Business Environment Analysis Report: Iceland Supermarket - Module X

This report provides a comprehensive analysis of the business environment surrounding Iceland Supermarket. It begins by identifying the purpose of different organizations, including Iceland Supermarket, KFC, Transport for London, and Cancer Research, and then delves into how organizations meet the objectives of various stakeholders such as shareholders, employees, customers, and suppliers. The report further explores the responsibilities of companies, including legal, ethical, and stakeholder-related duties, and details the strategies employed by Iceland Supermarket to fulfill these obligations. The analysis extends to the impact of economic systems on resource allocation, with a specific focus on how fiscal and monetary policies, as well as competition and regulatory mechanisms, affect Iceland Supermarket. The report also examines market structures, pricing and output decisions, and how Iceland Supermarket shapes its responses through market forces and the broader business and cultural environment. Furthermore, it investigates the significance of international trade, the impact of global factors, and the effects of European Union policies on Iceland Supermarket, providing a holistic view of the company's operational context.

Business Environment

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Identifying the purpose of different organizations.................................................................3
1.2 Describing the extent to which organization meet objectives of different stakeholders.......4
1.3 Explaining various responsibilities of company and strategies employed to meet the same 5
TASK 2 ...........................................................................................................................................6
2.1 How economic systems attempt to allocate resources effectively ........................................6
2.2 Impact of fiscal and monetary policy on Iceland supermarket .............................................6
2.3 Impact of competition policy and other regulatory mechanism ..........................................7
TASK 3............................................................................................................................................8
3.1 Determining pricing and output decision of business through market structures.................8
3.2 Ways to shape Iceland responses through market forces.......................................................9
3.3 Shaping behavior of Iceland Supermarket through business and cultural environment........9
TASK 4..........................................................................................................................................10
4.1 Significance of international trade to Iceland supermarket.................................................10
4.2 Impact of global factors on Iceland supermarket ................................................................11
4.3 Evaluating impact of policies of European Union on Iceland Supermarket.......................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
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INTRODUCTION
Business environment is surrounded by the number of factors which constitute internal
and external environment. Some of these factors are controllable and some of them are not. It
generates need to assess environment effectively in order to ensure smooth flow of production in
the marketplace. The present report is based on Iceland Supermarket which is a subsidiary
organization of Associated British Foods. It provides frozen food items and non-frozen grocery
as well. Further, this report covers the purpose of different listed organization and
responsibilities of organization are explained along with strategies in order to meet the same. In
addition to this, significance of international trade to corporation has been discussed. Apart from
this, impact of global factors in cited organization has also analyzed in the report.
TASK 1
1.1 Identifying the purpose of different organizations
Purpose of all the organizations are different from each other. It is because, every
corporation has specific aim to operate business. At this juncture, all policies and strategies are
made accordingly. It has been explained as follows- Iceland supermarket-This supermarket chain is working in retail industry of UK and
providing frozen and non-frozen food items (Ahmed, 2012). This corporation has
approximate 1.8% share of UK food market which aids to provide employment
opportunities to citizens as well as good food services to buyers. This organization is
privately owned and arranged funds at its own. Furthermore, cited organization carries
out business at its own risk but it needs to follow the regulatory framework imposed by
UK government. The main purpose of Iceland supermarket is to become one of the most
responsible retailer in the country. Therefore, the company make sure that best and
quality products are offered to customers. KFC (Kentucky Fried Chicken)-It is one of the types of food chain which is specialized
in fried chicken. This corporation operates in restaurant industry and based in UK. Main
purpose of this corporation is to expand business by providing services across large
number of countries (KFC, 2016). Presently, it is operating in 118 countries and it also
has own subsidiary of Yum! Brand.
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 Transport of London-This is statutory corporation which has main purpose of transport
authority. Main role plays by this local government body is to implement policies and
transport strategy in order to manage transportation services across London. It does not
have sole motive to increase profitability but to ensure proper development of London
city (Transport for London, 2016).
 Cancer Research-It is a type of non profit organization whose main purpose is to
recognize causes and accordingly develop effective treatment strategies for the
prevention of cancer. It mainly evaluates various cancer treatment so as to meet
organizational objectives in an effectual manner. It has different distributed computing
such as Help Conqur, World Community Grid and Folding@home (Cancer Research,
2016).
1.2 Describing the extent to which organization meet objectives of different stakeholders
There are different stakeholders which are engaged with corporation. It includes both the
direct and indirect parties which facilitate to ensure the smooth flow of business in an effectual
manner. The first and foremost stakeholder is shareholders who are directly engaged with
Iceland Supermarket (Lusardi and Mitchelli, 2007). Main motivate of shareholders is to get
detail information related to liquidity, profitability and growth potential of corporation. At this
juncture, management publishes annual report and includes shareholders in board meeting so as
to have clear communication with them. In order to meet the expectations of shareholders,
management focuses on the expansion and growth. Further, employees are also directly related
to company because they work for growth and success of the same. Owing to this, their main aim
is to have secured job with good pay scale. These needs are met by company through providing
good opportunity to workforce (Camacho, 2012). Third stakeholder of company is customers for
whom company exists. Here, customer’s preferences are taken into account by Iceland
Supermarket so as to meet their expectations in a right manner. For example: promotional
strategy such as “buy one get one free” is offered to buyers in order to increase their interest
towards the products and services provided by Iceland Supermarket. On the other hand, suppliers
are also the important parties who are indirectly connected with firm but play major role in
maintaining the flow of production. Here, it is important for corporation to meet the requirement
of suppliers by rendering the payment of raw material on right time. It shows that Iceland
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Supermarket fulfills the requirement of all its stakeholder and makes them satisfied in order to
ensure high profitability and increase sales turnover in the marketplace. Main stakeholders of
Iceland supermarket includes its customers, employees, suppliers, government and investors.
Further it can be stated that these are the people and parties which are affected by activities of
Iceland supermarkets. The objective of customers is to make sure that quality products are
available at convenient prices. The investors want to get high return against the investment made
in Iceland supermarkets. Objective of supplier is to develop long term relation with the
organization. Government wants that the supermarket follows all the laws and regulation which
has been framed by regulatory bodies and government.
1.3 Explaining various responsibilities of company and strategies employed to meet the same
Iceland Supermarket needs to fulfill several responsibilities towards different parties
such as general communities, customers and shareholders. Here, management of organization
needs to perform its job with power and integrity (Galende, 2006). For example: company is
responsible towards the governing bodies and it has to follow the guidelines imposed by
government. Here, structural management must be there which determines that employees are
provided guidelines properly and they are working effectively. On the other hand, all workforce
who are working in Iceland Supermarket must be treated with respect. This aspect makes it
possible to retain personnel for the longer time span and deliver good quality of services to
consumers. Similarly, interest and wellbeing of general community must be considered. In this
regard, corporate social responsibilities should be fulfilled effectively. Similarly, employment is
generated in UK, Europe and other areas where Iceland Supermarket is working. It aids to meet
the expectations of general community (Bernard and Jensen, 2004). Not only this, but it is the
prime responsibility of company to assess internal and external environment. The external
environment can be related to the compliance of regulatory framework (Cheng and et .al., 2007).
Accordingly, basic salary should be provided to workforce and they must be provided safe
working environment. In addition to this, company should fulfill its responsibilities towards the
end users. Here, care is taken while placing advertisement related to products and services.
Furthermore, for fulfilling all its responsibilities, Iceland Supermarket is performed
several motivation techniques for employees and effective marketing strategies for the attraction
of buyers. Marketing strategies include discounting, special offers through which buyers are
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provided more in less prices. Therefore, Iceland Supermarket ensures compliance of regulatory
framework and well being of local environment in an appropriate way (Freeman,2010). The
three main responsibilities of Iceland supermarket are mentioned below as:
 Responsibilities towards stakeholder- Iceland supermarket is required to make sure that it
do not forget any of its stakeholder. The chain of supermarket is responsible for
understanding all the objectives of all its various stakeholders. In addition to this, it is the
core responsibility of organization to satisfy all the objectives of all its stakeholders.
Along with this, it is the responsibilities of Iceland supermarket to involve all its
stakeholder in decision making process.
 Legal responsibilities- Iceland supermarket also responsibilities towards customer
legislation, employee legislation and healthy & safety legislation. This means that the
supermarket needs to follow legal laws and regulations which has been followed by
government of the country. Other than this, it is the responsibility of Iceland supermarket
to provide safe and hygienic working environment to all its employees.
 Ethical responsibilities- Iceland supermarket also needs to accomplish all its ethical
responsibilities. It is the responsibility of the supermarket to the make sure that it do not
involve in any kind of unfair trade practices. Along with this, the chain of supermarket
also needs to protect the environment under which it operates.
In order to meet all these objectives, various steps are taken by Iceland supermarket. The
organization always makes sure that it involves all its major stakeholders in the decision making
process. On the other hand, it provides employees with a very safe and hygienic working
environment. In order to take care of its ethical responsibilities, Iceland supermarket always aims
at accomplishment of its corporate social responsibilities. Further monitoring at regular intervals
is done to ensure whether the supermarket is addressing all laws and legislation or not.
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TASK 2
2.1 How economic systems attempt to allocate resources effectively
Economic system refers to the system of distribution of different type of resources and is
associated with the manufacturing process which is being carried out. It is of different type
which takes into consideration command, mixed and free market on the basis of which any
specific economy operates (Ghosh, 2004). Main components of economic system are land,
labor, capital, entrepreneur etc. In mixed economy both private and public individuals have right
to participate in major affairs of the economy and each and every decision is taken for the
welfare of the economy. Further, in command economy main role is played by government
where decisions are taken for the welfare of society and resources are allocated on the basis of
same. Apart from this, in free market economy main role is played by private players where main
stress is on profit maximization and large numbers of efforts are applied so as to accomplish this
objective. Therefore, in this way different economic systems allocate resources in different
manner as per their actual need (Jennings, 2010). The problem associated with economy is
related to determining three main factors which are what to produce, how to produce and for
whom to produce. In command economy, government is the one which decides what to produce.
Further the problem of how to produce is determined by workers and it is the government of the
country which determines for whom to produce. On the other side, in mixed economies, what to
produce is defined on the basis of customers and government, how to produce is also decided by
government and purchasing power of people become the basis on which whom to produce is
determined. In economies such as as free enterprise , business makes decision regarding what to
produce. Customer purchasing power becomes the basis on which for whom to produce is
determined. The last factors how to produce is decided by customer preferences.
Iceland supermarket carries out overall operations in the market of UK where mixed
economic system is present and decisions are taken by both private and public players.
Resources are allocated by considering the overall demand in the market. Further, all the
resources are allocated by company keeping in view the market conditions and this in turn has
favorable impact on the business. Apart from this, main motive of business is profit
maximization which is accomplished by supplying all the range of commodities to customers
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timely and this has supported to enhance overall performance of firm in the market where
operations are being carried out (Johnston, Bringall and Fitzgerald, 2002).
2.2 Impact of fiscal and monetary policy on Iceland supermarket
Fiscal policy is an important tool of government by which government makes
adjustments in its spending and tax rates of a particular country. On the other hand, monetary
policy is a tool through which the money supply is controlled in a particular economy.
Monetary along with fiscal policy introduced by government has direct impact on business
operations. Fiscal policy developed is linked with expenditure level of government for the
development of the society and this type of spending is regarded as must which generally takes
place in the form of infrastructure development of railway etc. Further, it involves the tax rates
on the basis of which government spending is altered regularly and in case if tax rates are
enhanced then expenditure level of company increases (Kárpáti, 2001). Apart from this,
monetary policy is linked with interest rate in the economy where fluctuation in the interest rate
affects expenditure level of the business enterprise.
In case when fiscal policy of the government is changed then tax rates are increased or
decreased due to which firm has to pay taxes accordingly. Company like Iceland supermarket
carries out operations on wide basis due to which business enterprise has to pay higher taxes to
the regulatory authorities and this is one of the major expenses for business. Apart from this,
when monetary policy is changed then firm has to pay high amount for the amount obtained from
bank as loan (Manas and Graham, 2003). Therefore, in this way both fiscal along with monetary
policy has direct impact on the business operations and it leads to rise or decline in overall
expenditure level of the organization. Firm has to modify all its range of activities when fiscal or
monetary policy of the business is altered as business performance directly depends on it.
Government has power to change its policies anytime and due to this reason firm has to employ
effective strategies so as to deal with the issue of change in policies.
2.3 Impact of competition policy and other regulatory mechanism
Iceland supermarket carries out operations in the market where competition level is quite
high and this may have adverse impact on the business performance. Further, large numbers of
laws are present which companies operating in retail sector have to follow for operating
efficiently (Cornuel, 2007). Therefore, this also influences organizational performance. Business
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enterprise has to comply with regulations such as tax, payment of duties, quality standards etc. In
case if firm does not complies with the regulatory laws then it may have adverse impact on the
overall performance of business. Organization has to comply with consumer protection law
where each and every operation carried out must be in favor of consumers and they must not be
exploited through adulteration or any other type of unethical activity which may have adverse
impact on organization (Iqbal and Strong, 2010).
On the other hand competition policy has also direct impact on performance of Iceland
supermarket where it is not at all possible for enterprise to adopt any unethical practice so as to
deal with the issue of competition in the market. No, doubt company operates in the market
where competition level is high but for competing with different firms fair practices have to be
undertaken. So, this may also has favorable impact on the business where taking positive actions
for dealing with condition of rise in competition level can be profitable for business (Dickinson,
2013). Apart from this, environmental regulation may also have adverse impact on business
where it is necessarily required for business to take corrective actions for saving environment
from damage. Firm has to comply with the legal laws which are associated with protecting
environment. Therefore, in this way competition policy along with regulatory mechanism has
impact on performance of Iceland supermarket. As per the companies Act, Iceland supermarket
is required to make sure that it is not using any kind of unfair practices at the time of carrying out
its operations. In order to survive in long run, the chain of supermarket is required to follow all
the legislation and laws which has been formed in the companies Act. On the other side of this,
Iceland supermarket is required to provide hygienic and quality products to all its customers.
TASK 3
3.1 Determining pricing and output decision of business through market structures
There are different types of marketing structure under which organization operate their
business. It includes perfect competition, monopoly and monopolistic competition. These market
structure facilitate to take effective pricing and out decision related to Iceland Supermarket.
Iceland Supermarket operates in perfect competition where level of competition is high and
demand of products and services. Here, price of product are kept relatively moderate in order to
meet objectives of number of buyers (Gabriel, 2004). On the other hand, monopoly market is that
wherein management has control over pricing decision. This is because single owner is there and
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demand of products and services is high. Furthermore, monopoly market organization tend to
change decision as per the demand of product and services. It shows that buyers are forced to pay
high price in case they require product which is only available in monopoly market. In addition
to this, monopolistic kind of market structure is that in which competition level remain moderate.
In such manner market structure is the crucial aspect by which management take decision related
to price as well as output (Iqbal and Strong, 2010). It shows that Iceland Supermarket makes
decision related to price and output as per the policies and norms of market. It does not have
right to charge very low price in case other competitors are charging high. This is because
ultimately it will increase loss of company. However, promotional strategies are employed by
management so that consumers can be provided good quality of products in affordable prices. In
addition to this, organization can effective take output decision with regards to new products in
accordance with expectations of consumers. Thus, market structure defines that what will be the
pricing strategies and how customers will be attracted. The market in which Iceland supermarket
operates is oligopoly market where there are few sellers and various buyers. Demand in this
market is determined by the number of customers. Further activity of one organization has an
direct impact on other market players. The supply depends on the level of demand which exist in
the market. Labor in oligopoly market is easily available as because of few players in market.
Labor can be short in those market where there are many firms operating. Businesses such as
Iceland supermarket which operates in oligopoly market has adopted highly advanced
technology. Economies of large scale production is one of the main feature of an oligopoly
market in which Iceland supermarket operates.
3.2 Ways to shape Iceland responses through market forces
There are several market forces which affect performance of Iceland Supermarket and
accordingly management need to take right decision. These forces include factors like
technological, economical and political (Johnston, Bringall and Fitzgerald, 2002). For example,
change in political parties and trade barriers affect organization performance to a great extent. In
this regard, it becomes necessary for Iceland Supermarket to bring improvement in the current
work environment in accordance with changing scenario. It aids to maintain good performance
of company in the marketplace and stay competitive. On the other hand, unfavorable economic
conditions are those under which purchasing power of buyer go down and they face issue in
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making frequent purchase decision. At this juncture, Iceland Supermarket adopt effective
strategies to boosts sales. Similarly, company revise its pricing strategies to sale its perishable
goods in right time. In addition to this, changing in technological scenario bring proper
innovation in the service sector. Here, customers also frequent use fast technology for home
delivery such as internet (Dickinson, 2013). Owing to this, Iceland Supermarket need to make
use of same technology to reach number of buyers. It depicts that an organization must put active
efforts in order to achieve target rate of return and fulfill its long as well as short term objectives.
Apart from this, legal barriers related to trade and tax need to be considered by the firm. Here,
company pay its employees as per the law and also keep working condition appropriate for them.
On the other hand, in case of changing preferences of buyers, management changes its product or
bring some kind of innovation in the same. Therefore, market forces play active role in shaping
organizational response.
3.3 Shaping behavior of Iceland Supermarket through business and cultural environment
Business and cultural environment are very important in shaping behavior of
organization. This is because organization culture is the imperative element which assists
workforce to work with integrity and put active efforts in achieving organizational growth and
success. Here, all employees have their own set of beliefs, values and culture which in turn they
face problem while completing task in organization (Johnston, Bringall and Fitzgerald, 2002).
For example, different language, religion are some of the factors which are considered by
corporation while maintaining good organizational culture. At this juncture, cultural diversity
must be ensured and management need to assure that all workforce are treated with respect and
dignity. Similarly, management make provision that simple common language like English will
be used to ensure smooth flow of information among each department (Ahmed, 2012). This is
what makes an organization supportive for employees and other related stakeholders. Apart from
this, Iceland Supermarket also uses effective channel of communication through which barriers
related to language can be resolve and effective work environment can be maintained.
Furthermore, corporation need to change work environment by taking into account several
aspects such as working hours, safety art workplace, rest room and favorable internal policies
and regulations. It shows that positive response of management facilitates to expand business at
global marketplace with less barriers. After carrying out PESTLE analysis, it can be stated that
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Iceland supermarket is affected by various kind of macro environmental factors. Any kind of
political changes in the country have an direct impact on the activities of organization. For
example increase in tax rates results in lowering down the sales and profitability of Iceland
supermarket as people will be left with less amount of money with them. Along with this,
changes in economic situation can lead to decline in sales. For example situations such as
recession have negative impact on entire operations of Iceland supermarket. The organization is
also required to meet changing taste and preferences of society. Social factors such as cultural
value, beliefs and attitude have an direct impact on the operations of Iceland supermarket. The
technological advancements has resulted in enhancing the overall productivity and efficiency of
the supermarket. Further using up-graded technology has helped the organization to deliver
quality and satisfactory services. The legal changes have impact on the functions and overall cost
of Iceland supermarket. For example in case of any kind of legal changes, the brand is required
to make changes in its existing plans and actions. At last the organization by factors which are
linked with environment. In recent years, supermarkets have been encouraged to lower down the
negative s impact of their operations and strategies on environment. Iceland supermarket has
made changes in its operations and it has resulted in adding the cost.
TASK 4
4.1 Significance of international trade to Iceland supermarket
In the era of globalization importance of international trade is rising at faster pace where
it is one of the main motive of every business to indulge into practices of trade at global level so
that overall performance can be enhanced easily (Ahmed, 2012). Further, it is well known fact
that at international level large numbers of opportunities are present which Iceland supermarket
can grab easily for operating efficiently. At global operation each and every operation carried out
by business operation is high effective and due to this basic reason organizational performance
can be enhanced easily and in turn it allows business to grab large number of opportunities being
present in the market.
At international level Iceland supermarket can easily sustain in the market for longer
period of time and it assist in accomplishing overall aims along with objectives (United Kingdom
- International trade, 2016). On the other hand, it allows business to better understand the
concept of comparative advantage. Further, as per this concept trade taking place between two
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