Business Environment: Impact on Next Plc's Retail Operations

This report provides a comprehensive analysis of the business environment, focusing on the retail company Next Plc. It begins with an introduction to the business environment and its significance, followed by an examination of different types of organizations, stakeholder objectives, and Next Plc's corporate social responsibility (CSR) initiatives. The report then delves into economic systems, including command, free market, mixed, and transitional economies, and assesses the impact of monetary, fiscal, and competition policies on Next Plc's operations. Furthermore, it explores the influence of market structures on pricing decisions, market forces on operational abilities, and business and cultural environments on Next Plc's behavior. The report also examines the importance of international trade, global factors, and EU policy on Next Plc's performance, concluding with a summary of key findings and a list of references.

BUSINESS
ENVIRONMENT
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1 Purpose of different types of organization...............................................................................3
1.2 Meeting objectives of different stakeholders.........................................................................4
1.3. Various responsibilities of Next Plc and strategies to meet them ........................................4
TASK 2 ...........................................................................................................................................5
2.1 Different types of economic systems.....................................................................................5
2.2 Impact of monetary and fiscal policy on Next Plc.................................................................6
2.3 Impact of competition policy on Next Plc.............................................................................6
TASK 3............................................................................................................................................7
3.1 Impact of market structure on pricing decisions of Next Plc.................................................7
3.2 The impact of market forces on the operational ability of Next Plc .....................................7
3.3 Impact of business and cultural environment on the behavior of Next Plc...........................8
TASK 4............................................................................................................................................8
4.1 Importance of international trade to Next Plc........................................................................8
4.2 Impact of global factors on Next Plc.....................................................................................9
4.3 Impact of EU policy on the operations of Next PLC.............................................................9
Conclusion ...................................................................................................................................10
REFERENCES .............................................................................................................................11
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INTRODUCTION
Business Environment (BE) refers to surrounding in which business functions and carry out
different activities to attain its goal of productivity and profitability. Thereafter, business environment is
accumulation of internal and external factors that influence the functioning ability of company ( Binh and
et. al., 2010). Further, by studying the business environment, organization can exploit different business
opportunities. It further helps in adapting various changes and ensuring flexibility in business. In this
report, different implication of business environment to retail organization will be studied. To facilitate
the study, Next Plc a renowned retail company of UK has been selected. In this report, learning will be
shown regarding impact of fiscal, monetary and competition policy on the functioning of cited company.
TASK 1
1 Purpose of different types of organization
In the present context, there are different kinds of business enterprises which are operative in
market with varied purposes. The explanation of which is as follows:
 Public company: They are different kind of companies that are permitted to offer their
registered shares to general public. Main purpose of public company is to maximize the welfare
of society by generating employment opportunities to individuals and by providing ethical goods
and services to them. For example, Next which is UK based public company, whose major
purpose is to provide ethical products to customers and maximize the interest of its stakeholders
(Binh and et. al., 2010).
 Private company: It refers to organizations which are closely-held by individuals or limited
number of shareholders. They are restricted to offer their shares to general public through the use
of stock exchange. The main aim of private company is to maximize their proficiency. For
instance, Virgin group is a leading airline company whose objective is to ensure expansion in
various parts of country and thereby increases the profits of company (Alcidi, 2011).
 Partnership: It refers to single business owned by more than one person who further shares
profits and loss of company. The major purpose of partnership is to enhance the shared benefit of
members. For example, John Lewis is a type of Partnership Company who provides retail
products and services for enhancing their proficiency.
 Charity: It is a type of non profitable organization that operates for the social well being. Their
main aim is to enhance the welfare of society and serve for the public interest. For example, Blue
cross is a charitable organization who provides shelter and home to abandoned animals (Daft,
2009).
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 Sole proprietorship: It is type of business that is functioned and closely-held by single
individual which is personally responsible for all debts and profits. The major purpose of sole
proprietorship is to maximize profits and minimize loss. For example, Kurt Geiger is a type of
sole proprietorship providing shoes for both men and women. The main aim of this company is to
boost sales and increases profit.
1.2 Meeting objectives of different stakeholders
Stakeholders are those individuals who are influenced by the actions, strategies and policies of
organizations (Freeman, 2010). They can further affect the different operations of the company as well.
Therefore, it is important for Next Plc to meet their objectives and enhance their interest as well. Various
stakeholders of Next Plc are explained as follows:
 Customers: They play key role in the functioning of company as they use products or services
offered by company to generate revenue in return. To meet the objectives of customers, Next Plc
provides innovative and unique products to users. In addition to this, they identify needs of
potential customers design products accordingly.
 Suppliers: They offer various goods and services that are main input for the functioning of Next
Plc. The organization takes due care of its suppliers by maintaining sound relations and settling
due payment on time (Fernando, 2011).
 Government: The main aim of government is to ensure that organizations work in accordance
with prevailing law and order. To meet the objective of government, company ensures timely
payment of tax and duties. In addition to this, various guidelines generated by UK government
are strictly followed by Next Plc while carrying out operations (Adler, 2007).
 Employees: They play an important role in company as they help in attaining overall goals of the
organization. To meet the objectives of employees, Next Plc give proper remuneration, safe and
positive work environment, training and growth opportunities to its employees.
Furthermore, Next Plc takes proper steps like organizing meetings, feedback process etc to
identify the needs and preference of its key stakeholders.
1.3. Various responsibilities of Next Plc and strategies to meet them
Being a socially responsible organization, Next Plc assures that it meet its responsibilities
towards various members associated with them. Different responsibilities of company are explained as
follows:
 Social responsibility: Next Plc takes various steps to meet its duties towards society. In this
aspect, company organizes CSR activities regularly. Similarly, company has donated £879,047
amount for charitable purpose (CSR activities of Next Plc, 2015). Further, it takes significant
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steps to reduce unemployment level of country and enhance the living standard of population.
Therefore, Next Plc have generated full and part time jobs to more than 50000 individuals that are
inclusive of aged, physically disabled, young college going individuals.
 Environment responsibility: To fulfill its responsibility towards environment, Next Plc is taking
effective measures to reduce pollution, non renewable waste and other harmful impacts due to its
operations. In this aspect, 98 stores of Next Plc are recycling packing materials and plastic.
Therefore, 11,935 ton of waste like, cardboard and plastic is recycled by company (CSR activities
of Next Plc, 2015). In addition to this, Next Plc has reduced Co2 emissions by 7.1%.
 Legal responsibility: Organization takes effective measures to fulfill its legal responsibility.
Therefore, it follows all the legal regulations and policies duly. The management of organization
ensures that they are indulged in fair and ethical trade practices only (David, 2000). Therefore,
various policy like, competition, anti-discrimination, fair trade and employment policy etc are
adhered by Next Plc.
TASK 2
2.1 Different types of economic systems
The economic system refers to mode of manufacturing and distribution of various goods and
services. In addition to this, it states the method of allocation of resources in society among different
organizations and groups. Broadly, there are 4 types of economic system and there description is as
follows:
 Command economic system: In this type of economic system the arrangement of resources is in
the hands of centralized bodies. Therefore, the decision regarding production of goods and
services is taken by government authorities. For instance, economy of China is a kind of
command economy.
 Free market economy: In this type of economy the distribution of resources is done according to
the prevailing market forces (Arch, 2003). Therefore, the goods and services which are highly
demanded are produced first. The main aim of economy is enhance the total revenue. For
example, US economy is type of free market economy.
 Mixed economy: This type of economy system that involve different benefits of command, free
market and transitional economy. Therefore, the resources are allocated between both private and
public business. The economy of UK is a type of mixed economy.
 Transitional economy: It is a kind of economy that is transforming from command to market or
mixed (Galende, 2006). The key reason for such transformation is due to integration of
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economies through globalization and liberalization. For instance, Cuba, Bulgaria etc is type of
transitional economy.
2.2 Impact of monetary and fiscal policy on Next Plc
There is strong and direct impact of fiscal and monetary policy on the functioning of
organization. The fiscal policy represents the government spending and taxation program that impact the
entire economy and organizations operating in it. Thereafter, the changes in government taxation program
can directly affect the profitability of Next Plc. For instance, increase in tax rate means company will
have to more tax which will increase its operating cost. Further, organization will be forced to increase
the cost of products and services . Presently, the basic corporation tax rate in UK is 20% while it was 22%
in 2008 (Economic System, 2013). Therefore, the company have more chances to increase its revenue.
Furthermore, monetary policy represents the manner in which monetary body of UK, Bank of England
regulates the macro economic constituents of economy. For this aspect, monetary bodies control and
make changes in money supply by modifying the interest rates. Presently, the interest rate of UK is 0.5%
that is very low in contrast to other countries. This states that Next Plc can borrow loans at low cost and
use the funds in expansion and growth projects. In addition to this, in 2015 the inflation rate of country is
decreased to 0%. Therefore, the demand of products and services offered by company are likely to
increase. Therefore, there are more marketing opportunities for cited company in future (Pestel and
Johnston, 2000).
2.3 Impact of competition policy on Next Plc
Competition policy is a regulatory framework devised by European Union to ensure healthy
competition and fair trade practices. The main objective of this policy is increase the competitiveness of
UK market and protect the interest of customers. Further, it aims at reducing the misuse of monopoly
power and boost healthy competition between different organization in same business. It help in
enhancing the efficiency of market and assist it in functioning smoothly. To avoid legal actions it has
become crucial for Next Plc to consider competition policy while operating (Halinen and Törnroos,
2005). The competition polcy has increased the competition for company. Therefore, organization have to
keep competitive prices to sustain in long run. The main rivals of company are, Tesco, Sainsbury, ASDA
etc. Further, Next Plc assures that it is involved in healthy market practices with its rivals. Therefore, to
sustain competition from its rivals company make creative changes its products and services. The
company also safeguard the interest of suppliers and assure that they are not forced to supply on rate
lower than prevailing market rate. Thereafter, company cannot merge with its rival to reduce competition
in market. Further, Next Plc is not found guilty for violating competition policy till date (Ormanidhi and
Stringa, 2008). This has further build positive image of company in market. However, its major
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competitor, Tesco is accused of violating competition policy and therefore, it have to pay £6.5 million
amount as fine. Therefore, to avoid such circumstances it is significant for Next Plc to consider
competition policy strictly.
TASK 3
3.1 Impact of market structure on pricing decisions of Next Plc
At present there are various markets operating in the economy. The description of which is as
follows:
 Perfect competition: This a kind of market where there are many sellers offering homogeneous
products and services. There is no entry barrier, therefore, any new business entity can enter the
market and old one can exist. Therefore, organization can earn normal profit only (Arch, 2003).
 Monopoly market: In this type of market only one business enterprise offer specific product and
therefore enjoys the dominant position. Due to entry barrier in industry, monopoly power lies in
the hands of single organization. Therefore, company can charge maximum prices from its
customers.
 Monopolistic competition: In this type of market there are many sellers providing differentiated
products and services. Further, the entry is quiet easy as compared to monopoly market. Further,
to sustain competition, prices are charged by monopolistic firm considering the pricing policies
adopted by rival organization (Freeman, 2010).
 Oligopoly competition: It is kind of market controlled by limited number of business enterprises
that that offer identical products. Therefore, organizations have prime control over the market
share. Further, company charge prices for its offering as per the quality and features of products
and services.
3.2 The impact of market forces on the operational ability of Next Plc
The market forces refers to those economic factors that impact the price, demand and
accessibility of products and services in market. The market forces play an important role in the
performance of production and distribution functions of Next PLC. Therefore, it impact the performance
of company in different manner. In addition to this, it influences the proficiency of company and ascertain
the future prosperity of business enterprise (Daft, 2009). To sustain in long run and avoid the problem of
over production or under production, it is important for company to regard market forces. In this respect,
Next Plc can align its production with prevailing demand. However, to ascertain the demand, organization
can take assistance of market survey or research, past sales figures and conduct demand analysis. It will
also help company in identifying the needs and preference of prospective customers and design products
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accordingly. Thereafter, Next Plc can align demand with supply of its products and assure proper
accessibility of products and services in market. This further help in meeting the product needs of
customer in effective manner. Further, with the aid of market forces, Next Plc can check the appropriate
availability of demanded product in its retail stores (Binh and et. al., 2010).
3.3 Impact of business and cultural environment on the behavior of Next Plc
Next Plc is working in more than 33 countries therefore, it provide services to various customers
of different backgrounds,culture and ethnicity. Further, business and cultural environment have direct
impact on the functioning of company. Therefore, it is important for organization to understand the
cultural needs of customers. In this respect, Next Plc ensure workforce diversity and employs individual
of different culture and background. They further help in identifying the needs of customers in better
manner (David, 2000). It also assist business entity in fulfilling the guidelines of Anti discrimination
policy. As per this policy, companies are prohibited to do discrimination in its present as well as potential
employees on the basis of religion, culture, ethnicity, gender, caste, creed etc. Further, management of
company ensures that there is positive culture within the organization. For this aspect, communication
between management and employees is improved. The positive culture ensures healthy work environment
which is crucial for retaining talented and competent employees within the organization. Thereafter,
business and cultural environment have positive impact on the market reputation and target customers.
TASK 4
4.1 Importance of international trade to Next Plc
With the integration of economies, it has become a necessity for company to expand its
operations in foreign country. This will further help organization in increasing productivity and
profitability. Presently, Next Plc operate more than 170 stores in 33 foreign nations through using
franchising (About Next Plc, 2015). In addition to this, it is providing its services using e-commerce sites
to more than 50 foreign countries. Therefore, 87% of sales are through online portals. Therefore,
international trade assist Next Plc in providing various products and services to large number of
customers. The international trade also help in increasing the market share and customer base of
organization. Further, through international trade Next Plc can make appropriate utilization of its
production capacity and reduce the per unit cost of production. Further, international trade will help
company in building brand recognition in market (Adler, 2007). This will further help in launching new
services in brand name. Thereafter, to compete internationally, it will become crucial for company to
make constant up gradation in its products. This will lead to innovation in product and services of Next
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Plc. Furthermore, to ensure smooth functioning in international market, it is feasible for company to
consider guidelines laid down by World trade organization.
4.2 Impact of global factors on Next Plc
There are large number of elements at international level that can influence the operation of
company. They are,
 Political factors: To assure smooth functioning in foreign market, it is important for company to
follow the rules and regulations laid down by government of host country. Therefore various
policy like, taxation, employment etc of host nation should be adhered by Next Plc. Further, to
gain interest of local political parties, more job opportunities should be provided to local citizens
(Walsh, 2005).
 Economic factor: It refers to impact of economic policies like, monetary, fiscal, interest rate of
target country on the functioning of company. It also involve the GDP, GNP, disposable income
etc of host country. Therefore, economic policy of host country should be considered before
planning expansion.
 Social factors: It refers to impact of social and cultural elements of foreign market, on the
functioning of Next Plc. To assure sales of products and services it is important for company to
meet the social needs of country (Daft, 2009). For instance, in Asian market the customers
oppose the sale of beef meat. Therefore, company should not offer such kind of products which
are against the religious and cultural norms.
 Technological factors: It refers to use of upgraded tools, techniques and processes that help
company to sustain in foreign market (Pestel and Johnston, 2000). Therefore, to sustain
competition in international market it is important for Next Plc to do adapt new technology and
do research and development.
4.3 Impact of EU policy on the operations of Next PLC
 Enhanced job possibilities in domestic country: As per the employment policy, organizations
functioning in UK are required to generate employment possibilities to citizens of country first.
The major purpose of this policy is that it will assist in increasing the level of employment and
raise the living standard of individuals. Therefore, Next Plc do campus interviews and take
assistance of employment sites for generating jobs for UK based individuals. Therefore, it has
given job opportunities to more than 50000 individuals of domestic country (About Next Plc.
2015).
 Increased satisfaction of employees: According to the employment policy laid down by EU, has
become important for business enterprise to provide healthy and safe working environment to its
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employees. Considering this policy, Next Plc provide healthy work environment to its employees
and workforce. This also help in retaining the talented and capable employees within the
organization.
CONCLUSION
From the above report, it can be concluded that, it is very important for business enterprise to
study business environment. It further help in adapting various changes and ensuring flexibility in
business. The fiscal and monetary policy of UK have direct impact on the operations of Next Plc.
Thereafter, to avoid legal actions it is important for company to adhere competition and other policies
framed by European union.
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REFERENCES
Books and Journals
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European Business Review. 15(2). pp. 116 – 122.
Binh, T. and et. al., 2010. The Influence of Changes in the Market Environment on Economic
Production Characteristics of Pangasius Farming in the Mekong Delta (Vietnam).
Marine Resource Economics. 25(4). pp. 373-390.
Daft, B., 2009. Organization Theory and Design, 10th Ed. Cengage Learning.
David, K., 2000. The Cultural Environment of International Business. South-Western Publishing
Company.
Fernando, A. C., 2011. Business Environment. Pearson Education India.
Freeman, C., 2010. Strategic Management: A Stakeholder Approach. Cambridge University Press.
Galende, J., 2006. Analysis of technological innovation from business economics and
management. Technovation. 26(3). 300-311.
Halinen, A. and Törnroos, J. Å., 2005. Using case methods in the study of contemporary
business networks. Journal of Business Research. 58(9).pp. 1285-1297.
Nimwegen, G. and et al., 2008. A stakeholder perspective on mission statements: an
international empirical study. International Journal of Organizational Analysis. 1(2).
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Ormanidhi, O., and Stringa, O., 2008. Porter’s model of generic competitive strategies. Business
Economics. 43(3). 55-64.
Pestel, R. and Johnston, P., 2000., Technology driving change: scenarios for Europe in a global
information society. Foresight. 2 . pp.211 – 217.
Walsh, P., 2005. Dealing with the uncertainties of environmental change by adding scenario planning to
the strategy reformulation equation. Management Decision. 43. pp.113 – 122.
Online
About Next Plc. 2015. [Online]. Available through: <http://www.nextplc.co.uk/~/media/Files/N/Next-
PLC/pdfs/corporate-responsibility-report/cr-2013-v2.pdf>. [Accessed on 13th January, 2016].
CSR activities of Next Plc. 2015. [Online]. Available through:
<http://www.nextplc.co.uk/~/media/Files/N/Next-PLC-V2/documents/cr-reports/cr-2005.pdf>.
[Accessed on 13th January, 2016].
Economic System. 2013. [Online]. Available through:
<http://www.economicsonline.co.uk/Competitive_markets/Economic_systems.html>.
[Accessed on 13th January, 2016].
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