Contemporary Business Environment

Contemporary business
environment
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1............................................................................................................................................3
Explain the market structure in the UK within which a company will be operating.............3
TASK 2............................................................................................................................................4
What are the economic factors within UK that will affect the organisation..........................4
TASK 3............................................................................................................................................6
Impact of Brexit on the business operations of a company....................................................6
TASK 4............................................................................................................................................6
Impact of COVID-19 likely to have on the business.............................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................8
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INTRODUCTION
Business environment is the sum and collection of the all the internal and external factors over
which business has no control and but it effects the profitability and performance that has an
impact on to the growth of the organisation. Every entity operates in the different environment
that influence business and also get effected by its activities. Entity has no option rather than
responds and adopts changes according (Hamilton and Webster, 2018). A firm is a part of a big
environment so there are very few factors that under control of firm. If a business posses good
understanding and effective analysis about the business environment then they can easily
recognise then respond to the forces that affects the firm. Along with the threat environment is
also consist of the endless opportunity that can be grab to be successful at a market place.
This report is based on the penny market which is a grocery retailer supermarket chain based in
Germany and run 3500 stores. This study on the penny market involved market structure in UK
for grocery supermarket, economic factors that can affect the company, impact of Brexit on the
operations of the company. Furthermore it also includes impact of COVID-19 likely to have on
to the business entity (Dawson, 2018).
MAIN BODY
TASK 1
Explain the market structure in the UK within which a company will be operating
Market structure is refers to the number of firms in the market, their market shares and
other features that described the degree of the competition in the market that effects the
profitability of other business. There are many types of market structure that exist in the UK
market as according to the nature of the business. In relation to the penny market, market
structure for the grocery supermarket chain is oligopolistic market.
Oligopoly market structure: this refers to the market where few companies rule over the
particular market or industry. It has been said that there are few firms with the large number of
buyers, although there is no clarity about the number of firm exits. But few numbers of firms rule
and considered as the dominators for others. In this case firms either compete with each other or
collaborate together to rule the market(Luiz, Ganson and Wennmann, 2019). They use their
market image as to influence to set the price and in turn to maximum profit here consumer
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becomes price taker. There are barriers to entry and new firms generally find difficulty to
establish themselves. In UK there are four largest multiple retailer ASDA, MORRISONS’S,
SAINSBURY’S, TESCO who are covering 70% of the grocery market with the number stores
across the UK and has developed the oligopolistic market. As penny already has a good brand
recognition and image so it is easy for the company to enter into this market although it will
provide many advantages for the growth of the company along with some challenges that helps
in to increase the internal efficiency and effectiveness of the company(Arrowsmith, 2018).
Firms in oligopoly market are depended on each other and each of firm might sell the
distinctive product from other firms, their interdependence means that they have to set and
changes prices as according to their competitors. This market is characterized by the imperfect
knowledge where customers don’t know about the best prices and availability of the product as
there is wide range of industry types and products with the large number of buyers. This type of
market is tend to stay stable as this is consist of the few firms and large number of buyers where
demand is always high and always ready to take the prices which are offered by the companies
without negotiation and bargaining.
TASK 2
What are the economic factors within UK that will affect the organisation
Economic is one of the factors of business environment and is consisting of the goods,
services and money (Hillary, 2017). It includes the variables which are refers to financial state of
an economy that has direct impact on the profitability and financial operations of an
organisation. This factor involves interest rates, tax rates, law policies, wages and government
activities. Although, UK has stable and good economic conditions which is good for the business
operations. But there are also several factors that influence the activities in both negative and
positive. Some of them are discussed below:
Prices and interest rates: Price is a quantity of payment which is given by party to another in
return of goods and services. This gets affected by the rate of inflation in the country that directly
influences the spending of the consumers on the products and services significantly. And this is
why producer price index and consumer price index are considered as the indicators to leading
economic. Higher inflation rate destroy the purchasing power of the consumers (Savic, Lawton
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