Business Environment of UK: PESTLE and Porter Five Forces Analysis

This report provides an analysis of the business environment of UK for prospective foreign investors. It covers the micro and macro environment, PESTLE and Porter Five Forces analysis, nature of competition among UK firms, and political factors impacting business performance. The report concludes that UK is a welcoming market for foreign investors with equal policies and regulations for both UK and non-UK firms.

BUSINESS ENVIRONMENT
OF UK

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
PESTLE analysis of UK business environment..........................................................................4
Porter five forces analysis for UK businesses.............................................................................5
Nature of competition among the UK firm and their price elasticity for pricing the products
and services..................................................................................................................................6
Political factor that impacted the business performance.............................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment encompasses with all the factors that impacts the organizational operation.
Business environment helps in finding the opportunities for the businesses to design the
appropriate strategies to improve the performance for enhancing the profitability of the business
(Alexandrou, 2022). In business environment potential firms compete with each other to make
the productive market place. Business environment of UK is consider as one of the safest and
easiest market place for doing business in the world. Following report will cover the analysis of
business environment of UK for the prospective foreign investors to start their business in UK
market. Presentation will cover the micro and macro environment of the market and describe the
pestke and porter five framework.
MAIN BODY
Business environment:
It encompasses with the elements such as competition, stakeholders, suppliers, and industrial
trends which affects the market position of the organisation. It is the environment where the
companies of different sector interact with their customers and operates their business to develop
revenues. They compete with other organisation to increase their market share and to provide the
qualitative products and services to their customers.
Micro environment:
This environment refer to comprise of all the elements of the businesses which mainly
influences the organisational performance. It involves the customers, vendors, resellers,
competitors. It is the operating environment of the organisation, they are mainly associated with
the company (Al-Shaer and Hussainey, 2022). As the main purpose of the firm is to provide the
satisfactory products to the customers, thus for that companies mainly focuses on the feedbacks
which is made by the customer in order to provide them customer satisfaction.
Macro environment:
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It refer as the huge condition of the economy against the specific market field. Thus the
macro environment can directly impacted by the GDP, trade policies and other factors. It mainly
affects the working approach of every enterprise.
PESTLE analysis of UK business environment
Political: These factors are governmental regulations, tax, tariffs and bureaucracy. UK consists
of England, Scotland, Wales and northern Ireland it consider as the powerful country in world.
Business environment is stable. Government increase the taxes on the basis of consumer and
business activities, they also motivate the businesses to deliver the particular product when it
links with social benefit and also discourage the products delivery when it linked with negative
effect. After Brexit entry it creates uncertainty in business environment, it affects the supply
chain, but finally it culminated in UK leaving EU deal. Government rules are same for both UK
firm or no UK firm thus foreign investors can easily enter the market.
Economical: Economic growth, interest, inflation rate and other economical factor. UK is
considering as the 6th greatest economy in the world. National living monetary increases for
every year. If there is change in economy policies, it affects the business (Brown, Hall and
Davis, 2019). As the business market is diverse and offers equal opportunity to all business, thus
it gives the space for grow to foreign companies as well. Unemployment rate is low that is why
country’s per capita is higher.
Social: Health consciousness, career attitude, cultural aspects and other demographic trends
comes into this category. UK country has good and huge market, country is mainly influenced by
the social class, but the people are multicultural. Consumers are educated and have a great
degree of mobility. Companies in the market have been produced many products regarding
preference of customers and still there are some opportunity left for businesses to explore. Thus
changing in trends and societal belief have good impact on business.
Technological: Emergence of new technologies are impacting market. UK country is the most
advanced technological country in the world. Business environment is highly technological thus
businesses aims to provide the tech savvy products to consumer. Thus it offers the good business
opportunity to the entrepreneurs and other foreign investors.

Legal: It involves the legal compliances, industrial regulations, labour laws and intellectual
property. Thus in UK business market it is mandatory for the organisations to follow the
employment act 1996. Also follow the equality act 2010 to prevent any kind of discrimination at
work place. Those business which not follow such are forced to shut down their business.
Environmental: UK country believe in sustainability thus they are companies are committing to
reduce the environmental factor and to reach the sustainability(Dey and et.al 2020). Thus one
need to ensure the sustainable goals before establishing the business in market.
Porter five forces analysis for UK businesses
Bargaining power of customer: Consumer buying power can impact the whole business
productivity and drives changes in the existing economy. Thus it is found that for the UK
market customer buying power is relatively low, however customer can switch the
companies as the goods are mostly undifferentiated.
Bargaining power of suppliers: If there are few suppliers in the market then it cause the high
power. But for the UK it is seen that there are number of suppliers are present in the market
whether national or international, so businesses can easily switch vendors according to their
financial capacity to purchase the raw products.
Threat of new substitute: Threat for substitute is differ from product to product as for the food
product is comparatively low.
Threat of new entry: It is examining as barrier to the new entry, it is found that UK
supermarket is tough to enter because the existing companies have good brand reputation. As for
the foreign investor they must need to come with greater strategy and unique product to develop
in market (Eze and et.al 2019).
Competition among rivalry: Competition in the UK market is intense as companies have good
market image. Thus for the foreign investor company it is important to make sure to come
with strategy or to collaborate with existing company to sustain in the market.
D) ANALYSIS OF MICROENVIRONMENT
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Nature of competition among the UK firm and their price elasticity for pricing the products and
services
Competition between the companies creates an intense business environment where the
businesses are always trying to stand out from their rivalries. As the supermarket industry of the
UK is highly competitive there are many retail companies such as Sainsbury, Tesco, Unilever,
ASDA, Morrison etc. Thus the market is highly intense and customer in the market also demands
for the unique product which makes the firms to come with greater approach to compete with
their rivalries or to develop their market share. Thus every company have their brand image in
the market, in spite of highly competitive market all company have good market share because of
their unique strategies and pricing on the products (Jose, 2021). Pricing elasticity demand refer
as the percentile ratio of there is change in demand made then it also impacts the product pricing.
It can also understand as how the changes drives in supply or demand when the pricing for the
goods are changes. UK market is the good example of oligopoly as the pricing war is more
common in the market. As for the Tesco their product bread for this they have great elasticity
because there are many alternatives are present in the market. Thus if they rise the price for bread
then consumer might shift to their rivalries. Thus company usually offers the less or cheap price
on product whose consumers are elastic, however consumer of inelastic demand pays much
higher to Tesco for other products. Another cheap product of the Tesco is baked beans, they
offer the cheap price over it just to make sure that customer will not switch to other Heinz. Thus
it is the strategy of Tesco as to provide the cheap price product which have elasticity demand in
market.
As for the Sainsbury price due to the food deflation effect and facing intense competition from
other supermarket. Company is looking for driving changes in their products. Company has
started to lowering the investment for their promotional activities to favouring the regular prices
on the products. For the mark and spencer company, they usually concern with the quality of the
product as to provide the best products to the customer (Liute and De Giacomo, 2022). Thus
company is more sensitive regarding their prices as the demand is highly price elastic, since any
changes in the prices are likely to drive changes in the demand, because of the availability of the
other alternative products. Thus it is found that the sales for the M&S has dropped due to the
decline in take home price of many customers. Therefore price elasticity causes major changes
because of this companies are r5eviewing their pricing strategy to increase their revenues or to

compete in the market without loosing their best position in the market (Meineke, Hellerstedt
and Nordqvist, 2019).
E) ANALYSIS OF MACROENVIRONMENT
Political factor that impacted the business performance
Political factor has major impact over the business performance, as businesses are required to
follow the tax policies and other regulations in order to sustain in the market. As changes drives
in any legislation causes major changes for the businesses also as they need to review their
strategies again to follow certain rules. As for the UK the major political decision was Brexit, it
is their exit from the EU, which cause the major changes in the country’s infrastructure. Trade
policies have been changes now it become difficult for the organisation to transport their
commodities due to the several customs at borders are imposed on them (Pasquire and Manu,
2022). Trade with the EU has dropped at large margin, UK exports to the EU countries have
fallen down by the 45 percentile. It is estimated that almost all business industries have suffered
a lot due to the Brexit decision, it impacts the productivity of business. Manpower issues also
raised in UK, as before Brexit decision companies are free or easily import export their good and
services without tariffs and border customs. But after the changes in the Law companies not
required to pay the tariffs but still they have to submit the documentation which they do not
submits before brexit. Industries who have regular trade with the EU are more likely seen to
suffer. Thus food and agricultural industry have faced many problems regarding the supply chain
services, because of the Brexit effect UK retailers and some consumers have stockpiled the foods
which results as a scarcity of resources such as food unavailability. As the UK depends on the
fresh food delivery thus the delivery services delays and caused many problems. Tesco company
run out of their products their food shelves leaves empty.
Thus Tesco has made decision to connect with the booker and Carrefour boost, as these
are Europe’s largest retailer, it means they can easily create more pressure on the suppliers and
provide a ability to pressurise them to burden as any price which is increased by the Brexit. As
other company Morrison they have vertically integrated business it develops around 25 percent
everything which they sells. Company provide the range of poultry products, as having a great
manufacturing and supply based system in its own country UK have great advantage to the
supermarket amid brexit (Tijssen, van de Klippe and Yegros, 2019). Although company also
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imports the products like other businesses but they are less exposed to the risk of tariffs trade
barrier and border custom checks.
CONCLUSION
From the above report it is illustrated that the business environment associated with various
factors which drives changes in the businesses. Above report have discussed the UK business
environment for the prospective foreign investors, as UK business market is most welcoming for
the foreign investors as the policies and regulations are equal for both UK and non UK firm and
both are liable to play a role in economy of the company. Above report have discussed the macro
and micro business analysis as how the external factors impact the business performance. Report
also covers the framework which is Pestle and porter five forces. It further explains the
microenvironment analysis in which is describes the nature of competition between the UK firm
and how they have follow the price elasticity for pricing their products and services. It lastly
concluded with the analysis of macro environment which discuss the political decision as Brexit
that impacts the business and how organisations have survived its impact.

REFERENCES
Books and journals
Alexandrou, N., 2022. Duties, Responsibilities, and Liabilities of Directors in the UK. Corporate
Social Responsibility and Governance: Stakeholders, Management and Organizational
Performance in the European Union.
Al-Shaer, H. and Hussainey, K., 2022. Sustainability reporting beyond the business case and its
impact on sustainability performance: UK evidence. Journal of Environmental
Management. 311. p.114883.
Brown, D., Hall, S. and Davis, M.E., 2019. Prosumers in the post subsidy era: an exploration of
new prosumer business models in the UK. Energy Policy. 135. p.110984.
Dey, P.K. and et.al 2020. The impact of lean management practices and sustainably‐oriented
innovation on sustainability performance of small and medium‐sized enterprises: empirical
evidence from the UK. British Journal of Management. 31(1). pp.141-161.
Eze, S.C. and et.al 2019. Determinants of perceived information need for emerging ICT
adoption: A study of UK small service businesses. The Bottom Line.
Jose, J., 2021. Analyzing the necessity and impacts of organizational culture on the performance
of Unilever UK Ltd (Doctoral dissertation, Dublin, National College of Ireland).
Liute, A. and De Giacomo, M.R., 2022. The environmental performance of UK‐based B Corp
companies: An analysis based on the triple bottom line approach. Business Strategy and the
Environment. 31(3). pp.810-827.
Meineke, A., Hellerstedt, K. and Nordqvist, M., 2019. The changing role of the chairperson of
the board: an analysis of business press articles in the UK, US and Germany. In Research
handbook on boards of directors. Edward Elgar Publishing.
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Pasquire, C. and Manu, E., 2022. Key factors affecting commercial actors in collaborative
working within the UK construction industry. Journal of Financial Management of Property and
Construction.
Tijssen, R., van de Klippe, W. and Yegros, A., 2019. Globalisation, localisation and glocalisation
of university-business research cooperation: General patterns and trends in the UK university
system.
Books and journals