Business Environment: Iceland Supermarket Case Study

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BUSINESS ENVIRONMENT
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Table of Contents
Introduction............................................................................................................................................3
Task 1.....................................................................................................................................................4
P 1.1 Purposes of the corporations.....................................................................................................4
P 1.2 Meeting the goals of the various stakeholders of Iceland Supermarket...................................4
P 1.3 Tasks and strategies adopted by Iceland Supermarket..............................................................5
Task 2.....................................................................................................................................................7
P 2.1 Different types of economic system and their efforts towards resource allotment...................7
P 2.2 Impact of fiscal and monetary policy on Iceland Supermarkets...............................................7
P 2.3 Impact of competition policy and regulatory mechanisms on the activities of Iceland
Supermarket.......................................................................................................................................8
Task 3.....................................................................................................................................................9
P 3.1 The impact of market structures in the determination of the pricing and output decisions of
businesses in Iceland Supermarket.....................................................................................................9
P 3.2 Illustration of the ways in which market forces shape Iceland Supermarket............................9
P 3.3 Businesses and cultural environments in Icelandic Supermarket...........................................10
Task 4...................................................................................................................................................11
P 4.1 The significance of international trade to Iceland Supermarket.............................................11
P 4.2 Analysis of the impact of global factors on Iceland Supermarket..........................................11
P 4.3 The impact of policies of the European Union on Iceland Supermarket................................11
Conclusion............................................................................................................................................13
References............................................................................................................................................14
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Introduction
The internal and the external factors of an environment influence the various functional activities that
are taking place both within and outside the company (Hillary, 2017). In this assignment, the various
kinds of policies regarding finance, fiscal policies, competition policies and various kinds of
regulatory systems and their effect, which will aid in the efficient and uninterrupted functioning of
the business will be analysed and examined in the light of Iceland Supermarket. The various kinds of
markets presently functioning and operating within the business environment will also be focuses
upon by means of the chosen organisation Iceland Supermarket. The various global factors and the
policies adopted by the European Union will also be analysed so that it can aid Iceland Supermarket
to frame policies and strategies, which will aid them to maintain a aggressive outlook and continue in
the cutthroat environment.
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Task 1
P 1.1 Purposes of the corporations
A. Iceland Supermarket – This supermarket is a private corporation and is focused upon providing
superior products to the target population of UK. They engage in serving variety of food products
and have around 100 stores (Pechey and Monsivais, 2015). They are not liable to sell off their shares,
which are present in the market without the permission and agreement of their present shareholders.
B. KFC – KFC is the largest chain delivering fast foods of superior quality and pocket friendly
pricing. It has around 25000 outlets spread in over 150 countries. The main aim of the organisation is
to achieve aggressive benefit by offering diverse range of products to the consumers of the target
market (Hussain, 2017). The company is a private organisation, as it cannot sell its shares in the
market even after the permission of its present shareholders of the corporation.
C. Transport for London (TFL) – This is a public corporation and is controlled by the London
government who is responsible for looking after the transport arrangement in London (Urry, 2016).
The main aim of the corporation is to look after the transport facilities available in the country and
about 30000 people are presently working in this organisation. The company is legally liable to sell
away its shares in the market.
D. Cancer Research – The organisation is managed by a range of individuals and groups who work
for charitable trust. It is a non-profit organisation, which focuses upon serving individuals. It is a
benevolent trust, which mainly serves people who have cancer (Holzapfel et al., 2015). The money is
earned by donations from either government or individuals, which are, spend for serving such
diseased individuals.
P 1.2 Meeting the goals of the various stakeholders of Iceland Supermarket
The stakeholders are the life and blood of any organisation and therefore every company must meet
their objectives. The major stakeholders of Iceland Supermarket are the owners of the organisation,
company’s shareholders and employees, government, consumers, creditors and suppliers and the
environment in which it is presently operating. These stakeholders have different objectives, which
needs to be fulfilled by the company in the course of the business.
 Owner – The owner of the organisation is aiming to focus upon earning more revenue and
profit so that it can sustain in the market. Iceland Supermarket should meet this objective, as
this will be of great help to the organisation itself aiding them to move efficiently in the path
of sustainability and success.
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 Employees – The employees are the chief stakeholders as they are the pillars of any
organisation. The employees of the organisation have the objective of getting remuneration,
salary hike, bonus and leaves according to the works they perform (Ryals, 2017). Iceland
Supermarket should meet their objectives because keeping them satisfied and contended will
only promote organisational goals and work levels.
 Shareholders – They aim at earning the highest possible gain and return from the amount of
money invested by them in the organisation. The organisation can function uninterruptedly
only if the objectives of such shareholders are met in time (Rao-Nicholson, and Salaber,
2015).
 Government – The government has direct and indirect stakes in all the organisations, which
are presently functioning in the marketplace Tax revenue, constructive utilisation of resources
are some of the direct stakes whereas indirect stakes includes economic growth, creation of
employment, safety and security issues of the society and the employees of Iceland
Supermarket. The objectives if met, will aid the organisation to function easily in the business
environment and maintain sustainable advantages (Thomassen et al., 2017).
 Suppliers – The suppliers of the organisation aim to receive accurate commissions based on
the supplies provided by them to the company. Iceland Supermarket should meet such
objectives so that they can gain advantages while competing with its rivals in the market.
 Creditors – They aim towards receiving interests as per the industry standards based on the
amounts invested by them in the corporation. Iceland Supermarket must meet their
objectives, as it will help them to avail advantage regarding any monetary assistance in
future.
 Society – The society needs an eco friendly environment with top class infrastructure and
proper benefits for common people. Iceland Supermarket should meet the requirements of the
people, as it will assist them for the growth and prosperity of the organisation in the course of
time (Wilshaw, 2018).
P 1.3 Tasks and strategies adopted by Iceland Supermarket
Iceland Supermarket has a variety of responsibilities, which needs to be satisfied by them. It has
responsibilities towards the stakeholders and various legal and ethical responsibilities, which are
necessary to be met as soon as possible so that they can gain advantages and scopes to continue in
the market.
 Responsibilities towards stakeholders – Iceland Supermarket should consider all its
stakeholders while managing and functioning its business as well as taking important
decisions within the organisation. They should identify all the primary and secondary
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stakeholders and fulfil their objectives time to time in order to co-ordinate their activities
smoothly. The organisation should always consider its primary stakeholders before taking
any important decisions (Keogh, 2016).
 Legal responsibilities – Iceland Supermarket must provide equal opportunities to all the
employees, staffs and managers who are presently working within the organisation. The
organisation and the staffs should adopt the policy of legal financing so that they can pay
regular taxes without any confusion. Iceland Supermarket must consider consumer’s rights
regarding the service and product quality they are providing and the payments they are
receiving against the sale of such products. They must also skilfully handle the hindrances
and complaints received by individuals and handle them tactfully to avoid dissatisfaction
(Lever and Evans, 2017).
 Ethical responsibilities – The ethical responsibilities like fair trading, protection of
environmental rules and policies, honest claims in promotional activities and liability for non-
consumers should be looked after by Iceland Supermarket. They should design and frame
appropriate strategies so that they can easily meet these objectives in no time.
The organisation, Iceland Supermarket, must use participative management styles, stakeholder
analysis techniques and design policies in such a way that they go well in hand with the designed and
desired objectives to meet the wants of the stakeholders. The legal responsibilities can be met by
Iceland Supermarket using human resource management and consumer focused marketing
techniques (Tench and Topić, 2017). They should emphasise upon the safety, health and security of
the consumers in the market as well as the employees in the organisation. Professional financial and
appropriate accounting methods should be used by the organisation to manage the financial and
taxation legislations. The ethical responsibilities of Iceland Supermarket can be met by providing fair
product pricing and following the green concept, by means of recycling goods. Iceland Supermarket
should follow the concept of ethical marketing for selling its products in the marketplace and should
be aware of the corporate social responsibilities to function efficiently (Tidy et al., 2016).
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Task 2
P 2.1 Different types of economic system and their efforts towards resource allotment
The various types of economic systems and the ways they use resources effectively can only be
analysed and examined after understanding the types of resources that an organisation deals with.
There are various types of resources, which an organisation deals with like human resources, tangible
and intangible resources, financial, and time and information resources. The different economic
systems, which attempts to allot resources, are as follows:
 Command System – The allotment of resources in this system are handled by the various
governmental agencies functioning in the market. Countries like Cuba, North Korea use this
system as this is the feature of every communist society.
 Free enterprise – The sole producers and consumers of the market are the decision makers
depending on whom allocation is done. No governmental intervention is there in this case and
in countries like USA, Singapore this system is followed (Ghisellini, 2016).
 Mixed system – Government has a pivotal role in allotment of resources in this case. The
resources received are in the type of taxes paid by organisations and individuals. Countries
like Britain, France follow this system as it helps in the flow of huge wealth.
 Transitional system – The economy shifts from command to free enterprise system. In
countries like China, Russia companies move from public to private sectors to earn more
revenue and remove government interventions (Moseiko et al., 2015).
P 2.2 Impact of fiscal and monetary policy on Iceland Supermarkets
Fiscal policies and their impact
These policies are operated by the government to balance the level of earning and spending which is
influencing the economy of the nation. They affect the tax rates, interest rates and government
spending. The government is increasing and decreasing the rate of taxes and public spending in order
to influence the macro-economic productivity levels (Hansen, 2018). By using this, they are aiming
to curb down inflation rate, which will be helpful for the economy of the nation. The fiscal policies
create a constructive effect upon Iceland Supermarket as they aid in increasing the rate of
employment and maintaining the value of money.
Monetary policies and their impact
The central banks, regulatory bodies and currency boards analyses the growth rate and money
supply, which in turn affects the interest rates. These aspects are controlled by the actions including
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enhancing interest rate of altering amount of cash banks can store in vaults. The change in rate of
interests causes the organisations to change their method of spending cash (Bianchi and Ilut, 2017).
If the rate of interest decreases, Iceland Supermarket can manage its finances by borrowing requires
amount of money from the banks. New job opportunities will also be created that will promote
economic growth. Iceland Supermarket can also be motivated and influenced to set up new outlets or
start up diversified businesses by the aid of monetary policies. By means of such policies, they can
design and develop new strategies, which will help them to function well and sustain in the
competitive market.
P 2.3 Impact of competition policy and regulatory mechanisms on the activities of Iceland
Supermarket
The market decorum is maintained by the competition policies as it removes unprincipled practices
used by the company to attain advantages.
 Impact of competition policies – Iceland Supermarket can use this policy to enhance
efficiency and productivity by reducing costs and utilise resources in a better manner to
improve business supplies. The competitive nature is also enhanced which is aiding better
functioning in the market (Stucke and Grunes, 2016).
 Impact of regulatory mechanisms – Government frames such regulations to guide activities
and decisions and organise them well to provide benefits to the nation as well as to the public.
The food policy regulations ensure that the food safety and hygiene is maintained by Iceland
Supermarket. The Food Standards Agency of UK administers the policies regarding food and
keeps a close watch upon the actions of Iceland Supermarket (McIntyre, 2018). The company
can be shut down if there is any breach in the policy. Every organisation in UK must comply
with the guidelines of the Companies Act. It defines the responsibilities of an organisation
towards its consumers and its employees. Iceland Supermarket must design its policies as per
the Companies Act as any contravention of such guidelines can hamper the goodwill of the
business.
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Task 3
P 3.1 The impact of market structures in the determination of the pricing and output decisions
of businesses in Iceland Supermarket.
In the economy of Iceland and in general, market systems can be categorized into five types that are
perfect competition, monopoly, oligopoly, monopolistic competition, and duopoly. In case of perfect
competition, the number of business owners and customers are not limited. In this kind of market, it
is usually observed that, many sellers, trade same kind of things within the market. Because of that,
for any particular seller, changing the pricing of any product is quite impossible. As that change will
be reflected to other sellers in the market, who are selling the same product. In this way, a perfect
environment of clash arises (Becker, 2017).
Now, in monopoly market structure, due to the absence of competition, manufacturers set prices of
their good according their wish. This system of market is exactly opposite to perfect competition
market structure. One of the demanding factors of this kind of market system is the manufacturer has
to make or manufacture something that is not manufactured by any other manufacturers in the
market. In simple words, the product has to be unique. Oligopoly is slightly different from
monopoly. As discussed, in comparison to monopoly, rather than having a single manufacturer, in
oligopoly market system, more number of manufacturers is there. The only difference between
monopoly and oligopoly is that, due to the existence of other manufacturers, in oligopoly market, a
single manufacturer cannot decide the pricing of any particular product (Becker, 2017). Now, a
market structure like monopolistic competition can be described in such a way that, it is market of
numerous business owners like perfect competition, but each of these sellers produces different kind
of stuffs. Now, duopoly is a form of oligopoly with two manufacturers delivering same kind of
products. In this kind of market, both a manufacturers come to a negotiation about the pricing of the
product.
P 3.2 Illustration of the ways in which market forces shape Iceland Supermarket
In general, Iceland trades products made of aluminum, fish etc. Tourism plays a massive role in the
economy of Iceland. In 2016, United States became the biggest trade partner with Iceland
(Export.gov, 2019), which influenced the Icelandic customers a lot. Now, the demand of the
Icelandic market has increased, as the people of Iceland became more influenced by the culture of
USA. The employment rate in Iceland is low. People are moving towards the field of information
Technology. The demand in Icelandic market varies from time to time. Depending on which the
government of Iceland keeps, it changes the taxation policy in the country in order to maintain the
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overall economy (Merlingen, 2018). With a small population of 350,000 people, it is quite easy to
maintain the supply chain of the market (Export.gov, 2019). Generally, with arrival of new products
in the market, the demand increases. As the government in 2017, it is claimed that the Icelandic
market is going to stop the use of plastic in the market (Export.gov, 2019). The companies have also
started to produce biodegradable carrying products. Because of that, the supply chain of the market is
getting larger. The only disadvantageous thing, that is affecting the Icelandic supermarket is most of
the employees working in the market are foreigners.
P 3.3 Businesses and cultural environments in Icelandic Supermarket
In order to judge the factors that affect the business in Iceland, Social, Technical, Environmental,
Economic, Political, Legal and Ethical factors has to be discussed. As the population of Iceland is
massively influenced by America, a lot a cultural and social, practices are adapted and done by the
people of Iceland. In Icelandic Supermarket, Frozen foods are delivered the most, as population there
does not like fast or Junk food (Abdullah, 2019).
Coming to technical factor, Iceland is one of fastest growing country when it comes to technological
advancement. The population of Iceland is also very good in English as a language and overall
academics. That makes them more eligible to work in the field of technology and with other
countries around the world (Merlingen, M., 2018). The overall food quality in Iceland is better as
compared to other European countries. Most of the food eaten here is grown in the fields and farms,
which makes them healthy as well as safe to eat (Abdullah, 2019).
With less population, the people in Iceland have a decent power of money on average. As the
supermarket in Iceland, offers foods rich in quality, people there prefers to invest more on those. In
addition, Iceland has more than 700 food outlets in UK, because of which, the overall economy of
Iceland depends on Food businesses a lot. Coming to the political factors in Iceland both positive and
negative aspects are there. However, those factors do not affect that much when it comes to Icelandic
supermarket. In Iceland, taxation system is very strong. Government does not have to push business
owners to pay their part of tax unlike other European countries. Iceland as a country is very rich in
culture and the people there follow high ethics in their life (Abdullah, 2019). This phenomenon
makes Icelandic supermarket a very trustable place to do business in for other countries. In addition,
Iceland has also been able to maintain a good rate in economic growth.
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Task 4
P 4.1 The significance of international trade to Iceland Supermarket
International trading has multiple advantages as compared to domestic marketing. By
internationalizing businesses, Icelandic supermarket can be massively benefitted, as then the market
will be open to more number of customers. Iceland by internationalizing their food and other
businesses can generate more profit for the country, which will increase the economic position of
Iceland in the global chart (Feenstra, 2015). By doing international trades, Iceland will be able to
prove their business potential to the world. As mentioned before, the demand of product in Icelandic
market fluctuates in different seasons. Therefore, this problem of varying product demands in the
market can be avoided by engaging into international trading. Dependencies in the domestic market
can be lowered by increasing the global share of the exiting market, and that can be done by
internationalizing the business (Feenstra, 2015).
P 4.2 Analysis of the impact of global factors on Iceland Supermarket
Various global factors are there that can influence the businesses in Icelandic global market. Coming
to the first issue, Iceland as a country has less influence in the global market as compared to other
European countries. Because of that, it is not easy for Iceland to take loans as a country from the
World Bank for the betterment in their business aspect. This less percentage of shares sometimes can
be advantageous to the country as well, as it does not get as affected as other countries in global
economic crisis. Environmental factors like Global Warming and More Plantation have affected
Iceland as well (Houssa et al. 2015). For which Icelandic Government has started to invest on
technological advancement in both public and private vehicle department so that those make less air
pollution. Pressure has been put to use biodegradable products to all the retailers, as the use of plastic
is going to be stopped in Icelandic market. It has been noticed that many people from other part of
UK and USA are migrating in numerous number to Iceland.
Due to this migration, the pattern of product likeliness is changing. Other factor that is also
responsible for the change of this pattern is the impact of social media (Houssa et al. 2015). In
addition, various global political factors are affecting the market policies in Iceland. In technological
aspect, Iceland is way ahead than its rivals. However, the government is investing more to automate
most of the business processes, so that the complexity and chance of fraud decreases. In addition,
Iceland is developing its communicational technologies so that the country can participate more
actively in the global market.
P 4.3 The impact of policies of the European Union on Iceland Supermarket
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Being under the European Union, Icelandic supermarket has to pay zero custom tax to the
government. For this, in Icelandic supermarket, decent use of resources is observed. As this system
of taxation is applied across all the countries in Europe, business owners are able to trade in every
country and see the potential in various markets. The policies under European Union are
advantageous to workers in Iceland as well (Cini and Borragán, 2016). Many advantages like less
working hours, Employee rights, security for the workers are included in the policies. As a country
has to provide a good amount in order be in the European Union, Iceland also has to spend in this
regard. This affects the overall capital of the country (Cini and Borragán, 2016).
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