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: -