Analyzing the UK Business Environment for Penny Market After Brexit

This report analyzes the UK business environment for Penny Market after Brexit using PESTLE and SWOT analysis. It examines the impact of Brexit on the grocery industry and provides insights into the internal and external factors that can influence the business operations.

Business environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment is the term used for describing the overall condition around the business.
The environment influences the business situation, operations, growth and development. There
are basically two type of business environment internal and external environment that influences
the business conditions (Avesani, 2020). In this report as a business analyst, examination of the
UK ‘s business environment after Brexit needed to processed. Brexit is term used for withdrawal
of United Kingdom from the trade cooperation agreement with European union. In context of
Penny Market that is interested in entering the market of grocery in UK. For analysing the
business environment there are various theories and models. In the current report PESTLE and
SWOT analysis will be done to analysis the UK market. These are theories which is successful in
analysing in the business environment trends. Internal environment of the organisation is the one
which can be controlled by business entity. External environment is critical and the business
operation have no control over it. Supermarket industry of UK is very much developed and seek
new innovation. Since the pandemic and Brexit there are lot changes that took place in the
economy and various way the market have been effected.

MAIN BODY
Brexit is the terminology explained as “Britain exit “this the term used after the United
Kingdom withdraws its participation from the European Union.
Penny market is discount supermarket chain based in Germany, it operates about 3550 stores and
now has plan of starting new chain in the United Kingdom. for entering in the global market
there are various factor that need to analysed.
In order to maintain a smooth flow operation takes place inside the organisation, a business
should study about the various factor that influence the market behaviour. It is the factor that
describes the details about customer present in the market, potential buyer of the product their
choices, expectation and desires. In detail it provides the description about the age, group,
education qualification and other personal detail about the consumer (Bellucci, Bini, and
Giunta,2020). There are various method global business analysis uses which includes
environment scanning, monitoring, forecasting and assessment. Scanning helps in business
trends prevailing in the market. It also checks the presence of competition in the market.
Environmental monitoring is the process of observing the specified purpose as in the current case
penny wants to observe to form strategies and policies in the new market. Environment
forecasting is the estimation the organisation makes using the past trend that reflects the future
market condition. This successful in scanning the risk involved and potential hurdles that might
influence the business. Assessment is type of conclusion of the above three that provides with
higher property opportunity that might benefit the organisation also gives details about the
potential risk that ned to be managed.
Impact of Brexit on UK grocery industry;
Britain super market has dependence on European union of about 62% on all fresh food import.
about 46% of the food is imported from Spain. 22% imported from Netherlands. From overall
consumption about 325 arrives from the EU. From the data given above it can be concluded
there is strong impact of Brexit will have adverse impact on supermarket in UK.
Since the announcement there has been ambiguity in the market the retailers and business owner
have started accumulating stock. The impact has not been so much on end consumer up till now
their purchasing behaviour have been affected but not up to a level (Das and Rangarajan, 2020).

External business environment is composed of all the outer factor or influences that can affect
the working of business. It should thoroughly have studied to minimise the cost, manage risk,
scan business opportunity, function smoothly. Hence in order to study the behaviour of
External environment PESTLE analysis is used:
Political, Economic, Social, Technological, legal and environmental aspect of the business need
to studied in order to get brief idea about the business.
Grocery market is one of the most basic and leading industry in any economy, it contributes
large portion in contribution of GDP (Holbeche, 2018).
Political factor: Political stability is essential for the growth of any market including a
supermarket. In this factor the attitude of the government towards the industry, international
business is scanned. Political deviation has impact on the necessities market in different ways.
Since the Brexit, cost of the raw material and goods in the super market have raised due to the
restrictions about 80% of foods is imported from European Union. This can simply signify the
adverse effect of the political changes on the market. In the case of Penny supermarket political
condition does not show much favoured aspects. However, since the company is already
established import and export will not be much of a problem.
Economic factor: economic factor is the aspect that studies the consumer behaviour,
consumption pattern, interest rates prevailing in the market. in an economy where the disposable
income of the household is high most likely spend more on the supermarket. Since the pandemic
situation have been worse there was time when people barely spent on the things that’s when all
the business had adversely affected. Penny supermarket will be affected by rising fuel cost,
increase in the minimum wages and fierce competition this will have major effect on the
supermarket operations. Britain is a developed location where the consumer is rich and have lot
of disposable income, hence this signifies good opportunity for the organisation (Leke, Chironga,
and Desvaux, 2018).
Social factor: this factor of PESTLE analysis the sociocultural of the country, which helps in
studying the consumer behaviour and attitude towards the industry. It deeply examines the
culture, values and beliefs that impact the purchasing decision of the targeted audience. It is also
considered as the important factor to be examined. Awareness among the buyer about the fair
trade from where the goods being imported. The kind of material is being used in the process, the
purchased good effect on the health. It has been noticed that since pandemic consumer has

developed the habit of online shopping. Consumer need to the goods at their door step. Hence
this depicts that penny need to make online website that delivers the product and provide
services to the consumer at their home a desired location. Penny supermarket is working towards
building an online platform for UK market (Shakeel and et al., 2020).
Technological factor: this factor has become most important in today’s market survival,
technology makes the work simple and fast. In the industry of supermarket and retailing
technology has drastically changed. There is various component that need to addressed about the
technology updating that need to be implemented in order to survive the hype of completion in
the market. Data mining tool, enterprise resources planning and artificial intelligence are some of
the technique which can help the organisation in many ways and improve the productivity.
Optimum utilisation of resource, collecting sources of cost effective locations can have
facilitated by technology uses. In the case of penny supermarket, it is well established currently
working in about 3900 store can be helped by the technology to better management and fuller
utilisation of resources.
Legal factor: Different country have different rules and regulation for quality aspects and
business operations. It is also main component of the environmental analysis. Their different law
and policies applicable to the business in UK. In order to start a super market in the boundaries
of UK there are law that need to be addressed in reference to minimum wages rate, Equity act
2010 protecting people from discrimination, quality assurance and food safety rules, selling and
purchasing rule all needed to be addressed (Liu, Tong and Sinfield, 2021).
Environment factor: Since the pandemic people outlook have changed towards the environment,
and every individual is concerned about the sustainable development. Operations of the retailers
have huge impact on the environment when it comes wastage, production, resources utilisation
and other aspects related to environment. Penny supermarket have to produce goods and services
that is in favour of environment and do not put any harmful impact on the nature. Also this could
be helpful for the organisation as it will competitor advantage in this aspect. Supermarkets are
held responsible for maximum carbon dioxide production, so there have to be way that minimise
this effect so that organisation do not suffer. Proper management system for plastic wastage that
is not harmful for nature (Martinez-Jimenez, Hernández-Ortiz, and Fernández, 2020).

Internal environment analysis includes studying factor that are internally present influencing the
factors of organisation. In context of Penny supermarket SWOT analysis is made as following:
STRENGTH – Penny is discount store that is really famous among the consumers. It offers high
quality product. It has a consumer focused wide range of product available. It exists and have
successful operation in many parts of the world. It is successful in managing the business around
the world and keeps potential to further grow. Strong brand image and reputation in the market.
WEAKNESS- Range of store is currently limited to specified locations, inventory turnover is not
up to mark as compared to the presence of total number stores. It is enable to respond on time on
main quires and errors prevailing in the business operation (Melo, Borini, and Ogasavara, 2019).
OPPORTUNITY- It has well planned objective and ready road map to achieve the organisational
goals. The current case study also suggest that it has plans of expanding it business to the United
Kingdom which can be considered as huge step. Super market contributes the most to the GDP
of an economy therefore it is very potential business. Asian, African and European market shows
great potential for these kind of market. sources states that it is soon going to start its operations
in Turkey which depicts that company has great potential and many opportunities.
THREAT- Presence of competition in global business market cannot be ignored, so penny
supermarket too has to face a cut throat competition from big brands like Tesco, Morrison’s,
Sainsbury, Unilever and Asda which are already established. There is lot of factors that need to
be considered due to changes in law and order of the economy. Labour wage rate is increasing
with passage of time which cannot be avoided but ultimately rise the operational cost. Brexit is
also going to have a huge impact on the Penny supermarket as business have to deal with more
restrictions (Mosteanu, 2020).
Final Observation: From the above analysis of various model structure it can be said that, Penny
supermarket is in ideal position for entering in the UK market. but due to presence of strong
competition like Tesco and Unilever it had to bring innovation that provides it competition
advantage and customer attraction. Discount super market can be real success in the business
environment if upgraded technology is used and risk is managed properly. Brexit can be alit bit
of trouble where the company have to suffer loss due to restriction in the trade among the
countries.

CONCLUSION
The report above concludes the fact analysis of business environment is most important
element which influence the success of the business in the market. In above case of Penny
supermarket, it is looking for start-up in business market of UK. Since market of UK is
volatile due to Brexit the organisation need to be careful about the cost to be incurred.
PESTLE analysis shows that what are the factor of external environment that can influence
the business operation UK. From the study it can be said that business environment is very
much in favour of penny super market. apart from Brexit this could be a good opportunity.
For studying the internal environment SWOT analysis has been used. This signifies that
company is in really favourable situation.

REFERENCES
Books and Journals
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engagement into business: sustainability management, innovation, and sustainable
business models. In Innovation strategies in environmental science (pp. 107-143).
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sustainability and business growth of Indian SMEs. Indian Growth and Development
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Holbeche, L., 2018. The agile organization: how to build an engaged, innovative and resilient
business. Kogan Page Publishers.
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the world's next big growth market. Harvard Business Press.
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Martinez-Jimenez, R., Hernández-Ortiz, M.J. and Fernández, A.I.C., 2020. Gender diversity
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