Unit 1 Business and the Business Environment Assignment

Unit 1 Business and the Business Environment Assignment 2 343949
Micro environment factors concerns itself with factors that are close to the business that
will have a direct impact on it’s operations and their success. A Macro environment
concerns itself with external causes and variables that have an impact on the organisations
decision making and strategies. These factors include cultural, social, legal, changes in
technology and differing influences. BooHoo PLC will need to consider these factors when
operating not only just in the United Kingdom but also internationally through the use of
trade.
Political The Political factors within the company include the stability, changing policies and
taxation, trade and intellectual properties. By looking at the external political factors in a
business environment allows them to minimise the risks as trading internationally increases
a company’s sensitivity to the changing environments.
Political Stability: Countries with a lack of political stability can affect business operations
negatively, especially those that operate internationally which could potentially deter
investors and stakeholder’s. This could also harm the organisations performance as a whole
and it’s economic growth. These instabilities could not only be detrimental to profits but
also onto employees who cannot fully function due to social unrest and frequent strike if
they are delivering to countries with unrest. Furthermore, Governments/those in Political
Powers who can not agree on vital laws that may affect trading, inputting or exporting, can
have a subsequent effects on profits due to the impossibility of trading and delivering. This
would have a negative impact upon Boohoo as this can limit the growth of the company.
Taxation and Trade Restrictions: Entering countries that have high taxation levels will have a
direct influence on the profitability of organisations, as this affects international trade and
could prevent exports which can have a negative impact. However, companies can enter
into low taxation markets, therefore the company can benefit from this greatly through high
profits that can then be reinvested into Research and Development. Before leaving the
European Union, the United Kingdom had free trade movements within the union, therefore
no tariffs costs or trade restrictions existed between these countries and subsequent
countries that they had made prior deals with. Now due to the U.K having left the E.U, a
Free Trade deal has been created, however this does not include the existing trade deals
within the union (Edgingon, 2021).1 This has a positive and a negative impact on
organisations, as they can still import and export freely, however most goods will be
delayed to check on all goods that are being sent from the United Kingdom to ensure they
comply with E.U standards.
Economic: The Economic factors look at an economies performance, this includes their
growth, exchange rate, inflation rates, disposable income of the consumers and the
unemployment rates within a country. These can have a negative and positive impact on the
macro-environment.
Unemployment: When unemployment rates are high, companies looking to expand their
businesses within the macro environment, have a greater pool of recruiters to choose from
as the need for job security increases. This is shown as unemployment rates across the
1 Edgington, T. (2019). Brexit: What trade deals has the UK done so far? BBC News. [online] 11 Sep. Available at:
https://www.bbc.co.uk/news/uk-47213842.

Unit 1 Business and the Business Environment Assignment 2 343949
globe have increased due to the Covid-19 (BBC, 2021)2.This is favourable for BooHoo as this
will allow businesses to keep wages to a minimal and have a increase in profits. However,
this can be seen as unfavourable due to the amount of disposable income decreasing as
unemployment increases therefore consumers are unable to buy branded clothing.
Rates: Interest rates, exchange and inflation rates have a major impact on business
decisions and operations due to increases that could harm the business. The interest rates
directly affect the capital costs and can affect the growth of a company and it’s expansion.
Exchange rates will affect the price of exporting and importing goods, if the sterling pound
increases businesses can buy an increased amount of foreign currency and obtain more for
the same amount of money. This will have a beneficial affect on a company as they can
increase their profits due to the rates being very low.
Social: The social factors can affect an organisation through society which includes their
population growth, age and distribution. A company will need to look at the demographic
trends, consumer spending patterns and shared beliefs within those countries. Looking at
demographic patterns will allow companies to choose markets that have high growth
potential to secure profile. As Boohoo is targeted to woman between specific ages, they
would need to target a population that has a large female count when looking at expansion
over seas.
Social Media: With the growth of Social media websites, the fashion industry as seen a
major shift in it’s inspiration for designs and trends (Sellors, 2014)3. These platforms can be
used to interact with consumers and build an online presence in order to promote their
product and/or services on a global scale. This could be done by influencers wearing their
product which is beneficial for an organisation, and allows them to see what is trending on
the market for the specified age range. By influencers posting photos of a variety of outfits
makes it easier for consumers to make an instant purchase by swiping up or using affiliate
links to the designated webpage. A study found that nearly a fifth of people using the Social
media platform, Instagram, used it to find the latest fashion trends (Skeldon, 2019)4.
Showing a steady increase of the use of Social Media and it’s influence on the market which
can have a positives impact on the organisation due to advertising. However this can also
have a negative impact on organisations due to the overwhelming choices they have of
clothing brands and could lead to consumers outsourcing cheaper alternatives if they lack
finances.
Technological: External technological factors include new machinery, the speed of
technological change and the application of I.T. Due to BooHoo already being a online
2 Jones, L., Palumbo, D. and Brown, D. (2020). Coronavirus: How the pandemic has changed the world economy. BBC News. [online] 6 Mar.
Available at: https://www.bbc.co.uk/news/business-51706225.
3 Sellors, A.B. (2014). Social Media Influences on Fashion. [online] Social Media Today. Available at:
https://www.socialmediatoday.com/content/social-media-influences-fashion
4 Skeldon, P. (2019). Social influencers have led to the rise in fast fashion, with 30% of shoppers using Instagram for inspiration. [online]
InternetRetailing. Available at: https://internetretailing.net/mobile-theme/mobile-theme/social-influencers-have-led-to-the-rise-in-fast-
fashion-with-30-of-shoppers-using-instagram-for-inspiration-20388#:~:text=Home%20%3E%20Themes%20%3E%20Mobile-