Sustainable Supplier Management in the Chemical Industry

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This assignment delves into the complexities of managing sustainable suppliers within the dynamic environment of the chemical industry. It examines the inherent risks associated with sourcing materials and production processes while highlighting the importance of developing dynamic capabilities to effectively mitigate these risks. The analysis draws upon various academic sources and real-world examples, particularly focusing on Primark's ethical supply chain initiatives.

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BUSINESS ENVIRONMENT

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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Introduction to Primark.........................................................................................................1
1.2 Stakeholders of Primark and meeting their objectives..........................................................2
1.3 Responsibilities of Primark...................................................................................................3
TASK 2............................................................................................................................................4
2.1 Economic Systems of different countries.............................................................................4
2.2 Impact of Fiscal and Monetary Policy..................................................................................5
2.3 Competition Policies in UK..................................................................................................6
TASK 3............................................................................................................................................7
3.1 Pricing and Output decisions of different market structure..................................................7
3.2 Ways in which Market forces shape organizational responses.............................................7
3.3 Business and Cultural environment of Primark..................................................................10
TASK 4..........................................................................................................................................10
4.1 Significance of International Trade to UK market..............................................................10
4.2 Impact of global Factors on UK business organization......................................................11
3.3 Impact of EU Policies on UK business organizations........................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
A business environment is constituted from the set of conditions in which a business is
operating, and such conditions can be in terms of economic, political, social or institutional.
Hence, is can be termed as aggregate of all these varied conditions, which have the capacity to
influence the operations of a business enterprise directly or indirectly. In the present globalised
economy a highly vital role is played by these factors in determining the operations of a
company. It is important to understand that a business environment is encompassed of both
internal as well as external environment. In order to operate in an effective manner it is crucial
for a corporate to understand and assess the internal as well as external environment. This shall
further enables the management to develop strategies in accordance to the prevailing trends and
forces in market. In pursuance to this the present study purports to understand the internal as well
as external environment in relation to Primark. The study shall discuss different economic
systems and prevailing market forces in respective markets. Lastly, it shall illustrate the
significance of Brexit to the market of UK and various factors which impact the international
trade in relation to business organizations.
TASK 1
1.1 Introduction to Primark
Primark is a Private Limited Company which is engaged in operations related to clothing.
It is a retail company which exists in the fashion industry. In the year 2012 it marked its presence
in the countries of UK, Ireland and Europe with around 238 branches and is known for its
innovative strategies and fashion driven products. With the assistance of this knowledge and
information it is able to develop goods which are completely in accordance to the specifications
(Primark, 2016). The rationale behind the success of the company is the expertise with which
the management understands the needs of its customers as well as its suppliers. Owing to its
nature of a private company all the shareholders have limited liability in the company. Moreover,
the shares of these entities is held by only private persons and cannot be offered to public in
general.a) The different forms of organizations which exist in the market in accordance to
law are:
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b) Public Sector: These are the companies wherein the liability of the members is limited to
the extent of their unpaid amount in respect to the respective shares. These companies
have been empowered by law to offer shares to the public in general (Constangy, Marger
and Brompton, 2015). Therefore, all the corporates which are listed on LSE can be
defined as public companies. For instance Burberry Group Plc is a public company which
is operating as a luxury brand in the fashion industry.c) Charity: These are the organizations which are operating in the form of a non-profit
entity and the primary objective of their existence is philanthropy and social well being.
REACH Fund is one such organization which is operating in London for welfare of
children operating in cancer and leukaemia.
d) Cooperative: These are the autonomous association of different people, who have united
to work for their shared goals and needs in terms of economic, social and cultural
aspirations (Foerstl and et. al., 2010). For instance, Baywind Energy Cooperative is one
such organization which is operating to manage wind turbines in the nation.
1.2 Stakeholders of Primark and meeting their objectives
The management of Primark maintain a very healthy and consistent relation with all the
stakeholders of the entity, and in pursuance to the same a highly prominent role is played by each
one of them in operations of the company. Specific efforts are undertaken to understand the
requirements of all the customers and the suppliers so as to cater to their needs in an effective
manner. This is the reason the company has been able to place right goods for the right people at
a right time. Some of the specific initiatives which have been undertaken by Primark in relation
to the primary stakeholders are:ď‚· Customers: the primary objective of every customer is to receive goods which are of
good quality and are available at a right price. In pursuance to the same, the management
of Primark has been undertaking specific efforts to primarily understand the needs and
requirement of their customers, which is eventually catered by strategies and products
which best suits the specification (Cantwell, Dunning and Lundan, 2010). Moreover, the
pricing strategy also clearly reflect the value for money and therefore the company has
been successfully achieving the objectives of the customers.ď‚· Suppliers: Primark believes in maintaining a close integration with the suppliers so as to
be able to understand their aspects of needs and demands. The major suppliers of the
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company belong to Europe and Asia. Thus, in order maintain a healthy relation with the
suppliers a code of conduct is applied so as to maintain the relation in a consistent and
healthy manner.
ď‚· Employees: The company has an employee base of around 57000 employees. In order to
ensure a healthy working environment for each one of them the company has been
complying with the legal framework in an effective manner. It is understood by the
company that there are significant implications of non-compliance of ethical
considerations and in pursuance to the same strict mechanism has been installed by the
company (Trkman, 2010). Apart from providing a healthy and friendly organizational
culture, the employees are also provided with lucrative opportunities for personal as well
as professional development.
1.3 Responsibilities of Primark
Every business organization is imposed with certain roles and responsibilities which they
are required to comply with in order to successfully survive in the market. In pursuance to the
same, Primark has also been made responsible to comply with the following:ď‚· Interest of Stakeholders: It is understood by Primark that the stakeholders of the
company have a significant interest in the operations and success of the company. In
pursuance to the same it is the responsibility of the entity to cater to the interests and
needs of stakeholders in an effective manner. In pursuance to the same it is believed by
the company that in the present world expectations of consumers hold a paramount
position and especially in the fashion industry (Katkalo, Pitelis and Teece, 2010). Apart
from the consumers, a highly vital place is held by the employees, who are primarily
responsible for the operations of the company. Primark in order to protect their interests,
became a part of Better Work Partnership, 2010, which in essence shall enable the
company to improve the labour practices. Therefore, in the same manner the entity has
adopted various strategies to protect the interests of all the stakeholders.
ď‚· Legal Responsibilities: There are various legal considerations which the company shall
comply with by operating in a truthful and bonafide manner. In pursuance to the same,
the management is under the responsibility to ensure all the laws relevant to consumer
rights and protection are adhered with. Moreover, it shall be assured that the employees
are treated in a non-discriminatory manner to provide equal opportunities to all. Thus, in
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pursuance to the same, all the provisions of Equal Opportunities Act 2010 shall be
complied with (Lee and et. al., 2011). In addition, it is also important that the operations
of the company are in compliance with the provisions of health and safety laws as well
as environmental regulations.
TASK 2
2.1 Economic Systems of different countries
Economic system connotes the medium through which countries or governments make a
distribution of their resources as well as undertake activities of trade in goods and services. Thus,
the primary functions which are contained in every system are a production system, allocation of
resources and a particular way of distribution of services as well as goods.
Economic System of Cuba
The nation is comprised of a planned economy which is primarily dominated by
corporates which are state-run. It has been observed that government owns majority of the
entities. In the year 2000, it was reported that 76% of the employment was within the public
sector and rest of the population was self employed. It is a dual economy wherein two different
systems are persisting in a simultaneous fashion. Majority of the Cubans exist under Socialist
Peso Economy, which essentially makes available free services pertaining to education, health
care, employment and so on for the respective citizens (Teece, 2010). Moreover, all the
necessities of the citizens are also made available at an extremely low cost. On the other hand,
the other system of free-market dollarized economy exists in the tourism, exports and other
international sectors.
Economic System of United Kingdom
The economic system of UK is in the nature of mixed economy and in pursuance to the
same majority of the decisions pertaining to market are undertaken by the forces of the market
itself. Though there are certain decisions which are reserved for government, majority of them
are under undertaken by the market. Thus, the market forces of demand and supply play a
significant role in determining the production of a company. Thus, there arise a need for strict
regulations which governs the operations of the companies in an effective manner (Babatunde
and Adebisi, 2012).
Economic System of China
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China comprises a socialist market economy, which accounts for the second largest
economy in terms of nominal GDP and the largest by purchasing power parity, in the entire
world. In pursuance to the historical facts and events the public sector constitutes to be the
biggest share for the national economy. Each and every force of the market is regulated by the
authorities and any amendment in the regulations leads to an instant modification in the
operations of the company (Lee and et. al., 2010.). The economic plan for varied sectors is
developed the government and implemented in strict fashion.
2.2 Impact of Fiscal and Monetary Policy
The fiscal and monetary policy of the nation is developed by the government in order to
determine the spending patterns through the medium of taxation, public debt and so on. In
addition, the supply of money in the market is also regulated through the medium of bank rate of
borrowings and so on. The specific impact which is made by these policies on Farming and
Housing are:
a) Farming Sector: These policies when implemented in an effective manner create an
inflation cycle. This is done by stimulating the overall demand in the market by
increasing the supply of money or reducing the tax rates. This in turn results into an
expansionary phase which leads to increment in sales of the farmers and vice versa. Thus,
these changing phases in the market bring a change in the demand of farms products as
well (Sena Ferreira and et. al., 2012). In addition, the policy in relation to credit also
influences the manner in which farming sector operates.
b) Housing Sector: The fiscal and monetary policy determines the purchasing power of a
market as well as availability of money in the market. Hence, in the event these policies
infuse cash inflow, the builders are empowered to build different construction projects as
the capacity of investment increases. On the other hand, the people in general are also in
the capacity to purchase houses or pay the regular instalments (Craig and Campbell,
2012). However, in event the policy has an opposite stand the stakeholders are not able to
undertake their respective actions.
2.3 Competition Policies in UK
The primary objective in pursuance to which the competitive policies of UK have been
enacted are improving the competitive surroundings in the manner enterprises operate to enhance
the aggregate performance in the economy. It can be stated that the modern approach of the
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competition policy of UK is more pragmatic in nature. This can be stated in pursuance to the
preference of judging every case of monopoly and merger on an individual basis. The relevant
legislation which currently exists in the market are:ď‚· Competition Act 1998: The statute imposes prohibitions on formation of cartels, abuse of
dominance and collusions (Carroll and Buchholtz, 2014). It has also been provided in the
act that price or output fixing by a group of entities is strictly prohibited.ď‚· Enterprise Act, 2002: This statute was enacted to amend the competition policies and
strengthen the regulators and empowering them to punish the corporates who have acted
in violation of any of the provisions of Competition Act. Thus, in pursuance to the same,
the regulators shall now be required to assess the event of merger in respect to any of the
organizations and investigate into any matter if required. Moreover, in order to maintain
healthy competition in the market formation of cartels have been criminalized.
ď‚· Enterprise and Regulatory Reform Act, 2013: This legislation has been enacted to
establish the Competition and Markets Authority (CMA), which shall be required to
exercise functions of Office of Fair Trading and Competition Commission (Comanor and
et. al., 2014).
In pursuance to these legislations various regulatory bodies have been established in
order to control the operations of different entities in the market, and ensure fair competition
between business organizations:ď‚· Department for Business, Innovation and Skills (BIS): This body was established in the
year 2009, with the primary objective of promoting free as well as fair trade in an
environment of healthy competition.
ď‚· Office of Fair Trading (OFT): This is an independent body which operates to ensure that
the market is free from unfair and uncompetitive trading. It is also involved in
investigating anti-competitive activities which are undertaken within the market or the
practices of abuse of dominance and so on.
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TASK 3
3.1 Pricing and Output decisions of different market structure
Price determination constitutes to be one of the most important decisions in a business
enterprise. A highly instrumental role is played by market structure and in the manner different
forces operate.
a) Perfect Competition:This is a situation wherein numerous buyers and sellers are
available in the market, who are all well informed about different elements. Thus, in
pursuance to the same there is no attribute of monopoly and pricing is not under control
of any individual component (Bennett and et. al., 2010). Therefore, determination of
market price is done on the basis of equilibrium achieved between supply and demand,
over a short time duration.
b) Monopoly: In this form of market structure a single firm exists as the sole producer or
manufacturer and has no substitute in the market. Thus, there are no rivals in the market
and the enterprise exercising monopoly primarily focuses on the profits, rather than
quality of goods or services. Thus, the price of product is determined by the sole trader
existing in the market.
c) Oligopoly: There exist many firms which are not exercising perfect competition. It has
been observed that in such a market structure there are only few entities which are
actually competing in respect to a particular commodity. It is difficult to enter into
markets of this nature. Primark is currently operating in this form of market structure and
the market forces of supply and demand ascertain the pricing strategy of the products.
Often companies indulge in predatory pricing of products.
d) Duopoly: The entire market is controlled primarily by two corporates and these two
companies only indulge into competition over the prices (Pisani-Ferry and et. al., 2016).
3.2 Ways in which Market forces shape organizational responses
Every form of business organization are subject to the movement of market forces. In the
event any of the entities fail to respond to the same in an effective manner, the company shall
face the consequences. Two forms of market forces which primarily exists in the market are:ď‚· Law of Demand
ď‚· Law of Supply
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In accordance to Law of Demand the demand of a commodity is dependent on the price
of the said commodity, if other factors are constant. The combination of this relationship is
reflected through the demand curve. This curve is always downward sloping and reflects the fact
that the consumers are generally willing to purchase at lower prices. A demand curve can be
represented as:
On the other hand, law of supply says that the quantity available in the market or supplied
is primarily dependent on the price of the concerned commodity. Apart from the price of the
product, the price of substitute product, cost of labour, production technology also have an
impact on the quantity of supply of particular product (Dhingra and et. al., 2016). This
relationship is rep[resented on the supply curve, which represents that the traders intend to
supply an increased quantity of products at higher prices. This can be illustrated through the
following figure:
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Illustration 1: Demand Curve
Source: Supply and demand, 2014
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Illustration 2: Supply Curve
Source: Supply and demand, 2014
Hence, in pursuance to the price mechanism relationship of demand and supply enables
the entities to determine the prices at which the goods or services shall be sold in the market.
Thus, interaction of demand and supply determines the precise price which is also known as
equilibrium price. In addition, it represents a consensus on the price, at which the producers are
willing to make the goods available and the consumers are willing to purchase. It is thus,
represented in the following manner:
Illustration 3: Relationship of Supply and Demand
Source: Supply and demand, 2014
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In furtherance to the concept of demand and supply, it is imperative for the business
enterprises to effectively respond to the specific demands of market, in terms of Quality,
customer satisfaction, fiscal viability and cycle time. In addition, a non-profit or governmental
organization are also required to attain the demand of Mission. Thus, it can be stated that it is
crucial for the businesses to concurrently address each of the market forces and in compliance
with the standards ascertained by the market (Whish and Bailey, 2015). The movement of market
forces tend to produce pressure on the performance of corporates, which often leads to greater
customer satisfaction and innovative products.
3.3 Business and Cultural environment of Primark
A business organization can never operate in isolation and is always influenced by
different factors persisting in the surroundings. In a similar manner the behaviour of Primark has
also shown an impact in the following manner:ď‚· Cultural Factors: These factors are constituted from the beliefs and values which have
adopted or practised by the business organization. These are the internal factors which
determine the manner in which the organizational structure is formed and operates to
reflect the approach of the business towards different aspects.
ď‚· Business Factors: The business environment of Primark is constituted of Political,
technological, social and economic environment. Considering the fact that Primark is
across the national boundaries it is required to address the political conditions of every
market. Further, in the event of technological advancement, the company readily adopts
such technologies in order to produce an enhanced product in lesser hours. This are the
external factors which are also comprised of Social behaviour and lifestyle of people.
TASK 4
4.1 Significance of International Trade to UK market
International trade refers to undertaking business operations or functions across the
national boundaries and enable the organizations to cater to the needs of a diversified group of
customers on a wider platform. In addition, it is also considered beneficial for the economy of
the nation. The specific significance which international trade holds in respect to UK companies
are:
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ď‚· Larger Customer Base: It enables the domestic companies to enjoy a larger exposure of
markets and serve to the needs of an increased number of customers, who are highly
diversified in nature (Sokol, 2010.). This further empowers the businesses to realize
higher revenue and an international presence.ď‚· Reduced Cost of Production: International trade enables the UK companies to source
their products or raw materials from regions where it is available at a cheaper price. This
is the first measure which reduces the cost of production. Moreover, to address the needs
of a vast customer base, these organizations are required to undertake the production of
large quantities, which further reduce the cost of production. For instance, the suppliers
of Primark are based across Asia and Europe as the cost of labour is relatively low in
these areas. This in turn makes a reduction in the overall cost incurred for production.
ď‚· World Unity: International Trade is not only a medium to attain profits for an economy or
a company, but is also a measure to promote relations between different countries. These
relations develop world unity and implement measures to encourage transaction between
different nations. A remarkable example is reflected by the European Union market
which has installed various measures for free trade and standard policies (Bennett and et.
al., 2010). However, in pursuance to Brexit UK is no longer a part of EU and hence, there
remains uncertainty in respect to the manner in which trade shall be undertaken UK.
4.2 Impact of global Factors on UK business organization
The global factors are constituted from the changes which take place in the environment
of world and in some manner shall effect the operations a business. There are various UK
organizations which are functioning on an international level and hence, in pursuance to the
same are susceptible to the global factors. The impact can be assessed with the assistance of
following factors:ď‚· International Trade: The economy of nation is highly dependent on the manner the
multinational companies are operating. The rationale behind the same is that UK works in
the form of a mixed economy and a change in the environment of another country may
have an impact on the multi-national companies of UK (Foerstl and et. al., 2010). In turn
the economy of UK shall be impacted.ď‚· Multicultural Workforce: Expansion of operations beyond the national boundaries
automatically diversify the workforce of an organization. In pursuance to the same the
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UK corporates face its merits as well as demerits. Merits in the form of supporting
diversity and innovative measures, whereas demerits in the form of increasing conflict
situations.ď‚· Global Growth: The global factors in the form of competition, import/export duties,
varying demand of products and so on have an impact on the business organizations of
UK. With the increasing uncertainty in respect to these factors the element of risk also
increases and thus, requires the business organizations to be protected (Babatunde and
Adebisi, 2012). In pursuance to the same WTO has been made responsible for ensuring
fair competition and trade in the global market.
ď‚· Climate Change: Though this factor does not have an impact on all the business
organizations, it has a major impact on the entities which are producing seasonal goods.
In addition, it has also been noted that with a changing global climate and increasing
global warming, the companies are required to replace their technology in order to adapt
to the changed weather.
3.3 Impact of EU Policies on UK business organizations
The primary objective of creation of European Union was to ensure free trade among the
member nations and maintain a healthy environment for the organizations to operate. In
pursuance to the formation of EU, the concerned policies and legislation are followed by all the
member states in a uniform fashion. Thus, the business organizations of UK also had great
impact on the manner in which they were freely operating in the region. However, with the
occurrence of the event of BREXIT the UK organizations have been under uncertainty. Some of
the specific impact which can be witnessed are:ď‚· Environmental Policy: In pursuance to this policy a standard trading environment
exists all over the region, even enabling the small businesses to indulge in international
trade.ď‚· Free Movement Labour Legislation: This legislation is considered to be the primary
reason for occurrence of BREXIT. In accordance to these policies the government of
UK does not play any role in the practice of migration in work to be undertaken in UK
(Teece, 2010).
ď‚· EU Agricultural Policy: In accordance to the policy, farmers of UK received enormous
assistance from the government, which in consequence led to increased production.
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However, BREXIT has caused uncertainty in respect to the rights of farmers and their
production levels.
With the assistance of these policies it can be inferred that withdrawal of UK from EU
shall have both restricting and liberating consequences. Thus, the future growth of UK
businesses shall completely depend on the manner in which the government of UK enacts
various laws.
CONCLUSION
Business Environment plays a crucial role in development of operations of any business
enterprise and the same is clearly reflected in the strategies and operations of Primark. It can be
observed that the company is successfully addressing the interests of all its stakeholders –
Customers, employees, suppliers and so on. Moreover, it has also undertaken all its legal, ethical
and operational responsibilities in an effective manner. The economy of UK is operating on the
system of mixed economy, wherein the government is merely a regulatory body and all the
decisions are undertaken by the market. In pursuance to the same the business organizations of
UK are often impacted by the global factors. Lastly, the political event of BREXIT has caused
both restricting and liberating consequences on the market of UK.
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REFERENCES
Books and Journals
Babatunde, B. O. and Adebisi, A. O., 2012. Strategic environmental scanning and organization
performance in a competitive business environment. Economic Insights-Trends &
Challenges. 64 (1). pp. 24-34.
Bennett, M. and et. al., 2010. Behavioral Economics In Consumer Protection And Competition
Law: What Does Behavioral Economics Mean for Competition Policy?. Competition Pol'y
Int'l. 6. pp. 111-253.
Cantwell, J., Dunning, J. H. and Lundan, S. M., 2010. An evolutionary approach to
understanding international business activity: The co-evolution of MNEs and the
institutional environment. Journal of International Business Studies. 41 (4). pp. 567-586.
Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and
stakeholder management. Nelson Education.
Comanor, G. W. and et. al., 2014. Competition policy in Europe and North America: economic
issues and institutions. Taylor & Francis.
Constangy, H. W., Marger, E. and Brompton, A., 2015. Changing Business Environment.
Craig, T. and Campbell, D., 2012. Organisations and the business environment. Routledge.
Dhingra, S. and et. al., 2016. The impact of Brexit on foreign investment in the UK. BREXIT
2016. p. 24.
Foerstl, K. and et. al., 2010. Managing supplier sustainability risks in a dynamically changing
environment—Sustainable supplier management in the chemical industry. Journal of
Purchasing and Supply Management. 16 (2). pp. 118-130.
Katkalo, V. S., Pitelis, C. N. and Teece, D. J., 2010. Introduction: On the nature and scope of
dynamic capabilities. Industrial and Corporate Change. 19 (4). pp. 1175-1186.
Lee, L. and et. al., 2011. Entrepreneurial intentions: The influence of organizational and
individual factors. Journal of business venturing. 26 (1). pp. 124-136.
Lee, S. M. and et. al., 2010. Success factors of platform leadership in web 2.0 service business.
Service Business. 4 (2). pp. 89-103.
Pisani-Ferry, J. and et. al., 2016. Europe after Brexit: A proposal for a continental partnership.
Bruegel External Publication, Brussels.
Sena Ferreira, P. and et. al., 2012. Framework for performance measurement and management in
a collaborative business environment. International Journal of Productivity and
Performance Management. 61 (6). pp. 672-690.
Sokol, D. D., 2010. Competition policy and comparative corporate governance of state-owned
enterprises.
Teece, D. J., 2010. Business models, business strategy and innovation. Long range planning. 43
(2). pp. 172-194.
Teece, D.J., 2010. Business models, business strategy and innovation. Long range planning. 43
(2). pp. 172-194.
Trkman, P., 2010. The critical success factors of business process management. International
journal of information management. 30 (2). pp. 125-134.
Whish, R. and Bailey, D., 2015. Competition law. Oxford University Press, USA.
Online
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Primark, 2016. [PDF]. Available through:
<https://www.primark.com/~/media/ourethics/unpacked/primark-edition-16-full.ashx>.
[Accessed on 18th March 2017 ].
Supply and demand, 2014. [Online]. Available through:
<https://www.britannica.com/topic/supply-and-demand>. [Accessed on 18th March 2017 ].
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