Business Environment Report: Iceland Supermarket - Factors Analysis

This report provides a comprehensive analysis of the business environment surrounding Iceland Supermarket, a UK-based supermarket chain specializing in frozen foods. The report begins with an introduction to the concept of business environment, differentiating between internal and external factors and highlighting their impact on organizational objectives and stakeholders. It then delves into the specific purposes and objectives of various organizations, including Iceland Supermarket, KFC, Transport for London, and Cancer Research. A key section examines the extent to which Iceland Supermarket meets the objectives of its diverse stakeholders, including employees, government, customers, and suppliers, using a stakeholder analysis matrix. The report further details the various responsibilities of Iceland Supermarket as an organization and the strategies it employs to meet them, covering legal, ethical, and social responsibilities towards employees, the government, customers, and suppliers. The analysis extends to economic factors influencing resource allocation, the consequences of fiscal and monetary policies, and the impact of competition policy and regulatory mechanisms on Iceland Supermarket. Additionally, the report explores how market structure affects pricing and output decisions, the shaping of market forces, and the influence of business and cultural environments. The significance of international trade to Iceland Supermarket is evaluated, along with an analysis of global factors and the impact of European Union policies. The report concludes with a summary of key findings.

Business Environment
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Table of Contents
INTRODUCTION ...............................................................................................................................3
P 1.1 Purpose of various organisations listed below:.......................................................................4
P 1.2 The extent to which Iceland Supermarket meets the objectives of its different stakeholders
.........................................................................................................................................................5
P 1.3 Various responsibilities as an organisation and the strategies Iceland employ to meet them.7
TASK 2 ................................................................................................................................................8
P 2.1 Different economic factors helpful in allocating resources effectively..................................8
P 2.2 Consequences on Iceland Supermarket due to fiscal and monetary policies.........................9
P 2.3 Outcomes of competition policy and regulatory mechanism on Iceland Supermarket........11
TASK 3 ..............................................................................................................................................12
P 3.1 Effect of market structure while deciding pricing and output decisions of businesses .......12
P 3.2 Market forces shape Iceland Supermarket responses using a range of examples................14
P 3.3 Business and cultural environments shape the behaviour of Iceland Supermarket..............16
TASK 4...............................................................................................................................................17
P 4.1 Significance of International trade to Iceland Supermarket.................................................17
4.2 Analyse the impact of global factors on Iceland Supermarket (230 words)............................18
4.3 Evaluate the impact of policies of the European Union on Iceland Supermarket. (380 words)
.......................................................................................................................................................18
CONCLUSION..................................................................................................................................19
References..........................................................................................................................................20
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INTRODUCTION
Business Environment is combination of internal and external elements which affects the
business and their stakeholders. Internal factors affects internal environment of the firm which
includes policies, practices, employees, etc. whereas external factors are competitors, laws, market
structure, etc. It is easy to handle internal factors as compare to the external. So it is important to
gather information about these factors including social, political, economic and legal aspects for
working effectively in achieving decided objectives (Hamilton and Webster, 2012). Different
organisations have different purpose and objectives while some focus on earning profit and some
on social welfare. Each company has its size and type on the basis of which it achieves its targets
and goals. Stakeholders plays important role in success and growth of any company, they have their
area of interest and affects the firm in either positive or negative way and it is the prime
responsibility of the company to fulfil demands of stakeholders (Wetherly and Otter, 2014).
For explaining all these factors, Iceland Supermarket is taken into consideration in this
report. It is a chain of supermarket in Britain which gives emphasis on frozen foods which includes
meals and vegetables. They also sell meat, dairy products and dry goods. The study focus on the
purpose of various organisations, stakeholders of Iceland Supermarket, their responsibilities
towards stakeholders, market structure, various policies, global factors and international trade. In
the end, report is concluded in the form of summary with the key findings.
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P 1.1 Purpose of various organisations listed below:
The purpose of various organisations is explained below. Iceland Supermarket: This supermarket is a limited company which has 1.8% share of UK
food market. Private Limited firms do not provide their shares to the public or we can say
that these organisations are not accessible for the public. The capital of these firms is either
more or less as compare to public limited firms. The purpose of this supermarket is to
provide frozen meal to the customers that include prepared meals and vegetables. It does not
compromise with the quality and value of food and works according to the statement “the
food you can trust” by delivering healthy and tasty meals to the customers (The Iceland
Story) . KFC (Kentucky Fried Chicken): It is an incorporate type of firm whose purpose is to
deliver fast food especially non- vegetarian to the customers and using the earned profit in
the growth of the company. Owner of KFC does not use the revenue for his personal use.
KFC is a customer focused chain of fast food which specializes in fried chicken. It sells fast
food which appeals to the customers who are price as well as health conscious. By investing
the profit, firm increases its product items and improves the quality of food (Guay, 2014). Transport for London (TFL): It is public government organization whose shares are
available to the public and is added to the stock exchange. The main purpose of this firm is
social welfare and then profit earning. The main aim of this firm is to use such transport
strategies which can manage transport services across London. It focuses on creating values
for their users by providing them with high quality and innovative solutions. For public
welfare, it concentrates on friendly, safe and sustainable environment by minimizing impact
of its operations and pursuing all business policies for continue improvement in environment
(Brinkman, Navarroand Harper, 2014).
 Cancer Research: It is a non government organisation which works for cancer patients and
its awareness among the people. It is neither a part of UK government nor a private firm
which focuses on earning profit. It is a world's largest charity whose purpose is to minimize
the number of cancer deaths. It provides information about various types of cancers, their
symptoms, treatments, medicines and many more by researching into the prevention,
diagnosis and treatment of cancer disease. For influencing people it also conducts various
campaigns and activities.
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P 1.2 The extent to which Iceland Supermarket meets the objectives of its different stakeholders
Table 1 Stakeholder analysis matrix
High power Low power
High influence Key stakeholders
Government, Employees
Keep satisfied
Suppliers
Low influence Keep them informed
Customers
Negligible
None
Stakeholder is a person, group and society who is affected by the decisions and actions of
the organisation or affects the working of the organisation. There are different stakeholders who
have different areas of interest. The various stakeholders of Iceland Supermarket are explained
below. Employees: Employees are the most important assets of any organisation. The objectives of
them are job satisfaction which includes good working environment, good salary and many
more. To meet these objectives, Iceland Supermarket offer their employees a good salary,
conduct training programmes for their career growth and conduct employee engagement
activities to improve the worker relations. All these things, keeps the workers satisfied and
motivated. The staffs of the supermarket are trained properly in dealing with the customers
in an effective manner (Wetherly and Otter, 2014). Government: For running any business and achieving the targets it is necessary to cooperate
with the government as it monitor the working of companies. The objectives of UK
government are social welfare with the development of country and for this it monitors
whether the companies are following the policies and practices introduced by it or not.
Iceland Supermarket follows all polices which includes policies related to the sustainable
environment, corporate responsibilities, etc. It follows various policies for animal welfare
which includes Fish Sustainability Policy, animal welfare policy, etc (Craig and Campbell,
2012). Customers: The objectives of customers are to get quality, valuable products at affordable
price. Now days, they are health conscious and prefer a good diet. To fulfil all these
objectives, Iceland Supermarket takes care of the quality and value of the food and provides
them in fast and effective manner with friendly environment. They provide various easy and
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accessible services to the customers so that they can enjoy the shopping with them.
Customers feels that environment of supermarket is not friendly as staff does not guide them
properly so at this point firm is required to improve their environment and staff members
(Groza And Ragland, 2016).
 Suppliers: The objective of suppliers is to maintain good relation with the firm and to work
in proper cooperation and coordination. To meet the objectives of the suppliers, Iceland
coordinates with its suppliers and also ensures that they meet high standards of animal
welfare. All the suppliers who supplies meat to the firm have CCTV cameras installed in
their slaughterhouse which is monitored by the Supermarket time to time. Suppliers possess
written Fish Sustainability Policy for fish welfare (Hamilton and Webster, 2015).
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P 1.3 Various responsibilities as an organisation and the strategies Iceland employ to meet them.
It is prime responsibility of any organisation to fulfil the demands and objectives of their
stakeholders for achieving their goals and to enhance the business. Iceland Supermarket uses
different kinds of strategies for meeting the objectives of the stakeholders. The responsibilities
varies with the type of stakeholder and their interest. The responsibilities of Supermarket towards
their stakeholders with the strategies used are explained below (Daniels, Radebaughand Sullivan,
2011). Responsibility towards Employees: Iceland ensures that it is paying the right amount of
salary to its workers as per the type of work. It provide them various facilities which
includes medical facility, health and safety facility, retirement benefits and leave benefits. It
uses various strategies for enhancing the skills and knowledge of their workers such as
conducting trainings for communication skills, technical skills, employee engagement skills
and many more. By offering informal meetings, it tries to maintain good relations among
workers. It needs to improve the strategies as customers feels unfriendliness while
communicating with the staff (Upton, 2010). Responsibility towards Government: The responsibility of supermarket is to follow the
various policies and procedures of the government. It follows all the guidelines of
government while setting the business in UK. There are various policies precedes by the
supermarket which includes policies related to the animal welfare, economic situation,
customer health, food quality, sustainable environment and many more. It pays the taxes on
time with full honesty and conduct the business in lawful way (Reddy, 2016). Responsibility towards Costumers: Iceland works for satisfying their customer's needs and
demands and for this, it provide high quality food to them in an affordable price. It is the
first food firm in UK which stops using artificial colours, flavourings and non essential
preservatives. It uses the freezing process in natural way which does not consist of any
preservatives. They take care that food does not loses their freshness, vitamins and minerals
while packaging. They try to keep the honesty and loyalty to the users so that they prefer to
buy products from their supermarket (Xu, Kaye, and Duan, 2003).
 Responsibility towards Suppliers: Supermarket fulfil responsibilities towards their suppliers
by dealing at good price and coordinating with them. To maintain the quality of food, firm
takes care that they follow all the animal welfare policies and supply good quality of raw
materials. Firm give various offers to the suppliers for satisfying them and to reduce their
switching tendency (Hodgkinson,1997).
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Legal responsibilities Ethical responsibilities
Consumer legislation – Company has to
adhere with consumer rights regarding
quality, payment as well as handling there
complaints.
Strategies taken for the same can be with
respect to adhering with quality standards as
well as making a separate complaint cell.
Fair trade – Organization have to fairly
done the trading of products. Accordingly
the need is to strategize on avoiding the
buying when products are very low in
prices and selling the products in market
which are very high in prices (Hitt, Lee
and Yucel, 2002) .
Health and safety legislation – The need is to
maintain a safe and healthy environment for
employees. Moreover, the products offerings
should also be safe for consumption
(Wetherly and Otter, 2014).
The strategy to be used for the same can be
adhering with safe and transparent practices
Environmental protection – It is very
unethical to damage the surrounding
environment of organization. As a part of
their strategies, the organization can
conduct several CSR activities to protect
the environment.
Employee legislation- It gives rights to
employees by providing equal opportunities
and wages to all employees.
In this regard, the company is required to
adhere with the norms and regulations as
laid by the government.
Honest claims in promotions
The strategy here is that the product's
features, quality, ingredients and its actual
prices should be mentioned very clearly
(Reddy, 2016).
Tax and financial legislation – It includes the
legal financing like income and expenditure
and tax payments of organization.

TASK 2
P 2.1 Different economic factors helpful in allocating resources effectively.
There is a presence of varied kinds of economic systems that carry out appropriate resource
allocation. These are as follows;
 Command economy- Government is authorized to decide on both quality and quantity
parameters of resources in this economy. The process of allocating resources is carried out
by licensed administrative bodies . Government also determines the cost of products in this
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economic system. The advantage of this economy are easily availability of mobilised
resources, have power to transform the society. China and North Korea posses command
economy which helps in building up companies and helps them achieving their particular
goals (Spence, Jeurissen and Rutherfoord, 2000).
 Free enterprise economy- In this economic system, the economy plays a vital role in
dealing advantageous between customers and producers and moreover system trust on
marketplace for resolution of economical difficulties. The allotment of resources is through
action of independent and self governing forces in industry. This method of economy allows
consumers to determine goods and how to produce is judged by producers. The advantage of
this economy are availability of wide variety of products and fast response to the needs and
desires of the users. Along with it, disadvantage is that it encourage companies to use
harmful products. The countries which are using this system are Canada, Germany and
Japan. These countries allow the independent actions of the industries for utilisation and
allotment of resources (Hitt, Lee and Yucel, 2002) .
 Mixed economy- It is a profitable scheme that includes every characteristics of rules and
market schemes. This scheme allows a trade firm to decide on both resource allotment and
commodity manufacture with jointly abiding by administrative rules. The authorities are
involved in business organization to accomplish goals of economical process. This economy
provides benefits to the firm by controlling insufficient behaviour, providing essential
services and products and many more. United States, United Kingdom, etc uses this policy
as they have combination of government spendings and free market systems (Hamilton and
Webster, 2012) .
 Transitional economy- This economical scheme is shifting from key planning to
marketplace. The scheme considers economical easing which results in firm cost of
products. Russia has transitional economy as it has macroeconomic stabilization and
liberalisation (Hill, 2008).
P 2.2 Consequences on Iceland Supermarket due to fiscal and monetary policies
Monetary and financial policies are fixed concepts and actions which are utilized for working
of a business organization effectively. In Fiscal Policy, government uses its taxes and spendings for
the welfare and development of the nation and its economy. When government increase the
spendings demands of food products increases and this impacts the working of Iceland in right way
otherwise decrease in spendings leads to decrease in demand and results to effect product sales. On
the other hand, In Monetary Policy, government of UK controls the supply of money and takes
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decisions regarding the interest rates. With the decrease and increase in the interest rates sales and
customers of supermarket increases and decreases. These administrative regulations affects on the
functioning of Iceland supermarket (Telecommunications Business Environment. 2014). The
consequences of the above set of rules on the working of Iceland Supermarket have been discussed
below:
 Exchange rates
This charge per unit on the sum is gained from customers by changing the form of payment
manner. Any variation due to decrease or increase in rates reflects on credit firm which leads to
trouble in the firm. Higher rates decrease sales of supermarket and number of clients. Customers
starts switching which is creates problem for the Iceland (Higón, 2012).
 Interest rates
The authorities issue certain set of rules and regulations so that interest rates are confined to
certain limits. Any alterations in these rates directly has an impact on the role of firm as increase in
rates will certainly lead to increase in expenditure level. This situation will further result in increase
demand of productivity of Iceland Supermarket. (definition of 'Monetary Policy')
 Tax rates
The government also plays a significant role in changing the productiveness by elevating
and dropping the charge per unit which leads to changes in cost value. Still due to the increase in
tax values there is a eventual decrease in expenditure level which has a impact on Iceland
Supermarket. Increased taxes create burden on supermarket which results to higher food product
prices and lower customers (Kim, Lee, Chun and Benbasat, 2014).
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P 2.3 Outcomes of competition policy and regulatory mechanism on Iceland Supermarket.
In a commercial enterprise, Iceland Supermarket competes with different rivals of Tesco and
ASDA etc. And hence the functioning of company is directly affected by the various competition
norms and regulatory mechanism. Discussed below are the outcomes on functioning of a company:
 Competition policy
This plan of action includes certain set of rules which are characterized for the company's
functioning. If a company owns inordinate industrial abilities this policy helps in assuring security
to the firm. The prior focus of Iceland Supermarket is to provide quality food products, enhancing
customers contentment and building trust for the firm. The motive of enforcing this policy is to
enhance proper functioning of firm without any limitations. This policy also enables a credit firm to
evaluate costing scheme for a company's product and as result, alterations are noticed in
transactions of Iceland Supermarket. Any change in the pricing of food products leads to affect the
business of all the food markets. To compete with its competitors, Iceland Supermarket uses various
innovative strategies which includes lucky draw, food product sale, free home delivery, etc. It stops
using artificial colours, flavours and preservatives for making food healthy and tasty (Wang, and
Altinay2012).
 Regulatory mechanism
An undeviating outcome can be clearly noticed on the business patterns and supply of
the organization. In order to direct an organization in a more efficacious manner, Iceland
Supermarket obeys all the standards, agreements and rules implemented by authorities. For
instance, if administrative body redirects alteration in customers safety then its the responsibility of
the organization to evolve with safety measures as reported. Iceland follows all the EU,
international and government policies and procedures which includes sustainability policy, policy
related to the nutritional food, policies related to the animal welfare, Fish welfare policy,
environmental protection policy and many more. It invest more on the quality of food to maintain
their freshness and naturalness (Improve business environment, simplify tax regime. 2015).
Companies act policy -
Food policy
It is that area of public policy which is concerned with producing, processing, diosytubuting as well
as purchasing foods. In this regard, Iceland supermarket is required to adhere with the food policy
while making decisions with respect to processing techniques, marketing, and making the food
available to consumers. The management of supermarket is thus required to ensure the safety of
food by focussing on expiry date. It is also required to use ethical marketing while advertising food
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products to consumers (Wilde, 2013).
TASK 3
P 3.1 Effect of market structure while deciding pricing and output decisions of businesses
market structure pricing and output decisions
Perfect competition  Many buyers and sellers are present
 Goal is profit maximization.
 In this firms are price takers.
Monopolistic competition  Many sellers are present.
 Presence of many competitors.
 Firms decides the prices.
 Product is specifically different from
others.
Oligopoly  Firms have power to change their
products price according to customers
demand (Dudovskiy, 2013).
 Large number of sellers are present.
Monopoly  Presence of single seller and they
have control over prices and supply of
the products.
In any business the most typical thing is to decide the price of the products. Companies
including Iceland Supermarket try to take right decision as per their knowledge and obtained
information from the surveys and research. While determining the prices, it is important to have
information related to the market structure. Market structure consists of buyers and sellers which
keep in touch with each other while exchanging goods and services. Market structure of food
market has influenced the supermarkets to a great extent (Doing business in the UK. 2016.). If the
competition among the firms is strong then it affects the supply of food commodities as each
company tries to dominate the market. Iceland Supermarket is one of the leading supermarket of
UK so it has many competitors which includes J Sainsbury PLC, ASDA Group limited and Tesco
Plc. To compete with them Iceland offers the products in affordable price. It also offer one Bonus
Card to the customers, the winner gets the entire cost of Iceland's shop for free. Affordable price
with high quality of food attracts more customers and make them to keep supermarket at their top
priority. In food industry, firms have their hold on the prices for earning profit and competing with
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the competitors (Shokri and Nabhani,2015).
The prices of the products are decided by keeping various elements in mind which are
number of customers, suppliers, agents; level of production; market position and brand image; types
of products and type of competition. These all elements are interconnected with each other and
helps firms in deciding their product prices. Iceland Structure keeps the loyalty, honesty and clarity
with their users so that its competitors does not pull the customers towards them. The food market
also takes care the demand and supply of the food items while deciding their prices (Wetherly and
Otter, 2014). The main emphasis of Iceland is on frozen food and the demand of this is also high.
The price of frozen food is high as there is not such competitor who provide such a quality of
natural food without preservatives. People pay for it as they prefer good quality and healthy food.
Companies also takes care of their profit while deciding the prices as they also wants to grow and
enhance their business. Due to the wrong decisions, firms face losses and financial crisis. For
earning profit and popularity, Iceland keeps all the factors in mind and on the basis of various
elements and market researches they decides the affordable prices of their food products (British
business culture. 2014).
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P 3.2 Market forces shape Iceland Supermarket responses using a range of examples
Market Forces affects the Iceland Supermarket responses in various manners. Market forces
includes supply, demand and marketing to the customers. These forces helps the organisations in
achieving their objectives and enhancing their business. Forces of market affects the sales of
products and number of customers as well which affects the market image and position. Supply of
any food product depends upon the the amount of food items available in the market. Whenever any
new food product is introduced by the firm then in such condition supply of that product is more as
compare to the demand (The current tax and business environment, 2015).
Demand is the number of products or services desired by the customers in the market. So we
can say that, supply of any product is inversely proportional to its demand. Iceland Supermarket
tries to reach the equilibrium point so that their will be equality in demand and supply. For example,
Supply of frozen food is equal to its demand. By maintaining the quality and using innovative
strategies for keeping meal and vegetables fresh, natural and health they reach at the equilibrium
point. With it another example is that the firm uses the strategy of “Buy One and Get One Free”
which attracts more customers and increases the sales (Hamilton and Webster, 2012).
Supply and demand are also effected by the prices of the food items. Iceland makes changes
in prices time to time and uses the round figures which is called as clear cut prices. If the price of
product is more then customers like to buy them less or switch to their substitutes which decrease
the sales and number of customers. The supermarket focus on the quality and value of the food
which makes user to buy them even at premium prices (Business Environment and Skills Group.
2010).
For attracting more customers, they offer bonus cards to them and winner has rights to buy
products for free. If a user buys the products of worth $25 then firm offer them free home delivery
service on the same or next day. These unique strategies helps supermarket in focusing on
marketing to the customer feature of market forces. They try to attract customers of diverse fields to
increase the demands of their products and to reach the equilibrium point (Business and the
environment. 2015).
 Labour – The labour conditions also has an impact on working of Iceland Supermarket. For
example, presence of excess labour in market can be beneficial for the firm but the company
will respond by adhering with following fair wage policy. In the same way, deficit of labour
in market may not be beneficial for the company. In this regard, Iceland Supermarket may
respond by paying the labour a good wage.
 Technology – Changes in technology is a market force that Iceland Supermarket is likely to
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face. In this regard, there is a need on part of the supermarket to providing training to
employees for the same (Shokri and Nabhani, 2015).
 Economies of scale – The Company are further required to adhere with the concept of
Economies of scale where it has to get the maximum output in the minimum possible cost.
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P 3.3 Business and cultural environments shape the behaviour of Iceland Supermarket
The business and cultural environment shape the behaviour of Iceland Supermarket in many
ways. Before the concept of organised retailing, the firm was using only one store but for the
convince of customers and increasing the business growth opportunities, Iceland adopts the concept
of organised retailing. It starts providing all the food items under one roof which prevents the
wastage of time of users and provide them various kinds of food times. This change in the
behaviour takes supermarket to the new heights and makes it leading private supermarket of UK.
The firm also adopts the policy of sustainability. It uses eco-friendly and natural food items to
maintain the quality of food and health of users. It recycles the items for clean and safe environment
(Dudovskiy, 2013).
As people are health and environment concious now a days and due to this they prefer clean
and hygienic places with healthy food. It provide food of various ranges which includes Chinese
range of food, slimming world range and many more. The Iceland supermarkets are available in
various countries. Each country has its own cultural and business environment and to grow business
their supermarket follows all the rules, laws, policies and procedures of that country. It provides the
range of food as per the demand and taste of the nation's people (Bright green business. 2015). Firm
displays the products in simple and hygienic form which attracts the people to buy them.
Supermarkets run according to the timing of each country and follow there culture. It also hire
female candidates for various posts and provides them equal rights and responsibilities as of male
candidates. For example, in United Arab Emirates (UAE), female candidates are not allowed to
wear western clothes in such condition supermarket follows the culture and does not prefer western
clothes there. It expands the business to only those countries where the UK government allow them
otherwise not. For dealing with people, company hires those candidates who knows the language of
that particular country. It increases the employment opportunities in that nation and also develops it
in many ways.
In many African countries, refrigerated transport is not available which restricts Iceland
Supermarket to grow their business in such countries. People of some countries are not educated to
run supermarket in such nations is a big challenge. In such condition, firm provides training and
development programmes for educating people. So for all enhancing the business of Supermarket it
is important to consider both business and cultural environment of that country. By properly and
effectively managing and maintaining them, firm can achieve a good global market position (Guay,
2014).
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TASK 4
P 4.1 Significance of International trade to Iceland Supermarket
International Trade is one of the essential part of any business as it provides the opportunity
to grow globally. It plays crucial role in global market and economic integration of the companies
and countries. Iceland is a chain of supermarket in UK whose specialization is frozen food which
includes prepared meal and vegetables. There were 760 stores of it in the year of 2004 throughout
the UK which are now increased to a huge number. The fishes and fishery products are export to the
firm from other countries for example Iceland.
UK imports the food items from hot countries as it is cold country such as mangoes.
International trade policies such as agricultural polices, nutritional policies, environmental
protection policies and many more has role in food security at global level (Craig and Campbell,
2012). The trade increases the food availability in the world by supplying the food from various
sources. By the help of these international policies, food products are easily available to the Iceland
Supermarket which helps in growing the food range. This availability of foods from the various
countries and export and import of food items increases the food diversities for Supermarket.
Supermarket follows the policy of sustainable environment by keeping the clean and safe
environment around it. It recycle the products and use them in eco-friendly manner (World food
security and international trade. 2016). It keeps the stores hygienic for preventing customers from
any kind of disease or problem. The fresh and natural products also helps in maintaining the clean
and safe environment. It adopts the concept of organised retailing for providing all the food items at
same place which increases the growth opportunities of the firm and prevents wastage of time of
users (Business and the environment. 2015). This international concept helps in growing and
competing with competitors.
The global tariff on the agricultural products are four time more than the global tariff of
industrial food products. This policy of World Trade Organisation (WTO) leads to increase the
prices of the food items. Increase in price of food items leads to decrease the umber of customers.
But to maintain the quality of food and to keep the users healthy it uses agricultural food products
which shows that how much firm is loyal and devoted towards the health and safety of the users. By
following the policies and procedures of the international trade, Iceland Supermarket is able to
provide the diversified food products to the customers in various countries (Reddy, 2016).
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4.2 Analyse the impact of global factors on Iceland Supermarket (230 words)
The impact of the global factors on Iceland Supermarket are explained with the help of
PESTLE analysis which is as follows.
 Political Factors: Iceland Supermarket is running in various countries of world and in such
condition global political factors affects their working. This factor includes the tax rates, acts
of legislations and stability of the nation in which firm is running. Due to the financial
instability, government of many countries inspire supermarket to create more jobs for local
people for increasing employment opportunities (Wetherly and Otter, 2014). In such
condition, Iceland Supermarket creates the jobs for them or hire the local persons on the
available positions which leads to increase in the sales of products.
 Economic Factors: Economic factors impact the retailers pricing policy. The cost of the
goods are affected if there is rise in exchange rates or inflation rates of any country. This
will further increase the products price which may or may not be desirable or acceptable by
the customers. Economic fluctuation that occur in different economies are also a issue that
generates problems for the company. As it is not easy to be able to abide by all economic
conditions of all international markets.
 Social Factors- Social and cultural significance play an important role for any business or
organization. The supermarket has to consider the taste, preference and cultural environment
of the country (Upton, 2010). This is important as it will the companies ability to provide
different products. Each country is different from each other and may require different types
of product based on their taste.
 Technological Factors- Technology in some countries is easily available whereas in some
countries it is an add on as it has to be imported from others. It affects the productional and
operational unit of Iceland supermarket as the company will have to employ its resources in
acquiring technological assistance.
 Legal Factors- These are laws and directives formulated by the legal framework of the
countries which guides the supermarket to work in a certain way (Wetherly and Otter, 2014).
For example the company have to abide by the competition law framed by the international
countries the company is operating to stay away from any loss due to fine or may also be
term as illegal to work.
4.3 Evaluate the impact of policies of the European Union on Iceland Supermarket. (380 words)
European union consist of 28 states that are basically part of Europe. The european union
frames different policies and frameworks to restrict businesses to conduct any illegal activity and to
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safeguard the interest of the society. European Union policies for agriculture: EU have formulated agricultural policy to
safeguard the interest of the farmers. These policy targets and ensures the farmers and
agriculture industry is given equal monetary assistance. EU also states that business have to
help farmers to grow sufficient products which will also be a factor to reduce economic
inflation in the economies (Higón, 2012). The Iceland supermarket also has to invest in
modernising and providing technological advance to the agricultural industry. European Union competition policy: EU monitors the business activity of the different
business and organization in the countries. The companies have to abide by these regulations
and have to take into consideration these policies in order to regulate heavy or rigid
competition among the competitors (Shokri and Nabhani, 2015). The supermarket chain is
affected if EU regulates the prices of the products an services in the market. European Union Climate Change Programme: EU have developed a climate change
programme in order to follow the Kyoto protocol formulated by United Nations. As per this
programme business have to lower their activities affect on the environment. In order to
reduce the harmful affect of the business activities conducted by the organisation, the
Iceland supermarket have to use renewable source of energy which increase the cost of
goods which in return affects the revenue ability of the company.
 European Union manifesto for labour: The EU have formulates manifesto which are
guideline about rights of the labour working in the supermarket chain (Hamilton and
Webster, 2015). The formulation consists of wages that must be given to the labours
working for the company. This affects the business as the supermarket chain have to pay
minimum wages and thus cannot negotiate with workers and labours.
CONCLUSION
From the above study, it is concluded that business environment plays crucial role in the
growth and success of any organisation. All factors are need to be consider at the time of decision
making or strategy formation. Iceland Supermarket is one of the leading private food market of UK
which is also working at global level with a purpose to provide fresh and healthy froze food to the
customers. With its growth, firm is also giving full emphasis to its stakeholders by fulfilling their
objectives. It is obeying all the government policies, procedures and regulations and working in
legal manner. The market structure of food industry is oligopoly and to maintain in the market firm
is using creative and innovative ways to attract more customers towards it.
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