Business Environment Analysis: Primark, Course ABC, Semester 2

This report provides a comprehensive analysis of Primark's business environment, examining various aspects that influence its operations. It begins by defining the purpose of different organizational types and then focuses on Primark as a private sector entity, outlining its objectives and responsibilities. The report identifies and analyzes Primark's key stakeholders, including employees, customers, suppliers, and the government, assessing how the company addresses their objectives. It then delves into the economic systems of different countries, comparing command, mixed, and transitional economies, and evaluating their impact on businesses. Furthermore, the report explores the influence of fiscal and monetary policies, competition policies, and market structures on pricing and output decisions. It also examines the impact of cultural environments and international trade, including global factors and relevant policies on UK businesses. The report concludes with a summary of the key findings and insights into Primark's business environment.

BUSINESS ENVIRONMENT

TABLE OF CONTENTS
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
1.1 Purpose of different types of organizations...........................................................................3
1.2 Stakeholders of Primark and extent to which it can meet their objectives............................4
1.3 As an organization responsibility of Primark........................................................................5
Task 2...............................................................................................................................................7
2.1 Economic system follows by different countries...................................................................7
2.2 Impact of fiscal and monitory policies on businesses............................................................8
2.3 Impact of competition polices................................................................................................9
Task 3.............................................................................................................................................10
3.1 Pricing and output decisions of business in different market structure...............................10
3.2 Ways in which market forces shape organizational responses............................................10
3.3 Cultural environment shape the behavior of Primark..........................................................11
Task 4.............................................................................................................................................11
4.1 Significance of international trade ......................................................................................11
4.2 Impact of global factors.......................................................................................................12
4.3 Impact of policies on UK business......................................................................................12
Conclusion.....................................................................................................................................13
References......................................................................................................................................14
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INTRODUCTION
Business environment is the combination of internal and external factors that influence
business activities. Majorly, external and internal are two factors which affect the performance
and entire functioning of business. Macro elements include political, technological,
environmental, socio-culture components which are uncontrollable and affect the entire industry.
Micro factors consist of customers, suppliers, competitors etc (Sanz and Jones, 2013).
For the present report, Primark is being taken into account. It is has more than 100 retail
stores across Britain and Ireland. It offers fashionable clothes to the consumers at lower costs.
Current assignment will discuss purpose of public and private sector organizations. As a
renowned firm, responsibilities of Primark will be described in this study. Economic system of
different countries will be explained in this report. Impact of pricing and output decisions in
several markets will be discussed. Significance of international trade and impact of global factors
on UK business will be analyzed (Weiss, 2014).
TASK 1
1.1 Purpose of different types of organizations
In the modern era, entities have to face too much competition. All enterprises are working
for different purposes like sole traders have the objective to increase sales and to enhance profit
of the organization. On the other hand, limited firm purpose is to avoid unnecessary risks and to
make more profit. Government organizations do not work for profit maximization but their main
objective is to provide quality services to the clients (Fitó-Bertran, Hernández-Lara and
Serradell-López, 2014).
Private sector:
Primark is the international retail brand which has global supply chain. It has more than
100 retail clothing stores across the world. It is the private multinational firm and subsidiary
company of Associated British Foods group (ABF). It is working as the private organization in
the international market (Stacey, 2016). Objectives of Primark are discussed as below:
 To attract customers by providing satisfactory services.
 To enhance profit of the cited firm.
 To increase sales volume and offer lower price products to the consumers.
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 To enhance performance of workforce and create healthy working environment (Mutuku,
2014).
 To provide high quality products and better services to clients so that they can become
loyal towards the brand.
◦ Primark is the private organization which main objective is to enhance profit of the
organization. Company wants to attract more customers in order to increase sales of
the brand. The purpose of the cited firm is to satisfy its clients so that they be loyal
towards the organization that would help in profit maximization.
The public sector:
Public organizations are those firms which are ruled by the government. TESCO is one of
the leading brands which are public limited company. Purpose of such firms is as following:
 To provide effective services to clients.
 Impressive utilization of resources is another objective of public sector organizations.
 Quick resolution of consumer's query and to satisfy employees as well (Rothaermel,
2015).
 Profit maximization is another objective of public companies so that amount can be used
for economic development of the nation.
 Use government funding effectively and positive development of the infrastructure.
 To understand needs of consumers and provide them facilities accordingly (Yi, 2014).
◦ Main purpose of public firms are to provide satisfactory services to the customers.
They pay more attention of corporate social responsibility. Its main aim is to utilize
finds well so that company can build strong reputation in the market.
Charitable trust
These are non profit firms, their main purpose is to improve situation of society members
and to enhance their standards. They earn profit but that is secondary objective which is just to
recover the operational cost of trust.
Cooperative firms
there main purpose is to satisfy group members ad to fulfill their requirements. CBH,
Wesfarmers etc. are main cooperative firms those which are working in the same direction.
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1.2 Stakeholders of Primark and extent to which it can meet their objectives
Stakeholders are the persons those who are influenced by the business activities. Primark
has many stakeholders; employees, trade unions, customers, suppliers, government,
environment/ society. All persons have different objectives; it is the responsibility of
organization to fulfill needs and objective of all stakeholders so that they get associated with the
company for longer period (Schaltegger, Lüdeke-Freund and Hansen, 2016).
 Employees: Workers are the key assets of the company; Primark concentrates more on
its staff members. Cited firm tries to identify needs and wants of its employees and fulfill
those. The objective of employees is to get equal opportunities and get respect in the
firm. For that cited firm follows legislation so that people get equal treatment in the
organization (Barnes and Hunt, 2013). They involve them in board meetings and take
their suggestions time to time. It helps them in making them satisfied and fulfilling their
needs. People feel involved and stay in the firm for the longer period.
 Customers: Major objective of the consumers are to get satisfactory products and quality
services. For that, Primark provides training to its members so that people can enhance
their skills and become capable to perform better in the workplace. By this way, they will
be able to provide quality services to the customers (Reddick and Roy, 2013). Apart from
this, cited firm continuous look upon its quality of the products and improves as per the
demand of market. By this way, service users get satisfied and they give positive
feedback to others which create unique image of the company. It provides them trade and
cash discounts so that they can get quality products at the lower rates.
 Suppliers: These are main stakeholders of the company, as their supplied material and
prices can impact the businesses (Tian, 2016). Their main objective is to get timely
payments and for that Primark make payment to them. Cited firm inform them about
financial performance and dividend so that good relationship can be developed.
 Local community: For satisfying the needs of local public, Primark offers them with
superior quality products and provides immediate services to them. Cited firm always
care for safety of people so that they do not get any problem, that help the entitity in
making people loyal (Doyle, McEachern and MacGregor, 2015).
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 Government: Primark respect government rules and regulations and follow all norms in
the workplace. Whenever, authorities make modifications in any legislation then cited
firm modifies its working process accordingly. It pays corporate tax timely so that it can
contribute well in economic development of the country (Glavas and Mathews, 2014).
1.3 As an organization responsibility of Primark
There are many persons those who are associated with firm and company has to provide
them effective services Cited firm has to make several strategies so that it can meet their needs
and complete their responsibilities effectively. Duties of Primark are as following:
Ethical responsibilities:
Being a repudiated global brand, it is the duty of company follows fair trading. It is the
ethical responsibility of the cited firm to take care of the environment and not to produce such
goods which can harm surroundings (Tarhini, Al-Dmour and Obeidat, 2015). It is required to
follow legislation and no discrimination should be happen in the workplace. Cited firm needs to
give equal rights and opportunities to all employees and provide them wages according to their
capabilities and education. Appraisals and promotions are required to be given to them timely so
that they can feel relaxed and safe in the entity (Page and et.al, 2017).
Strategies: Cited firm should make fair pricing policies so that it can run its business
effectively an can fulfill its responsibility. Honest claim in promotions should be there so that
employees feel satisfied in the workplace and they put their best efforts for the welfare of the
company (Picoto, Bélanger and Palma-dos-Reis, 2014).
Legal responsibilities:
It is the responsibility of Primark that all operations need to be done in lawful manner. It
should pay tax timely to the government so that it can fulfill its responsibility.
Strategies: The firm should follow consumer and employees legislation in the
organization systematically. Company should not avoid any government law and It has to modify
its operations accordingly (Kor and Mesko, 2013).
It should work upon developing professional finance and accounting department. Primark
should circulate information to all departments so that they do not get involved in any wrong
activity. At the time of hiring employees company has to follow confession session so that no
further confusions take place (Page and et.al, 2017).
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Stakeholder responsibilities
It is the duty of Primark is to inform all stakeholders timely. It is the responsibility o cited
firm is to provide training to all employees so that they do their work effectively. Suppliers needs
o get information regarding financial performance of the entity. Towards the customers company
has responsibility to provide quality products and services (Negative and positive effects of
globalization for developing country business, 2015).
Strategies: Primark should implement stakeholders analyses techniques so that needs of
hem can be identified by them. It should adopt participative management style so that workers
take participation in decision making process. By this way they will be able to understand their
work effectively (What is the importance of international trade?, 2017).
TASK 2
2.1 Economic system follows by different countries
Economic system is the term which supports in solving financial problem and ensure
proper allocation of resources. It is very important to make balance between demand and supply.
If resources are limited and demand is high then it may create problem in the workplace (Kor
and Mesko, 2013). There are several economic system which helps in allocating resources
impressively so that shortage or surplus type of issues do not take place in the corporations:
A) Cuba:
It is the country which follows command economy system. It is the type of system in
which government has power to take any decision. Authorities decide supply of products and
pricing decision taken by government of the nation. They allocate resources as per the size and
preference of the firms. This type of economy system is not good for companies like Primark, as
because they would not be able to get proper resources on time to deliver their products. As
government takes all marketing and production decisions so overall sales and revenues get
hampered (Reddick and Roy, 2013).
B) United Kingdom:
It is the country which is famous for its trade and business. It follows mixed economy
system in the nation. It is the system where government and market both are decision makers and
they both take single decision of allocation of resources. It is the combination of two system that
is command and free market economy (Yi, 2014). All necessary information provide by
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company to government so that authorities can provide them timely resources for delivering
quality services to customers. Primark can get benefit by following mixed economy system, as it
would get sufficient resources so company will be able to improve its quality and will render
excellent services to clients (Tian, 2016).
C) China:
China is the big nation and follows transitional economy system. In this all decisions are
made according to the purchasing power of customers. Organizations take their decisions by own
and government do not get involved in their decisions (Glavas and Mathews, 2014). That is also
favorable economy system for the Primark, as cited firm will be able to identify needs of
consumers and would utilize its resources accordingly. By this way shortage of funds will not
take place in the workplace (Tarhini, Al-Dmour and Obeidat, 2015).
Free market economy is one of the most acceptable economy system. In such type
of system government intervention is avoided and with the help of demand supply curve
resources are allocated by the organizations. Primark can also use this system and can influence
its price mechanism for allocating its resources properly (Glavas and Mathews, 2014).
2.2 Impact of fiscal and monitory policies on businesses
Fiscal and monitory are two most important policies of government that impact upon the
entire industry. Fiscal policy is related to tax as development of economy is highly depended
upon collection of tax. Increment in VAT (value added tax) and income tax can affect the
enterprises (Barnes and Hunt, 2013). Monetary policies are such regulations which are related to
proportional distribution of funds such as changes in interest rates etc. Impact of both policies on
following business are as following:
A) Farming: If tax rates increases by the government then farming industry will have to pay
more tax than companies will not invest much amount. If VAT gets increased then industry will
have to make changes in the pricing strategy for getting predestined profit. On other hand if
government reduces income tax and people will have sufficient amount and then demand of
agriculture products will get high (Yi, 2014). If interest rates are lower than bank loans would be
easy for the entities thus, farming companies will be able to spend much amount in purchasing
farming equipment and they will be able run their operations well. If there is high interest rate
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then it would be difficult to purchase material. And they will increase products prices that can
decrease demand of the products (Barnes and Hunt, 2013).
B) Housing: It is another big sector that contribute well in the economy development of the
country. Fiscal and monitory policies both impact this industry to great extent. As if interest rates
are low then supply of money would be easier and banks will grand loan for property
development and infrastructure growth (Glavas and Mathews, 2014). By this way customers will
take interest to buy houses thus, business will get enhanced that would be positive impact on
monitory policy. Inflation and deflation can be controlled by the monitory policies. Lower rates
impact on prices thus customers will take interest in buying houses, by this way business of
housing industry will get higher. If income tax rates are higher than people will not spend much
amount that would have to pay more tax (Kor and Mesko, 2013).
2.3 Impact of competition polices
In the modern ear organizations have to provide quality services to clients to stay in the
competition. As due to high competition they have to modify their operations and have to mold
them in such manner so that entities can sustain in the environment for longer period (What is the
importance of international trade?, 2017). There are several policies and regulatory mechanisms
that impact on Primark: Competition act 1998: Trade liberalization is the main purpose of this policy. It supports
firm in identifying the standards and updated frameworks of practices. That impacts
positive on the Primark as by this way cited firm can modify its operations and can
sustain in the competitive environment for longer duration. This policy ensures that
quality products and services get delivered to customers that impacts positively in the
overall business as sales of the company get increased (Negative and positive effects of
globalization for developing country business, 2015). This act helps cited firm in raising
standards by this way it would be able to enter into global market and will get high profit. Fair trading act 1973: This policy ensures that no unfair practices followed by the
organizations. In the high demand companies can not increase their prices or can not sell
goods more than their margin. By this way company can smoothly run its business but no
changes can harm its profit (What is the importance of international trade?, 2017).
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 Enterprise act 2002: This act ensures that entities do not advertise wrong information to
clients. It ensures that all firms follow rules and regulations and do not get involved in
wrong activities. By this way Primark will be able to legally run its business that would
increase trust of customers and people will be loyal towards the brands (Tian, 2016).
 Competition commission: Competition policy helps to improve efficiency of the
workplace by this way cited firm will be able to gain competitive advantage. This
commission is related with the mergers and acquisitions. That can help in increasing
brand name of the cited firm. By this way business of the Primark can get spread across
the world (Rothaermel, 2015).
TASK 3
3.1 Pricing and output decisions of business in different market structure
A) Perfect competition: It is the market where number of sellers are high and customers
have many choices. Primark is operating in this market structure as there are number of retail
cloth shops those which are offering same quality products. It has to depended upon the price
maker and according to their prices cited firm has to take its pricing decisions (Rothaermel,
2015).
B) Monopoly: It is the market structure in which large number or organizations are here
and they have small portion of share in the market. They do not impact on pricing and output
decisions to great extent. They just supply goods in the market constantly (Reddick and Roy,
2013).
C) Oligopoly market: It is the market structure where limited number of companies offer
same products to consumers. Small number of firms together make control over the market.
Changes in price affect buying decision of the customers, as people may get change their mind if
companies increase their prices of the goods. If demand is high then companies can enhance their
prices (Reddick and Roy, 2013).
D) Duopoly market: It is the type of imperfect market in which two firms produce
homogeneous goods. If one firm increases its prices then customers go to other and if quality is
high then people make their sensible choice (Page and et.al, 2017).
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3.2 Ways in which market forces shape organizational responses
Demand and supply are two main market forces that impact on the business of the
organizations. Firms have to give proper response to these market forces. To give proper
response to such forces Primark has to conduct market research so that it can find out necessity
of public. For instance if Primark wants to introduce new fashionable cloth in the market then
first it has to identify the needs of people whether they will like it or not. On the bases of
research it should supply the material (Doyle, McEachern and MacGregor, 2015). If cited firm is
able to judge the demand of market them it would easily meet with the needs of customers. That
would help in satisfying them and to make them loyal toward the brand.
If entity is able to judge margin then profit of the company will get high. For example If
demand is high and organization do not have sufficient goods then consumers will get
dissatisfied that would destroy reputation of the firm to great extent. For instant demand of 170
clothing material is in the market and Primark is supplying only 100 then it can reduce its profit
and people will not rely on it (Doyle, McEachern and MacGregor, 2015). Company must focus
on equilibrium between demand and supply so that it can meet with the demand and will be able
to increase brand value of the firm.
It is necessary to make equilibrium between demand and supply. These both market
forces can influence the business activities. If there is high demand then it is necessary that
Primark decrease its prices in order to give proper response. If needs and perception of
consumers are getting changed or if any other competitors is taking place then in such condition
cited firm has to take support of marketing strategies in order to gain attention of consumers. By
this way it will be able to run its business smoothly and it will help in accomplishing goal of
organization.
3.3 Cultural environment shape the behavior of Primark
Business and cultural environment impact on the overall working of the Primark. For
running the business significantly it is very important to understand this concept.
Business environment: Generally there are two types of environment; economic and non
economic. In the economic environment policies, legislation come under whereas in non
economic demographic, technology, political, social environment are included (Glavas and
Mathews, 2014). If government makes changes in the polices then it impacts on entire industry
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and by this way Primark will have to make changes in its working process. If it fails to make
necessary modifications then it may harm the image of the company. If any new technology
takes places then cited firm will have to implement it in the workplace and have to trained its
workers for that so that company can sustain in the market for longer period (Barnes and Hunt,
2013). By looking upon this factor organizations can improve their performance level and can
gain competition advantages. It would help in improving efficiency of the company and will help
in increasing profit if the firm.
Cultural environment: values, belief, norms etc. impact on the business of the
organization to great extent. It helps in making employees loyal towards the brand and people
will be able to put their best efforts for the well fare of the company. By giving preference to
cultural importance cited firm will be able to satisfy its consumers effectively (Tian, 2016).
TASK 4
4.1 Significance of international trade
UK Business have opportunities to enter into global market, that can enhance their
performance and profit. Primark is the leading company that would get huge benefit by
international trading.
International trade will give benefit to cited firm of minimizing the cost of
communication and transportation. Apart from this business with foreign countries will help the
entity in knowing about the advanced technologies (Doyle, McEachern and MacGregor, 2015).
By this way organization will be able to build strong networks with its customers, suppliers and
employees. Internal trade will assist in increasing sales of the company thus, profit will get raised
to great extent.
Due to Brexit issue international trade activities of the firm have been affected, now UK
has to pay traffic charges and due to this manufacturing cost have been increased. This issue has
affected the economy condition of UK and due to this trade activities have been hampered (Page
and et.al, 2017). But international trade has open a way in which nation can make relationship
with other countries and can trade with them. By this way sales of products can get increased and
company can spread its image to mass audience. It impacts positively in the economy
development of the country. Investment opportunities will get increased which will help Primark
to survive in the competitive market for longer period (Kor and Mesko, 2013).
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