Business Environment Report: Iceland Supermarket Case Study Analysis

This report provides a comprehensive analysis of the business environment, focusing on Iceland Supermarket. It begins with an introduction to the concept of the business environment and identifies the purposes of various organizations, including Iceland Supermarket, KFC, Transport for London, and Cancer Research. The report then examines how Iceland Supermarket meets the objectives of different stakeholders such as customers, employees, and suppliers, and outlines the company's responsibilities and strategies to fulfill them. Task 2 delves into different economic systems and their impact on resource allocation, including free enterprise, command, and mixed economies, along with the effects of fiscal and monetary policies, and competition and regulatory mechanisms. The analysis further explores how market structures determine pricing and output decisions, and how market forces and the cultural environment shape Iceland Supermarket's responses. The report concludes by highlighting the significance of international trade and the impact of global factors and European Union policies on the organization. Overall, the report offers valuable insights into the external and internal factors that influence Iceland Supermarket's operations and strategic decision-making.

Business Environment
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TABLE OF CONTENTS
INTRODUCTION................................................................................................................................3
TASK 1.................................................................................................................................................3
1.1 Identify the purpose of various organisations............................................................................3
1.2 Extent to which Iceland Supermarket meets the objectives of different stakeholders..............4
1.3 Various responsibilities as an organization and strategies it employs to meet them..................5
TASK 2.................................................................................................................................................5
2.1 Different economic systems attempt to allocate resources effectively .....................................5
2.2 Impact of fiscal and monetary policy........................................................................................6
2.3 Impact of competition policy and other regulatory mechanism................................................7
TASK 3.................................................................................................................................................7
3.1 Market structure determine the pricing and output decisions of business.................................7
3.2 Ways in which market forces shapes Iceland supermarket responses.......................................8
3.3 Business and cultural environments shape the behaviour of Iceland supermarket....................9
TASK 4.................................................................................................................................................9
4.1 Significance of international trade.............................................................................................9
4.2 Impact of global factors on the organization...........................................................................10
4.3 Impact of policies of the European union on the Iceland supermarket...................................10
CONCLUSION...................................................................................................................................11
REFERENCES...................................................................................................................................12
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INTRODUCTION
Business environment study is considered as a learning that provides enhanced information
regarding various internal and external factors that relates with the business organisation. In this
respect, it can be said that number of business organisations are facing high competition in current
market so with the help of the information regarding diverse internal and external factors the business
firm can easily design effective strategies (Adhikara, 2002). It is also beneficial for attaining better
information regarding market and ensure that business is having optimistic opportunities in order to
attain success.
In the present report, learning will focus on work culture of Iceland supermarket stores in order to
understand concept of business environment. It will also emphasize on the ways which can identify the
purpose of different organisations that operate business in diverse environmental conditions. It will
also provide information regarding nature of UK market so that management of Iceland Supermarket
can design strategies in an effective manner. Further, it will also stress on understanding the behaviour
of organisation within UK market. Furthermore, it will also focus on the significance of global factors
that shape national business activities.
TASK 1
1.1 Identify the purpose of various organisations
As per the structured study of diverse kinds of business organisations, it has been spotted that
there are number of different purpose behind operational activities of the firms. In other words, it can
be stated that the every business organisation have different objectives and goals as per consideration
of nature and market conditions. In order to understand the concept of business environment, it is
essential to understand various types of business organisation and their purposes (Alexander, 2003).
Some of the organization’s key purpose is to increase the profit margin ratio and meet the key needs of
targeted customers. However, few of organisations have made efforts in developing social aspects and
improving communal factors within surrounding environment. Therefore, the intention of all the
organization is not precisely the same. Moreover, the classification of organisations can be done as
private, public and governmental (Buthe, 2008).
1. Iceland Supermarket: It has been spotted that the Iceland Supermarket is considered as a
subsidiary firm of Associated British Food which is referred as public limited organisation. Company
operates its business in retail sector and provides number of products such as retail food products. In
this respect, it can be said that the key purpose of public limited firm is to improve its profit margin
ratio and wealth of stakeholders by operating various activities in the retail sector (Gellner, 2004).
Iceland Supermarket firm also concentrate on corporate social responsibilities accomplishment in order
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to amend social development aspects.
2. KFC: It is referred as private limited firm which is essential part of the company named Yum.
It is one of the most famous restaurant firms that provide wide range of product line in order to meet
needs of its targeted customers (Harris, 2002). In addition to this, it can also be said that the key
purpose of KFC is to gain more and more profit as well as to increase the market share. In this regard,
company focuses on effective expansion of its operational activities in diverse geographical areas.
3. Transport for London: It is one of the local governmental body organisations which provide
transportation services within London. Company performs various activities to enhance experience of
public in context to transportation services (Katz, 2007). Key motive behind the services of
organisation is to serve the areas of UK and render better development opportunities to London with
the support of transportation services.
4. Cancer research: It is considered as a voluntary organisation that provides various health
care services to identify key issue of cancer as well as discover new ways to overcome issues. In regard
to organisational purpose, it can be said that organisation work for betterment of cancer patients and
provide them with better cure (Hill, 2008).
1.2 Extent to which Iceland Supermarket meets the objectives of different stakeholders
Stakeholders play a key role in success of the organisation so it is necessary for the company to
meet the requirements of stakeholders in order to have effective operational opportunities. In other
words, it can be said that stakeholders are considered as factors which can impact the overall
operational activities of the business firm (Miller, 2008). In regard to this, it can also be said that the
stakeholders of Iceland Supermarket can be classified as customers, suppliers, society, employees, etc.
Customers: It has been spotted that the customers are considered as one of the significant
stakeholder so it is essential for the firm to meet their key needs. The firm also provides wide range of
products and services to customers to gain profit (Nijkamp, 2010). However, the firm is effectively
focusing on improving quality of products and services so that user can feel valued. It is also beneficial
for the company as it facilitates in accomplishing customer's needs. Number of standards has also been
set out to improve experience of customer.
Employees: These are the individual who are directly involved in the operational activities so it
is also essential to meet key needs of employees. In this respect, it can be said that employee’s
requirement is to attain better facilities and services which can improve their morale (Kerin, 2002).
Company is also continuously focusing on various improvements in its services with an assistance of
industrial standards. Management is also considering motivational techniques to enhance the morale of
employees.
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Suppliers: Suppliers expect that they receive payment on time in respect of raw material so in
this respect company is focusing on effective payment system in order to meet the requirements
(Mahapatraa, 2012). Organisation is also focusing on improving relationship with suppliers in order to
accomplish their expectations effectively.
1.3 Various responsibilities as an organization and strategies it employs to meet them
Iceland Supermarket is considered as one of responsible retail firm that performs various
activities in order to accomplish its responsibilities in an effective manner. It is also one of key reason
that company provides healthy frozen food products to its customers (Carter, 2007). It facilitates in
meeting key needs of customers and social aspects.
It is one of key responsibility of organisation to ensure that the goods and services that they
provide to customers are of premium quality. Another responsibility is towards government and
employees such as proper facilities to employees. Responsibility towards government is effective
participation in social development and provide appropriate taxes on time (Fernando, 2011). In order to
have effective accomplishment of key responsibilities the business organisation has developed various
strategies such as they have meeting and discussion with stakeholders on continuous basis. However,
to meet the responsibility of providing healthy and safe frozen food to their customers supermarket
must focus on freezing the range of frozen food (Matthews, 2005). It is considered as procedure that
provides better preservation to food which is beneficial for customers needs accomplishment.
Moreover, in order to meet the responsibilities towards government the management invest in
various social and governance projects. In the support of this, it can be said that the payment of taxes
on desired time is also one of significant activity that facilitates in accomplishment of responsibility
(Grier, 2006). Iceland Supermarket also has some responsibilities towards environmental aspects so
management follows diverse environmental standards and policies in order to meet responsibilities.
Installation of fir alarm and energy efficient tools is also considered as a activity that can meet
responsibilities in better way. Various laws and regulations has also been followed while creating
policies in order to fulfil the responsibilities towards government, employees and customers.
TASK 2
2.1 Different economic systems attempt to allocate resources effectively
It is necessary for every business organisation to focus on key aspects of economic system in
order to attain better allocation of resources. It has been identified that the economic system key factors
also impacts the allocation of resources in diverse manner. Classification of economic system can be as
command, mixed, free enterprise and transnational systems.
Free enterprise: It is a economic system which is also considered as a free market economy.
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In this respect, it can be said that the business organisation is allowed to have allocation of resources
in its own way as economic system allows private owners to take decisions. For example, USA is
referred as free economy and it allows organisation to take decisions on individual basis (Rejc, 2004).
It is necessary for Iceland Supermarket to ensure that the decisions will provide maximization in profit
margin ratio.
Command economy: It is a economic system in which government has power to take
decisions. In other words, it can be said that the government plays a key role in planning and decisions
of economic system. For example, Cuba is considered as command economic system so while
operating business in Cuba, it is necessary for Iceland Supermarket to ensure about decisions of
government (Bracci, 2013). Government authorities have full power to take decisions in order to
ensure about allocation of resources.
Mixed economy: It means the combination of command and free market economy in order to
boost the allocation of resources. In other aspect, it can be said that the decisions are made by the
collective work of government authorities as well as management of Iceland Supermarket (David,
2000). UK is one of best example of mixed economic system so, Iceland Supermarket can allocate
resources as per needs of organisation but the final decision will be taken into account with assistance
of government authorities.
2.2 Impact of fiscal and monetary policy
As per the structured study, it can be said that the fiscal and monetary policies have great
impact on the operational activities of Iceland Supermarket. In other words, it can be stated that he
various business activities of organisation can face some conflict situations due to changes in fiscal and
monetary policies. Fiscal policy is framework which is accessed by governance of UK to provide
effective direction to economic system (Guo, 2014). It mainly concentrates on optimistic investment of
business firms in diversified areas. In respect of this, it can be said that government consider
investment of company on social development.
However, the monetary policies of UK are being controlled by central bank. Authorities ensure
that the monetary policies are providing support to supply of money in economic development. If bank
has changed the interest rate on retail products then it will influence the cost of capital in diverse
manner (Ingulli, 2014). Advancement in interest rate will have negative impact on the operational
activities of Iceland Supermarket as cost of loan will also be enhanced.
On the other side, the taxation policies must be followed by the management of Iceland
Supermarket. In this support, it can be said that the increase in taxation policies will impact the profit
margin ratio of firm in negative manner. Advancement in tax rates forces management to pay high
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taxes to the government which will have direct negative influence on the operational activities of retail
firm (Kourteli, 2000). Along with this, exchange rate will also affect the operational activities of
Iceland Supermarket as it will impact perception of international customers. If exchange rate are high
then international customer's will back step as it will impact overall capital in negative manner.
2.3 Impact of competition policy and other regulatory mechanism
Competition policies are considered as one of most favourable policy that can provide various
business opportunities to customer's as well as organisation. It provides better protection to customers
from unethical practice that business can have get involved in. With an improved focus on competition
policy the management of Iceland Supermarket can easily promote fair work culture (European,
commission. 2010). In other aspect, it can be said that the policy also provide safeguarding to the
community. It means it restrict monopoly organisations to dominate market.
For example, if Iceland Supermarket is operating its business in monopoly market then it is
necessary for management to ensure that the products and services are provided to customer's as per
the consideration of competition policy. If organisation will have any avoidance of competition policy
then it will impact business in negative manner and may cause various legal issues. However,
competition policy also aims to make better market by improving efficiency of organization within the
market and also to enhance competitiveness of the UK businesses (External environment theory.
2014).
Other than this, it can be said that the influence of competition policy on Iceland Supermarket
will bring advancement in quality of products at very economical prices. In this respect, it can be said
that there are number of competition policies that has to be considered by the Iceland Supermarket as it
is beneficial to amend ethical business practice within environment (Kourteli, 2000). Fair trade policy
is also essential for business organisation as it creates positive environment within marketplace.
Moreover, implementation of new competition policy will prompt management of Iceland
Supermarket to have production and operational activities as per standards which are set out by EU and
government authorities.
TASK 3
3.1 Market structure determine the pricing and output decisions of business
As per the structured study of diverse market structure, it can be said that the different kinds of
market structure impacts the determination of pricing and other decisions. In the support of this, it can
be said that there are three key types of market structure and it is necessary for management of Iceland
Supermarket to focus on key concepts of structures in order to have effective decision making process
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(Ingulli, 2014). Classification of diverse market structure can be as perfect completion, monopolistic,
oligopoly and monopoly.
Perfect completion: It has been identified that the there are number of business organisations
who operate in same market with the similar product. It means the Iceland Supermarket can face high
ratio of competition which can impact business in negative manner (Guo, 2014). In this regard, it is
essential for organisation to decide pricing of products as per financial condition and key trends of
market in order to attain better competitive advantages.
Monopolistic: It means the competition low even if various firms are operating in same market.
It is because the products that company are different as compared to other competitors available in the
market. In order to have effective decision making process, it is essential for management of Iceland to
ensure that they are providing better quality of products as compared to other competitors in the market
(David, 2000). Company can also have pricing decision as per consideration of competitors products.
Monopoly: It is a market structure in which only one business organisation operates its
business, it means the company have effective control over market. In this respect, it can be said that
there is high entry barrier for new business organisation as existing business has already captured
market in optimistic manner. If Iceland Supermarket is operating its business in monopoly market that
means company is not facing any kind of competition (Bracci, 2013). Organisation can decide pricing
of its products as per product feature in order to gain better competitive advantage.
3.2 Ways in which market forces shapes Iceland supermarket responses
There are different market forces that can impact the operational activities of Iceland
supermarket. Classification of key market forces can be as demand, employee, technology and labour.
In regard to demand, it can be said that the changes in demand of frozen food products will influence
the operational activities of business firm. For example, the demand of frozen food products has been
increased then it will force management to improve its productivity so that goods and services can be
provided to customers in desired time (Rejc, 2004). It will also prompt management to focus on hiring
of various new employees so that operational activities can be accomplished in proper way.
Moreover, changes in technological tools also impact the business of Iceland Supermarket.
With the change in technology they can easily promote and advertise their services in the market. For
example, with an improved use of CRM system the company can easily improve its relationship with
customer's which is beneficial for advancement in services (Grier, 2006). Employees also plays a key
role in success of every organisation as they have direct participation in day to day activities. For
example, the employees are demanding to enhance their salary as per industry standards then it is
necessary for management to amend their salary which will directly influence organisational profit
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margin ratio.
3.3 Business and cultural environments shape the behaviour of Iceland supermarket
Political: It is essential for business organisation to follow various decisions and frameworks
which are set out by UK government. In this respect, it can be said that the political environment of
UK are stable that provides better opportunities to the Iceland Supermarket. Stability in political
factors boosts the opportunities and motivate management to pay taxes in appropriate manner
(Matthews, 2005).
Economic: It means the stability in economic factors is also essential in order to have better
business opportunities. Stability in terms of financial environment also has significant impact on
working of organizations such as Iceland Supermarket (Fernando, 2011). If economic conditions are
facing recession issues then it is essential for management to cut down the cost of products and
services in order to meet organisational goals effectively.
Social: Changes in social needs also impacts the operational activities of business so it is
necessary for management to ensure that the decisions are made as per needs of society. For examples,
the customers are more attracted towards healthy food habits so it is essential for management to bring
changes in its product line in order to meet the social needs (Carter, 2007).
Technological: It forces business organisation to use various technological tools in order to
amend the productivity. With an improved focus on digital billing system the organisation can
accomplish operational activities in easy manner. It is also beneficial to finish task in desired time
period.
TASK 4
4.1 Significance of international trade
With an improved focus on international trade policies the business firm can have better
opportunities and lead business to impressive level of success. With the help of international trade
business organization can easily expand their activities in the different other regions and also results in
expanding their market share. In this respect, it can be said that the business expansion in international
market will amend the profit margin ratio (Mahapatraa, 2012). It will allow business to sale its
products and services in diverse locations which will directly have positive impact on the market share.
Advancement in market share is beneficial for enhancement in profitability.
Moreover, international business expansion activities is also advantageous for effective
development of brand image. With the help of international trade the management of Iceland
Supermarket can easily expand its operational activities in diverse geographical area which will
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provide better presence in the retail sector (Kerin, 2002). Development in brand image also has some
positive impact on the customer base in order to attain better competitive advantages. Other than this, it
has been spotted that the business expansion in international market also provides detailed information
about market trends. In other words, it can be stated that the international trade supermarket will also
provide better competitive advantage in the retail sector.
4.2 Impact of global factors on the organization
It has been identified that there are number of global factors that can impact the work culture of
organisation. In this respect, it can be said that the classification of global factors can be as
development in technological tools, taxation framework, cost of workforces, etc. For example, while
working in international market the management of Iceland Supermarket has noticed that the global
retail firms are focusing on digital tools to amend inventory management (Nijkamp, 2010). It will
prompt management to adopt these kinds of technological developments in order to boost operational
effectiveness.
Other than this, it has also been spotted that the cost of labour can also impact the operational
activities of business. In this regard, it has been noticed that there are number of nations in which
company can access to low cost labour in order to accomplish goals effectively (Adhikara, 2002). For
example, if company expand its business in China or any other Asian nation then they can easily
approach to low cost skilled labour. Therefore it will positively impact the supermarket in lowering
their cost of production as due to availability of cheap workforce. Other than this, taxation policies of
every nation is differ which also impacts the work culture of organisation (Gellner, 2004). For
example, the tax rates in UK economic system impacts the work culture and forces management to
bring some changes in its decisions so that business can effectively manage all activities.
4.3 Impact of policies of the European union on the Iceland supermarket
It has been identified that there are number of European union policies that can impact the
operational activities of retail firm. Classification of EU policies can be as regional policy, food policy
and international policy. It has been spotted that the key aim of regional policy is have effective
development of positive work environment and amend the employment opportunities. With the help of
government support supermarket will develop and grow the area by generating employment
opportunities (Harris, 2002). In the support of this, it can be said that the effective consideration of
regional policy will also create better brand image within market.
Moreover, it has also been spotted that company is providing frozen goods to its customers so it
is necessary for management of Iceland Supermarket to ensure that they are having effective
consideration of food policy. In this respect, it is necessary for business organisation to develop
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products according to standards that has been set out by government (Gellner, 2004). For example, EU
has changed the standards in food policy that frozen food products must include 30% calories then it
will be essential for management to bring some modifications in its products as per new standards of
food policy. If business organisation will not follow rules and regulations in appropriate manner then
business can face some issues which can impact operations in negative manner.
CONCLUSION
As per the above study, it can be concluded that the study of business environment is essential
for every organisation as it provides learning regarding diverse internal and external factors. It is
essential to understand the different types of business organisation and their purposes. It has been
identified that the economic system key factors also impacts the allocation of resources in diverse
manner. Classification of economic system can be as command, mixed, free enterprise and
transnational systems. It has been identified that there are number of European union policies that can
impact the operational activities of retail firm. Classification of EU policies can be as regional policy,
food policy and international policy.
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