Business Environment Analysis Report for Primark PLC

This report provides a comprehensive analysis of Primark's business environment, examining various aspects crucial for its operations and success. The report begins with an introduction to the business environment, followed by an identification of different types of organizations and a detailed analysis of Primark and its stakeholders. It further explores Primark's responsibilities and strategies. The report then delves into different economic systems, assessing the impact of fiscal and monetary policies on business organizations. It also examines competition policy and market structures. The analysis extends to the impact of international trade, global factors, and European Union policies on UK business organizations, providing a holistic view of the challenges and opportunities within Primark's operational landscape.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK.1............................................................................................................................................3
1.1 Identify the purposes of different types of organisation ......................................................3
1.2 Primark and its stakeholders ................................................................................................4
1.3 Responsibilities and strategies of Primark:...........................................................................5
TASK 2............................................................................................................................................5
2.1 Different economic systems and why are they followed:.....................................................5
2.2 Assess the impact of fiscal and monetary policy on business organisations and their
activities:.....................................................................................................................................6
2.3 Competition policy................................................................................................................7
TASK.3............................................................................................................................................8
3.1 Pricing and output decisions of the businesses in following market structure:....................8
3.2 Market forces as demand and supply shape organisational response: .................................9
3.3 Business and cultural environment shape the behaviour of the organisation:....................10
Task 4.............................................................................................................................................10
4.1 Significance of international trade to UK business organisation:.......................................10
4.2 Impact of global factor on UK business organisations.......................................................11
4.3 Impact of policies of the European Union on UK business organisations. ........................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment is an environment where there are lots of complications arises in the
business which may be inside the organisation or outside the organisation. Before going to set
any industry or set up in any country, company need read out country's business environment,
and then react it. Company have to operate its business after considering its both factors. Like
external and internal factors. Primark plc is clothing retail chain company and it needs to look
out its environmental factors for making efficient and effective policy. Company also need to
look out its internal factors as well(Chavis, Klapper and Love, 2011 ). However, company does
not manufacture its own products it outsource their manufacturing from emerging countries, so
that Primark can take the competitive advantages over the cost. Primark follow their cost
leadership strategy, and that is why it is one of the most fashion outlet in the UK and Europe.
TASK.1
1.1 Identify the purposes of different types of organisation
Primark operates its business in retail clothing sector. It is the subsidiary of Associated British
Foods group. Company started its operation in 1969 in Ireland. Now company have their
operation in Europe and United Kingdom. Company's main strategy is to outsource their work
form their suppliers where it can get lower cost advantage in the product and that is why
company can get the competitive advantages in cost over the competitors. Primark is very
popular organisation and providing the famous fashionable products at a cheap rate . The cited
organisation sells product at the reasonable rate to attract customers and to beat the competitors
in the market. The purpose of this organisation is to sell the quality products which help the firm
to maximize their sales and profits during the year(Chow and et. al., 2011). Another purpose is to
create loyalty between the customers to retain them for a long period of time. This is the private
organization that makes their own rules and regulations to hit the targets on time.
Public Sector – There are many public companies and one of the competitors of this firm
is primark company which deals in the retail fashion chain. The main purpose of this
organisation is to maximize sales and profits and provide a number of products to general public
and to beat the market of retailer industries.
Charity – It is that organisation which provides education, cloth and shelter to the needy
ones. There are so many organisations in UK and one of them is Save the Children. As it is an

international non -government organisation and they promote and support the children rights and
provide relief in developing countries(Cohen and Winn, 2007). The vision of this organisation is
that there are so many children and every child should get the right to survival in the world, get
protection from the governments and should participate in the activities of the organisation.
Cooperative – It is that business organisation which is owned and operated by a group of
people or individuals for their mutual benefits and sharing of profits. One of the cooperative
organisations is Royal London Mutual Insurance Society Limited; the aim of this company is to
render different services to customers and should be aware about this organisation.
1.2 Primark and its stakeholders
Stakeholder holders are the different groups of people who has interest in the functioning of the
organisation and take part in the decision of a particular businesses. Different business events are
held to inform the stakeholders about the functioning of the organization and also their
suggestions are welcomed by the company. Stakeholders can b internal and external and
company has to keep both of them satisfied. Primark deals in the fashion industry and it is that
industry which faces maximum competition in the market as customers are so much concern
about the quality and the price and as various alternatives are available with them the company
has to keep them satisfied. Primark communicates to its stakeholder through their official trading
website. Different stakeholders has different expectations from the company and therefore the
Premark has the objective to keep all of them satisfied by using effective channel of distribution
for every stakeholders(Ebert and et. al., 2014). Primark also works with variety of social groups
and their objective is to protect their workers and give them all their rights for which the
company listens to the people of these groups and try to solve their problems. Ethical trading
initiative and better work partnership are the two companies which help Primark to satisfy its
stakeholder. Primark outsource its clothes from china and India as both these countries which are
leaders in the garment company and the company listens to the needs of the outsourcing
company and has launched various programs and seminars to get to know about the different
needs. Company dosen't give more emphasis on the marketing of the product and saves that
marketing cost for its customer and use that cost in communicating with the customer so that
they can to know about what is actually demanded by them. Therefore Premark is successful to
a great extent in satisfying its stakeholders.

1.3 Responsibilities and strategies of Primark:
As the organisation work in the society and for the society it has few responsibility towards its
employees and the society. While the company is operating its functions it should take care of
the laws and regulations made by the government. Initially it was considered that these
responsibility add to the cost of the organization but now the idea has changed and it is
considered as a contribution in the profitability of the business. Premark has the responsibility to
consider al his employees equal and no difference ion the basis of caste creed and colour should
be done. Company should see that minimum wages are given,proper working conditions are
maintained working hours are according the rules of law(Gebauer, Paiola and Edvardsson,
2010).There are other responsibilities of the company which are related to the environment issue
that that the company is not doing any harm to the environment like the resources are not
exploited,the wastage is properly disposed off. In order to full-fill these responsibilities the
company fore caste the future responsibility and work on them in advance. The Premark
company full-fill its social needs by keeping outsourcing their work from low cost
manufacturing units and providing the best product in low price and also take care of the
working hours of the employees that they are not exploited and paid accordingly. Being a
company dealing in textile Premark uses the material which does not harm the environment and
is easily degradable like use of cotton material. If the company is fulfilling its all responsibilities
good image of the company is formed which increase the profitability any organisation.
TASK 2
2.1 Different economic systems and why are they followed:
In Cuba the the gross domestic product is measured in dollar value and all the goods and
services produced are counted while calculating the GDP. The major contribution is of the
service sector like the tourism gives maximum share in the total GDP of Cuba. The industrial
base of Cuba is weak in comparison to other countries. the main reason behind this is due to the
inflow of foreign exchange from the service sector(Gecevska and et. al., 2010).Cuba import food
products and agriculture products from outside. The industrial product requirement can not be
fulfilled by Cuba itself therefore it takes assistance from the other countries. Cuba has closed the

primary schools in order to open homes for the homeless elderly people which is a burden for the
growth of the economy of Cuba. At the time of British empire U.K. has the strongest economic
system as it was the leading country in having the latest technology. But at the time of the world
war 2 the economy of UK was severely effected and many British colonies started becoming
independent. In UK economy,goods services capital and people has free movement within
member state. Different from above two china follows communist economy. The country has so
much of its influence on the private sector and therefore the GDP of china has increased 10% in
over 30 years. Reason behind following a particular economy system in different countries is
based on the available resources and technology. Also the production capacity of different
country is different. U.K has the latest technology and therefore the maximum contribution in
the GDP is that of the capital products. Cuba is more into tourism and therefore services of
tourism industries give more contribution is the total GDP. China having more hold of
government on private sectors give more production(Halbert and Ingulli, 2011).
2.2 Assess the impact of fiscal and monetary policy on business organisations and their
activities:
Fiscal policy is the tool used by the government to control the money flow in the country in
which the government take help of tax rate interest rates to monitor the nations economy it is
also called as the sister of monetary policy as both are adopted for the same purpose. Effect of
fiscal policy is more on the middle class section as they are the ones who pay the maximum tax
as they are the largest group in the economy. The main aim of this policy is to control the
inflation rate,budget deficit,aim to full employment etc. Monitory policy is another tool used by
the central bank to control the money flow in the country. In monitory policy concept of
expansion and contraction is followed. The bank issue the government bonds,change the interest
rates and also changes the CRR which is the minimum cash ratio any bank has to keep with itself
as reserved.
UK is has the most globalized economy but it facing so much of economic problems due to
unemployment and the inflation. Though fiscal policy is not so much famous in today's modern
world U.K use this policy to face the inflation by increasing the tax rate which will help in
reducing the aggregate demand in the market. By doing this inflation can b controlled to a good
extent. At times of rescission government can increase its expenditure in the agriculture sector

and reduce taxes for the farmers to increase the growth of the economy THE government of UK
reduce the C.R.R. for banks and also the interest rates are reduced when there is a need to
increase the money flow in the economy. By doing this people can take more housing loan at low
interest rate and the economy of the country can be prompted(Iskanius, Page and
Anbuudayasankar, 2010). When the government want the money flow in the market to reduces
the cash reserve ratio for the banks are increased so that the banks are left with less cash to give
for loans to the public therefore the y increase the interest rates which automatically reduce the
demand by the households.
2.3 Competition policy
For any business to grow it is important to stand out in the competition as there are many firms
working in the same business. In order to have maximum hold in the market one has to be strong
enough to face the competitors especially when one is entering in the market. Competition is
good for doing the growth and UK use the competition policy to increase the productivity and
avoid monopoly in the market. If the business has no competition it will not work much on its
efficiency and effectiveness. Different competitive policies are adopted by the organizations of
UK in which the most famous is deregulation of monopoly. Monopoly is the market where there
is only one producer and many buyer this promotes exploitation of customer as the producer is
the price maker not the price maker. Another policy is of having strict laws against
anticompetitive behaviour in which strict actions are taken against those firms who are involved
in the price fixing or other such illegal activities and the UK government put fines on the total
turnover of these companies. By adopting such policies the organization of UK are protected
against having the monopoly in the market(Harrison, 2011).). As the competition is healthy
every firm has the equal chance to enter in the market with their own product. Due to the
competition the customer is the one who gets the maximum benefit as due to tough competition
producer give the best product to the customer at best effective price. The customer has wide
choice to choose what is best for him and if the customer is not satisfied with product he can
switch to another product of same type very easily. Competition policy help the organizations to
make their hold in the international market and do the product innovation to give their best to the
customers

TASK.3
3.1 Pricing and output decisions of the businesses in following market structure:
a) Perfect Competition:
Perfect competition market structure is the structure of the market where many seller of the same
product are there and has a perfect competition in the market between them for their product and
to provide better services to their customer at low price(Iskanius, Page and Anbuudayasankar,
2010).In this market structure, pricing decisions are taken by the buyer and output decision are
taken by the companies that are providing goods and services according to the demand of the
product because every competitor wants to provide better product to their customer to eliminate
their competitor in the market.
b) Monopoly:
In monopoly market, Pricing decisions and output decisions are taken by the firm which are
based on the demand of the product in the market. Monopoly market situation is when there is
sole provider of the product and no other competitor exists in the market. So the seller has the
power to take the price decision because customer has no further choice to buyer the product
from other seller at low price. They can easily manipulate the market.
c) Oligopoly:
Oligopoly is the market situation, where several seller of the same product exists in the market.
Seller has the command over the price of the product. If all the seller charges the same price of
any product then it depends upon the customer from whom to buy. Seller adopt different
different advertisement techniques to attract the customer to buy their products.
d) Duopoly:
Duopoly market situation is the situation in which only two giant producer and seller of the same
product exist in the market and selling identical product and they have command over the
market for selling the product(Kubasek, Brennan, and Browne, 2016). These two competitor
control and take pricing and output decision. The firms may agree on same price and merge
themselves into a unit and create monopoly on the market.

3.2 Market forces as demand and supply shape organisational response:
All the organisation as private firm, public sector entity and even non profit organisation face the
market force. Market forces such as demand and supply affects the markets and the organisation
which are providing goods and services to their customer.
Demand is the desire and willingness of the buyer and the customer to buy the goods and
services. Demand can be addressed as individual demand and group's demand to the product.
When demand of a product is decreased then it shows that buyer is not ready to accept the
product, it may be due to higher price or low price(Kubasek, Brennan and Browne, 2016).
Supply shows the data which are derived from the demand curve which shows how much
quantity is required to produce and is the production as per the demand like consumer is
demanding and firm is ready to supply that much product or fulfil the desire of the customer.
When demand of a product increases in the market then it is necessary to produce goods
as per the demand of the market. If seller does not consider demand of goods and do not make
appropriate supply of the product then it affects the reputation and goodwill of the seller in the
market and punished by the market as losing ability to competing in market. Market forces
affects the price of the product and the quantity of goods. To shape the organisation, firms need
to understand the market forces and make their production as per the demand of the customer to
influence the market. Market forces must be considered according to the standard of the market.
Market force produce force on the firms to perform well and compete with the competitor to
stand in the market so it is required to manage such forces(Laumer, Eckhardt and Weitzel,
2010). Those who consider such earn to continue participating in market and those who do not,
lose the marketplace.
Sources: Demand and supply, 2017.
Illustration 1: Demand and Supply, 2017.

3.3 Business and cultural environment shape the behaviour of the organisation:
Business environment means all the factor whether internal factor or external factor as
employees, demand and supply, customer, rules and regulations that are required to follow that
affect the organisation. Business environment is how the demands and desires of the customers
are met.
Cultural is the characteristics of the organisation people such as social habit, liking,
languages of a particular region. Cultural environment is a belief, practice and customs which are
found in group of person, which are different to each other.
One of the barrier of cultural issues is the language. People coming from different region
follow different culture and they have their own language(Loorbach and et. al., 2010). It is the
most affected part of the business which have direct influence over the business because people
coming from nation face difference on the basis of language.
Business environment factor like customer, supplier, employees of the organisation that
have direct influence over the business and it is very important in the hand of the business to take
the decision by covering all the aspects and factors of the business. Demand and supply affects
the business and it shapes the structure of the organisation but only when, when organisation
makes focus on the demand and supply curve so that better goods and services can be provided
to their customer at low rate as comparison to their competitor that are exists in the market. All
the factors whether internal or external that have impact over the business must be considered
while planning and execution as per the graph.
Cultural issues are social habits that have impact over the business so business firm must
refereed to the cultural issues and when firm is offering something then it is required to consider
that whether the people will accept the product and is the product as per the culture and
behaviour of the customer.
Task 4
4.1 Significance of international trade to UK business organisation:
International trade is the exchange of goods and services among the different different
countries. International trade provides and play a vital role in the growth and success of the

nation. It enhance the reputation to the global market and expands the business of a organisation
to the other countries. it is an important source of revenue to the government of the nation.
International trade provides global reputation to the business of the nation(Loorbach and et. al.,
2010.).
Significance of international to UK business:
After the separation of UK from EU, UK required to increase the productivity of the
nation as well as the quality of the product that they are supplying to the market. International
trade attracts the internationally skilled worker. It bring international workforce to the UK. It is
to strengthen the skilled worker of the nation to provide better services and product to the
international market which helps in enhancing the international reputation of the nation.
After separation, it is very important in the hand of UK to produce more and more
product and to enhance their services so that global reputation can be enhanced. International
trade is always very important for a country because it gives better opportunities to the business
and in the another hand it gives revenue benefits to the country which indirectly provide the
strong base to the economy of a nation. International trade took place to give many advantages as
availability of better resources, import of product that can not be produced in the country due to
production cost will affect the entire economy of the nation, export of product to generate more
and more revenue. In another hand international business give few disadvantage to the business
as loss of local jobs and it increase dependency on foreign market. Local business have limited
market but international market can access to the new customer(Moutinho, 2011). Foreign
government gives few advantages to the business that are in foreign market as tax deduction for
few years, cheap land. International trade provides moral support to the business of UK, it
increases productivity and profitability in international market.
4.2 Impact of global factor on UK business organisations.
Global factors are the external factor which have direct influence over the business of
nation as legal factors, political factors, social factors, technological and economical factor.
These factor affect the business of a nation. International factor are labour, capital and other
factor that also have direct impact on the business.
Global factor that influence the UK business as increasing level of interdependency of
nation economy and multi culture-ism in organisation that are in UK. Impact of global factors on

UK business can be summarised under a term that is PESTLE. Which comprise of Political
factor, economical factor, social factor, technological factor, legal factor that affect the business
and ecological factor.
Following are the factors that have impact on the UK business:
1. Political factors:
 level of political stability
 bureaucracy in international market.
 Trade control initiatives.
 Relation between UK and other countries.
2. Economical factor:
 international economic crises
 market fluctuation.
 Impact of world bank
 importance of outsourcing initiatives.
3. Social factors:
 change in family pattern
 concern for minority in society
 increase in migration practices
4. Technological factors:
 technological infrastructure
 new innovation in technology
 technological break through.
5. Ecological factors:
 impact of global warming
 increase in level of pollution
 activities of international environmental organisation.
6. Legal factors:
 laws and regulations affected international business.
 Increase in legal globalisation.
 Cross country transaction.