Business Environment Analysis Report - Business Environment Analysis

This report provides a comprehensive analysis of Primark's business environment, exploring its responsibilities to various stakeholders, including customers, suppliers, employees, and communities. It delves into the impact of different economic systems, such as free market, mixed, and command economies, on business operations. The report examines the influence of fiscal and monetary policies on business activities, highlighting how tax rates, government spending, and interest rates affect companies like Primark. Furthermore, it discusses the role of competition policy in promoting business efficiency and the significance of global factors. The report also analyzes Primark's ethical, employee, and environmental responsibilities, along with its obligations to investors. Finally, the report concludes by considering the impact of the EU on UK firms and the challenges and opportunities faced by businesses in the current market landscape.

BUSINESS ENVIRONMENT
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TABLE OF CONTENTS
Introduction .....................................................................................................................................3
1.1 ................................................................................................................................................3
1.2.................................................................................................................................................4
1.3 ................................................................................................................................................5
TASK 2 ...........................................................................................................................................5
2.1.................................................................................................................................................5
2.2.................................................................................................................................................6
2.3.................................................................................................................................................7
TASK 3 essay .................................................................................................................................8
TASK 4..........................................................................................................................................11
4.1...............................................................................................................................................11
4.2...............................................................................................................................................11
4.3...............................................................................................................................................12
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
In the present context, business of companies is affected by range of environmental
factors. The strategies are to be designed accordingly (Kemp and Vinke, 2012). Analysis of the
surrounding conditions is important so that constant improvements related to business can be
decided. The purpose of this research study is to understand the responsibilities of firms towards
the different stakeholders. It also shows the impact of fiscal and monetary policies on the
business activities. The significance of the global factors is also understood in order to find out
how the company reacts at the global level. At last the report will end in discussing the impact of
EU on UK firms.
1.1
Primark is an Irish clothing retailer operating in different countries around UK and
Europe. It is a type of subsidiary company of the ABF (Associated British Foods). The products
of the company are mainly sourced from suppliers in Europe and Asia. It offers kid clothing,
women wear, men’s wear, accessories, footwear etc. The main purpose of the organization is to
offer great value along with innovative products to the consumers. The brand makes a great
contribution to the contemporary fast fashion trend.
The purpose of one organization in the following categories is as follows:
(a) The Public sector - The public sector companies are those which are under the control and
regulation of the government. Stocks of these kind of firms are traded publically. The main
purpose is to serve the public of the country (Ahmed, 2012). For example NHS in UK is a
national healthcare system in England which is also publicly funded. It is one of the largest
single payer healthcare system across the world which gives healthcare service to every single
resident in England.
(b) Charity - Charity organization is a kind of non-profit business however it differs from the
other NPOs. The main focus is on achieving philanthropic goals as well as the social wellbeing.
For example, NSPCC (National Society for the Prevention of Cruelty to Children), is a charity
body working for the prevention of child (Leon and Garcia, 2011). The main purpose is to assure
that children must be protected from all kinds of violence and exploitation.
(c) Cooperative – Cooperative is an independent association of individuals who jointly
contributes towards a common economic, social and cultural objectives. For example, Baywind
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Energy Co-operative is one of the largest cooperatives which owns the business of wind turbines
in UK.
1.2
Stakeholders are the persons or groups who are always interested in the performance of
the company. Primark also meet the objectives of the different stakeholders in the following
manner:
 Customers - The Company believes in offering its customers the right goods at the right
prices and at the right place. It always aim to provide unbeatable value without having
any comprise with the innovation and quality. The expertise lies in understanding the
people and their requirements.
 Suppliers – Suppliers are the ones who provide raw materials and inputs for conducting
the business activities. Primark believes that success can be achieved through working in
close integration with the suppliers to produce goods according to the specifications. The
products for the brand are mainly sourced from suppliers in Europe and Asia. Company’s
own supplier code of conduct is the mandatory requirement within which all its suppliers
work.
 Employees – The organization is having over 57,000 employees. As a retail outlet,
Primark has to focus seriously on its workforce. Their commitment to employee
development is evident from the fact that it has established a world class Management
Development Program to build the career of the employees at all the levels (Conner,
2016). The management encourages ideas, team spirit and passion across all the business
divisions. The promotional opportunities are also advertised by the organization for the
existing workers.
 Communities - Company has also entered into a partnership with BSR (Business for
Social Responsibility). There is an initiative started in this regard which is known as
HERhealth (Health Enables Returns). It is about safeguarding the health of the females
working in the factories which make products of Primark. In this way the organization is
fulfilling its corporate social responsibilities towards the society.
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1.3
Primark has to meet different kinds of responsibilities as an employer. These can be
described as follows:
Ethical responsibility – It is about performing the business activities by remaining under the
code of conduct. Company has established core principles related to its suppliers and factories. It
has to ensure that products are being manufactured in good working conditions. People making
them are also entertained in decent and fair manner (PRIMARK, 2016). The code of conduct is
based on the Ethical Trading Initiative Base Code which is an internally documented component
for labour practice.
Towards employees – Primark holds most of its important responsibilities towards the
employees. For instance the programme in India is aiding large number of workers through
education & support on vital issues. It is encouraging their rights related to health and safety
(Wright, Marston and McDonald, 2011). Different kinds of rewards and development programs
have been adopted for their motivation. It also encourage people from all the backgrounds and
every individual has an equal chance to achieve growth within the firm. Competitive annual
leave entitlement, bonus scheme, health insurance etc are some of the benefits offered to the
employees at the Primark.
Environmental responsibility – Another obligation which the company has to fulfil is the
protection duty towards the environment. The brand has taken effective steps to reduce the
impact of its stores and operations on the environment. Most of the stores make use of Building
Energy Management Systems in order to control the consumption of energy.
Investors – These are the groups who make investment in the business activities of the company.
It is the duty of the Primark to give appropriate returns to the investors (Jones and Scott, 2011).
For the long term success and profitability it is important to maintain long term business
relations with the investors.
TASK 2
2.1
Economic system is regarded as the production of goods and its exchange in varied
markets. This is greater significance in having viable economy so that efficient country can be
developed. There is presence of three kinds of economic system which exists within the market.
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This is comprised of free market, mixed as well as command economy. There are several driving
forces that includes resource allocation in an effective manner. Moreover in case of free market
economy full freedom is being given to the producers and buyers for exchange wherein both the
parties gains greater advantages. Under this the issues are being handles directly by system.
Further market has responsibility towards resource allocation. Moreover the stakeholders have
several options within the market. The market has responsibility towards deciding on what has to
be produced taking into account the demands of the customers. The needs of the customers as
well as their preferences are given greater priority in order to earn more profits. In contrast to this
under command economic system the controlling authorities possess the responsibility of
effective use of resources (Nandi, 2010). The government takes all the decisions that relates with
demand and supply of the goods within the market. Moreover what to produce, how to produce
and how much has to be produced is being decided upon by the firms. The allocation is carried
out by making sure proper planning as well as strategy. The example to country that follows
command economy is China. In contrast to this mixed economy is one that includes both
command as well as free economic system. Under this free market forces are controlled through
legal authorities so that they can gain the advantage of both the economies as well as allocation
of resources can be allocated effectively (Prasad, 2010). Under this the terms relating to
production are partly taken by the customers and rest through intervention of regulatory
authority. The decisions are developed through evaluation of purchasing power of the target
customers their interest as well as policies of the regulatory authority. The example of countries
having mixed economy includes Cuba as well as United Kingdom.
2.2
The policies of the government as well as other regulations have significant role in
making determination of fiscal as well as monetary policies of the nation. Such acts as an aid in
maintenance of balance among the expenses as well as income of the government so as to
achieve its target. There is presence of majorly two kinds of policies that are being followed by
all the countries (Shaikh, 2010). This includes fiscal as well as monetary policy. The main factor
which influence the business includes rates of tax as well as spendings of government. The
determination of the fiscal policy is being done by government that has critical role in the
growth of the economy and assist in development of employment opportunities within the
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market. It offers customers and producers to access their capital. In this business needs to take
into account rates of tax that facilitate in development of strategies and taking adequate
decisions.
Primark is affected to a greater extent by the means of fiscal and monetary policies. In
case the regulatory authority impose low taxes then firms would make investment in several
sectors which helps in creation of job opportunities for the individuals. On the other hand
monetary policy is regulated by the central bank. It does not just affect the business but influence
economy on whole. It offers ability to them to gain credit. Monetary policy acts as an aid in
maintaining lower rates of interest (Tokuoka, 2013). However contrary policy assist in
decreasing supply of money and increasing difficulty in borrowing money. Thus the activities
being held in the organization depends on both the policies. Moreover it is policy that is prepared
keep a track on increase or decrease in the money supply that is taking place within the
economy. Inflation rate increases within the economy in case supply of money enhances to a
specific level. Because of enhancement in the rate of inflation several problem arises within the
nation (Kelliher and Henderson, 2006). Further such exerts pressure on the regulatory authority
to take suitable steps to increase supply of money within the economy. CRR, SLR as well as
open market operations are major parts of monetary policy of the nation. In case supply of
money is increased within the economy central bank increases the CRR rate. Because of rise in
CRR rates bank is required to keep greater amount of money with central banks. Therefore due
to such reason banks possess lesser amount of money with them that can be given as loan to
general public as well as business firms. Thus banks offers lesser amount of debt to the
organizations.
2.3
Primark is regarded as one of the leading fashion retail store within UK. With the
increase in popularity of the of fashion industry in the people it is becoming challenge for the
organizations to survive in the market. In the present era firms are making investment so that
they can bring innovative as well as new fashion stores and can be successful in competing with
present ones. This is in order to gain competitive advantage. The policy of competition assist in
making promotion of competition that assist in enhancement of business efficiency. It acts as an
aid in making market to work in better manner that leads to improving the efficiency within the
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market and increase competitiveness of firms within UK. It is involved to widen the preferences
of the customers, bring innovative ideas as well as offer training to personnel that assist the
organization in promotion of dynamic efficiency as well as sufficient pricing in comparison with
the competitors. The competition policy needs to make sure the elements within the firm which
are as under: Innovation in technologies that assist the firm in attaining dynamic efficiency with
several market: The firm needs to bring new idea for production of goods. This would
assist in increasing the sales as well as profit of the business (Halbert and Ingulli, 2009). Promotion of suitable price competition among the suppliers: The firm needs to carry out
survey within the market in order to attain knowledge regarding the prices of the same
products so that Primark can establish suitable pricing which would attract larger
customer base.
 Enhancement of the interest of the customers by the means of increasing choices as well
as offering the products at economical prices: The firm needs to ask the customers
regarding their preferences so that goods production can be in accordance with their
requirements. Such would assist in their satisfaction.
Moreover the regulations are developed by regulatory authority in order to forecast the
manner in which organization work better and results are against this for both producers and
customers. This is comprised of fair trading, standard customer service as well as environmental
policies. The legal authority makes monitoring of the cost, assures standards and ensures entry
and exist of organization within the market (Jahansoozi, 2006). Primark is facing issues in
competing with other organizations such as New Look that are operating in similar industry. In
accordance with competition policy of UK none of the organization can develop a cartel on its
land in order to give stiff competition to rivalries. In case any organization does so then strict
actions would be taken against them.
TASK 3 ESSAY
There are several kind of markets within an economy that assist in defining the prices and
types of output that is required to be supplied within the market. Majorly the output and decision
of pricing are interdependent on one another in several conditions. However under perfect
competitive market the single business that small is size does have potential to affect the price in
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comparison with larger firm. Therefore it is required to consider the price that has been set and
later needs to make decision regarding the quantity that has to be supplied. Moreover in such
case the prices are equivalent the marginal cost of production. On the other hand in monopoly
market single owner can make changes in the prices as they are the only provider thus can enjoy
market power. But in case if the prices of particular product enhances then its demand within the
market decreases (Khattab and et.al, 2012). There is presence of single firm within the market
and less or no competitors which is the major reason because of which organization is operating
in the market structure that possess high bargaining power. In such kind of structure the firm
changes higher prices of the product as it is is single business within the market that is making
sales of the product within the market. Thus in such market structure market price as well as
decision regarding output are being made by organization at its own level. Moreover under
oligopoly the prices depends on the strategic interactions developed by organization. Thus
market structure is developed with number of sellers as well as buyers within the market. Further
in monopolistic market structure there is variation within the product that is offered by
organization (Anonym,2009). Primark is under such category as there is no difference among
services provided by stated business as its rivalries. Thus Primark in order to be in the
competition takes decision through evaluation of prices adopted by competitors and their level of
output.
The forces within the market are defining the relationship among the demand and supply
within the market. The response given within the business is in accordance with the economic
condition. Further the response of the firm towards market forces has greater influence on the
image and profitability of business. In relation to sufficient demand and supply the successful
business takes suitable actions to carry out effective research of the market so that products
delivered can met the expectations of the customers (Berman and et.al., 2009). Along with this
organisation can carry out research of the market and its analysis which would help it in knowing
about the customer demand. Primark is able to make judgment regarding the demand of the
market in effective way that assist in satisfaction of customers and required products are
provided within suitable time. Thus such assist the business in enhancing the profitability as they
can effectively make estimation of the margin as well as supply range of products that can
maintained in an effective manner. For instance, in certain branches of Primark they are
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experiencing losses due to inefficient judgment made regarding the demand of customers. This is
resulting in lower the customer base. Therefore such would lead to influencing the brand image
of organization. Moreover the association among the market forces and business response is
significant in making sure the success of business and satisfaction of customer needs.
Business as well as cultural environment has greater influence in making determination
of organization's behavior. There is existence of two kinds of business environment which is
comprised of economic and non economic. Former involves the system, policies as well as
conditions of the economy (Boyce and Dwan, 2003). However the later one is comprised of
natural, technological, social, legal as well as political environment. As Primark has branches in
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Illustration 1: Source: Demand and supply curve, 2015

several nation it is significant for them to take into account business as well as cultural
environment of particular place. The statistics presents that per capital income of UK and China
is not similar. UK is greater in comparison with China. This assist in making determination of
the price rates for the countries. Like in the present case it would be greater in case of UK than
China. Moreover the policies that involves industrial, fiscal, monetary, foreign investment as
well as export policy are not same for all the nation which has huge influence on the behavior of
business. Further the social factors such as values, beliefs as well as tradition of each community
is different from others.
It is significant to target specific individuals where unit is required to be established.
Such would assist in enhancing the sales of the organization. For instance people of China prefer
several kinds of clothes that are not same as one that are needed by people of UK. This makes
challenging for the organization to make supply of products on accordance with their
requirements (Chen and Mohamed, 2008). Technological factors relates with bringing alterations
so as to enhance production. It is important for organization to make utilization of new
technology that would assist in production of quality products and assist in enhancing the
quantity with greater effectiveness. Such is defined by regulatory authority and passed within
equal time interval that enhances the business cost. This involves discrimination of age and
enhancement in minimum wages.
In addition to this environmental factors is comprised of alterations in weather, climate
that influence the business operations such as tourism as well as farming. Therefore such
external factors that business needs to consider because of cultural factors has greater impact of
activities carried out within organization.
TASK 4
4.1
International trade is regarded to be most important for the entire nation where it becomes
difficult for firm to grow or produce all the goods and services in any specific economy.
Generally the exchange of commodities from other nation is only possible when countries are not
manufacturing and presence of international trading is considered to be must. It is regarded to be
profitable along with fruitful for both the nations where trading activity is being carried out.
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Below mentioned are some of the advantages of international trade for UK businesses
and they are as follows: Production cost: By delivering large number of commodities to different nations it is
possible for organization to decrease production cost. Further, in case if goods are
purchased in bulk then it leads to decline in production cost associated with the
organization. This can surely lead to rise in profitability level along with the sales volume
of company in the market. Broad market: Majority of the companies operating in the market of UK manufactures
product for domestic use only and this shows that they are sacrificing with the potential
limit (Dawes, Zhang and Sarkis, 2005). They can easily indulge into practices of
supplying products to different countries. By indulging into trading activities within the
country can lead to high growth and apart from this it will develop reputation of business
in the international market.
 Economy: Trading with different nations has positive impact on the entire nation. It
directly leads to rise in level of GDP and produces favorable results for the entire nation.
4.2
Global factors have direct impact on UK business organization and its description has
been provided below: Market opportunity: Market of UK provides large number of opportunities to the
businesses operating in the market. Further, advanced tools are being employed for
carrying out production activities. At global level opportunities are quite high where
skilled workforces along with other form of advanced tools are present for carrying out
operations. Government laws: At international level large number of laws along with regulations are
being present which businesses have to comply with necessarily. Such laws affects
internal operations of the company such as employment etc (Dettwiler and et.al., 2006).
In case if company does not complies with various laws then it leads to decline in
performance of the business. Apart from this, payment of tax along with other form of
duties also influences business operations of the company.
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