Contemporary Business Environment

This study material explores the market structure of the UK, economic factors affecting businesses, key impacts of Brexit, and the impact of COVID-19 on business. It provides insights into the contemporary business environment.

Contemporary Business
Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
1. The market structure of the UK...............................................................................................3
2. Economic factors that affects the business of UK...................................................................4
3. Key impact of Brexit in business.............................................................................................7
4. Impact of COVID-19 in business............................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Business environment refers to collection of exterior and interior factors including
employee, needs and wants of customer along with their expectations, activities of government,
developed in technology, trends in market and social also changes in economic. These factors are
affected by company and that how company can work either directly or indirectly. Some of
factors are influenced by organization or environment according to any situation (Nikitina and
Lapiņa,2019). Penny market is international supermarket with chain based discount in Germany.
The company also started its operation in UK and also many various developed countries
furthermore it is analysed with business environment to set up business. This report examined
market of UK in which organization is soon to be owned and their economic factor that will have
impact on business. Moreover study about likely how Brexit has impact on their organization
with COVID-19 affection in business for operating their company.
1. The market structure of the UK
The term market refers to the place where buying and selling of goods or services takes
place. Market structure for the both the goods and services are determined by competitions
prevailing in the market. The nature of competition and pricing policy are determined by market
structure. The market structure has some major determinants such as number of buyers and
sellers operating in the market, nature of goods and services, entry and exit barriers, economies
of scale, change in customer turnover, etc. There are four types of market structure which are as
follows- Perfect competition, Monopoly, Monopolistic competition, and Oligopoly. (Ahn, 2019)
The market structure in UK is oligopoly. Oligopoly is the type of market structure with imperfect
competition. The some of the features of oligopolistic market in UK are: - There are only few big
firms that are of dominating nature, any small change or action may affect the other firms of the
market. The firms notice each and every small action of the rival firms to compete in the market
of UK. The firms in the oligopoly are interdependent. Interdependence can be explained as like
action of one firm leads to the reaction of another firms. Firms of UK generally avoid price wars
with their rival firms, it can be said that the firms follow non price competition. Firms of UK
follows strict price policy. It means that the changes in demand and supply doesn’t lead to the
change in prices, it stays same irrespective of any condition. The biggest reason of why there are
only few firms in oligopoly market because there are barriers in the entry of new firms. There

are certain features or elements that have to be crossed to get an entry, some are as follows- huge
capital, patents, raw material control. The seller in this type of market sells differentiated or
homogeneous products. In UK there are only 4 main companies that are dominating the other
retail or supermarket industries. (Lampadarios, 2017) The curve of oligopoly market is
indeterminate as the producer’s behaviour pattern cannot be determined. The demand curve of
oligopoly market is uncertain (indeterminate). The firms under this type of market cannot ignore
the rival firm’s reactions. The change in price of one firm will surely affects the other
competitive firms. hence the demand curve is not definite and keeps shifting.
The consumers in UK are more benefitted with oligopoly market as compared to the firms
in UK because this type of market structure follows lower price and price rigidity policy, as the
prices remains stable irrespective of any change in conditions in the market. If one company
increases the price of commodities, then other firm will take advantage of that and come up with
the lower prices; which surely benefits the consumers. The consumers in UK are significantly
influenced by oligopoly market because of the following reasons- quality of service is excellent,
prices are lower, less number of competition, no collusion.
2. Economic factors that affects the business of UK
Economic factors are those factors which affects the economy. It reflects the important data of
the market and economy. Economic factors include population, gross domestic product, tax rates,
interest rates, foreign direct investment, unemployment, inflation policies, wages, law and
governmental activities. All the activities related to manufacturing, distribution and use of good
and services are included in economy. The economic conditions of a country have a huge impact
on working of businesses. The dynamic economic environment affects all the business whether
the business is domestic or international. The main motive every business is to maximise the
profits, this can only be done by analysing the consumers demand, appropriate supplies to the
consumers, maintaining the quality of goods and services. The economic elements greatly affect
the production process, sales and procurement process.
UK has very strong economic position as compared to other countries. The economy of UK is
greatly developed, independent and international trading. UK has fifth position in largest national
economy.
The various economic factors that affects the businesses in UK are mentioned below: -

Interest rates:
Interest rate is the most important economic factor that has the major impact in relation with
liquidity of cash of the economy. It influences the cost of borrowing from various financial
institutions. An increase in interest rates leads to the increase in cost of borrowing which makes
hard for business to borrow money from financial institutions. And decrease in interest rates
leads to the decrease in cost of borrowing which makes affordable for the company to borrow
money for various business operations. Interest rates are the good income source for financial
intuitions and conversely affects the companies with an aim to take huge business loans for their
operations.
Exchange rate
Exchange rate can be defined as a value of one currency in terms of another currency. The
exchange rate come into picture only when there is export or import of good and services takes
place. (Issah and Antwi, 2017) Because of exchange rate the international market gets affected. It
plays a vital role in countries economic growth. Change in exchange rate affects the company in
payment of its international supplier and because of this profit margins may be affected.
Tax rate
Tax rate is the rate at which an individual or corporation is taxed. It plays a significant role in
the growth of an economy. An increase in tax rate leads to the increase in costs which affects the
prices in the business. (Kanakaratne, Bra and Robson, 2020). As soon as the business starts
earning profits, its crucial to pay corporate taxes. The taxes affect the costs of business. Other
taxes include- Value added tax, environmental taxes, land fill tax, etc.
Inflation
Inflation refers to rise in prices within an economy over a period of time. It includes rise in
prices of daily using items i.e., food, clothing, etc. The inflation indicates that the purchasing
power of country is decreasing. Inflation is measured in terms of percentage. When inflation rate
is higher, it leads to increase in the cost of living. In country some level of inflation is important
to measure the expenditure or to promote the expenditure.
Demand and supply
The demand and supply are the most crucial economic factor that affects the business.
Demand is willingness to buy a commodity and supply is how business will offer the commodity
to the consumer. Hence, these factors play an important role in the growth of the economy.

Law and policies
The various laws and policies are the significant economic factors as they influence business
environments. The policies have a huge impact on business, as they guide various norms and
rules which are to be followed in operation of business. Any change or modifications in the
policies will affects the economy of the country. The law and policies are made by government
in respect of making an economy healthy.
Wages
Wages can be defined as a remuneration paid to the employees in respect of work done in the
company or task assigned. Wages directly affects the cost of the company as it added in the
direct cost of the company. The increase in wages of the employees will increase the spending
power of the employees.
Recession
Recession refers to decline in economic activity which lasts more than one month. When a
spending level falls, it leads to recession in economy. Basically recession influence the
purchasing power of consumers and with that the companies have to reduce the prices of their
products or commodities.
Government activity
The activities undertaken by government promotes the growth of economy or that sector. Like
if government is promoting medical industry, then it will boost the economy of that sector, which
have a great influence on the economy’s overall growth. Various subsidies programs are initiated
by Government that provides various aids to the business organisation. Government policies
affects the businesses strongly. The state of the economy affects both the company and
individual.
Money and banking
The monetary and fiscal policies affect the business environment and economic environment.
The money circulated in the country shows the demand of consumers. The banking facilities
provided by the banks showcase the borrowing capacity of business as well as individuals.
Banking policies are significant in affecting the price of merchandise and interest rates with
assets prices and investments. The economic environment activities are wholly influenced by
monetary policies of that country.
Labour costs

It is one of the controversial and largest economic factor that affects business. If the
companies put higher labour cost, then it will decrease the profit margins of the companies. The
few policies that affects labour costs are - payroll taxes, minimum wages, hiring subsidies and
overtime pay.
3. Key impact of Brexit in business
It significant to organization has organized near features the penalty in no dealing with
Brexit. This channel force pace during large choice of change to facilitate which are probable in
taking position plus what resources need to keep their operation prepared.
Produce on the supply chain:-
In terms of not dealing with Brexit most of products and services are moving towards UK and
they need to check in other countries boarders, which could be more effected their goods.
Furthermore many formalities will be affected at time of movement between many developed
countries. If Penny market supply their goods and service outside to UK for that they have to
keep ready with some new process plus customs duties and follow various rules and regulation
(Belyaeva,2018). If suppose they has not prepared all this documents they have directly impact
on business along with relationship. So for that they have to maintain good relationship with
other suppliers and discuss their impact while in supplying of goods and services. Check out with
many agents and find out various methods of transporting products. While before taking these
steps in securing their products as being connected with customer to inform them about goods
are delayed in delivery.
Customs rules and regulation:-
Penny market need to understand new custom process and few duties. As they required for trade
between different countries and there will be no free goods movement in domestic or
international. Transferring of products can be called exports and imports for that completion of
many forms such as codes, value of goods etc. If UK does not being agree than no part will be
ready for trade in their products and services. This means that customs duties have to be paid on
importing of goods from one to another countries (Bloom and et.al.,2019). They need to do
applicable for rules from other countries and try to refers guidelines for importing and exporting
business along with that checking requirements more ever decide procedures to follow that.

People:-
Citizens of other developed countries has status in continued living with their Brexit post in UK.
If Penny market wants to follow their business in while developed countries they have to look
out peoples taste along with that their needs and wants in any goods and services which Penny
stores can provide them (Hohlmeier and Fahrholz,2018). Business travelling for people in
between in UK and try to analyse their patterns of employees and then they can easily decide for
setting up their business for these organization need o regulate rules and regulation with other
employee as well with other stores.
Data and systems:-
Penny stores need to know which of customer are being located in UK so that might be help
them for complying with other countries with having some new regulations. As they need to
make sure about their software and desired to adopt new technology (de Ruyter and
Nielsen,2019). To follow these they make sure about customer and contracts whether they are
located in UK or some other states. Than identify wants and updates that changes with new
regulation and norms. Track out their data, keep them personal which company collected, so not
share at time of across boarder further more communicate with other third party.
4. Impact of COVID-19 in business
In today time all world is fighting for their life to save themselves from COVID-19 in between
that many business have been affected along with that they must be navigate their financial and
operation challenges while this virus has taken place rapidly in all business as well in all peoples
life.
Impact on customer-
The Covid-19 has forced out to Penny stores to centres their business and how to delivery out
their employee in relevant with customer expectations. They must also think about to become
more digital with various different channels (Bartik and et.al.,2020). As from this strategy how
much of support they can gain through this continues crisis.
Worldwide COVID-19 virus have evermore distorted Penny stores experiences―as consumers,
workforce, peoples and their attitude plus behaviour keep on changing in outcomes. The disaster
has essentially varying how as well as what products customers will purchase, accelerate gigantic

structural clients changes there requirements. for example. formerly direct threat of virus will
agreed, company will require to consider changes along with that they have decide according to
consumer, better communication with them, also provide them proper experience of their goods
and services. With these involvement of new behaviour of customer company have to work
according to that only, also try to become more digital while in expanding in offering and
creating some new guidelines like helping them in online delivery of foods and other products.
This might be best opportunities for their organization in making more developed and have more
online customer segments.
Impact on employee:-
Penny stores gets more affected by Covid-19 and have bad impact in employee for their work.
Company will determine how long their work in short term or long term goals as according to
workforce and they are try to functions more and struggles more for having their goals and
objectives to be complete (Donthu and Gustafsson, 2020). In keeping company to be developed
many other employee or expertise have to try to give their best in this situation while by
providing their customer foods and help them out with their financial services. Opportunities can
be achieve in working together to have best achievement of people working for other life's.
Many of employee working at this stores has lost their jobs either working on less amount of
salary for satisfying their needs and wants. Citizens, organization also community require to fit
their reason tactics now to facilitate tin develop worldwide fitness and financial surroundings
change. Business, government, society, moreover non-profits every one have fun significant role
in developing humanistic, mind loom so as to promote mutual labour force pliability.
Impact of operation:-
There have many crisis changes in fundamental due to Covid-19 such as changes in consumer
behaviour, in supply chains and attitude towards their buying products. Hence, before all these
pandemic they have done many production of goods and service for selling out and planned to
build up more their stores in developed countries (Dwivedi and et.al., 2020). But now they have
done less production of goods and many other services for their customer and in present things
are going well in good so Penny stores has decided to developed them more in operation with
having many finance problems solve out. They have less amount of profit in now days for their
products and many people's are become more health conscious for their lives.
Impact of finance:-

Penny business has got affected in terms of finance for their fulfilling customer needs and wants
and they can't help out their customer who are regular. the company also do not have much
money to make them more stable in market along with employee are also suffering from this
problem (Fairlie, 2020). For company finance plays major role for developing more business as
Penny wants to operate in many other countries but now they have also become more stable for
their investment due just not having much money with them and facing large issue from
monetary terms.
CONCLUSION
This report concluded about the market structure of Penny in different countries at time of Brexit
impact and how they have impact with COVID-19 in their business. Economic factor might be
affected for organization due to having less money with their customer and new entrants
customer. In Covid-19 many other people as well as many other business has got affected as they
have to pay large amount of loss for their business development. many of people have lost their
jobs or some of them are working at less amount of salary for their satisfaction.

REFERENCES
Books and journals
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economies and competition among chain stores in the US supermarket industry. Applied
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