Business Environment and Stakeholder Analysis: Iceland Supermarket

This report provides a comprehensive analysis of the business environment impacting Iceland Supermarket. It begins with an introduction to business environments and their influence on organizations. The report then delves into the specific context of Iceland Supermarket, examining its purpose, stakeholder objectives (customers, government, employees, and shareholders), and corporate social responsibilities using Carroll's Pyramid model (economic, legal, ethical, and philanthropic). The analysis extends to the broader economic system, including market dynamics, fiscal and monetary policies, and competitive regulations. The report also explores how market forces shape organizational responses and the impact of the business and cultural environment. Furthermore, it assesses the significance of international trade, global factors, and European Union policies on Iceland Supermarket's operations and performance. The report concludes with a summary of key findings and insights into the company's strategic position within its complex business environment.

BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Purpose of below stated organizations..................................................................................1
1.2 Ways to meet the objectives of different stakeholders in Iceland Supermarket...................2
1.3 Responsibilities of Iceland Supermarket as an organization and implemented strategies ...3
TASK 2............................................................................................................................................1
2.1 Economic System to Allocate Resources :............................................................................1
2.2 Impact of fiscal and monetary policy:...................................................................................2
2.3 Impact of Competitive Policy and Other Regulatory Mechanism........................................2
TASK 3............................................................................................................................................3
3.1 Market structure determine the pricing and output decisions ..............................................3
3.2 Different ways in which market forces shape organizational responses ..............................4
3.3 Impact of Business and Cultural Environment on Iceland supermarket ..............................5
TASK 4............................................................................................................................................6
4.1 Significance of International Trade on Iceland Supermarket...............................................6
4.2 Impact of Global Factors on Iceland Supermarket...............................................................6
4.3 Impact of the European Union policies on Iceland Supermarket.........................................7
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment includes external factors and internal factors which affect how
company functions like its customers, employees, business regulations etc. These factors
influence every aspect of business like its nature, prices of product, policies and many more.
Internal factors are the conditions that are available within the environment which affects the
organization. External factors are the conditions that cannot be controlled by organization. In this
context, present report has been prepared that provide understanding of different organization
and its influence on stakeholder. Also, it describes about the relationship between businesses
and the local, national and global environments. For this purpose, the firm undertaken for the
present study is Iceland food Ltd which is a British supermarket chain and emphasized on selling
frozen and non- frozen foods. Organization further has a great share in UK food market.
TASK 1
1.1 Purpose of below stated organizations
a) Iceland Supermarket
Iceland is among-st the renowned British supermarkets, headquartered in UK. It mainly
deals into the selling of frozen food and groceries, which together includes various ready made
meals, vegetables, and non frozen items such as dairy and dry goods. It is one of the leading
chain of supermarket heading forward to make a different identity of its name. The main purpose
of this company is to become the most reasonable retailer. Thus, it always focuses on providing
good food to the consumers. The key accountability of its quality food is purity, which is
together safe and healthy.
b) KFC
Kentucky Fried Chicken, formerly known as KFC is one of the rapidly growing fast food
restaurant headquartered in UK. It is specialized in preparing fried chicken and is considered as
the world's second largest fast food chain. Other than serving the finest quality of chicken to its
consumers, KFC also aim towards making huge amount of profit by expanding its business all
over the world. Thus, the main purpose of KFC is to beat its competitors like MC Donald's, and
Pizza Hut, etc in every corner of the world and together providing a better customer service, as
compared to others.
c) Transport for London (TFL)
1

Transport for London is a government body, responsible in managing the transport
services of London. It is formally named as London transport, serving in the area of greater
London. Mostly, whoever visits or lives in London, uses the services of TFL. Thus, it aims at
providing a better experience of journey to one and all. They deal in three units which cover
surface transport, rails, cross rail and underground, covering 580km network of main roads and
around 6000 traffic signals of the whole city. TFL invests into the latest technology to plan the
smoothest ride of its customer's.
d) Cancer Research
Cancer research is the world's leading charitable organization, serving in UK. It is
entirely funded by the public, where there are over 40000 uniform representatives raising funds
for it in the form of donations. It conducts investigation in order to prevent, diagnose and treat
the disease. It has its own hospitals, universities and institutes across UK, where the testing
procedure takes place. The main purpose of this organization is to soon beat the cancer.
1.2 Ways to meet the objectives of different stakeholders in Iceland Supermarket
The stakeholders of Iceland supermarket are considered as the main asset of the company
which include its customers, employees, shareholders, and the overall community, which
involves the government and public. They are the greatest supporters of the company with few
expectations from the business. Thus, in order to continuously gain their support, the company
needs to fulfill its objectives towards that group. Various objectives of different stakeholders
include- Customers- Iceland supermarket is among the most responsible retailer in UK,
continuously aims to provide ethically sourced food to its customers, which is the only
demand of every consumer. Government/ Public- It together works with the government of UK in order to promote
public health. For this purpose, the stated company has totally stopped the usage of
artificial substance in its food and started promoting fresh fruits and vegetables. It
effectively tackles the sales of alcohol by completely banning it for the under age people.
It equally cares about the animals, protects the environment by minimizing waste and
promoting recycling. It also supports the community by making charities, etc.
 Employees and Shareholders- As per the employees of Iceland supermarket, it is a great
place to work where their core values include continuously communicating to the
2

employees, responding towards their views and providing them recognition and
introducing rewards for their outstanding performance. The shareholders also receive
timely returns with high dividends. They get an increased revenue and profits that leads
them to purchase more shares of the company.
1.3 Responsibilities of Iceland Supermarket as an organization and implemented strategies
As an organization, a company possess few social responsibilities which needs to be met
effectively and in accordance to the expectations of its customers, employees, investors,
creditors, and few governmental bodies, etc. Iceland Supermarket too plays a responsible role by
efficiently making use of Carroll's Pyramid model. It majorly depicts four elements which
includes- Economic responsibilities states being profitable. It is the responsibility towards the
shareholders, investors and creditors by providing them accurate and profitable returns on
their investments. It is done by increasing sales and cutting the cost of the company and
requires the planning of a sound strategic plan for the company. Legal responsibilities is towards the government and public health which considers
obeying all the rules and regulations, adhering to certain laws to protect the environment.
In reference to that, the stated company makes timely tax payments, contributing to the
country's development and also engages in various social activities by caring for animal
welfare, etc. Ethical responsibilities is carried out by always being moral. It refers to doing the right
and fair things, especially towards the stakeholders of the company by avoiding or
minimizing any kind of harm to them.
 Philanthropic responsibilities means being a good corporate citizen. Iceland supermarket
has always carried out its philanthropic responsibility by effectively supporting the
community around. It often participates in various charitable activities raising a good
cause and is present in over 780 communities.
3

TASK 2
2.1 Economic System to Allocate Resources :
Most important decision of economic system is to deal with problem of scares resources
and resource allocation. Economy system includes market economy, command economy and
mixed economy.
 In market economy, scares resources are owned and controlled by private companies and
hence the decisions for allocating the resources are made by the individuals owing the
companies. Although, in free market economy, resources are allocated by making
interaction with the market forces of the consumers and producers which is to define the
product as per the consumer preference, initialize the production manner as per producer
preference and the product availability is depended on the buying power of the buyer.
They are like food products and household products produced by the private companies.
 In command economy, the government is responsible to command and control the
economic activities whereas the role of market is less in decision making. Due to
government intervention, there is a slow rate of reaction which eventually reduces the
power of market to make changes in production concerning consumer purchasing
patterns. This causes fluctuations in demand and supply. Decisions fo rallocating the
resources are made by the law of state. Resources are allocated as per the preference of
planner instead of public preference. For example, Government can force the public to
pay taxes on time. Command economy coordinate scarce resources at the time of crisis,
like in natural disaster or war etc.
 In mixed economy, combination of market forces and government interventions are
involved. Mixed economies have different private sector and public sector hence the
power of making decisions lies under the individual and government. Private sector
assign their resources by market forces and public sector allocate their resources by
government like fire services, police force and many more. Many times resources are
allocated by both public and private sector like health and medical care
 In transitional economy, is an economy which is changing from a centrally planned
economy to a free market by undergoing & adopting the procedure of liberalization. It
gives power to the market forces in setting the prices for products & services and

creating a financial sector to facilitate the movement of private capital like Construction
of building, building of roads, etc by private sector on behalf of government sector.
2

2.2 Impact of fiscal and monetary policy:
Fiscal policies and monetary policy has a great impact on the business organization.
Fiscal policy are determined by the government and evaluate the amount of tax which has to be
pay to the government. If government increases the tax rate then it becomes crucial for a firm to
invest capital. Company may charge more from their customers by charging high charges on
product and services. Lower taxes means more money to invest in jobs.
Monetary policy controlled by central bank will affect the business of Iceland Supermarket as
well the country's economy. It is the Ability to obtain credit and ensure low interest rate.
 A general fall in the level of income tax: If government lower the tax rates or its forms of
taxation, then it results in rising of profit generation capacity of a company. Like it rises
the buying power of the customer which generates more profit for Iceland supermarket.
 A rise in the value: If the currency value of pound increases, which is a favorable
condition for Iceland, then it would also impact its profitability and sales.
 A fall in interest rates: Every company provide loans and hence if the interest rate is
falling then profits of the company would rise. However, for an individual it is a
drawback, as they would purchase lesser loans which would increase their savings and
the sales of the company like Iceland.
 A large increase in unemployment: Increase in unemployment gives negative impact on
the organization. As for Iceland Supermarket, it reduces the employee and labor power
which decreases the sales of the company.
 A large increase in the level of government expenditure: Government expenditure is
managed by the taxation policy and if the government expenditure increases, it would
affect as rising taxes. It is profitable for Iceland Supermarket, as when the tax increases
then company's profitability also increase.
2.3 Impact of Competitive Policy and Other Regulatory Mechanism
Competition policy promotes competition in the market and improves the efficiency of an
organization to compete. Competition policy's main objective is to ensure the ability of an
organization to encourage its efficiency and compatibility to survive in the market.
There are some policies as mentioned below:
Antitrust and cartels: It restricts competition like fixing the prices of the products by the
company.
3

Market liberalization: It involves introducing competition in monopolistic market like in retail
market, banking sector and telecommunications.
Merger control: it involves the investigation of merger and acquisition of firms which would
result in dominating market. Competition policy not follow monopolistic market and allow easy
entry of new competitors.
Some rules and regulation, which affects the business of Iceland Supermarket, are
enforced by government like fair trading policy, policies defining the services provided to the
customers and environment. Increase productivity and skills. Regulators are appointed to see
how a market works and result for producer and customer. Iceland is committed to high ethics,
and social responsibility over dealing in the retail market.
Iceland invests a lot of its revenue on marketing and attracting targeted customers in the
market. It has many rival firms in the world like ASDA, Tesco plc, J Sainsbury
plc,etc .Bargaining power of the company is higher because of cut throat competition and lack
of differentiated product. Iceland would keep making profits, as compare to its competitors
because it has high rivalry of low call rate prices. Competitors provide the innovative products as
same Iceland provides to its customers.
TASK 3
3.1 Market structure determine the pricing and output decisions
Market structure plays a crucial role in determining pricing and production and Iceland
supermarket have to follow the market structure which is set by the government. There are few
market structures like monopolistic competition, oligopoly, monopoly and perfect competition
(Kapoor and Sherif, 2012). Market structure affects the supply of different product in the market
and when the competition is high then there is high supply of products and business venture
focuses on dominating the market. Different market structure have been discussed down under:
 Perfect competition: In perfect competition, there should be homogeneous product.
There are number of buyers and sellers and price are perfectly elastic. By considering this
fact, it is clear that there are no restrictions on entry and exit for the firms. Under this,
firm also generate a reasonable amount of profit even after having so many competitors
in the retail market (Fernando, 2011). Price is determined by the equilibrium between
4

supply and demand in the market. In this case market is short so that more product cannot
be produce to increase the demand.
 Monopolistic competition: In this market large number of firms are supplying product.
There is no barrier in entry of new firms.New firms are free to enter into the market and
existing firm are free to leave the market.
 Monopoly market: In this market, there is only one seller who produce the product. If
there is high demand in the market then company can increase the price. There is no rival
firm in the monopoly market and have no close substitute for the product. However,
corporate imposes prices for the products and services in order to increase their revenue
without considering the individual’s income.
 Oligopoly market: There are small number of firms and each firm has its own control on
the supply. High rivalry and cut throat competition in the market and new entry is
difficult. There will be substitute but not the perfectly close substitute.
3.2 Different ways in which market forces shape organizational responses
Market forces affect the organization's response like demand, supply and marketing of
the customer. It will affect the Iceland supermarket goodwill and profit as well. Further,
mentioned company do surveys to judge the demand for their customer (Hamilton And Webster,
2015) . Cited firm judges the market demand that demand of its product is in right amount that
what consumer is in need of. Mentioned organization also keep in mind about the correct and fair
supply of their products and sell as much of their product as possible without overstocking.
Further, supply and demand are inverse relation and company will reach on apoint which
is called equilibrium. However, if company is not able to satisfy the customers needs and wants
then it will affect organization goodwill and revenue as well. The relationship between market
forces and organization affect the success of business and customer satisfaction. When consumer
are willing to buy more than demand rises and rising of demand will affect the price. However, if
mentioned venture increases the price of any product customer shift to their competitors who
provide product in lesser price. It will decrease the demand and it will also affect the sales of the
company.
Apart from it, Iceland supermarket has to identify and consider all the market forces in
order to make effective strategic decision for the achievement of their mission and vision.
5

Perception of customers plays a crucial role and venture do their best in satisfying the needs and
demands of their large customer base. Organization deals in frozen foods, including prepared
meals and vegetables along with non-frozen grocery items like produce, meat, dairy, and dry
goods (Svensson and Wagner, 2015). Further, technological development also impact their
performance and they have to update themselves so that they remain competitive in the industry
they are serving in.
3.3 Impact of Business and Cultural Environment on Iceland supermarket
There is a great impact of business and cultural environment on organization. Further,
there are two kinds of business environment- economic and non economic. Economic
environment includes ecosystem, policies, and economic condition. Non economic environment
includes demographic, technological, legal, social environment. Moreover, there are various
others which has been discussed down under:
 Political environment: Customer relation company value the most and Iceland
supermarket shifts from unit pricing and sale their meals as per the rate which is
prevailing within the country. Further, by delivering more value to the customer better
financial outcome will be received by mentioned organization (Elearn., 2008). Further,
government also provide the licensing policy which can help the supermarket in
expanding their retail operations.
 Economic environment: Pricing factor and appropriate cost for products are fair and this
generally attract customers to purchase their product. However, if there is any economic
crisis then market will downturn and organization will not be able to increase their
revenue for that time period.
 Social environment: Social factor include safety, health consciousness etc. Further,
Iceland supermarket provide good services to their customers. Further, they generally
focus on producing the product which is mostly demanded by the customer’s.
 Technological environment: With all new techniques and innovations, technology is
upgrading with a rapid pace and mentioned firm also have to change their production
process in order to stay competitive in the market.
 Legal environment: Every company has to work under legal framework. It is abided by
laws and follow rules and regulation like Food protection act, Environmental act and
various others.
6

TASK 4
4.1 Significance of International Trade on Iceland Supermarket
International trade is most important operation for all nations as it is not possible to
produce each and every product in same country. There are some reasons which specify that
international trade is important to Iceland business:
 Production cost: By trading in other countries, company expands its trading boundaries
to lower the production cost. Iceland also imports and exports many products from and to
other country, this helps in increasing the sales and earning capacity of profits (European
competition policy. 2016).
 One country could never produce all the necessary products in its boundaries, it has to
import some products from another country. Iceland also trade products in international
market in order to maintain the level of supply and demand.
 International trade gives the opportunity to exchange products in overseas market to
avoid the situation of scarcity in resources and it gives an option for those products which
could not be products but could be imported from other countries. The trading of goods
like food, shares, wine, jewellery and services like banking, tourism etc. international
trade helps a country become richer(European competition policy, 2016 ).
 It helps Iceland to expand its competitiveness and raise market shares. Export to the other
country would increase sales and profitability. It helps in stabilizing seasonal market. By
trading domestically they could attain a steady growth but by trading internationally they
would gain reputation as well as profits from global market. International trade increase
trade, sales and customers. Some times UK employees go to other countries to work
which give them opportunity to earn remittance.
4.2 Impact of Global Factors on Iceland Supermarket
Global factor gives the better opportunities to make international trade which boost UK's
economy. Many of the UK company operate in other countries where they get cheap labor and
material. Global growth gives an opportunity to expand its business all over the world. Some
factors which affect the business of Iceland Supermarket are:
 Impact of economic environment – Economic affects in global market like economic
crisis, inflation, etc. increases the importance of outsourcing. Global copyright, patent
7

and intellectual property disputes are such political factors which affect the business of
Iceland Supermarket. Government make rules and regulation according to these global
factors which are easy to follow by Iceland Supermarket (Dettwiler, Lindelöf And
Löfsten, 2006). Economies which are rapidly growing are threat for the UK organisation.
The rules and regulation regarding the global data protection also affects the UK business
of Iceland Supermarket. Political factors like war terrorism create uncertainty in the
environment Change in government through democratic election which could influence
future business strategy of Iceland.
 Monetary policies and fiscal policies like changes in interest rate, taxes are also the
factors which are affecting the business environment. Availability of jobs, training also
affect the social factors (Nandakumar, Ghobadian And O'Regan, 2010). Cultural values
is one of the important factor which affect the organization. Adoption of new technology
as competitive edge by increasing number of business. Imported goods to UK are usually
subjected to custom tariffs by the government in order to protect producers. World trade
organisation (WTO) deals with global rules of trade its main motive that trade flows
smoothly and freely.
4.3 Impact of the European Union policies on Iceland Supermarket
Iceland Supermarket has to make its policy as per the rules and regulation made by the
European union. All rules are same for the European countries. Iceland Supermarket have the
license to import-export the products which makes it ease for the company to export their
products to other European countries and import product from other countries as well. European
competition policy ensure that market competition is free and so the companies works to provide
better product to the customer and in best prices (British business benefits greatly from EU
membership., 2013). European union has its own policies:
 Health and safety act: To provide proper medical facility to the employees and keeping
people healthy. Iceland has to maintain the health and safety measures over its products.
 Employment Act: By designing employment policy it has become easier to find job. This
policy protect people from physical disabilities. It also helps in providing remuneration to
employees when they are increasing their working hours, this motivates the employee's
spirit of working and increase companies expenses so that profits of Iceland also increase.
8

 European policy work to promote the rights of women, children and minorities. European
policy work on gender equality and non- discrimination policy also(Impact assessment of
european comission policis., 2006). By reducing gender gap European union, forces the
companies, like Iceland, to pay equal to male and female employee and increase the
number of women in positions like in responsibility, politics etc.
CONCLUSION
Based on this report, it has been cleared that it is very important to understand the
business environment. By analysing business environment company can know its strength,
weakness, opportunities and threats. Company will also analyse its macro and micro factors
which affect the environment factors like political, technological, economic, social factors.
9

REFERENCES
Journals and Books
Hartwell , A. And Michael , B., 2015. A helping hand: examining the effect of foreign banks on
the business environment. 10(4). pp.875 - 895.
Dettwiler, P., Lindelöf, P. And Löfsten, H. 2006. Business environment and property
management issues: A study of growth firms in Sweden. 8(3). pp.120 - 133.
Didonet,S. And et.al., 2012. The relationship between small business market orientation and
environmental uncertainty. 30(7). pp.757 - 779.
Eldridge , S. and . et.al., 2014. Management control systems for business processes in uncertain
environments. 31(1). pp.66 - 81.
Elearn., 2008. Business Environment. Routledge.
Fernando, C. A., 2011. Business environment. Pearson education India.
Gurtoo, A. And . Antony, S., 2007. Environmental regulations: Indirect and unintended
consequences on economy and business. 18(6). pp.626 - 642.
Hamilton, L. And Webster, P., 2015. The international business environment. Oxford university
press.
Harrison,. L. J. and Kelly, J. S., 2010. Perceived environmental uncertainty's effect on
commitment in business‐to‐business channels. 28(6). pp.792 - 803.
Joseph, C. And .et.al., 2013. Environmental literacy and attitudes among Malaysian business
educators. 14(2). pp.196 - 208.
Kapoor, B. and Sherif, J., 2012. Human resources in an enriched environment of business
intelligence. 41(10). pp.1625 - 1637.
Martinez, F., 2012. The syncretism of environmental and social responsibility with business
economic performance. 23(6). pp.597 - 614.
Murthy , V., 2014. Learning from praxis: How high-profile winners and losers inform business's
extant theories on longevity, environment, and adaptation. 10(1). pp.33 - 47.
Mytton, E. and Gale, C., 2012. Prevailing issues in legal education within management and
business environments. 54(4). pp.311 - 321.
Nandakumar, M. K., Ghobadian, A. And O'Regan, N., 2010. Business‐level strategy and
performance: The moderating effects of environment and structure. 48(6). pp.907 - 939.
10

Onyiod, C. B., Boyd, D. and. Thurairajah, N., 2016. Developing SMEs as environmental
businesses .16(1). pp.30 - 45.
Sloman, J. and Jones, E., 2011.Economics and the Business Environment. Financial
Times/Prentice Hall.
Svensson, G. and. Wagner, B., 2015. Implementing and managing economic, social and
environmental efforts of business sustainability: Propositions for measurement and
structural models. 26(2). pp.195 - 213.
Worthington, L. and Britton, C., 2006. The Business Environment. Financial Times Prentice
Hall.
Yu,W. And Ramanathan, R., 2012. Effects of business environment on international retail
operations: case study evidence from China. 40(3). pp.218 – 234.
Online
British business benefits greatly from EU membership., 2013. [PDF]. Available
through:<http://www.euractiv.com/uk-europe/british-business-benefits-greatl-analysis-
531518 [Accessed on 3th feb 2016].
European competition policy. 2016 [PDF]. Available
through:<http://www.economicsonline.co.uk/Business_economics/European_competition_
policy.html>. [Accessed on 5th feb 2016].
Impact assessment of european comission policis., 2006. [pdf]
http://www.oecd.org/greengrowth/40033017.pdf. [Accessed on 4th feb 2016].
11