Business Environment Analysis Report: Primark Case Study (BUS101)

This report provides a comprehensive analysis of Primark's business environment. It begins with an introduction to business environments and their impact, using Primark as a case study. Task 1 identifies Primark's organizational type as a private limited company and its objectives, along with stakeholder analysis, including suppliers, shareholders, employees, customers, and the government. Task 2 explores economic systems, focusing on how resources are allocated, and assesses the impact of fiscal and monetary policies, competition policies, and regulatory mechanisms on Primark. Task 3 delves into market structures, illustrating how market forces shape organizational responses and evaluating the influence of business and cultural environments on Primark's behavior. Finally, Task 4 examines the significance of international trade to UK businesses, analyzes the impact of global factors, and evaluates the impact of EU policies on UK business organizations, concluding with a summary of the findings and references.

Business Environment
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TABLE OF CONTENTS
Introduction......................................................................................................................................3
Task 1 ..............................................................................................................................................3
1.1 Identifying the types of organization along with their purpose.............................................3
1.2 Describing the extent to which Primark meets objectives of its different stakeholders.......4
1.3 Explaining the responsibilities of Primark.............................................................................5
TASK 2 ...........................................................................................................................................6
2.1 Explaining how economic systems attempt to allocate resources effectively.......................6
2.2 Assessing the impact of fiscal and monetary policy on Primark and their activities............7
2.3 Evaluating the impact of competition policy and other regulatory mechanism on the
activities of Primark ....................................................................................................................8
TASK 3 ...........................................................................................................................................9
3.1 Explaining the market structure that helps in to determining the pricing and output
decisions of business....................................................................................................................9
3.2 Illustrating the way through which market forces shape organizational responses using a
range of examples........................................................................................................................9
3.3 Judgement on how business and cultural environment shapes the behaviour of Primark...11
TASK 4 .........................................................................................................................................11
4.1 Significance of international trade to UK business organization.........................................11
4.2 Analysing the impact of global factors on UK business firms............................................12
4.3 Evaluating the impact of policies of the European Union on UK business organization....13
CONCLUSION..............................................................................................................................14
References......................................................................................................................................15
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INTRODUCTION
To grow a business in a right direction, managers of the company needs to be recognize
predicted, and deal with the changes in both internal and internal environment. This helps in to
understanding about what is happening inside and outside of an organization so that right
organizational strategy to be prepared to face the environmental challenges. Business
environment is consists of different set of conditions like social, economical, political and
technological etc. All these environmental factors affects the business operations either in a
positive or negative way. Environmental factors gives strength to an organization in order to
maximize their efficient utilization of resources. All these factors makes organization more
flexible and dynamic in nature. It helps the company to grow and long survival in the market
under the diverse situation. It made the organization in order to examine environmental factors
and constructs the strategies according to environmental changes towards the attainment of
business objectives. The following research is based on business environment and to understand
its significance; Primark case study is taken in to consideration. It is a kind of British food group
subsidiary company. Company have 238 branches in UK, Ireland and Europe. It provides
distinctive products and services compare to their competitors. Primark sourced its product and
services from Asia, Europe and other key sourcing company. Under this study it assess the
impact of fiscal and monetary policy on Primark.
TASK 1
1.1 Identifying the types of organization along with their purpose
Primark is the leading firm that is working in the retail sector tremendously. Company
believes in ethical trading and provides quality cloths to entire world. It is subsidiary of ABF
(Associated British Food) group. It offers innovative and fashionable cloths at reasonable rates.
Primark is a leading company so that it provides limited liabilities to its stakeholders. The main
motive of this company is to provide quality of goods and services to customers at affordable
prices along with value added services. Its business operations are governed under the laws of
England, Scotland and Ireland. Primark main objective is to offer range of product and services
according to customer demands and their needs (Popescu, 2013). In addition to this, it can be
stated that Primark is considered as private limited company which focuses on profit
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maximisation so that goals and objectives can be accomplished. It has been witnessed that
diverse range of products are being provided in order to meet the needs of customers. Company
is continuously focusing on improvement in supply chain in order to ensure that overall services
can be advanced in desired manner. Primark have been to supply quality and affordable product
to the customers with a focus on new promotion (Cai, and Yang, 2014).
Primark is the public limited firm.
 Vision of the cited firm is to offer products and services in entire world.
 Mission of the Primark is to enhance profit and to provide satisfactory services to the
clients so that they be loyal towards the brand and give positive feedback to others.
Company wants to enhance its brand reputation and want to expand its business
worldwide.
Private Limited Company- That kind of business organization is established for the
purpose of earning maximum profit by offering various kind of product and services to market.
Market influencing factors like demand and supply plays an important role in decision making
process of an organization. 5 forces porter model also influence the business strategy of an
organization (Popescu, 2013). By having an application of diverse methods the businesses can
have better opportunities in the market.
Public limited company- That type of organizations are established for the purpose of
sharing its share to the companies. Its profit are to be used for the further development and
growth of an organization. British Airway is a public limited company. International airline
group has acquired British airways. Public needs are being considered as critical aspect while
having a designing of structure so that goals and objectives can be accomplished in desired
manner (Cai, and Yang, 2014).
Franchises- Business organization mainly focused on brand value, reputation, expertise
and experience of Franchisor. McDonald's and KFC are the best examples of that kind of
business organisation. Franchisor gets substantial amount of fee and licence along with its brand
values that helps in to spread their foot prints (Popescu, 2013).
Partnership- Joint ventures are formed in order to share risk and investment in a
business. Partnership gives strength to business organization towards the establishment and
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smooth functioning of organizational activities. Sharing of knowledge and skills helps in further
growth and development of business activities (Sena Ferreira and et.al., 2012).
Sole trader- Sole traders are a single proprietorship who own their business without any
partners or funders. The core purpose of sole trader is to make complete control over their
business activities in order to generate maximum profit with optimum utilization of resources.
1.2 Describing the extent to which Primark meets objectives of its different stakeholders
Primark has several stakeholders that makes impact on organization by direct and indirect
way. There have been several actions taken by company to meet the objectives of its different
stakeholders. Each and every stakeholders is important for the sustainable growth of an
organization. They have rights to know about the company financial position and performance
related informations. Primark has been published annual report where all the information are
presented related to company performance as well as financial position of a company.
Suppliers- Primark main objective is to provide transparent transaction system off both
money and service. Earning profit, fair price, timely payments, brand value awareness and
market share have some objectives of suppliers to Primark. Suppliers are the raw material service
provider to an organization. If company makes some changes in its product quality and new
development of any kind of product that time essential information are to be provided to
suppliers that helps in to effectively manage the raw the material quantity and quality according
to changes in several circumstances.
Shareholders- Management plays an important role in formulation and implementation of
business strategies under consideration of stakeholders needs of Primark. Shareholders main
focus on the Primark short term and long term profits because it helps the investors in decision
making process of investment. Primark takes opinion and advice from most powerful
shareholders regarding to shape an renovate the organizational functions towards the smooth
functioning of all operations and activities (Sena Ferreira and et.al., 2012).
Employees- Primark meet the employee objective or expectations by proving attractive
incentives, satisfactory wages, prestige , growth opportunities and career development.
Employees expect and demand for stable and healthy work culture within an organization along
with various benefits and equal work opportunities.
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Customers- For a customer Primark main objective is to provide high quality of services
in an efficient way with timely response because customers are highly responsible towards the
revenue generation. It has been noticed that if company customer needs are not properly
accomplished then it will impact the overall outcome. Through considering customer needs the
sales and profit margin can be advanced effectively.
Government- Govt. plays an important role for the environment or legislation changes
that can be harmful for organization productivity so that it protects the organization productivity.
Tax, job creation and creation and major contribution by company in country economy have
some expectations of government to the cited company.
1.3 Explaining the responsibilities of Primark
The role of Primark is dynamic in nature because it vary over the year. Following
changes are basically related to customers expectations and demand from the suppliers and local
communities (Babatunde, and Adebisi, 2012). The main role of cited organisation is to
effectively meet the challenges in order to fulfils the customers expectations.
Responsibility towards the environment- Every business organization promotes their
business in way to maintain environment sustainability. Primark company integrates both social
and environmental factors. CSR is generally used in an organization for the purpose of balancing
between economic, environmental and social imperatives.
Responsibilities towards the stakeholders- Primark organization are responsible towards
the involvement of stakeholders in decision making process, and to determine and understand the
company objective. Company uses various strategies towards the accomplishment of its
responsibilities.
Ethical responsibilities- Under this responsibility, company uses fair trade, environment
protection, honesty are some ethical accountabilities of Primark. Towards the achievement of
these factors, company needs to use various strategies like fair pricing, fair trade contract,
packaging, regulations on wastage for environment protection, ethical marketing and CSR
activities are also be consider under the ethical responsibilities. In order to have better
opportunities and meet key needs of stakeholders the business firm is well focused towards
improvement in social needs. Using CSR activities overall opportunities can be advanced and
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lead business firm to impressive level of success. Legal norms are being considered during
activities accomplishment.
Legal responsibilities- Company adopted various strategies in order to fulfils all these
responsibilities like customer based marketing is fair and trustworthy, managing of human
resource, health and safety activities within an organization along with adopting the finance and
accounting standards. This responsibility also protects the rights of customers and employees
under the health and safety of personnel, tax and financial documentation etc are to considered
(Yu, and Ramanathan, 2012).
Colleague engagement- Primark has various programs through which company can
fulfills the responsibilities towards the employees. Company gives charity to needy non profit
organization where current or retired employees makes contribution in the donation of fund. This
fund can be used for cancer patient and who can not afford the cancer treatment. Company
believes that ethical and fair relationship with employees and stakeholders are the essential
element for the growth of an organization. They does not exert pressure on employees
unethically.
TASK 2
2.1 Explaining how economic systems attempt to allocate resources effectively
Every country follow different economic system with the aim of optimum allocation of
resources in an efficient and effective manner. United Kingdom, Cuba and China have diverse
economic structure with each other. Economic system gives guidelines to nation in order to
effective allocation of resources, goods and services in a community. Resource allocation is the
most critical aspect for an economic system. Economic system are divided in to four types like
traditional, market, command and mixed economy system.
Free market economic system- In this resources are allocated on the basis of market
forces that is demand and supply and is directly progressives to the demand of a particular
product or services in market place. Government intervention are avoid here and to ensure that
without use of government Legislation Company should adopt fair and transparent economic
system. This type of economy will also be beneficial for the Primark because there will not be
any interruption of government regarding supply and demand thus, cited firm will be able to
make its own decision and profit will not be required to share.
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Command economic system- Cuba is the country that implements command economic
system. Under this system whole power of decision making is in the hand of government, they
allocate funds by looking upon size of firm. where resources are allocated by the Government
authority of a country. Under this situation earning profit is not a main motive of an organization
it basically concerned with the social welfare of society. The government decides the supply of
the product or services along with its pricing. Government takes production or marketing
decision. All the economic resources are in the hand of centralized power. It has high level of
regulation and rules for every business work.
Traditional economic system- In this system allocation of resources are driven by the
price factors. It is regulated by the government legislation and private player (Cai, and Yang,
2014). Company like Tesco PLC cannot run their business in this kind of economy because of
requirement of huge economical resources for retail business.
Mixed economy system- United Kingdom is the nation where mixed economic is followed
.In this type of system both government and market take decisions and both respect decision of
each other. That helps in enhancing the economic position of the county to great extent. Primark
can get huge benefit from this economic system because it will be able to get sufficiency
resources from the government and cited firm will put its hard efforts to improve quality of
performance. In this type of economic system government and market palyers are the decision
makers towards the allocation of resources. It is a combination of free market and command
economy. Most of the public oriented companies are adapted mixed economy system.
Above the four economic system Primark company also uses market economic system
where the resources are allocated on the supply and demand of a product because its product and
services are change according to the changes in the customer taste and preferences. Pricing is a
crucial factors in way how many items and quantity are to produce. Primark product price
determination is based the demand of customers and by the choice of suppliers. Equilibrium
pricing can be determined through the customers and suppliers are satisfied with the product of
Primark.
2.2 Assessing the impact of fiscal and monetary policy on Primark and their activities
Monitory policies are those regulations which are related with the interests rates and
fiscal policies are those which are much more related with the tax rates. Fiscal policy are
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formulated for the purpose of having an impact on the economic activities while monetary are
used to control the macro economic variables that make an impact on the economy. Most
affected issues in fiscal policy is Increment in Value Added Tax (VAT) or Income Tax (Yu, and
Ramanathan, 2012). If government increases interest rates then it will affect the operational cost
of the entity thus, cited firm will not be able to expand business easily. On other hand if tax gets
increases then Primark will have to pay more tax thus profit will get reduced.
Primark product and services are affected by the fiscal policy. If VAT is increased on the
products or services that makes an greater impact on the consumer buying behaviour that time
Primark makes new pricing strategy in order to maintain the retention level of customers. This
strategy helps in to achieve predetermined level of profit. On the other hand if income tax are
increases that time people are trying to spend less money for purchasing the product because that
time high amount of tax will be paid with respect to previous time. They will try to limit their
budget with the daily necessities and makes cut off on the luxury items. Primark is the retailer of
food and grocery items if amount of taxes is rises it makes lessor impact on the Primark product.
Housing is the main industry which is affected by the monitory and fiscal policies. If
government decreases interests rates then there will be problem in supply of money then people
will get loan easily for purchasing the properties.
In monetary policy where demand and supply are determines by the proportional
distribution of money. Both the policy fiscal and monetary affects the business directly and
indirectly in terms of their productivity phenomena. Fiscal and monetary policies tools are used
by the Govt. to establish ebb and flow of economy. Expansionary monetary policy is other
monetary tool to boost the country economy by lower interest rate and larger money supply. The
Federal reserve can directly decrease interest rates or purchases bonds from treasury to increase
the money supply. It decreases the overall money supply in order to spent less money by
customer’s for purchasing goods. Rate of lending of money is low and affects the sales ratio of
an organization.
2.3 Evaluating the impact of competition policy and other regulatory mechanism on the activities
of Primark
Competition policy are developed by the UK government with the aim of prevention and
minimization of monopoly power (Popescu, 2013). It helps in to protects the interest of end
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users. Regulatory body of nation prepares the framework. The main aim of competition policy is
to promote competition in market place with respect the improvement in the organization
efficiency. It helps in to reduce the monopoly in the market place. It also gives an opportunities
to firm in order to face level of competition and maintaining the quality of end products. In UK
market there are several competitors are exist, intense competition reduces the prices of the
product. Through this company can gain high market share by offering better prices and more
people can afford to buy the products. Competition also encourages the businesses towards the
improvement in the certain quality of product and services in the existing product line
phenomena. More choice and innovative product may establish the retention level of customers
for a longer time period.
There are many policies made by the UK government related to competition. One of the
great law is competition act 1998 that works for trade liberalization. That is beneficial for the
organization through this they will be able to improve standards. This policy impact on the
Primark to great extent because through this it will be able to provide satisfactory products and
services and will be able to gain competitive advantage
Fair trading act 1973 is another policy related to competition, which works to minimize
the unfair practices so that firms run their business fairly. That will impact positively on the cited
firm because through this it will be able to enhance its brand image.
Competition is needed for the growth of the market. Competition policy are framed by
the UK for creating fair competition among the organizations in market. Primark is competing
with Sainsburry and Tesco that impose the forces towards the new invention and new brand
value product which can dominates the UK market in future. Sainsburry is able to create a
sustainable image in market.
TASK 3
3.1 Explaining the market structure that helps in to determining the pricing and output decisions
of business
Pricing and market structure are the two basic component in the economy. Primark uses
mixes economy system where prices of the products regulated by the government and private
players so that it can make higher profit. Intensity of competition, spending power of consumers,
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number of business organization are the attributes of the market structure (Zhang, and Huang,
2012.
Perfect competition is the market structure in which sellers are high in number and population
have mass choice for the products. Primark is working under this structure because there are
many retail shops those which provide cloths to consumers.
Monopoly is the structure where large number of similar firms operate but they do not
affect pricing decisions. Oligopoly is the structure where limited firm operates and they have
strong control over the pricing policies (Doyle, McEachern and MacGregor, 2015). Auto mobile
industry come under this market.
There are various types of market structure like perfect competition where Large number of
buyers and sellers are exist, monopoly where only and seller or larger number of buyers are
available, monopolistic in this market less number of buyers and sellers are exist in market place.
that and oligopoly. In perfect competition market, consumers have too many choices due to the
large number of sellers.
Primark is operate in perfect competition market structure where similar and identical
retail chain are available in UK. Primark product and services are less influence by the changes
in the prices and consumers are not obligated to come Primark for buying their necessity
products. Primark has no choice to made prices of a product because it is totally dependent on
the pricing of the competitors (Zhang, and Huang, 2012). There are unlimited number of
consumers and producers are available in market place.. There are low entry barriers and all
company products are identical in nature because there is no differentiation. British telecom
industry, post office and micro soft windows provides monopoly in market. where firm have
patent or copyrights for no one can sell a product or to protect intellectual property ( Popescu,
2013).
3.2 Illustrating the way through which market forces shape organizational responses using a
range of examples
Demand can be defined as products which are desired by the buyers and to get the the
particular goods people are ready to pay the amount. Supply can be termed as services supply
by entities to satisfy the consumers needs. Market forces mainly influence the decision making
process in an organization regarding to innovation and expansion of new product. In fact many
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times these forces are responsible for shaping the entire business strategy of business
organization. Industry considers the five forces porter model and to understand this. It is
necessary for the Primark to make balance between demand and supply because by this way it
will be able to run business smoothly. If demand is high as compare to supply then cited firm
will have to decrease its prices in order to give response to the high demand. On other hand if
supply is high then demand then firm may face loss so they increase prices accordingly. If
Primark make equilibrium between demand and supply so it will be able to gain success and it
will sustain in the market for longer duration.
There are different types of market forces are exist such as :
 Demand and supply
 Elasticity of demand and supply
 Economies of scale
 Customer satisfaction
 Short run and long run concept
 Technology with employee skills
 Bargaining power of buyers
 Bargaining power of suppliers
 Threat of new entrants
 Level of competition
 Threat of substitute from competitors
Demand and supply- Market forces shapes the business strategy of Primark. Demand and
supply influence the Primark business decisions. Primark wants to produce new grocery
products and items. Primark organization needs to be analyse the supply and demand of the
grocery product.
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