Business Environment Analysis of Primark

This report delves into the business environment of Primark, examining various factors such as economic systems, stakeholder objectives, and the impact of global forces. It highlights the significance of international trade for UK businesses and evaluates how competition policies shape organizational behavior. The analysis includes a detailed exploration of Primark's responsibilities towards stakeholders and its strategies to meet them, alongside an assessment of fiscal and monetary policies affecting its operations.

Business Environment
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INTRODUCTION
Business environment is the combination of different set of conditions such as social,
economic, technology, political, etc. These all are affecting the business operations either in a
positive or negative manner. Interaction between business firm and its external environment gives
strength to the organizations by focusing over effective utilization of resources (Haidrer, 2010). This
thing makes company more flexible and dynamic in nature to run the business in marketplace.
Business environment helps the enterprises to ensure survival and growth of trade in diverse
situations. With the help of this, companies can forecast the future or predict changes in external
environment in advance. It enables the business enterprises to study environment and prepare
strategies according to them to attain the business objectives (Worthington and Britton, 2015). The
present research is based on business environment where to understand its significance; case study
of Primark is taken into consideration. It is a subsidiary company of Associated British Foods
Group. There are more than 238 branches in the UK, Ireland and Europe (Aydin, and Kirişci, 2013).
The cited firm’s products and services have become distinctive in nature. Organization has mainly
sourced its products from suppliers in Asia and Europe. Along with this, China, India, Bangladesh
and Turkey are also the key sourcing countries for Primark. Objectives that will be covered under
the current investigation are organizational purpose behind doing business, nature of nation
environment on which business operates and significance of the global factors that shape trade
activities of Primark (Hamilton, and Webster, 2015) .
TASK 1
1.1 Identifying types of organisations and their purpose
Primark is a Public Limited Company where its shareholders have limited liabilities towards
the organisation. Business has been operated by organisation under the laws of England, Scotland,
Wales and the Republic of Ireland. The purpose of company is to provide quality goods to
community at cheap prices with value added services (Kubasek, Brennan and Browne, 2016).
Another aim of cited firm is to offer customers with a wide range of commodities and to cater all
diverse end user’s needs and wants. This has helped Primark to develop a large consumer base and
influence them for repeat purchases.
Public sector: The organisations belongs to public sector which is having an aim to provide
goods and services to public at affordable rate by not focusing over generated profit. These have
been managed by government either directly or indirectly. Public limited companies have financed
by regulatory bodies where they are either owned by the government itself or purchasing majority
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of shares. These are listing in stock exchange board of the nations. Purpose of these types of
enterprises is maximized wealth of shareholders by generating high profit and ensuring growth of
business. Example of public limited company is Tesco, Sainsbury, Next plc and Associated British
Foods Group (Hamilton and Webster, 2015). These all have the same objective i.e. earning profits
by offering high quality of products and services to customers at affordable prices.
Charity: These are Non-Governmental organisations which run their activities and other
organizational works by getting donations from individuals or group of people. Purposes of these
firms are gaining the attention of community towards social issues and resolving them completely
from the root of occurrence. These are also looking for the welfare of people who are facing some
serious societal, physical and financial problems (Fernando, 2011). CHS Group is a charity
organization which provides a wide range of high quality, good value homes; support and care
services across Cambridgeshire to the people.
Cooperative: These are jointly owned organizations that are engage in various operational
activities such as distribution of goods, production of products, etc. Purpose of these types of
companies is to be set out the particular outcome that members of the firm can attain them on the
behalf of the business (Wijaya, Spruit, Scheper and Versendaal, 2011). Examples of cooperative
enterprises are Daily Bread Co-operative, London Capital Credit Union, and The Co-operative
Bank.
1.2 Describing the extent to which Primark meets objectives of its different stakeholders
Primark has several stakeholders which directly or indirectly get affected by the actions of
organisation. There have been several actions taken by company to meet the objectives of its
different stakeholders. Objectives of partners of cited firm are as follows:
Shareholders: They have focused over Primark’s short and long term profits so that they can easily
get the best returns on investment. They have expected that company increases its market share in
various geographical locations. Along with this, another aim is to maximize the value of corporation
within short span of time (Hutchison, Noy and Wang, 2010).
Employees: Workers of Primark have some objective or expectations from company such as gaining
handsome amount of incentives, satisfactory wages, prestige, growth opportunities and career
development.
Trade unions: Primark trade unions have expected from the management that organization should
develop good relations with employees, establish and maintain industrial relationship. Along with
this, they have anticipated that firm should offer at set minimum wages to personnel (Aruoba and
Chugh, 2010).
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Customers: Service users of Primark have imagined that company will provide them satisfactory
products and services at low prices by maintaining quality standards. They have also ensured that
all commodities will be ethically produced by the organization.
Suppliers: Profit, fair price, prompt payments, brand awareness and market share have some
objectives of suppliers to Primark (Davig and Leeper, 2011).
Government: Tax, job creation and investment in the economy have some expectations of
government to the cited company.
Management plays an important role in formulation and implementation of business
strategies under consideration of stakeholders needs of Primark. Organization takes opinion and
advice from most powerful stakeholders regarding to shape an renovate the organizational functions
for helping in smooth functioning of all operations and activities. Company product quality are to
be discussed with customers so that improvement in the quality can be achieved by getting feedback
from the customers. Health and safety regarding issues are to be discussed with company
employees that provide solution for health issues and comfortability in order to perform their work
effectively. Govt. plays an important role for the environment or legislation changes that can be
harmful for organization productivity so that it protects the organization productivity. Trade union
act is framed for the protection and legislation of work force they have no authority and power for
protect it. Organization made certain policies and strategies that protects the trade union and they
are freely to work in an organization. Suppliers provides raw material to an organization so that if
company change its product quality and new development of any product and information are to be
provided to suppliers so that they can effectively manage and supply the raw material according to
changes. Shareholders are the important element for any organization that affects the organizational
activities and functions because they invest their money in an organisation so that they have rights
to invite in making decisions and framing strategies in order to feel they are the part of an
organization.
To meet the objectives of different stakeholders, Primark has first worked on fulfil prospects
of primary stakeholders (such as owners, employees, customers, suppliers etc) because they are
more important for the organization rather the others. For this, some actions have been taken by the
firm in this direction by adopting the strategies. After satisfying primary stakeholders, company has
tries to meet the objectives of secondary stakeholders (such as local community, public, NGOs) by
maintaining low costs (Aydin, U. and Kirişci, K., 2013). The whole process has been carried out by
Primark by application of Power/Interest stakeholder matrix. On the basis of interest and power of
partners, company has taken actions to attain stakeholders’ objectives.
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1.3 Explaining the responsibilities of Primark as an organisation and the strategies employed to
meet them
The aim of Primark is to make employees, vendors and diverse communities as a part of
success by involving them. There are three major responsibilities of organization: for stakeholders,
legal and ethical liabilities. The duties of cited firm and strategies employed to meet them are as
follows:
Responsibilities towards stakeholders: Under this, company has responsible for involving
them in decision making process, determine and understand their objectives. For this, Primark has
adopted several strategies to complete those responsibilities such as Stakeholder Analysis
Technique, Multi-strategies for multi-objectives and Participative Management Style. For example,
with the application of Stakeholder Analysis Technique, organization has gathered and analyzed
qualitative information to find whose partner interest should be taken into the consideration (Gropp,
Hakenes and Schnabel, 2011).
Ethical responsibilities: Fair trade, environment protection, honest claims in promotions,
responsible for non-customers etc are some ethical accountabilities of Primark. To achieve these,
company has followed few strategies such as fair pricing and contract for fair trade, Packaging
Waste Regulations for environment protection, ethical marketing, CSR activities etc. For instance,
Packaging Waste Regulations have encouraged organization to take responsibilities for minimizing
environmental impacts by pay a proportion of the costs of the recovery and recycling the packaging
(Koos, 2011).
Legal responsibilities: Under this, Primark has accountable for protecting the rights of the
customers and employees; ensure the health and safety of personnel, proper tax and financial
documentation etc. In order to fulfil all these responsibilities, company has employed some
strategies such as customer based marketing, human resource management, health and safety
activities, adopting professional finance and accounting standards etc (Etro, 2011). For instance,
Primark marketing activities have based on customer based promotion concept where company has
demonstrated the right information on various sources to the audience about the services.
Corporate social and environmental responsibilities- It is a management concept where
company integrate social and environmental concerns in their business operations and interactions
with their stakeholders. CSR is generally used in an organization for balancing between economic,
environmental and social imperatives. There are few categories of social responsibilities in today's
business.
Environmental efforts- It is one of the primary focus on the environment. Business
regardless of size have a large carbon footprints so company takes initiates to reduce those
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footprints are considered for both company as well as society.
Philanthropy- Primark social business practices are donating to national and local charities
that provides helps to local community.
Ethical labour practices- Primark maintains their relations with employees and stakeholder
arr fairly and ethically. They does not exert pressure on employees unethically regarding to work. It
is a necessary part for an organization because business are operate at international level where
labour laws are vary from country to country.
Volunteering- Company does good deeds without expectations of any thing return, It can
support any weak organization for the improvement in performance level.
TASK 2
2.1 Explaining how economic systems attempt to allocate resources effectively
Every nation operates different economic systems with the aim of allocation of resources in
effective manner. Cuba, United Kingdom (UK) and China are the three countries where their
economic structures have diverse with each other. Economic system is a kind of process in which a
state or a nation assigns its resources, goods and services in the community. It can be divided into
four types: traditional, market, command and mixed economy system. (Colciago and Etro, 2010)
In the case of Cuba, the nation has used command economic system where the allocations of
resources have done by organisations as per the central directions of government. This has
promoted the distribution of goods and services more equitably according to the value of
community (Command economies, 2016). It has minimized the situation of duplication and wastage
of resources. Under this, country has used its economic power to attain own political and social
objectives in collective manner.
On the other hand, UK has followed mixed economic system where most health generated
by the business industries of the nation. Here, the government has played an important role in the
allocation of resources. These supplies have obtained by regulatory bodies from diverse
organisations in the form of taxes. It has helped individuals to operate its trade in the UK and earn
the profits by showing the responsibilities towards the welfare of communities (Mixed economies,
2016). Along with this, it has promoted private and public sector efficiency in terms of optimum
and effective allotment of resources.
Apart from this, China has adopted traditional economic system in order to distribution of
diverse resources for the organizations. It has given economic liberalisation, restructuring and
privatisation in order to create a financial sector in the nation. This has promoted the organisations
to move from public to private ownership of resources for welfare of society (Feenstra, 2015).
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UK has an advanced capitalist economy, that is very open. In Uk mixed economic system
are used it is the combination of market forces and central planning. It basically more socially
oriented and market oriented economic system. London is one of the world leading cultural and
commercial centres because of tourist destination. It has world leading industries in sector of
finance, commerce, marketing and technology many other high skilled service industry where
people invest huge amount of money around the country. Primark has been offered wide range of
products to customers at affordable prices. There are many relatiers in UK so that country economy
is high and have potential growth on regular basis. Every organization makes contribution in
country economy for the wealth and growth that increases the competition among the countries.
Economic system is the system of production, resource allocation and distribution of goods and
services. Scarcity of resources is the challenge for an any country. the companies have freedom of
choice of operation, although certain restrictions are to be imposed for regulating price and
maintaing public interest. Primark generally follows the planned economic system where govt
controls the economy. Major decisions like how to distribute resources and prices are govern by the
goveren by the of UK.
2.2 Assessing the impact of fiscal and monetary policy on Primark and their activities
Monetary policy is use to control macro variables in an economy with the help of interest
rates. While fiscal policy follows with the aim of influencing the level of economic activities via
changing in taxation pattern and spending of government. The objectives of UK regulatory bodies
are decrease inflation rate i.e. CPI by 2%, strengthen economic growth by minimizing inflationary
growth, bring the reduction in unemployment ratio and avoid large deficit on present account
balance of payments (Eaton, Kortum and Kramarz, 2011). The formulated fiscal and monetary
policies of UK government have made the impacts on business activities of Primark which are as
follows:
Impact of fiscal policies on Primark and their activities: Tax related fiscal policy of UK
regulatory bodies have affected cited organisation by bringing the changes in the account of
disposable income of customers which they are spending on purchasing the goods and services. If
government increases the tax rate on commodities by decreasing net income of people then it will
make them more budgets conscious (Brunot, 2015). By doing this, they will limit their expenditures
to requirements. It will directly make the impact over Primark in terms in increase the prices of
goods because of raise in tax. This will amplify the overall costs of different operational activities
such as farming and housing etc. The result of this it will bring the reduction in consumer demands.
But, in case UK government decreases taxation rate then the impact of this on cited firm and its
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activities will be opposite (Smithers, 2015).
Impact of monetary policies on Primark and their activities: The Federal Reserve sets the
interest rate on borrowing money which has taken by the organisations form banks in the form of
loans either for short and long term. When the interest rate is set minimum for financial institutions
then it will become easy for Primark to take loans easier from banks for different purpose like
farming and housing etc (Pettinger, 2007). Along with this, it will increase money flow in the
market which will stop inflation rate to rise.
Fiscal policy can be applied in two distinct way. Expansionary fiscal policy it is use when
Govt. runs a deficit or when Govt. spending exceeds tax revenue, that is happen during a recession.
Contractionary fiscal policy is used when Govt. spending is less then tax revenue or Govt.
accumulates surpluses. Monetary policy of country helps in to create wealth in an organization.
Both the policy affects the business directly and indirectly , it is important for business owner to
understand and monitors changes in Govt. policies. Fiscal and monetary policies are tools used by
the Govt. to establish ebb and flow of economy. Expansionary monetary policy is another Govt. tool
to boost the economy through lower interest rate and larger money supply. The Federal reserve can
directly decrease interest rates or purchases bonds from treasury to increase the money supply.
Decreasing monetary policy are used to prevent an economic bubble. It decreases the overall money
supply in order to spent less money by customer’s for purchasing goods. Rate of lending of money
is low and affects the sales ratio of an organization.
2.3 Evaluating the impact of competition policy and other regulatory mechanisms on the activities
of Primark
Competition policy develops by UK government with the aim of prevent and minimize the
abuse of monopoly power. This creates market failure and goes against the interest of public. So to
protect the interest of the end users due to impact of monopoly market structure, the regulatory
bodies of the nation has prepared the following framework. Aim of competition policy is to promote
competition in market in order to make the market better and improves efficiency of the
organisations. The impact of competition policy over Primark and its business related activities. It
has reduced monopoly power in retail sector. This has given the opportunity to the firm to face the
high competition level by maintaining the quality of the end products (Manova, 2013). It increases
enterprise efficiency and creates a wider choice for consumers and helps in reducing prices and
improvement in quality. In UK market there are several competitors so that low prices of product
are easily available in market, Through this company can gain high market share by offering better
prices and more people can afford to buy products. Competition also encourages businesses to
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improve the quality of goods and services for existing product. More choice and innovative product
may be establish for retaining the customers for a longer time period.
TASK 3
3.1 Explain how market structures determine the pricing and output decisions of businesses
There are four types of market structures which help the businesses to take the decisions
related to output and prices. For Primark, the role of different market arrangements in pricing and
output decisions are as follows:
Perfect competition: In this, there are low entry barriers and products are identical in nature with no
differentiation. There is a presence of the unlimited number of consumers and producers. It creates a
perfect elastic demand curve. There are several enterprises which provides same kind of product or
their substitute product in order to coverage large market share.
Monopoly: This is a type of imperfect competition where only one producer sells goods and
services which are diverse in nature from each other. It can be said that they are not perfect
substitute for the offer goods. Under this, company can charge any prices of the goods as compare
to its customers where the consumers have willing to pay any cost of items because they have no
options available in front of them (Chor and Manova, 2012). The material supply industries of UK
provide some good illustrations for uncompetitive market. British telecom industry, post office and
micro soft windows provides monopoly in market. where firm have patent or copyrights for no one
can sell a product or to protect intellectual property.
Oligopoly: This is a market which runs by the small number of the organisations and they have kept
the control over the majority of the market share. The organisations have lower down the prices of
the goods to attract the customers and enjoy the huge profitability situation so that it is considered
as mobile market. less number of competitors are exist in the market place.
Duopoly: This is the special case on an oligopoly with two firms. In this, two companies have
gained the huge market share and generate huge amount of profit (Levchenko, Lewis and Tesar,
2010). Only two firm are exist in the market place to serve a particular region with same type and
quality of product.
In the case of Primark, company has operated its business under the oligopoly market
structure. In the UK, organization has run its trade in retail sector where there are few huge firms
which are dealing in the following sector from the long time. The products offer by them are
substitute in nature. So on the basis of this; cited company has taken the decisions related to price
and supply of the goods in the market place by analyzing demand of the market.
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3.2 Illustrate the way in which market forces shape organisational responses using a range of
examples
Demand refers to how much quantity of a product or services is desired by buyers. The
quantity demanded is the amount of product people are willing to buy at a certain price. the
relationship between price and quantity demanded is known as demand relationship. Supply refers
how much the market can offer. The quantity supplied refers to amount of a certain good producers
are willing to supply when receiving a certain price. The supply of the product also plays a key role
in determining the price of the product. If there is increase in the supply of the product the company
needs to reduce its price to attain consumer equilibrium. On the other hand if there is decline in
supply of the product the company is required to increase the price to cover the cost of the product
or services. The policies of a government plays a key role in determining the price and output
decision of business. If there are limited seller in the market the company can increase the price of
its product and will concentrate on increasing the output of the company on the other hand if the
competition in the market is very high the company is required to concentrate on reducing the price
of the product. Demand and supply are the two forces where an organisation needs to respond
towards them to survive in the market place. The demand for the goods is the quantity that
consumers are ready to pay. Where the supply of the products is the amount that suppliers are
willing to bring to the market at given prices. Increase demand of a specific item or service creates a
pressure on prices needed to be decrease. In the case of Primark, both demand and supply has
affected the responses of the organisation towards them. For example, the demand of packed and
frozen food items among the customers have increased with the item because they have become
more health conscious. In this context, cited firm has analyzed the demand gap and response
towards its. For this, the supplies of demanded products have increased from the firm side (Clifton
and Díaz‐Fuentes, 2010).
3.3 Judge how the business and cultural environments shape the behaviour of Primark
‘Organisational culture is defined as the way in which member of an organisation relate to
each other, their work and the outside world in comparison to other organisation. It can enable or
hinder an organisation’s strategy. The Hofstede Multi-Focus Model on Organisational Cultural is
strategic tool aimed at helping organisation to become more effective.’ (Hofstede1967-1973)
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Primark organisational culture defines values, beliefs and learned ways of doing business.
This shows the company structure and the personnel work at the workplace. It derives from the
company aims and purpose, its past, its present and its current ways of managing its people and
resources (Gross and Juncos, 2010). The organisational culture of the firm has influenced by UK
culture environment. This has made the impacts over the values, assumptions, attitudes and
behaviours of both management and staff toward their work, customers, quality of product and
decision-making process of management. On the other hand, business environment such as
political, technology, social, legal etc factors have affected the operational work of the organisation.
Primark has given the response towards it by taking various actions such as strategy formulation,
adopting new technologies, following the rules and regulations etc (Falkner, 2011). PESTEL
analysis affects the organization culture in way o change their strategic business planning and their
circumstances in order to reduce the effect of PESTEL environment. Use of various alternatives that
helps in protection towards certain changes. Organization culture are varies from company to
company in order to promote their productivity and efficiency. Environmental factors affects the
organization culture like operation management, marketing strategic tools and their promotion
methods for the survival in market place. Primark can get competitive advantage over their
competitors in order to achieve high growth by accepting environmental opportunities.
TASK 4
4.1 Significance of international trade to UK business organisations
‘World Trade Organisation is an international agency with 162 member countries and its
purpose is to promote international commerce. The World Trade organisation’s main functions are
to provide forum for negotiations to reduce barriers to international commerce and to administer a
system of rule governing trades. (BBC News, 2015)
International trade can be defined as the process of selling and buying of services and goods
across international borders. In the present time, it is considering as the most important backbone of
development of the nations. Before exit from Brexit, Britain has trade with EU members and other
nations in the world. But after leaving from group, the risk of losing international trade benefits
have increased for the nation (Thomas, 2011). It promotes the importing and exporting of goods and
services in order to create wealth in a country as well as organization. International trades helps in
promote their business outside the country and capture the wider market region. It helps in
maintaining the balance between supply and demand of a product.
For the UK, there is several significance of international trade. First one is availability of
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