Business Environment Analysis of Primark in the Czech Republic

This report offers a comprehensive analysis of Primark's business operations, focusing on its potential expansion into the Czech Republic. It begins with an introduction to Primark, an Irish clothing retailer, and provides background information on the Czech Republic. The report delves into the business environment, examining political, economic, social, technological, legal, and environmental factors influencing Primark's operations. It utilizes Porter's Five Forces model to assess the competitive landscape, including competition intensity, threats of new entrants and substitutes, and the bargaining power of buyers and suppliers. The analysis highlights the challenges and opportunities Primark faces in the Czech market, considering factors like consumer behavior, economic indicators, and industry performance. The report concludes with an overview of the key findings and implications for Primark's expansion strategy.

Business organisations and
environments in global
context

Table of Contents
INTRODUCTION...........................................................................................................................1
1 Information of Primark business organisation.........................................................................1
2 Business environment of Primark............................................................................................5
3 An appropriate analytical approach.........................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business globalization refers utilization to interact among various countries in order to
develop global economy. It is the process of connecting the world's market segments and
business with another segments and business in another country. Primark is an Irish clothing
retailer which operates in Germany, Austria. It has almost 350 stores. This study shows about all
the factors that impact on business environment of Company. It involves internal and external
factors like social factors, political factors, economic factors, strengths, weakness, threats of
Czech country because Primark wants to expand its business in this country (Collings, Scullion
and Caligiuri, 2018). It also shows about five porters of porters that is competitors model. It tells
about all factors like competitors' intensity, bargaining power of suppliers and customers that
majorly impact on the company's business in the entrants of in new market.
1 Information of Primark business organisation
Background details of Primark
Primark is a fast fashion retailer whose headquarter is in Dublin. This company's first
store was founded by Arthur Ryan and Galen Weston in 1969. In 1971 Penneys opened a large
store in Belfast city. It offers and provides a various range of clothing products which include
new born and children's clothing, men's wear, women's wear, accessories, footwear, beauty
products and confectionery. It also contributes to the contemporary fast fashion trends as like
popular retailer Zara and H&M. It owns about 350 stores. Its largest store in located in
Manchester, England. Primark has irresistible offers or trendy clothes at low prices. It always
comes back for another and new batch of new outfits and its low price attracts consumers to buy
heaps of items that help company in increasing revenue. It expanded its business in many places
and it opens its first store in Madrid, Spain in may 2006 and after 10 years it opened 40 stores in
Spain. It opened it's another store in Netherlands in December 2008.
Primark also opened its first store in Austria in 2012 and to France in 2013. Primark has
given the facility to its customers for buying products online through one of three websites like
Amazon, eBay and ASOS. This company's products are made in countries that include Pakistan,
China and Bangladesh, India. Its cosmetic brands has been officially certified cruelty free. From

the data it has been revealed that since 2011 its net worth has been increasing annually that has
been reached 378.7 billion. It is one of the United Kingdom's leading clothing retailer that has
market share of almost 7% as of 2017. Company also opened its 1ST U.S. Store in
Downtown crossing, Boston in 2015. Now also it wants to expand in the another country which
is known as Czech republic (Geppert, Matten and Williams, 2016).
Background details of Czech republic country
This country is a unitary parliamentary republic which has 10.6 million inhabitants. This
country' s capital and largest city is Prague having 1.3 million residents. Czech republic is a
developed country with high income and export oriented. This country ranks as the Sixth
peaceful and the safest country and one of the most religious country in the world. This country
has been divided into 3 lands that are Moravia in the east, Bohemia in the west and Czech Silesia
that is located in North east. Unemployment rate of this country is the lowest in the EU at 1.9%.
The poverty rate of this country is the 2ND lowest of OECD members. GDP(Gross domestic
product) in this country was 215.73 billion dollars in 2017. It represents GDP in % is 0.35 of the
world economy. Neighbour countries of Czech republic country are Poland, Austria, Slovakia
and Germany.

This shows the business environment and all the data of Czech republic country . These
are major economic indicators. Czech republic join the EU on 1 may 2004. This company has a
relatively the higher capita GDP in 2005. Economy is also supported by various number of
services like business services and finance related services.
Illustration 1: Illustration 1: Business environment
Sources: (Economic of Czech, 2019.)

This shows the tax revenue of Czech republic as 34.9 %.
Illustration 2: Tax revenues of Czech republic
Sources: (Tax Revenues, 2019)

This shows the all the industries performance of Czech republic country.
Illustration 3: Industries performance of Czech republic country
Sources: (Industries performance, 2017.)

Porter's five forces
It is a competitors' analysis model which shows competitors intensity, bargaining power
of buyers and suppliers etc. This model was formulated in 1979 by Michael Porter. This model is
used by managers in order to analyse internal environment of the company that helps in decision-
making process. All the factors which involve in porter's five factors as it wants to expand its

business in Czech republic country so it is important for Primark to know about all the factors
before entering in new market. Five forces of Porter's are as follows:
Competition intensity: The UK retailing industry has many retailers. This shows that
Primark operates in competitive environment. It has many popular competitors like: Next & Gap,
Zara, Top man etc. Next & Gap have exploited the clothing demands for every type of people
specially young people that posses a major threat of driving the company out of the market.
Primark has expanded in many countries and now it wants to expand in Czech country so it must
recognize all the factors and competition intensity in this country.
Threats of new entrants: Primark has little control over new entrants which includes
various countries in the market. It may be beneficial and facilitated by lenient policies of
government because it encourages free exit and entry.
Threats of new substitutes: Substitutes defines as products from another industries or
from another competitors which can be used in order to serve same purpose. This situation
happens when changes in prices in substitutes happen in economic terms that lead and results in
change in demand for company's products. When, more substitute gets available then demand of
company's products elasticity becomes high. Primark is managing to keep the risk related
substitute at a lower level. There are variety of substitutes are available such as: Zara,
Manchester united, Tesco. For being in a competition and the purpose of expanding in Czech
republic country, it charges a responsible price in compared to other retailers (Hamilton and
Webster, 2018).
Bargaining power of buyer: Primark has many buyers as it is the largest retailer store in
the UK. There are other many retailers in this industry so the bargaining power of buyers are
relatively and comparatively high (Smagina, 2017). It is the consumer's nature that they visit
many shops before making purchasing decision in order to seek lower price. For entering in new
market and country and for the main purpose of making money, Primark need to consider and
focus on lower prices because high price and cost lead losing customers.
Bargaining power of suppliers: For getting success and for becoming leading market
Primark need to consider and manage the bargaining power of suppliers accordingly. Primark
has and consist of wide supplier base in domestic and foreign. From single supplier it does not
demand too much. Primark has ability to obtain raw materials at lower cost (Geppert, Matten and

Williams, 2016). It has to switch to new suppliers because now it wants to expand in new Czech
country.
2 Business environment of Primark
There are some factors that affect Primark business environment. Its business
environment includes all those internal and external factors that impact on its activities and its
processes that are strengths, weakness, opportunities and threats of company which it requires to
be addressed. In spite of this it has some external factors that majorly affects its business and
expansion of its company as it wants to expand in Czech republic country. Some external factors
that affects its business are as follows:
Political factors:There are some political factors that affect company and the
performance of the entire firm. It includes various policies of government related Czech republic
country that divert the local priorities of company. Government helps in contributes in
forecasting the growth of downfall of the Primark. There are some acts and policies that include
sales protection act, health and safety acts, data protection act, consumer's protection act, fiscal
policy and monetary policies that company needed for compliance (Simon Brexendorf and
Fassnacht, 2016). It should react in the context of impact of decrease and an increase in their
business.
Economic factors:Economic factors include the impact of various economic trends and
market changes of country in which Primark wants to expand its business that create risks in the
company. The major issues and factors that often involved in economic analysis are the fiscal
and monetary policies. This economy analysis measures the strengths of these policies in order to
support the business cycle. This company is recognized one of the strong business that helps and
contributes a lot in GDP or gross domestic products. In order to make the company able to
sustain in various economic changes there is requirement of monetary fund which holds in the
effects of recession in low exchange rates that is made by export and import operations (Menet,
2016).
Social factors: Some social factors and analysis involves demographic changes that may
affect the influence of the products in new buying perceptions of market. Social changes make
company able and force them to conduct further research. To develop processes of company and
make innovative products that can help to earn the trust of the market. Changes in tastes and

demands of customers of Czech country also affect Primark's business decision-making process
in negative manner and in positive manner. Primark focuses on the taste and preferences of the
society and buying customers. For being in a competitive market or in a newly marketed
products, company finds and try to make another way to increase and enhance their own creation
in order to become leading market (Arnold, and et.al., 2017).
Technological factors: Technological factors help in positive manner if company uses
the latest technological innovation which help them in improving the performance of the Primark
in order to expand business in Czech republic country. There are various technological
innovation that support them in improving the quality of products which Primark made and are
famous for. With the help of advance technologies, it can minimize uncertainties that appears in
social changes and economic changes. It has to face many problems related technologies like
insecurities of data, fraud, shoplifting and for resolving this problem it uses various high cameras
and advanced software (Smagina, 2017).
Legal factors: Legal factors include some laws that company has to comply in terms of
trading policies, tariffs, taxation, insurance policies, wages and salaries etc. Most of the legal
factors and aspects are connected with political as most of the laws are created and made by the
government. The major issue and problem related law that Primark have to face as it wants to
expand business, that is overuse of labour and maximizing their strengths in order to produce
more products that is against the employees' law. Another legal factor is to protect consumers
law as company requires producing and deliver the demanded products of the customers and give
importance to their rights as buyer (Goemaes and et.al., 2018). For solving this problem it
emphasises on developing employee-employer relationship, producer-supplier relationship and
organisation-customer relationship.
Environmental factors: There is a major factor which can be involved in environmental
analysis that is corporate social responsibility of the company. Environmental issues also related
with ethics. For environmental satisfaction Primark focuses on reducing the use of resources or
wastages to avoid exploitation that is a big dilemma for the business because it has number of
competitors. CSR policy affect the decision-making process of the organisation as this policy
make the company to make decisions that are ethical in nature and will be helpful in the welfare
of stakeholders. Values are also considered as an important factor for Primark as it makes and

develop services and products after analysing the values of customers at a particular place
(Petlina, 2015).
In spite of external factors there are some internal factors also that affects business
environment that involve:
Opportunities of Primark
Primark has some opportunities as it has opened 47 new stores in UK. It also has been
opened 7 new shops in Spain. It has many competitions with other companies like H&M and
Matalan and it is a leading market in retailer market. It is creating new market segments and
focus on new market trends. Company has good transport infrastructure. Primark has the main
and big opportunity of geographical expansion (Qian, 2017). It is an expanding venture that
provides the best quality products and services overseas. Those people who are fashion
conscious, the company provides them higher and fashionable clothes.
Threats of the company
The threat which company need to address is that customers demands which are rapidly
changing and wants uniqueness. It does not have any promotional strategy in order to promote
their products in another countries as it wants to expand its business in Czech republic country.
Changing market demands also is threat for the company as it needs to change their decision-
making process according to this. It has strong competitions from China.
3 An appropriate analytical approach
Many companies operate in niche market and there is no need of expanding their business
into new markets. In contrast, some countries and business can achieve growth only by
expanding their business in new countries and new markets, Primark has also increased their
sales by expanding its business in new markets and for this it has adopted new entry market
strategies. For entering in new market and country, company must recognize some factors like
trade barriers, price localization etc. There are some strategies of new market entry to Czech
republic that include:
Franchising, licensing, Joint ventures, Piggybacking, Turnkey projects etc.