Business Environment Report: Primark's International Operations

This report provides a comprehensive analysis of Primark's business environment. It begins with an introduction to the business environment, followed by an examination of Primark's organizational structure, aims, objectives, and stakeholder relationships. The report then delves into Primark's responsibilities, including environmental and ethical issues, consumer legislation, fair trade practices, and health and safety. Task 2 focuses on economic systems, differentiating between free market, mixed, and command economies, and evaluating the impact of fiscal and monetary policies on the UK economy. The report concludes with an analysis of competition policy and regulatory frameworks, examining collusive behavior, abuse of market power, innovation, and pricing strategies. This report offers insights into Primark's operations and the broader business environment, including international trade, and the influence of the European Union's policies.

Business Environment

Introduction
All the internal and external factor which impact business activities is known as business
environment. Some of the factor which include the company function are customer, employees,
supply and demand etc. The present report is based on Primark company which is operating at
international business. There are various kinds of product and services such as clothes,
accessories, beauty product etc. The present report is based that there are different pricing and
output decision of business which is determined in the market is explained. Along with this, the
significance of international trade to UK business organization is discussed. Apart from this, the
impact of polices of the European Union on UK business organization is evaluated.
Task 1
1.1 Identifying different type of organization
Different type of organization operates their business activities in all over the world. Each
organization aim is to become one of the largest organizations in all over the world. For this they
set mission, vision and objectives. According to the given scenario, Primark is operating its
business in the retail industry. It offers high quality product and services to its customer. Primark
and different organization aims and objectives are discussed below:
 Primark: Primark is an international clothing retail company of UK. Along with this,
there are different types of product and services which offered by the organization such
as clothes, food, accessories and beauty product.
◦ Aim: The aim of Primark company is to earn profit and become of the successful
company in all over the world (Primark. 2016).
◦ Mission: Mission of Primark company is to provide high quality product for its
customer and satisfy their needs and wants.
◦ Vision: The vision of Primark company is to supply quality and affordable product to
is customer and focus on new promotion techniques.
 Charity; Charity organization is that which operates its business for the welfare of poor
and unhealthy people. Its aim is to provide good life to people whose financial condition
is not good. Along with this, charity organization needs to take permission from the
government before carrying out all business activities.

 The public sector: The public sector organizations are those which are operated by
government. Its aim is to gain maximum profit and by carry out all its company’s
function in s systematic manner. Public sector organization helps in growth and
development of economy. It also provides employment opportunities to unemployed
people. For example, the public sector organization is the Ministry of finance which carry
out its activities through fund which is provided by the government. Its mission is to
continued the flow of fund in country and make sure the stability of economic.
1.2 Primark meets the objective of its different stakeholder
Primark is operating its business in different countries. Its aim is to provide valuable
product to its customer and satisfy their needs and wants. Along with this, there are different
stakeholders of the organization who play significant role in the success of Primark. Some
objectives of stakeholder which needs to be fulfilled by the organizations which are discussed
below:
Internal stakeholder
 Employees; Employee are important stakeholder. They make product according to the
needs and wants of the customer. So Primark is required to focus on fulfilling needs and
wants of its employee by involving them in the company’s decision making process
(Netzer, Feldman and Fresko, 2012.). For example, Primark can share organization goal
and objective with them which help the employee in achieving them easily. Owner: Owner of the organization is also the important stakeholder. Company have
some objective towards its owner that, company needs to earn profit by selling product
and services.
External stakeholder
 Government: Government plays significant role in organization as they formulate the
rules and regulation for the company. It is necessary for Primark to follow and adopt all
rules and regulation which are made by the government. For example, Primark is
required to pay tax to government on time.
 Customer: customers are also important for the organization because they buy product
and services. It is the objective of Primark to provide them product and services
according to their needs and demand.


Illustration 1: Different type of stakeholder
(Sources: Stakeholder of organization. 2016)
1.3 The responsibilities of Primark as an organization and strategies to meet them.
Responsibilities of Primark and strategies to meet them are as follows:
 Environmental and ethical issues: Primark is making various types of product and
services for its customer. At the time of making product and services, the firm is required
to make sure that all waste produce from the industry must be recycled and it is a
responsibility of the organization. For making the surrounding environment neat and
clean, the company can make environmental friendly product. Apart from this, Primark
should not carry out any unethical activities. Strategies to carry out ethical practices such
as Primark need to avoid misleading customer and destroying its competitor.
 Consumer legislation: Strategy to meet each responsibility is that, the company can use
consumer based marketing in which it can focus on marketing activities such as
promotion, price and product. Along with this, it is required to emphasize on satisfying
the consumer needs and wants.
 Fair trade practices; Primark need to adopt fair trade practices in which it need to make
sure that customer are not cheated and harmed by their product and services. Along with

this it needs to avoid child labour practices in their work force (Lee and Saez, 2012).
Company can make strategies that it make product and services of high quality and sell
them at fair prices.
 Health and safety legislation; Primark need to adopt health and safety legislation at
workplace, so those employees who are working in their organization are not harmed by
any working activities. For this strategy company can adopt that is company can find out
and remove all risky hazard from workplace and adopt health and safety policy.
Task 2
2.1 Different type of economy system
Economic system is that in which government allocate resources and product and
services to its customer (Types of economy system. 2016). There are five factors which can
control the production that are labour, capital, and entrepreneur as well as physical resources.
There are three types of economy and different country has different economies which are
discussed below;
 Free market economy: Free market economy is that in which all the organization has
freedom to choose resources to make goods and services. Along with this, company do
not face any type of government interfere at the time of buying resources. Organization
decides the price of its product and services according to the demand of customer. In
China, the organization operates its business in free market economy where resources
allocation power is in their hands. There are different types of resources which come
under production that is land, capital, physical resources and labour.


Illustration 2: type of
economic system
 Mixed economy: Mixed economy is that in which allocation of resources is partly in
government and partly is in the company’s hand. Along with these resources, information
resources, land and labour all are allocated half by the government and half by
organization. In United Kingdom, there is mixed economy so price of products are set by
the government and organization.
 Command economy: At Cuba, there is command economy because in that country there
are few resources available. So all types of decisions are made by government related to
allocation of resources. Along with this, price of product and services are also set by
government. In this economy. There is full control in government hand from distribution
of resources till how to produce and what to produce.
2.2 The impact of fiscal and monetary policy
 Fiscal Policy; Fiscal policy is that in which government modify its spending level and
decide the tax rate, so that it can monitor and influence the nation economy (Jiménez,
Ongena and Saurina 2014.). In fiscal policy government make decision in relation to
collection of revenue and spending that revenue. Monetary policy; it is a process in which supply of money and often targeting interest
rate to making sure price stability is decided by the monetary authority of government.
The main goal of monetary policy is to contribute in the economic growth and stability.
Role of UK exchequer

The government chief financial minister is the chancellor of exchequer who's responsible
for the increasing revenue of country through taxation and can control the public spending. It
work for the treasury which is its overall responsibility.
Role in chancellor of the exchequer in fiscal policy is that it have full right to set
government spending and tax rate. Along with this it can use fiscal policy for increasing the
investment in some area for instance in health and eduction it can increase the spending.
Role in chancellor of the exchequer in Monetary policy that is it can set internet rate.
However, at present the interest rate is set by Bank of England. But in case if Bank of England
unable to meet the government inflation target then it need to wire letter to Chancellor of
exchequer.
Role of central bank in fiscal policy and monetary policy
Impact of fiscal policy and monetary policy on farming in UK
There is great impact of fiscal policy on farming because if government increase the
interest rate then farmers cannot borrow money. Farmer need money for buying equipment and
seeds for this purpose they take loan from bank. If interest rate is high then they cannot tale loan
which impact the farming activities. On the other hand if government increase the tax prate then
farmers cannot buy seed of good quality. This become barrier for them in carrying out all the
activities of farming.
Impact of fiscal policy and monetary policy on Housing in UK
For the development and growth of economy government can increase the the interest
rate which can decrease the demand of housing at UK. People are unable to pay high interest rate
on housing loan. On the other hand if government interest the tax rate then people are unable to
save money for buying house.
2.3 Competition policy and regulators frameworks
Competition policy aim is to promote competition in market ans also focus on improving
the efficiency of organization in individual market (Karadi and Gertler, 2015). Along with this it
also tried to increase competition in UK business. It aim to make sure that there should be
effective price competition between suppliers.
There are two main type of behaviour which need to investigate they are as follows:

 Collusive behaviour: Collusive behaviour help organization in increasing profit as well
as expenses.
 Abuse of market power: Abuse of market power is that in which company who have
high share as compare to other competitor then it considers as powerful in the
organisation (Managing Business resources. 2016.). Primark is one of the leading
company and it have more then 50% share.
 Innovation: organization who are operating its business in competitive market then it
need to make product which are different from its competitor. Along with this for survive
in the competition market company always need to make product which are of high
quality and innovative so that consumer may no dislike the product.
 Low price for alls; company make innovative product with this company also need to
keep the price of produce lower so that customer not switch to other market product
(Manova, 2013).
There are some competition policy and regulatory mechanism which have great impact on the
Activities of organization. These are as follows:
 Competition act 1998: the main purpose of this competition act 1998 is to make sure
that there are some activities which need to prohibited by the organization. For instance
dominant position of organization should not be abused on any level. Along with this it
restrict the competition such as including the price fixing etc. this act is introduce for the
fair trading.
 The office of fair trading: It is a non ministral government department and non profit of
the UK. According to the office of fair trading its main aim is to protect consumer and
competition law. Along with this its goal is to make markets work well for consumer and
their should be fair dealing practices.
 The department for innovation and skills: This department objective is increase the
sale and improve skill of employees. It helps in promoting the free and fair market for the
Primark and others.
 Competition commission: the role of competition commission is to measure that merger
can reduce the competition or not. The competition commission is the non departmental
body (Zhang and Huang, 2012.). It also investigate the merger market and other queries
related to the competition law in UK. Apart from this it work is to make sure that healthy

competition between the companies of UK and it should benefit the economy of country
and consumer.
 Enterprise act 2002: The enterprises act 2002 made the major changes in the UK
competition. Along with this according to this act if any competitor break the rule then it
is disqualified from competition policy. For investigating the market there are few power
of regulators.
Task 3
1. Pricing and output decisions of businesses under the following market structures
The market structures like Perfect competition, Oligopoly, Monopoly and Duopoly where prices
and output decisions of different organization are determined.
a). Perfect competition - In perfect competition market where all the products are
homogeneous in nature. Prices of commodities can not be decided by a single firm because there
are large number of competitors (Schularick and Taylor, 2012.). Companies are free to enter and
exit in the market as per their wishes. All the companies charges approximate prices to their
customers. Consumers have responsible to choose a good quality products from wide range of
companies at reasonable prices so that Primark sell their products at a below market price with
maintains the good quality to attract the customers.
b). Monopoly - In monopoly market only a single kind of product and services are sell
by one seller. This kind of product and service is unique in nature because no one can enter in the
market to sell same kind of product and substitute of product. Only a single firm is present at
market place so that it can willing to decide their product price. Due to the absence in market
competition so that customers are exploited in this type of market structure single seller charges
the supreme prices for a limited productions. In case of Primark company monopoly market
structure is not exist at their present market.
c). Oligopoly - In oligopoly type market structure there are less number of organizations
are present but the sizes of the firms are large (Karadi and Gertler, 201). It is a type of
competition exist in between the perfect and monopoly type because entry and exit in the
marketplace is easier as compare to both. All these larger companies decides the prices of the
products which are homogeneous in nature. One of the best example is Primark whose

functions are belongs to oligopoly market. Which has a competitors named Zara, H&M and
Marks & Spencer's. These are sell the same kind and substitute type of products.
d). Duopoly - In this type of market structure where two organizations are present for
selling a single type of product. Both are powerful competitors with respect to each other. No
third one can enter in the market place with the same kind of products. After exiting anyone then
another one can establish in the market.
2. Illustrate the market forces (demand and supply) which shapes the organizationa
Demand - The amount of any commodity that customers are willing to buy is called as
demand. While Supply is the amount of any commodity that the firm wants to eager to produce
for the customers at a certain amount of price.
For a proper functioning it must need to balance between those factors demand and
supply. Demand and supply are dependent factors. High demand which leads to supply of the
products with increases the prices. While the demand of the product reduces it must want to
generate the revenue by decreasing the prices of the product. It shows that both the demand and
supply are affected by the prices of the products and vice versa (Cai and Yang, 2014.). Every
company change their prices at regular interval because the presence of large number of
competition in the market. Primark company products are daily usage and affordable in nature to
everyone so that sometimes companies offer the discount on certain products which increases the
demand of the products. When the increases the cost of production will reduces the demand and
increases the selling price of the products because price and demand are interrelated to each
other. Supply and demand of the product has inverse relationship. Supply maintains the positive
relationship between the price and quantity. A rise in demand for a particular product or service

tends to exert pressure on prices. When supply of the product is more in the market tends to fall
in the price of the product because producers get benefit from large scale production which
individual cost is reduces.
3. How the business and cultural environments makes an impact on the organization
The behavior of any organization are affected by the both business and cultural
environments. Business environment has several factors like micro and macro environmental
factors. Basically the economic and non economic factors makes greater impact on the
organizational behavior. In economic environment various factors are available like economic
systems and policies and under non economic environment social, political & technological
factors are exist. Changes in profit and sales level are under the cultural level. Brand reputation
affects the behaviour of the firm. In an every company employees are belongs to different parts
of the world. their geographic and demographic area are also different to each other by religion,
tradition and culture. If company tries to often the profit making motive in the cultural
environment that time employees may not work in the harmony with each other. Company
should try to manage the smooth functioning by the diversified people. Organization can be set
up their branches at different cultural environment where all get the employment opportunity to
same behavioural and cultural people (Asghar, 2013.). After the Globalization in the country
they have permit to do business at anywhere in the world that time all the firm faces the social,
rules and regulations issues so that every organization uses the universal functions and
operations which increases the employee productivity and customer approach. The culture of
Primark is to provide quality products at low prices. The culture of organization affects the
operations within an organization so that establish friendly relations and effective team work.
When the authority or the managers make the decisions under considerations of the cultural
environment so that outcome of the business mainly depends on the cultural and business
environmental factors.
Task 4
4.1 Significance of international trade to UK business
International trade is the exchange of goods, services form one country to another. The
international trade help country in bringing currency and help in raising the competition at
international level. There are some importance of international trade that are as follows;

World trade organization; World trade organization help in carrying out fair deal between the
organization and customer. Along with this, it also supports in carrying out all its organization
function in a systematic manner. World trade organization main role is to ensure that no dispute
take place between company and all trading activities can be carry out freely.
Emerging market; international trade help in selling good and services in emerging market. This
also help in increasing the profitability of the organization and also help in gaining the
competitive advantages. There is also chance for the organization to expand its business in the
emerging country that are Russia , china etc.
Economic growth; International trade also help in developing the economic growth of the
country. If company sale its product and services in another country then it help in increasing the
GDP and national income (Jiménez, Ongena and Saurina 2014). Some time it happens that
conflict take place between two country due to trading activities
Competitiveness ; if there is trading between two country then it give rise to competition. Along
with this, if there is systematic exporting and importing of goods then company it benefit the
growth of economy.
Optimum utilization of resources: The international trade help in reducing the wastage and
proper utilization of resources.
Furthermore there are different country who are operating its business in free trade
market that is United kingdom , US etc. international trade increase the profitability of the
organization. Apart from this UK is now separated from the EU policy which is affecting the
organization who are operating its business in EU. Along with this UK need to pay tariff charges
for international trade which lead to increase the production cost.
4.2 Global factor imapct the UK business
There are some of the global factor which are impacting thing the UK business, some of
them are discuss below:
Business: organization are selling its products and services in different country. There are
some political factor which can impact the business (Carvalho, Marques and Berg, 2012.).
However at the time of operating business in other country it is necessary for the organization to
make follow rules and regulation of that country.

Environment; now a days people are now more consider related to their product and
services company need to make sure that they made environmental friendly product for its
customer.
Work force skilled; It is not necessary for business that is get highly skilled employee in
different country. This factor can impact the organization at the time of carrying out business in
another country.
Labour cost: Labour cost is that which can affect the profitability of business and
operation of business. Labour want high salary which is not possible for business to give them
because it highly impact the profitability.
4.3 Impact of policies of the European Union
European policies have great impact on the UK business which are discussed below:
 EU policy help organization in expanding business in different EU countries. Along with
this, it helps in carrying out all activities freely without charging any kind tax or tariff.
 Impact of employment policy is related to the working hour of employees (Auerbach and
Gorodnichenko, 2012). If there is modification made in the law then company then it
impacts the organization.
 Further if there is fluctuation in interest rate then it negatively impacts the organization. It
interests rate is high then company cannot sale its product and services at high price.
 There is also impact of taxation policy that is company profit can be impacted because it
need to pay high tax. Along with this, for increasing profit company need to increase the
price of its product and services.
EU make different policy which help in carrying gout all business activities in a
systematic manner. All the company who are carrying out its business activities in EU are
impacted by its rules and regulation.
Conclusion
From the above report it can be concluded that there are different type of organization
which operates its function in different industry. Charity organization main aim is to provide
better health and living standard to people. Further there are different type of stakeholder that are
employees, customer, government etc. this all are important for the organization so company

need to fulfil some of objective toward them. There are some responsibility of organization
toward the environment that is company need to make environmental friendly product and
services. Further it can be concluded that competition policy help in promoting the fair trading
practices in competitive market. There are some changes take place in fiscal and monetary policy
so that growth and economy of country can be stable. There are different policy in the European
union which each and every company need to follow who are operating its business in under
European union. In a monopoly market if organization want to operate its business then it need
make product and services which are different from its competitor.