the country to increase profits and foreign fund for the nation. UK is having a huge impact of
BREXIT and recession in the past years. UK companies can helps their nation to increase their
exchange funds(Klapper, Lewin and Delgado, 2011).
4.2 Impact of global factors on UK business organisations
Global factors have a major impact on the business organisations in UK. These factors
can change the working and planning of an organisation. These include technological,
economical, social and ecological. Technological factors- Technological innovations and up gradations are happening very
frequently which is hard to keep up pace with. The companies in UK to have the latest
communication and infrastructure elements need to indulge in the technological up
gradations in their business organisations to get the competitive edge. Economical- This is the major factor as for the organisations according to which they
form their financial policies and strategies(Chi, Kilduff and Gargeya, 2009). The
economy of UK affects the working and process of the company as it is complicated to
change the plans once the productions starts. BRICS nations as the emerging market with
rapidly growing economy are posing a threat for the UK organisations. Social- This factor has the basic values and problems of the society in which the
company operates. Poverty being the main problem apart from changing family values,
migration trends and mobility between social classes.
 Ecological- The major threat for the all economies in the world including UK is global
warming. The increased levels of pollution has increased the risk for health and natural
hazards. The companies are now asked to emphasise on the environmental protection
policies and practices and are asked to promote the same.
4.3 Impact of European Union policies on UK business organisations
Europe is the most important partner of UK in trading business(Dollinger, 2008). The
European Union plays a crucial part in influencing the economy of UK by implementing the
laws, taxation policies, and support and subsidies for the business and the country has to follow
them to remain the member of the EU.

 Employment policy- The policies of EU encourage the employment in the country. It is
keen on increasing the efficiency of the business activities and providing more
employment. The government also supports to train and develop the people to attain more
employment. Legal policies- The legal obligations are to be followed by all the members of the
European union(Dong, Wu and Hou, 2009). These includes tax policies, rules and
regulations for the companies and trade practices in the country as well as outside the
country. These help in increasing the security and development of the business and
people in UK. Agricultural policies- The EU policies support the agricultural sector in the countries by
subsidising a large amount to them. The agriculture needs to be supported and developed
to support itself. The funding from the EU has become a great help for the farmers in UK.
 Education policies- The government has created more training and vocational courses to
support the educational level of the people to increase the employment in the
county(Hawken, 2007). However, with no funding by EU for education will have an
impact on the students coming in UK from other EU member countries but making more
places for UK students.
CONCLUSION
The above concluded report is having focus on the business environment and it's impacts
are analysed on the organisations in UK with regard to the leading retail company, Primark as an
example. Different markets factors with its responses and impacts on the business are evaluated
as well as the impact of EU policies on the UK organisations. It shows how the global factors
affect the UK business and describes the nature of national environment in which business
operates. Thus, it shows the operation of UK business relating to national and international
factors. PRIMARK have to adopt environmental factors in their business activities, they have to
make changes as per the market needs and market forces. They have to be responsible for their
stakeholders to manage them as per the requirements of business environment.

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