Business Environment Analysis of Iceland Supermarket

This report provides a comprehensive analysis of the business environment of Iceland Supermarket, covering various aspects such as the purpose of different types of organizations, resource allocation in economic systems, the impact of fiscal and monetary policies, and the significance of international trade. It also discusses the responsibilities of Iceland Supermarket towards its stakeholders and the effects of global factors and EU policies on its operations. The report concludes with insights into how these elements contribute to the supermarket's success.

Business
environment
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TABLE OF CONTENTS
Introduction .....................................................................................................................................3
Task 1 ..............................................................................................................................................3
P 1.1 Purpose of different type of organization...........................................................................3
P1.2 Iceland supermarket meet the objectives of all its stakeholders..........................................4
P1.3 Various responsibilities of Iceland supermarket and strategies employed to meet them ...4
Task 2...............................................................................................................................................5
P2.1 Allocation of resources in different types of economic systems.........................................5
P2.2 Impact of fiscal policy and monetary policy on Iceland supermarket.................................6
P2.3 Impact of regulatory mechanism and competition policy on Iceland Supermarket...........7
Task 3...............................................................................................................................................7
3.1 Determination of price and output decision by various market structure .............................7
P 3.2 How market forces shapes the response of Iceland supermarket.......................................8
P 3.3 Impact of cultural and business environment on Iceland supermarket...............................9
Task 4 ............................................................................................................................................10
P4.1 Significance of international trade to Iceland supermarket...............................................10
P4.2 Impact of global factors on Iceland supermarket..............................................................10
P4.3 Impact of Europeans union policy on Iceland supermarket..............................................11
Conclusion ....................................................................................................................................12
References......................................................................................................................................13
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INTRODUCTION
Business environment can be termed as set of internal and external factors which affects
all the operations and activities of business enterprise. In the present scenario, companies are
required to understand their business environment in order to stay competitive. Along with this,
organizations are also required to develop all their strategies and action plan after carrying out
the evaluation of their respective business environment. The present report demonstrates the
purpose of various types of organizations. Along with this, it also reflects the extent to which
Island Supermarket which is chain of supermarkets meet the objectives of its stakeholder. This
report depicts the impact of various kinds of economic system on business enterprise. In addition
to this, it also highlights the major impact of monetary and fiscal policy on organizations such as
Island supermarket.
TASK 1
P 1.1 Purpose of different type of organization
Every organization operates with certain purpose, aim and objective. It is not necessary
that two organizations operating in same industry have same business purpose (Jones, Comfort
and Hillier, 2007). For instance, one can operate with an aim of increasing market share whereas
the other business can operate with the objective of achieving higher sales and profitably.
Purpose of four different types of organizations is listed below as: Iceland supermarkets- Iceland supermarkets are considered one of the fastest and most
innovative chains of supermarket in Britain (Iceland Supermarket, 2016). One of the
main purposes behind its operations is to supply best and quality products to all the
people in market. Other than this, the chain of supermarket also aims at becoming one of
the leading chains of supermarkets in the areas where it operates. KFC- Kentucky Fried Chicken is the most renowned chain of restaurants which has more
than 170000 outlets in different countries of the world. The major purpose of KFC is to
maximise its profits and enhance the level of customer satisfaction (KFC UK, 2016).
Other than this, it can be stated it is specialized in making and delivering fried chicken to
people all across the world.
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 Transport for London- Transport for London is a government body which maintains and
deals with various kinds of aspects associated with transport system within London
(Transport for London, 2016). The core purpose of this body is to manage and improve
all the transport related services in London. This means that its operates with an aim of
ensuring that the best and most satisfactory transport related services are being provided
to all the people of the city.
 Cancer research- Cancer research is an organization of UK whose main objective is to
reduce the total number of death in the country which occurs due to cancer. It can also be
stated that it is one of the largest centre of cancer research in terms of charity.
P1.2 Iceland supermarket meet the objectives of all its stakeholders
Every organization is required to meet the expectations and objectives of all its
stakeholders. This creates a sense of satisfaction among them and help in ensuring long term
growth and success of a business enterprise. One of the major reasons behind success of Iceland
supermarket is its high degree of meeting objectives of its stakeholder (Harrison, 2013). While
carrying out all its operations and activities, the supermarket chain always consider the need and
expectations of all its internal and external stakeholders. For instance, the objectives of
government and other regulatory bodies are satisfied by following the rules, regulations and
laws. On the other side of this, the objective of customers is met by delivering them with best
quality of products and services (Hamilton and Webster, 2015). Further, suppliers are also
considered as one of the major stakeholders of Iceland supermarket and their objectives are
satisfied by providing them with payment on time. Along with this, they are also provided with
equal opportunities for growth and development. In last few years, the competition among chain
of supermarkets in UK has become very intense. Now businesses such as Iceland supermarkets
can achieve higher growth by enhancing the degree of satisfaction among all its stakeholders
(Jones and et. al., 2005). When the objective of each and every stakeholder of the supermarket is
met, a sense of satisfaction is developed among them. Till now, Iceland supermarket has been
very successful in meeting all the objective of its stakeholders.
P1.3 Various responsibilities of Iceland supermarket and strategies employed to meet them
Businesses enterprise has various kind of responsibility which are required to be
accomplished in effective manner (Jones, Comfort and Hillier, 2006). Iceland supermarket is
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responsible towards all its stakeholders which have direct and indirect impact on all the
operations of supermarket. It is the core responsibility of Iceland supermarket to take care of the
environment under which it operates. This means that, the organization is required to ensure that
all its operations and activities do not create any kind of harm to the environment. In order to
meet all its responsibilities towards environment, Iceland supermarket has increased its
sustainable practises (Mountford and Uhlig, 2009). On the other side of this, the brand is also
responsible in providing quality and hygienic food to all its customers. In this context, it has
employed a strategy where it remove all the artificial flavour and colour form all its products.
This enhances the overall quality of products and helps in fulfilling the responsibility of
supermarkets towards its customers.
Along with this, responsibility of the Iceland supermarket is to follow all the rules and
legislation which has been developed by the government and other regulatory bodies. In order to
accomplish this responsibility, the brand evaluates its strategies at regular intervals. Iceland
supermarket is also responsible to take care of all its employees. In order to meet this
responsibility, regular training and development program are carried out to enhance skills and
knowledge of all workers (Christiano, Eichenbaum and Evans, 2005). Furthermore, employees
are also provided with equal opportunities for growth and development along with safe working
environment. It is the core responsibilities of Iceland supermarket to develop effective and long
term relation with all its suppliers. This responsibility is satisfied by encountering suggestions
and considered them at the time of decision making.
TASK 2
P2.1 Allocation of resources in different types of economic systems
Economic system aims at determining three major factors which are what to produce,
how to produce and for whom to produce. Organizations are required to allocate all their
resources in the best possible manner to stay competitive in marketplace. It can be also stated
that resource allocation depends on the type of economic system under which a business
enterprise operates (Rafiq and Fulford, 2005). There are various types of systems such as mixed,
free enterprise, command economy etc. Allocation of resources in different types of economic
system mentioned below as:
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 Free enterprise economy- In this kind of economic system business is set free to operate
and carry out their activities. The task of resources allocation entirely depends on market
forces which are demand and supply (Hackney, Grant and Birtwistle, 2006). This means
that on the basis of producer’s supply and consumer demand in market, the allocation of
resources takes place. Command Economy- Command economy is a kind of economic system in which the
government of a country takes care of its financial system (Yu, and Ramanathan, 2008).
Further in such kind of economy, resource allocation is determined by government with
the help of a centralized plan.
 Mixed economy- In such kind of economy, both government and private sectors plays a
very significant role in the economy of a country. Allocation of resources in public
sectors takes place with the help of centralized planning whereas resources in private
sector are allocated on the basis of factors such as demand and supply.
P2.2 Impact of fiscal policy and monetary policy on Iceland supermarket
Fiscal and monetary policy are the two important tool of government which are used
make the economic of country stable. Government of UK makes changes in both these policies at
regular intervals in order to maintain adequate demand and supply. One of the major difference
between these tools is that monetary policy is concerned with interest rates whereas fiscal policy
deals with factors such as tax rates and spending of government. It can be stated that both these
policies have direct impact on activities of business such as Iceland supermarket. In order to
boost the economy of UK, its government encourages people and business to borrow money by
lowering down the interest rates (Burch, Dixon and Lawrence, 2013). This means that people in
market have more money left with them which results in increasing the demand of products
which are offered by Iceland Supermarket. In addition to this, when interest rates are low then
Iceland Supermarket is able to borrow money easily which helps in its growth and development.
On the other side of this, when the government of UK wants to grow the economy less
quickly then it increases the rate of interest. This has direct impact on the overall sales and
profitability of Iceland Supermarket. It can be also stated that with the help of fiscal policy the
government of UK determines tax rates. Higher taxes means less money left with people which
lower down the demand of products offered by Iceland Supermarket (Hamilton and Webster,
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2015). On the other hand, low tax means people have more money left with them which directly
increases their overall spending. Therefore, it can be asserted that fiscal and monetary policy
have an direct impact on Iceland Supermarket and all its activities.
P2.3 Impact of regulatory mechanism and competition policy on Iceland Supermarket
The competition policy determined by government of UK has an direct impact on
businesses such as Iceland Supermarket. Competition policy and other regulatory mechanism has
restricted the organization to dominate the market. Further the policy consists of four main
elements which are Market liberalization, Antitrust & cartels, Merger control and State aid
control. The concept of liberalization has encouraged new entry in markets such as monopoly or
which possess very less competition (Yu and Ramanathan, 2008). Antitrust & cartels has
affected restricted Iceland Supermarket to get involved in process such as price fixing
agreements which results in restricting the degree of overall competition.
Elements such as Merger control has created barriers in formation of any kind of
monopoly in marketplace. In this context, Competition Act was developed by government of the
country back in the year 1998. The prime objective behind this Act was to make sure that
companies do not dominate market position. Another core purpose behind establishment of this
Act was to integrate the businesses of UK with the competition policy of European Union. Along
with Enterprise Act was developed in the year 2002 which brought various kind of changes in
the competition law of UK. It also made modification to laws which were dealing with
bankruptcy and insolvency (Giulietti, Price and Waterson, 2005). It can be evaluated that the
competition policy and other regulatory mechanisms has restricted the operations and activities
of Iceland Supermarket to a great extent. This has forced the organization to not get involved in
any kind of unfair practices. In addition to this, it has affected the overall sales, profitability and
growth of Iceland Supermarket.
TASK 3
3.1 Determination of price and output decision by various market structure
Market can be defined as place where products and services are sold and purchased. The
concept of price and decision regarding out is determined by the kind of market in which a
particular business enterprise operates. The forms of market structure cab be classified into the
following:
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 Monopoly- It is a kind of market structure in which has only one seller in the entire
market. Furthermore, the product is so unique and creative that it results in entry
barriers for the other firms to enter the market. The prices and output decision in this
market structure cannot be determined by the producer. In addition to this, the
business has control over a single factor among prices or output.
 Perfect competition- This is a kind of market structure which has large number of
sellers and buyers. Therefore, large buying and selling of homogeneous products takes
place in this market. Organization have freedom in terms of entry and exit. Prices and
output decision are determined by all the firms operating in market.
 Oligopoly market- It is market structure in which a homogeneous product or service is
sold by few sellers. This means that the strategies and action of one particular
organization has an direct impact on the other businesses operating in oligopoly
market. The prices and output decision in this market is same or near the prices
offered by competitors.
Iceland supermarket is chain of supermarket and the marker structure in which it operates
is oligopoly market. This means that any kind of changes in advertisement, marketing, prices and
products of one firm will results in counter moves from the other market players (Economics,
2016). Furthermore it can be also stated that any kind of price moves of Iceland supermarket
have an direct impact on the sales and profitability of all its rivals in the marketplace.
P 3.2 How market forces shapes the response of Iceland supermarket
According to businesses market forces are the factors such as demand and supply affect's
the prices and quantity of Iceland supermarket. The organization is required to manufacture and
deliver products according to their demand in market. Iceland supermarket is also required to
examine the changing requirements of all its customers and then needs to make modification on
the basis of those examination. In case of Iceland supermarkets it can be stated that the need and
demand of its products such as frozen food changes at regular intervals (Iceland Supermarket,
2016). Therefore, the supermarket chain needs to manage and supply products according those
changing demand. Another market force which drives and shapes the response of Iceland
supermarket is the perception of all its consumers. The organization needs to analyses the what
kind of brand image does the people in market perceives with regards to Iceland supermarket.
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Lot of time, efforts and resources are being utilized by the organization in order to change the
perception of people and enhances its overall brand image. The level of competition in market is
another factor which shapes the response of Iceland supermarket. It has been found that the
organization operates in oligopoly market which means that there are very few sellers. The
changes in prices and strategies of one market players has a direct impact on the operations and
activities of Iceland supermarket (Burch, Dixon and Lawrence, 2013). For instances, if one of its
competitor has lower down the prices, then the demand of products offered by Iceland
supermarket will directly get low. The organization will be required to shape its response
according to the market player which means it needs to make changes in its pricing strategy in
order to maintain existing demand. Therefore, it can be stated that the market players have direct
impact and shapes the response of a firm to a great extent.
P 3.3 Impact of cultural and business environment on Iceland supermarket
The culture and business environment are termed as some of the key factors which
supports in growth and success of an organization. At the time of operating in a particular nation,
Iceland supermarket needs to make sure that it respects and takes care of cultural and business
environment. One of the main advantage of this is that it assists in getting aware about the
changing need and demand of customers. Adapting factors associated with cultural and business
environment also the chain of supermarkets to create a sense of satisfaction among all its
consumers (Rafiq and Fulford, 2005). Any kind of changes in political environment of UK,
forces Iceland supermarket to make changes in its existing plans and strategies. Further if the
country observed low economic growth then the organization is required to lower down its
prices in order maintain demand of its products and services in market.
Changes in business environment such as social changes also affected the supermarket to
a great extent. This means that if the demand of frozen food in market gets low then the
organization will be required to make modification in its frozen foods. Other than this, spending
on activities such as marketing and advertisement will need to be increased in order to maintain
demand of frozen food in market. Any kind of legal changes such as modification in Acts related
to employment will forces Iceland supermarket to restructure its entire processes related to
employment and operations (Giulietti, Price and Waterson, 2005). Strict laws related to
environment will encourage the organization to use more sustainable practices which can lower
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down the negative impact of all its operations on environment. The changing trend in labor
market also effects Iceland supermarket. Growth in skilled and effective labor will help in
increasing the overall performance of the supermarket.
TASK 4
P4.1 Significance of international trade to Iceland supermarket
International trade can be termed as the process in which businesses involves in buying
and selling of products beyond national borders. It can be also stated that international trade is
backbone for economic growth and development. Business such as Iceland supermarket are
benefited greatly by such kind of trade. One of the main advantage of international trade is that it
has allowed Iceland supermarket to increase its opportunities for growth and development.
Further carrying out operations in one particular nations restricts the opportunities for expansion
and increasing sales as there are limited number of buyers (Guy, Bennison, and Clarke, 2005). It
has helped the organization in enhancing its overall activities and customer base. In addition to
this, it has also resulted in lowering down the entire cost of operations. International trade also
helped Iceland supermarket in getting competitive advantages over other market players. This is
gained by attracting new customers by operating in new international markets. Along with this, it
has also assisted the supermarket chain to enhance domestic competitiveness. Iceland
supermarket is considered as one of the most renowned chain of supermarkets in UK (Jones,
Comfor and Hillier, 2006). One of the major factors which can be linked with its success is
international trade. It has allowed the brand to gain global market share and has resulted in
reducing dependency of Iceland supermarket in its existing or domestic markets.
P4.2 Impact of global factors on Iceland supermarket
Some of the common global factors which affects the activities and operations of Iceland
supermarket are mentioned below as: Social factors- These are the factors which are associated with changing taste,
preferences and lifestyles of people at global level. The pattern and behavior of buying is
related to modifications or changes in overall structure of the population. Further it has an
direct impact on sales and profitability of Iceland supermarket (Harrison, 2013). At the
time of operating at international level, the organization is required to take care of the fact
that the social and cultural structure varies from nation to nation.
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 Political factors- Any kind of political changes in plans and policies at global level also
affects Iceland supermarket to a great extent. At the time of operating, the chain of
supermarket is strictly required to adhere the laws and regulation developed by European
union (Yu and Ramanathan, 2008). This has impacted the operations of supermarket by
making changes in spending power of people in various markets. Economic factors– The economic changes at international level have an direct impact on
the demand, sales and profitability of Iceland supermarket. For instance situation such as
downfall results in lowering down the purchasing power of customers. This further leads
to lowering down the demand of products and services which are offered by Iceland
supermarket (Burch, Dixon and Lawrence, 2013). In such situation, the organization will
be also encouraged to adopt a low price strategy in order to maintain demand.
 Technological factors- Iceland supermarket is positively affected by any kind of
technological advancements and innovations which takes places at global level. Adaption
of new and up graded technology helps Iceland supermarket to lower down its entire cost
of operations. This results in enhancing overall sales and profit margin of supermarkets
chain.
P4.3 Impact of Europeans union policy on Iceland supermarket
Iceland supermarket had various kinds of positive and negative impact of the policies
which has been adopted by European Union. One of the main advantage of these policies and
practices is that it has made Iceland supermarket a very responsible retailer (Jones, Comfort and
Hillier, 2007). European Union as developed such kind of policies which has encouraged the
chain of supermarkets to provide best and quality products to all its customers. This has resulted
in enhancing overall brand image of the business enterprise. It is the only results of EU policies
that other market players are not able to create a situation in which profits are raised on the
expense of other business organizations (Christiano, Eichenbaum and Evans, 2005). This has
resulted in enhancing the overall opportunities for growth and development for Iceland
supermarket. In terms of negative impact, it can be stated that the policies of European Union as
restricted the opportunities related to expansion for Iceland supermarket. Free trade among
member nation has helped the supermarket to increase its sales but on the same side restriction
on trade with other countries have negatively affected Iceland supermarket.
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CONCLUSION
From the above report, it can be concluded that there are various factors which has
contributed in success of Iceland supermarket. The brand has always taken care of the business
environment under which it operates. In addition to this, it can be also concluded that Iceland
supermarket has been always successful in meeting objectives of all its stakeholders. It has also
performed its responsibilities in most effective manner. It can be asserted that economic system
influences allocation of resources in business. The fiscal and monetary policy has affected
Iceland supermarket to a great extent. From the above study, it can be concluded that the
organization has also affected by competition policy and other regulatory policy. Other than this,
the policy and practices of Europeans union has both negative and positive impact on Iceland
supermarket.
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REFERENCES
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