Business Environment Analysis of Primark: A Detailed Report

This report provides a comprehensive analysis of Primark's business environment, examining its organizational purpose as a subsidiary of Associated British Foods, its stakeholder relationships, and the strategies employed to meet their objectives. It explores the company's responsibilities, including compliance with regulations and stakeholder engagement. The report delves into the natures of national environment in which businesses operate by analyzing economic systems in Cuba, the United Kingdom, and China. It assesses the impact of fiscal and monetary policies on farming and housing, and examines competition policies and regulatory mechanisms in the UK, evaluating their impact on Primark. The report also investigates market forces, including pricing and output decisions in different market structures, and the influence of business and cultural environments on Primark's behavior. Furthermore, it discusses the significance of international trade, global factors, and EU policies on UK business organizations, offering a detailed overview of Primark's operations and its interactions with various internal and external factors.

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BUSINESS ENVIRONMENT

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Table of Contents:
Introduction:...............................................................................................................................2
Task 1.........................................................................................................................................2
LO1 Understanding the organisational purpose of businesses..................................................2
1.1 Identifying what kind of organisation is Primark and discussing its purpose:....................2
1.2 Describing the extent to which Primark meets the objectives of its different stakeholders:2
1.3 Explaining the responsibilities of Primark as an organisation and the strategies employed
to meet them:..............................................................................................................................2
LO2 Understanding the natures of national environment in which businesses operate............2
2.1 Explaining the types of economic systems operated in Cuba, United Kingdom and China
to allocate resources effectively with proper reasons:...............................................................2
2.2 Assessing the impact of fiscal and monetary policy on farming and housing:....................2
2.3 Identifying competition policies and regulatory mechanisms in the UK and evaluating
their impact on the activity of Primark:.....................................................................................2
LO3 Understanding the behaviour of organisations in their market environment.....................2
3.1 Explaining how pricing and output decisions of businesses are determined in perfect
competition, monopoly, oligopoly and duopoly market structure:............................................2
3.2 Illustrating the ways in which market forces like demand and supply share organisational
responses using a range of examples:........................................................................................2
3.3 Judging how the business and cultural environments shape the behaviour of Primark:......2
LO4 Be able to assess the significance of global factors that shape national business activities
....................................................................................................................................................2
4.1 Discussing the significance of international trade to UK business organisations:...............2
4.2 Analysing the impact of global factors on UK business organisations:...............................2
4.3 Evaluating the impact of policies of EU on UK business organisations:............................2
Reference list:...........................................................................Error! Bookmark not defined.
Appendices.................................................................................................................................2

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Introduction:
There are many internal as well as external factors like clients and suppliers,
competition, technological factors, political factors, economic factors and social factors that
have a large impact on the businesses. It has been found that Customer’s demands are
changing rapidly and several legislations have been developed by the government that must
be followed by all the business so they must try to adopt new strategies to overcome such
issues to run their business effectively.
Market trend and governmental activity play significant role to change the business
activity. This study has focused on explaining the purpose of Primark as a cooperative
business and it also describes the purpose of private sectors, non-profit organisation. On the
other hand, it places an emphasis on evaluating the competition policies and regulatory
mechanisms and the impact of monetary and fiscal policies on farming and housing. Apart
from that, the study also shows that the significance of international trade on UK
organisations.
Figure 1: Logo of Primark
(Source: Primark.com, 2016)

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Task 1
LO1 Understanding the organisational purpose of businesses
1.1 Identifying what kind of organisation is Primark and discussing its purpose:
It has been seen that Primark is a subsidiary company of the Associated British Foods
and it runs their business with the help of their suppliers. It that case, goods are not
manufactured by Primark but the suppliers from Europe and Asia help Primark to
manufacture goods (Primark.com, 2016).
Primark values for money so they deliver their goods at low cost by understanding the
needs of the customers. When Primark works with the suppliers from different countries then
several people from those countries get job opportunities. In such way, Primark creates job
opportunities in different countries to develop the economic state of those countries. Primark
is a private limited company.
Being a private company, Primark follows the basic principles that are followed by
the private companies. The private company make all the decision by considering the size of
their capital. The main aim of the private companies is to increases their profits by reducing
all the other financial barriers.
Dividends as well as investments are also involved in the principles that are taken into
consideration by the private companies. The major objectives of the private company are to
maximise the level of profits, structuring proper organisational structure to earn huge profits,
to maintain transparency in the case of financial reporting etc.
Discussing the purpose of public sector, cooperative and non-profit organisation:
NHS is a public-sector organisation and controlled by the state, national, provincial
and local government. The purpose of the public-sector organisation is to provide necessary
services to the public, not focusing much on earning profits. Public sector has a large impact
on economic state of a country and various governmental services are provided by the public

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sectors. Kearney and Mareschal (2014, p.154) stated that public sectors focus on providing
benefits to the society.
On the other hand, NHS allows the public to access health care free of charge and
NHS also assesses the medical requirement of the communities living in a specific area. NHS
does not allow the care homes to entertain any kind of discrimination within the organisation.
All the people from different caste, race, gender, age group, religion and region must be able
to access medical treatment so it can be said that NHS also plays an important role to ensure
the betterment of the society.
British Red Cross is a non-profit organisation, and their purpose is to serve the people,
they do not focus on earning profits. The Non- Profit organisations mainly functions by the
donations that are provided by the government, individuals or other business organisation.
The donations that are provided to the non- profit organisation are kept separated from the
hold of taxation, to encourage the business organisations, as well as, individuals to provide
service to the public via non- profitable organisation.
Government provides financial support to the non-profit organisations to proceed with
their job. British Red Cross helps the people, who are suffering from crisis and they do not
entertain any kind of discrimination. Therefore, they try to empower the communities to
mobilise their power to resolve the crisis faced by them. It also provides help and support to
the people, who have badly injured due to road accident or fire.
Cooperative Press can be considered as the cooperative enterprise and the aim of the
enterprise is to help communities to publish the cooperative news. Nembhard (2014, p.174)
stated that cooperatives can be considered as the autonomous organisation that work for the
fulfilment of several needs like economic needs, cultural as well as the social needs. Non-
profit community may work with the cooperatives and cooperatives run their business by
taking help from others. They must not run their business to make profit only but they try to
provide beneficial opportunities to the society.
1.2 Describing the extent to which Primark meets the objectives of its different
stakeholders:
Stakeholders are the most important part of any business organisation. The growth of
the organisation is completely depended on the growth, as well as, the satisfaction of the

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stakeholders of that company. Stakeholders are the customers of the company, the employees
working in the organisation, the suppliers, and the directors of the organisation etc. all the
individuals, as well as, other business organisation those who are linked with the company
are considered as the stakeholders of the company.
The stakeholders’ objective is to earn benefit with the growth and development of the
organisation. We can say both stakeholders and the organisation walk hand in hand in the
profit earning market. Both are directly proportional to each other; stakeholder’s satisfaction
increases the organisations’ profit and stakeholders’ dissatisfaction reduces the organisations’
growth and development.
There are several internal and external stakeholders are involved in the business
activities of Primark. The internal stakeholders of Primark are the managers, employees,
owners, trade union and the external stakeholders are the government, non-governmental
organisation and communities. Carvalho and Jonker (2015, p.79) stated that the needs and
interests of different stakeholders must be different and all the needs of all stakeholders must
be fulfilled to make them satisfied.
Internal as well as the external stakeholders play an important role in operating a
business smoothly. In that case, Primark tries to understand individual’s needs and based on it
Primark makes final decision to satisfy all the stakeholders because the stakeholders are
committed to the organisational success.
It has been found that the suppliers want to make profit to enhance the production of
the fashion clothes. On the other hand, the customers prefer purchasing high quality products
at low cost. In that case, Primark tries to understand the changing demand of the customers
and their purchasing capacity and based on it they deliver the products to them.
Primark encourages the suppliers to manufacture more products maintaining high
quality to make more profit. Apart from that, the shareholders want to increase share in the
market and to do so Primark tries to increase sales revenue based on the demand of the
customers. Sendyona et al. (2016, p.180) commented that, all the organisations must need
governmental support while operating their business internationally or domestically.
In that case, Primark is abided by several legislations developed by the government.
To get governmental support Primark tries to maintain a good relation with the government
by paying a specific amount of tax based on their sales revenue and profit. On the other hand,

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trade union leaders often claim more leave, calendar holiday, increment, insurance and
reward based on their performance from Primark and then Primark listens to them properly
and decide in favour of them to make them feel satisfied by avoiding any kind of internal
conflict that can hamper the business activity of Primark.
1.3 Explaining the responsibilities of Primark as an organisation and the strategies
employed to meet them:
Per Mitchell et al. (2015, p.870), all the organisations must perform their duties to
make all their stakeholders motivated and satisfied. Being a private limited company, Primark
have some responsibilities, such as the organisation must focus on the demands, as well as,
the suggestions of the stakeholders, letting the stakeholders know all the necessary
information about the organisation, the organisation must also include the suggestions of the
stakeholders in the decision- making process of the organisation.
Therefore, Primark tries to make all the stakeholders involved in the decision-making
process. Primark obtains feedback from the customers to know about their satisfaction level
after purchasing and using their products. Primark also conducts survey to know about the
changing demand of the customers from different region. On the other hand, Primark believes
that stakeholders act like a heart within an organisation and without having their support and
contribution to business they cannot reach their business goal.
In such condition, they try to give equal importance and attention to all the
stakeholders. Rahimova et al. (2016, p.250) commented that the views and opinion of
different stakeholders must be different. In that case, Primark tries to obtain the views of
individuals on various issues and conducts conferences and seminars to make a beneficial
decision for business.
Primark encourages all the shareholders, employees and trade union to share their
skills and knowledge with others to enhance the performance of all. Apart from that, they
provide training programmes to the internal stakeholders to improve the knowledge and skills
of all to improve the business activity.
It has been found that when the stakeholders have been trained and capable of making
prompt decision then it can be resulted on the performance of the organisation. Primark tries
to comply with various legislations like Data Protection Act, Equality Pay Act 1970,

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Disability Discrimination Act 1995 and Equality Act and they do not entertain any kind of
discrimination within the organisation (Legislation.gov.u, 2016).
Moreover, the private limited company has many other responsibilities; one is to
provide the employees with proper training that they can work productively for the
organisation. Along with it, the organisation must also analyse the environmental condition
surrounding the organisation, and work towards the improvement of the environmental
condition, as healthy environment encourages the employees positively to work productively
for the company.
Primark tries to understand the needs of the employees and based on their demand
they adopt some strategies to satisfy their needs. Primark provides promotion, reward,
incentive, bonus and transfer in accordance with the performance of individuals to make the
employees mentally satisfied. It also provides harmonious working environment to the
employees and organises customer reward programme to hold their loyal customers.
The organisations’ strategy lies in including all the stakeholders in the decision-
making process of the organisation along with the improvement of the environmental factors,
and encouragement, as well as, better training of the employees etc. All these strategies help
the organisation to reach the pinnacle of success.
LO2 Understanding the natures of national environment in which businesses operate
2.1 Explaining the types of economic systems operated in Cuba, United Kingdom and
China to allocate resources effectively with proper reasons:
Economic system refers to the system of proper distribution of all the productions
that are produced in a country. The major objective of the economic system is to serve all the
people in the country or society, equally. The economic system can further be divided into
other systems; they are mixed economy system, free economy system etc.
The economic system that is used by China is mixed economic system. There are
many merits, as well as, demerits of these economic systems. The merits of the mixed
economic system involve the encouragement that it provides to the private sector
organisation, the efficient use of resources by organisation is also encouraged by functioning
of the mixed economy system.

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Along with the merits, there are other demerits of the mixed economy system. Such
systems are un- stable in nature, the planning that are done in this system are inefficient
planning etc. Another economic system is command economic system. Cuba uses Command
economic system. Command economic system is beneficial in this modern world because this
is a system where the goods or the products that are to be distributed among the people, are
determined by the government of that country.
There are many advantages, as well as disadvantages of Command system. The
disadvantages of command economy are that the government, which determines the
production of the country, always remain disconnected from the group of the customers, thus
unaware of their necessary demands. Command economy faces many surpluses, as well as,
shortages related problems etc. There are even many advantages in Command Economy, they
are the resources are received or mobilized very quickly; it is also beneficial for execution of
massive or huge projects etc.
Protectionist economy has been found it China and it has been seen that China
government encourages the foreign organisations to come and open a manufacture industry in
the country to resolve unemployment issues. In that case, the businesses can manufacture
goods in China with the help of labour market that is controlled by the government but they
are not allowed to sell their products within the country. Businesses easily can hire the
employees from the labour market in China at cheap cost due to high population to
manufacture more products (Bian et al. 2016, p.990). The China government provide support
to the foreign organisations in manufacturing products and the exchange rate is not stable
here. Therefore, many organisations face difficulties while expanding their businesses in
China.
Morris (2016, p.125) stated that Cuba is a developing country and its economic
condition is not stable at all so there are several people, who suffer from unemployment
issues. In that case, organisations, which want to establish their business in Cuba, can be
benefited from the labour market. In that case, they can use the jobless people at low cost.
Cuba government provides flexibilities to all the organisations to make more profit and the
businesses are not bound to pay high tax. Legislations developed by the Cuba government do
not hamper business activity of the organisations.

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Free trade economy can be seen in UK and UK government allows the businesses to
run their business effectively using their strength. UK government does not claim high tax on
revenue so the organisations can make more profit easily. On the other hand, there are many
organisations, which are competing so UK government developed legislation like
Competition Act 1998, to control competition among various organisations
(Legislation.gov.uk, 2016). In that case, the organisations cannot change any cost for the
products and they are bound to fix a price for all the products, which are similar available in
the market.
2.2 Assessing the impact of fiscal and monetary policy on farming and housing:
Fiscal Policy is meant to reduce the rates of unemployment, to stabilize the cycle of
business, as well as, to control inflation. This is done by adjusting the rates of tax as regulated
by the government. Fiscal policy embraces two different kinds of fiscal policy instrument like
revenue policy and expenditure policy that are available to the federal government.
Burns et al. (2016, p.370) mentioned that these two fiscal instruments depend on each
other. When personal income tax rates, indirect business tax rates, corporate profit tax rates
increase or decreases then it directly or indirectly hampers the economic condition of a
country so it can be said that all the people living in the country also have been hampered by
this situation. In such condition, their purchasing capacity can be enhanced or poor. When
expenditure of a country increases and disposable income starts decreasing then the economic
condition of the country becomes poor.
Monetary Policy refers to the action that is done to modify the supply of money that
will take place in an economy. The monetary policy is maintained by various actions such as
purchasing, as well as, selling the bonds of government, either increasing or decreasing
interest rates etc. Changes in monetary policy of a country can impact on mortgage
borrowing and household spending.
Abubakar (2016, p.152) commented that there is a link between house price and
monetary policy. In that case, it has been found that the price of the house increases based on
the monetary policy developed by the government. The monetary and fiscal policy must be
developed in favour of all the businesses to improve the economic state of a country. When

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fiscal policies have been developed effectively to increase purchasing capacity then they can
afford well built houses at any cost and any time. When the purchasing capacity of the people
becomes low then they cannot afford high price building and therefore no business
opportunities exist in the country.
When the promoters are bounded to pay more tax then they cannot provide huge
discount on every purchase. Apart from that changes have been seen in contractual interest
rates and lifestyle of the people. In such condition, availability of housing start decreasing so
automatically the price of the housings starts increasing.
Bell and Eiser (2015, p.214) added on that cash flow problem may arise capital that
has been invested in constructing the housing cannot get back until the complex is not sold.
Farming industries also can be affected by the Fiscal and Monetary policy.
If the farmers must pay more tax, then they cannot afford materials for harvesting
crops as per the demand of the customers. In that case, the price of the crops starts increasing
and the people do not have much ability to afford high quality crop at high price cannot
purchase these. In such situation, all the people may suffer from hunger and in this time
people can go to bed being starved.
2.3 Identifying competition policies and regulatory mechanisms in the UK and
evaluating their impact on the activity of Primark:
The competition policies that are followed in UK are Merger Policy, Collusive
Behaviour and the misuse of the market power. It has been found that retailers in the UK face
difficulties while running their business in the competitive market because there are several
potential entrepreneurs operate their business by adopting the same strategies, business
policies and the capital.
The major competitors of Primark are Marks and Spenser Group, Tesco Plc and Asda
Group Ltd so it can be said that Primark must try to survive in the market competing with the
rivals by enhancing the strength to use unique ideas, comfortable materials and convincing
pricing strategies. In such condition, Primark chooses fashion conscious market to enhance
their sales volume.
As per the Competition Act 1998, all the businesses must try to fix price of a product
and when necessary they can raise the price of the product together to handle the competition

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among several businesses. Jordà and Taylor (2016, p.255) stated that this legislation shows
that all the businesses must try to choose same mode of payment and the must deliver a
product within a time.
The legislation also allows the market to be split because this way would be helpful in
minimising the competition among the businesses belongs to the same sector. This legislation
was developed to punish the regulators, who are responsible for the market dominance. As
per the Enterprise Act 2002, all the businesses must operate their business being
independent without being influenced by the politicians.
The directors of an organisation can be sued or disqualified under this legislation if
they breach the rules of competition. On the other hand, the legislation allows the customers
to place their complaints against the unfair or uncompetitive practices done by the
organisation. Jude et al. (2017, p.870) commented that in the UK, the Department of
Business, innovation and Skills, competition commission and The Office of Fair Trading
undertake the Regulation of Firms and promotion of competition.
The Department of Business, innovation and Skills promotes fair markets to improve
skills and productivity. The department tries to make proper condition that must be suitable
for the business success and it also focuses on the betterment of economic performance of all
the regions in UK.
Apart from that, the office of Fair Trading (OFT’s) allows the business to put the
right trading practices based on the interest of the customers. Thereafter, anti-competitive
practices and abuse of market power can be investigated by OFT’s. In the context of Primark,
it can be said that they cannot set price as they wish but they set price of the products based
on the market price.
Apart from that, Primark complies with the legislations while operating their business
in the UK. However, they can set prices of the products based on the purchasing capacity of
the customers while operating their business internationally. On the other hand, Primark must
not entertain any kind of unfair practices in business.
Besides that, to provide the continuity of the business the management of the
organisation must boost the confidence of its employees which are considered as the building
blocks of success in the competition market. The management must be very concern
regarding cutting cost of the entire production which indicates as the effective competitive