Business Environment Factors Impact on BooHoo PLC: Unit 1 Assignment 2

This report examines the business environment, differentiating between micro and macro factors and their impact on business operations. It explores political factors, including stability, taxation, and trade restrictions, and economic factors such as unemployment, interest rates, and exchange rates. The report also analyzes social factors like social media's influence, technological advancements, legal changes, and environmental considerations. Using BooHoo PLC as a case study, the analysis includes a SWOT analysis to identify strengths, weaknesses, opportunities, and threats. The report concludes by emphasizing the importance of understanding both internal and external factors for making strategic business decisions and maintaining a competitive edge.

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

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

Unit 1 Business and the Business Environment Assignment 2 343949
fashion retailer; they should keep looking for opportunities to continuously develop their
brand through the use of technology. With the increase of online shopping due to the
Pandemic in 2020, phone users are now able to pay for items using Apple Pay therefore
making transaction smoother. This has a positive impact on the organisation as consumers
have the ability to make purchases with just the click of one button. However, Boohoo do
not invest large portions of profits into their research and development team therefore can
not always keeps up to date with the latest trends and fashion statements. Therefore their
competitors can pose a threat as they have a more advanced R&D team and technological
developments.
Legal: Changes within the legal system and new laws in place can shape the macro business
environment by imposing new laws and regulations. These can pose opportunities as well as
threats depending on what has been imposed. As Boohoo operates internationally they will
have to look at the varying laws that will affect their company and decision making. By
keeping up to date with new legislation that will have an affect on their business will mean
they will not hit with legal cases and fines due to non-compliance. They will also have to
have research and ensure their Intellectual Properties are patented and comply within
specific countries as this could give their competitors an advantage.
Environmental: These factors consist on the importance of pollution targets and lowering
carbon companies carbon footprint. Many business operations also relay on the
environment due to the exportation and importation of goods from one location to another.
Businesses will also need to take in to consideration differing countries policies and their
environmental impact. Furthermore consumer trends have found that the use of eco-
friendly products are becoming more favourable with the population; therefore Boohoo
should use this opportunity to adapt to some Green Business approaches. If a company does
not have a “Green approach” or business operation in order to reduce carbon footprint; this
can have a negative impact on the company due to consumer beliefs. Furthermore, it was
found that Boohoo’s environmental impact was rated very low due to the non-eco friendly
materials and little to no evidence on reducing chemicals (Good on you, 2020)5. This will
have a negative impact on the company and their brand image due to personal beliefs and
the growing pressures of lowing emissions.
Every organisation are affected by external and internal factors therefore an analysis must
be made before making business decisions that affect the company as a whole. An external
analysis will allow the company to identify events and factors that may influence strategic
decisions that are made by the organisation.
SWOT Analysis
Strength: A strength the company has is their ongoing online presence, mainly through the
use of social media outlets and being a collective group that offers a range of products for a
large population of ages. They have also introduced a smoother way of allowing consumers
to purchase items using Apple pay, this will mean that customers will not have to go
5 Good On You. (2020). How Ethical Is Boohoo? [online] Available at: https://goodonyou.eco/how-ethical-is-boohoo/#:~:text=Boohoo%27s
%20environment%20rating%20is%20%27Not.

Unit 1 Business and the Business Environment Assignment 2 343949
through the hassle of getting their card out in order to pay. Lastly, a strength the company
has is the trading agreement that is still in existence with the European Union meaning that
they can still input and export goods.
Weakness: The weaknesses that the company have include their environmental policies, this
will have a direct impact on consumers across the world due to moral and social beliefs.
Another weakness is the amount they spend on their Research and Development team
compared to their competitor, who have a significant advantage on their innovative
products.
Opportunities: Boohoo could enhance their online presence further by recruiting influencers
to wear their brands across all social media platforms, these could increase sales and
promote new fashion trends. Furthermore with the ability to access these products through
links, this will allow consumers to browse Boohoo’s website for similar products. Boohoo
could also make use of the continuous growth of new technology, this can enable a more
concise gathering of data and consumer spending. Lastly, Boohoo can increase their green
initiative by providing products that are eco-friendly which will not only increase sales, but
deem them as partially ethical.
Threats: The threats that are posed to Boohoo are the technological developments used by
fellow competitors, as this could be used to attract new customers and increase their
market shares. Furthermore, the growing competition within the fashion industry places
pressure on prices as consumers may seek cheaper alternative to specific products due to
finances. Lastly, the fluctuating interest and exchange rates, affects sales internationally and
provides an unstable financial and economic environment.
Inconclusion, the business environment involves both internal and external environment
and factors, this is important to an organisation so that they can identify their weaknesses
ad threats. With business becoming more competitive, Boohoo will need to consider their
external factors in order to give themselves a competitive edge, adhere to fashion trends
and changes to legislation.
Bibliography

Unit 1 Business and the Business Environment Assignment 2 343949
Edgington, T. (2019). Brexit: What trade deals has the UK done so far? BBC News. [online] 11
Sep. Available at: https://www.bbc.co.uk/news/uk-47213842.
Good On You. (2020). How Ethical Is Boohoo? [online] Available at:
https://goodonyou.eco/how-ethical-is-boohoo/#:~:text=Boohoo%27s%20environment
%20rating%20is%20%27Not.
Jones, L., Palumbo, D. and Brown, D. (2020). Coronavirus: How the pandemic has changed
the world economy. BBC News. [online] 6 Mar. Available at:
https://www.bbc.co.uk/news/business-51706225.
Sellors, A.B. (2014). Social Media Influences on Fashion. [online] Social Media Today.
Available at: https://www.socialmediatoday.com/content/social-media-influences-fashion.
Skeldon, P. (2019). Social influencers have led to the rise in fast fashion, with 30% of
shoppers using Instagram for inspiration. [online] InternetRetailing. Available at:
https://internetretailing.net/mobile-theme/mobile-theme/social-influencers-have-led-to-
the-rise-in-fast-fashion-with-30-of-shoppers-using-instagram-for-inspiration-
20388#:~:text=Home%20%3E%20Themes%20%3E%20Mobile-.