Business Organisations and Environments: Iceland Foods in Mexico

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Business Organisations and Environments in a Global
Context
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Executive Summary
This report will present the background information of Iceland Foods Limited, which a retail
industry based in United Kingdom. A brief detail about the company’s establishment and legal
structure will also be stated in this report. Mexico, which is the emerging market for the
company, a detailed discussion about the country’s market in the retail food industry will also be
presented. The micro, macro and internal factors of the company in the country will also be
briefed about. These factors have a positive and negative impact on the company which will also
be mentioned in the report. There will be graphs and images to support the statistics.
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Table of Contents
Introduction......................................................................................................................................4
Background Information of Iceland foods LTD..............................................................................5
Background Information on the Business Environment in Mexico................................................6
Analysis of the Business Scenario...................................................................................................8
Conclusion.....................................................................................................................................27
Reference List................................................................................................................................28
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Introduction
The sum of employees, customer’s needs, demand and supply, clients, suppliers, activities of the
government, innovation in technology, customer’s behaviour, and economic changes is known as
Business Environment. These factors directly or indirectly affect the function of a business
organisation. These factors can also influence the situation of a business organisation. This report
will state the background information of Iceland foods limited and the background information
of the market in Mexico. The analysis of the business environment will also be deduced in the
report along with graphs, statistics and images in order to support the following data and the
micro, macro and internal analysis of the business will also be undertaken.
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Background Information of Iceland foods LTD
Iceland foods limited are a private limited company, which was established on 10th April 1970.
The company’s main base is situated in Deeside, Wales, and United Kingdom. It has more than
15043 employees serving the customers. This exclusive British food retailer has more than 950
stores all throughout the UK. It further acquired 40 stores across the whole of Europe. This
company supplies frozen groceries and foods. Sir Malcolm Walker, Tarsem Dhaliwal and
Richard Walker are the founder and Executive Chairman, Managing Director respectively of the
company whose net income is around 160 million pounds. The company’s first store was opened
in Leg Street, in England along with a partner named Peter Hinchcliffe. Malcolm and Peter
invested sixty pounds to rent a store. The name of the company was suggested by the founder’s
wife, Rhianydd who is also known as Ranny. They expanded the business by acquiring 18 stores
of Bristol, which is based at St. Catherine’s freezer Centres. The business went public by 1984
for the first time.
The South East based Orchard Frozen Foods was purchased by the partners. The organisation
opened eight, seven, and one store in Ireland, Dublin, and in Letterkenny respectively. It also
expanded its business in Czech Republic. There was an attempt by the organisation to tie up
with the British Home Stores. Malcolm Walker and other mangers were forced to resign the
company after the company’s new chief executive Bill Grimsey issued a warning regarding the
profit. The company is also known for its charitable causes as the company raised over one
million pounds for its assistance associate Alzheimer’s Research UK. Since its establishment the
company has become very popular in the UK and it is named Best Big Company to work for and
the founder of the company was named as the Best leader in the UK. Total sales at stores rose to
3 billion pounds in the month of March 2019. The company removed palm oil, which was being
used as an ingredient becoming the first ever supermarket in the UK by the end of 2018.
Superama, Amsterdam Market, Sumesa is the serious competitors of the organisation.
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Background Information on the Business Environment in Mexico
Mexico is situated in the continent of North America, south of United States. Belize, United
Sates and Guatemala are the countries that surround the country of Mexico. The population is
drastically arising and it expected to overtake the population of Japan. It has grown to
127,818,345 in the year of 2019. The country’s GDP raised to 1.223 trillion dollars in 2018. The
GDP per capita rank of the country rose to 66th in 2018. The country’s GDP is supported by
services, industry and agriculture by 64.5%, 31.9%, and 3.6% respectively. The unemployment
of the country has gone down to 3.6% in 2017.
Figure 1: Inflation rate of Mexico
(Source: oecd.org, 2019)
In the month of July 2019 the unemployment rate rose to 3.75%. In the very same month of the
previous year it was 3.5%. The interest rate was lowered by the Central Bank of Mexico by 25
basis points to 8 percent during the meeting held in august (oecd.org, 2019).
The unemployment rate rose for both men and women. The country’s main business industries
are chemicals, iron and steel, mining, textiles, tourism and vehicles. Two-thirds of the retail sales
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in Mexico are grocery stores and supermarket chains and hypermarket and expediency stores that
sell food are the country’s largest retail chains. There are more than 127 million consumers in
Mexico becoming the second largest market in Latin America.
Figure 2: GDP of Mexico
(Source: oecd.org, 2019)
The country’s economic growth is heavily linked with the consumer food service. This
foodservice is no exception in the country. The country is investing a lot on it and is expected to
grow among the leading companies. Some of the largest retailers are situated in Mexico. Mexico
is the 11th largest economy in the world and the retail sectors provide a majority of support to it
(oecd.org, 2019). Although there is a serious competition in the retail sector the overall Mexican
retail industry is doing quite well. Grocery stores and supermarket chains contribute to more than
two-thirds of the retail sales in Mexico.
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Analysis of the Business Scenario
Pestle Analysis
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Elements Factors Analysis
Political
 Corruption Level- According to a survey reported
Mexico ranks 138 of 175 countries
(Tradingeconomics.com, 2019). This means the
corruption level in the country is quite high.
 Dependent on World bank for loan- The World
Bank reported that Mexico stands second in Latin
America, which leads to a highest per capita
income at around 14,400 dollars (World Bank,
2019).
 Government Stability- The federal government of
Mexico is the national government of Mexico,
which is quite stable (theglobaleconomy.com,
2019). There are no public rights and protests
against the government.
 Since, the
corruption
level in
Mexico is
high the
company
will create
a negative
impact on
it. If the
company
establishes
its
franchise
in Mexico
then it will
have to
face some
serious
corruption
problems.
 Mexico is
the least
dependent
on the
World
Bank for
its
economic
developme
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nt. The
people in
the country
have high
per capita
income
giving
them the
power to
purchase
more. This
will lead to
a positive
impact on
the
company.
 The
governmen
t stability
will have a
positive
impact on
the
company.
If there are
no public
protests
then the
company
can freely
do its
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business
leading to
growth and
developme
nt of the
company.
Economical  Inflation rate- The inflation rate fell from 3.95%
to 3.78% in July 2019 (Tradingeconomics.com,
2019). Since 1974 the inflation rate in Mexico has
gone down.
 Unemployment trend- Mexico has reported the
highest inflation rate in July 2019 where it rose
from 3.5% to 3.7% (Tradingeconomics.com,
2019).
 Gross Domestic Trend- the GDP of Mexico is
worth 1223.81 billion US dollars, which is quite
low as compared to other countries whose GDP
touches the mark of trillion dollars
(Tradingeconomics.com, 2019).
 The low
inflation
rate of
Mexico
will have a
positive
impact on
the
company
as the
company
will have
to pay less
for its raw
materials
to its
suppliers.
Since, the
company
will be
establishin
g a fresh
franchise
in Mexico
so a low
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inflation
will have a
positive
impact on
the
company.
 The low
GDP of
Mexico
will have a
negative
impact on
the
company.
A
country’s
GDP is the
reflection
of the
country’s
well being.
If the
country is
not doing
well in
terms of
economy
then there
will be a
bad affect
on the
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