The Impact of Business Environment

This assignment requires a comprehensive analysis of how different elements within the business environment influence the success of firms. Students will examine legal regulations, political climate, economic trends, and other relevant factors to understand their effects on businesses. The analysis should draw upon academic sources and real-world examples to provide a nuanced understanding of this complex topic.

Business
Environment
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TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
Task 1 ..............................................................................................................................................3
P1.1 Purpose of different organizations.......................................................................................3
P1.2 Extent to which Iceland Supermarket meet the objectives of its stakeholders ..................4
P1.3 Responsibilities of Iceland Supermarket towards its stakeholders and strategies employed
to meet them ...............................................................................................................................5
Task 2 ............................................................................................................................................5
P 2.1 Economic system attempts to allocate resources effectively..............................................5
P.2.2 Impact of fiscal and monetary policy on Iceland Supermarket ........................................6
P2.3 Impact of competition policy and regulatory mechanism .................................................7
TASK 3 ...........................................................................................................................................7
P3.1 How market structure determine pricing and output decisions ..........................................7
P3.2 Ways in which market forces shape Iceland supermarket response ...................................8
P3.3 Explanation of how culture and business environment shapes behaviour of Iceland
Supermarket ................................................................................................................................9
TASK 4 .........................................................................................................................................10
P4.1 Significance of international trade to Iceland supermarket ..............................................10
P4.2 Analysis of impact of global factors on Iceland Supermarket .........................................10
P4.3 Impact of policies of European union ...............................................................................11
Conclusion ....................................................................................................................................11
References......................................................................................................................................13
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INTRODUCTION
In the present scenario, understanding business environment has become one of the most
crucial tasks for mangers. It helps the organizations to become aware about their core strengths,
weaknesses, opportunities and threats. In addition to this, analysis of Business Environment (BE)
also helps the firms to become more flexible and dynamic. However, it can be argued that it is
not easy for managers to understand such environment as they are required to deal with various
kinds of challenges and issues related to the same. This report explains the purpose of different
type of organizations which operates in a particular business environment. Along with this, it
also reflects the extent to which Iceland Supermarket meets the objectives of its various
stakeholders. The present report demonstrates various aspects of business environment. It
reflects the impact of competition and regularity mechanism on Iceland Supermarket.
TASK 1
P1.1 Purpose of different organizations
Organization can be termed as a group of individuals which are organized together in
order to achieve certain business objectives (Ahmad and et. al., 2010). It can be stated that
different organizations operate with different kind of purposes. There are different types of
organization such as public, private and charitable. It can be stated that private organizations
operates with an purpose of increasing sales and profitability. On the other hand, private
organization operates with an purpose of providing quality products and services to people in
market at convenient prices. Charitable organization performs with an objective of growth and
development of society and the people living in the same. Some organizations along with their
purpose are explained below as:
Iceland Supermarket-
Established in the year 1969, Iceland Supermarket is British chain of supermarkets
which deals in frozen food products (Iceland Supermarket, 2016). Its products line includes
prepared vegetables, meals and items such as dry good, meat and dairy. It is an private limited
company with 850 stores in UK and various places. This chain covers almost 1.8% of the total
food market of UK. Main purpose of Iceland Supermarket is to become a responsible retailer in
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the country. In addition to this, its purpose is to provide ethical, healthy and safe products to all
its customers.
KFC-
Popular by the name of KFC, Kentucky Fried Chicken is an American based chain of
fast food restaurants. It also provides franchise options and the business allows other people to
set up their business by using the brand name of KFC. The chain has specialized itself in the
segment of fried chicken and it is also considered as second largest chain of restaurants in terms
of revenue (KFC, UK, 2016). One of the major purposes of KFC is to increase its market share
in the entire fast food market of the world. Along with this, core purpose of KFC includes;
providing the quality products and dynamic experience to its customers in all over the world.
Transport for London-
‘Transport for London’ also known as TFL is a government organization which takes
care of various aspects associated with the entire system of transport in London (Capon, 2009).
Its core purpose is to provide better and satisfactory transport opportunities for all the people
living in London. In addition to this, it also aims at addressing the barriers which individuals face
at the time of using transportation services.
Cancer Research-
Cancer Research is a research centre which tries to identify the cause of cancer along
with prevention and treatment regarding the same. Further it is an non government organization
established with an objective of not making profits and operates with voluntary charity. It
purpose is to cure the world from disease such as cancer (McAusland and Millimet, 2013). In
addition to this, all its operations and activities are directed towards identification of ways
through which cancer can be cured.
P1.2 Extent to which Iceland Supermarket meet the objectives of its stakeholders
Stakeholders are considered as a very important part of the business organization. Iceland
Supermarket is a chain of supermarkets which offers frozen food and grocery items to its
customers. The chain consists of some internal and external stakeholders who play a significant
role in its growth and development. Its internal stakeholders include managers, workers and
owners (Buthe and Milner, 2008). On the other side of this, external stakeholders of Iceland
Supermarket include customers, suppliers and government. Till now, the chain of supermarkets
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has been able to meet the objectives of all its stakeholders. Internal stakeholders such as
managers and employees are provided with adequate opportunities for growth and development.
It has also met the objectives of owners by providing higher profits. Customers’ objectives are
satisfied by providing safe and hygienic food products. Iceland Supermarket also uses some
sustainable practises in order to ensure that its operations do not have any kind of negative
impact on community (Meiners, Ringleb and Edwards, 2014). The chain of supermarkets meets
objectives of government by following all the rules, regulations and legislations in its practises.
Organization develops all its strategies and action plan by considering the objectives of all its
internal and external stakeholders.
P1.3 Responsibilities of Iceland Supermarket towards its stakeholders and strategies employed to
meet them
Every organization has some sort of responsibilities towards all its stakeholders. It is the
core responsibility of Iceland Supermarket to provide safe and hygienic products to all its
customers. Further, it is also responsible to provide its workers and managers with safe working
environment and better pay (Carter, 2007). This organization is responsible to take care and
follows the rules and regulation related to employment and operations. Other than this, it is the
responsibility of Iceland Supermarket to maintain good and long term relationship with all its
suppliers. Supermarket chain has adopted various kinds of strategies to meet all its
responsibilities. It has employed a strategy in which it involves all the external and internal
stakeholders in its decision making process. This creates a sense of satisfaction among
stakeholders and also makes the organization aware about its responsibilities. In order to grow
and survive in long run, Iceland Supermarket is required to take care of all its responsibilities.
Further stakeholders are the people which are directly or indirectly gets affected by activities of
the supermarket. By accomplishing all its responsibilities, a sense of satisfaction is created
among all the people and parties which are associated with Iceland Supermarket (Chavis,
Klapper and Love, 2011). The organizations makes changes and modifications in all strategies
adopted to meet its responsibilities at regular intervals. Views and opinions of various
stakeholders are also taken into consideration before developing any kind of strategy. This helps
Iceland Supermarket in developing strong relation and bonding with all its stakeholders. Some of
the core responsibilities of Iceland Supermarket are mentioned below as:
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 The supermarket chain has responsibilities towards all its primary and secondary
stakeholders. It is the responsibility of Iceland Supermarket to understand the objectives
of all its stakeholders
 Iceland Supermarket is also responsible for meeting the objectives of all its stakeholders
at its best.
 Iceland Supermarket is responsible to make all its primary stakeholders, part of the
decision making process.
 The organization also have some sort of legal responsibilities which are required to be
accomplished. In more simpler terms it can be stated that Iceland Supermarket is
responsible to safe and healthy working environment to all its workers. In addition to this,
it is also responsible for providing quality and safe products to its customers.
TASK 2
P 2.1 Economic system attempts to allocate resources effectively
Resource allocation can be defined as the process in which the available resources of a
firm are distributed among all task and activities. The process depends on three major factors
which are what to produce, how to produce and for whom to produce. Allocation of resources
depends on the kind of economic system in which a business enterprise operates. There are
various types of economic systems which exist in a country (Dettwiler and et. al.,2006). In
command economies, government has the power regarding the financial management of a
particular nation. Along with this, it also has control over the pricing of all products and services.
Government of UK determines what it has to produce. Further, government and its workers
determine how to produce. The last factor which is for whom to produce is also decided by
government of the country only. On the other side of this, in a free enterprise economic system
there are very few barriers and restriction made by government on business activities. What to
produce is determined by preferences of customers, how to producer is decided by producers of
UK and for whom to produce is determined by the purchase power of the people in country.
Mixed economy system is the mixture of both public and private ownership (Faul. 2008).
Government of UK and customers of the country are the two major factors on the basis of which
what to produce is decided. In addition to this, preference of government and producers are taken
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into consideration in determining how to produce. Factor such as for whom to produce is defined
with the help of government and purchasing power of people in UK.
P.2.2 Impact of fiscal and monetary policy on Iceland Supermarket
Fiscal policy is the way through which government of UK try to adjust tax rates and
spending. On the other hand, monetary policy is the method through which government regulates
the flow of money in the country. Both these polices have an direct impact on all the activities
and operations of Iceland Supermarket (Fernando, 2011). Any kind of increase in tax rates
results in low amount of money left with people. This lower down their purchasing power and
declines the entire sales and profitability of Iceland Supermarket. In addition to this, increase in
government spending also declines the sales of the retail organization. On the other side of this,
with the help of modification in interests rates, government try to control the flow of money. If
the demand of products and services are high in market then government increases the prices in
order to meet those demand. It can be stated that with the help of expansion in monetary policy,
government try to boost the supply of money in the country. This means that the loans get
cheaper and people are left with more money along with themselves. It creates a positive impact
on the sales and profitability of Iceland Supermarket (Gurtoo and Antony, 2007). When the
monetary policy declines, people in the market finds it very difficulty to get loans. This results in
lowering down their purchasing power and overall spendings. Therefore, it can be asserted that
both the fiscal policy and monetary policy have direct impact on the sales and profitability of
Iceland Supermarket.
P2.3 Impact of competition policy and regulatory mechanism
One of the major impact of regulatory mechanisms and competition policy has been on
the operations of Iceland Supermarket. To a great extent, it has forced the retail chain of
supermarkets to provide better and quality products to people all across the country. In last one
decade there has been been many modifications in regulatory mechanism and policy related to
competition. These modifications has encouraged the chain of supermarket to not use any kind of
unfair practises at the time of competing with other chain of supermarkets (Halbert and Ingulli,
2014). Other than this, regulatory changes has also lead to certain modification in the process
and operations of Iceland Supermarket. The organization has been forced to adopt more
sustainable practises in order to lower down its impact on environment and community under
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which it operates. The brand also have also taken initiative regarding its corporate social
responsibilities. Now its operates with a purpose of becoming more responsible retailer and
providing the best quality of products to the people in UK.
It respects the environment and eliminates the chances of adding any kind of artificial
flavours in all its products. At every stage and step, the brand makes sure that the quality of all
products in maintained in best possible manner. In recent year due to the regulatory policy it has
also started to working with government of UK to deal with public health responsibilities.
Iceland Supermarket have also taken initiative regarding care about animal welfare (Hamilto and
Webster, 2015). All these practises has enhanced the brand image and goodwill of Iceland
Supermarket in the entire marketplace of UK. Along with this, it has also supported the chain in
getting competitive advantage over other market players. One of the major objective of
competition policy is to make the market fair. In addition to this, it has stooped the chain of
supermarket to create any kind of monopoly in the market. It can be stated that businesses such
as supermarket ave an option of cooperating or merging with other market players in order to
achieve a situation of monopoly. Therefore, the competition polices and regulatory mechanisms
has created barrier for businesses such as Iceland Supermarket.
TASK 3
P3.1 How market structure determine pricing and output decisions
Different type of market structures are being present on the basis of which business
enterprise operates. Such types of structures are perfect competition, monopoly and monopolistic
competition (Kelliher and Henderson, 2006). Further, each and every structure affects pricing
and output decision due to which enterprise has to take effective decisions so that overall
performance of firm can be enhanced easily in the market. In market structure where perfect
competition is present level of competition is quite high and every product offered by business
has close substitute due to which it becomes difficult for firm to sustain in market for longer
period of time. Monopoly is another type of market structure where there is single seller offering
product in the market and it is possible to dominate the market (Kew and Stredwick, 2005).
Further, in monopolistic competition differentiated products are offered in the market and
companies are allowed to freely enter into the market and exit is also possible.
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Iceland supermarket carries out operations in the market where perfect competition is
present and this acts as hurdle especially at the time of carrying out operations in the market.
Further, substitute of products offered by company are easily present in the market due to which
overall performance of business is influenced due to this (Khattab and et. al., 2012). Apart from
this, large number of sellers are present in the market who are offering frozen food due to which
firm has to set moderate prices as setting high price may influence customers to shift towards
other brand in the market. Output decisions are taken by enterprise keeping in view market
condition and overall demand of products in the market. Further, setting moderate prices allows
to enhance profitability level of the business.
P3.2 Ways in which market forces shape Iceland supermarket response
External forces present in the market have direct impact on business performance and it is
required for firm to take corrective actions so as to deal with such forces. Further, demand is one
of the major force affecting Iceland supermarket where business has to examine overall demand
for commodity in the market. By knowing customer requirement organization has to manage
supply and this supports in satisfying this overall needs in most effective manner (Krasniqi,
2009). Apart from this, demand for frozen food changes over a period of time due to which
business has to manage its supply accordingly. Customer perception along with action is also one
of the major force which business has to consider and company has to determine whether
customers perceive its brand positively or not. Firm has to apply large number of efforts in order
to change customer perception towards its products and services. Therefore, this is also one of
the major force affecting business performance in the market (Dettwiler and et. al., 2006).
Setting prices for commodities is also important where business has to identify its competitor
pricing and pricing decisions are taken as competition as a force affects business performance
and sometime acts as hurdle in accomplishment of desired aims and objectives. Apart from this,
time to time business has to alter its strategies so that forces present in the external environment
may not influence its overall performance and business can deal with it in positive manner
(Meiners, Ringleb and Edwards, 2014). For instance in case if demand for frozen food is high in
the market then business has to increase supply of the commodity so that customers can be
provided products on time and as per their actual need. Therefore, in this way market force has
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direct impact on organizational performance where business has to carry out operations
accordingly.
P3.3 Explanation of how culture and business environment shapes behaviour of Iceland
Supermarket
Culture can be defined as the set of values, principles and beliefs which helps in
determining the difference between right and worn. On the other hand, business environment is
termed as set of internal and external factors which affects an organization. Culture and business
environment play very important role in shaping the behaviour of Iceland Supermarket (Li and
et. al., 2010). At the time of operating in a country, the chain of supermarkets is required to
considered the culture and business environment of the nation. If the policies and practises are
not as per the environment then the chain of supermarket cannot survive in the market for long
time period. In order to meet the demand of customers, Iceland Supermarket is required to make
modification in its strategies and policies according to the changing business environment. Any
chances in political environment of UK such as changes in tax rates and interest rates are
required to be taken into consideration (Krasniqi, 2009). In case the taxes are high then the
supermarket is required to lower down the prices of its products so that adequate demand of its
products can be maintained. In addiction to this, in case of economic instability, the supermarket
is required to make changes in strategies to maintain its market share. The high rate of
technological advancement forces Iceland Supermarket to adopt new plants , machines and
process which are technically advanced.
TASK 4
P4.1 Significance of international trade to Iceland supermarket
International trade is directly beneficial for company like Iceland supermarket as it can
provide wide platform to business in which it becomes easy to carry out operations and in turn
large number of opportunities can be grabbed easily. Further, it is possible for organization to
indulge into the practices of export and import so that its brand presence can be improved at
global level (Kew and Stredwick, 2005). Moreover, it is well known fact that economy of UK is
growing at faster pace and this is providing large number of benefits to companies operating in
the market. Apart from this, many bodies are present in the market such as WTO etc who are
indulged into the practices of promoting trade in between different countries and this is
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beneficial for company like Iceland supermarket (Kellihe and Henderson, 2006). On the other
hand through international trade company can easily serve different type of market and in turn
act as a development tool. Apart from this, it provides large number of benefits to company such
as profitability along with sales volume can be enhanced easily and overall targets can be
accomplished in effective manner.
Further, indulging into practices of international trade company has to comply with
policies developed by European Union are required to be followed necessarily by business so
that trade can successfully take place at international level (Chavis, Klapper and Love, 2011). On
the other hand, large number of challenges are present at global level which company has to deal
with in appropriate manner. Further, effective strategies are required so that business can grab
large number of opportunities being present at global level. This will have positive impact on the
brand image of business and can support to deal with sustainability issues being present at global
level. Therefore, in this way international trade is significant for company like Iceland
supermarket and can support in overall development.
P4.2 Analysis of impact of global factors on Iceland Supermarket
The changes in global factors such as political, economic, social, environment and
technological have an direct impact on the Iceland Supermarket. The positive attitude of
government encourages better growth and development of the supermarket. The organization
also have a risk of getting exploited by government (Kew and Stredwick, 2005). Economic
conditions at global level affects the demand of products and services which are offered by the
supermarket. Any changes in exchange rate also affects the entire purchasing power of
customers. The changes in social conditions can has an impact on demand and supply of its
products and services. Legal factors deals with laws and regulation related to employment.
Iceland Supermarket needs to make changes in its practises (Li and et. al., 2010). The
organization is required to make sure that it do no encourage any kind discrimination and unfair
practises. Along with this, it is also required to follow a fair and transparent policy related to
employment.
P4.3 Impact of policies of European union
European union is considered as a very powerful and dominating trade union all across
the world. Further all its policies have an direct impact on its member countries and the
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businesses which operates in those countries. These policies have forced Iceland Supermarket to
carry our effective and fair practises related to trade (Chavis, Klapper and Love, 2011). In
positive terms it has affected the supermarket by allowing it to freely conduct business along
with all its members states. This has increased the future scope and growth for Iceland
Supermarket. Other than this, these policies has also provided other benefits like abolishment of
selling tax and eliminating trade related barriers. This has helped the supermarket chain to
operate more freely and enjoy higher profitability. Iceland Supermarket is not bound to any kind
of regulations and policies which has been developed by European unions. On the other side of
this, EU policies has also affected the supermarket in negative aspects in terms of employment.
The brand is required to make sure that the best and most deserving candidate get hired for the
vacant position (Kelliher and Henderson, 2006). This means that at the time of recruitment and
selection the organization should not be partial. Along with this, Iceland Supermarket is also
required to make sure that equal chances for growth and development are provided to all its
employees. Therefore, it can be stated that there are some negative as well as positive impact
which European Union has on the Iceland Supermarket.
CONCLUSION
From the above study it has been concluded that, it is essential for the organization to
consider both internal and external factors of business environment. One of the important part in
current market scenario is to consider the needs and demands of stakeholders of business,
Iceland Supermarket is effectively considering all the those factors which makes direct impact on
decision making of stakeholders. Iceland have to consider all the policies government as well as
practices of operating business in UK also which are related to monetary and fiscal policy. On
the other side, company also allocates its resources in accordance with the market structure and
rules and regulations of government of country. At the time of operating business at global level,
Iceland also have to follow the policies related to international level while dealing its trading
activities. In addition to this, it is also essential to consider the global level factors which makes
direct impact on business such as taxation, inflation rates, foreign exchange etc. and also the
policies of European Union while dealing with countries of Europe. Therefore, it can be
explained that business environment plays very important role in success of a business.
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