Business Environment Analysis: Primark, Economic Systems, and Policies

This report provides a comprehensive analysis of Primark's business environment, examining various aspects that affect its operations. It begins with an introduction to Primark and its purpose, followed by an assessment of how well Primark meets the objectives of its different stakeholders, includ...Read More

Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Identification of Primark and its purpose..............................................................................1
1.2 Extent to which Primark meets the objectives of its different stakeholders .......................2
1.3 Responsibilities of Primark as an organisation and the strategies employed to meet them.3
TASK 2............................................................................................................................................4
2.1 How economic systems attempt to allocate resources effectively .......................................4
2.2 Assessment of the impact of fiscal and monetary policy on business organisations and
their activities..............................................................................................................................5
2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the
activities......................................................................................................................................6
TASK 3............................................................................................................................................7
3.1 How market structures determine the pricing and output decisions of businesses ..............7
3.2 The way in which market forces shape organisational responses........................................8
3.3 How the business and cultural environments shape the behaviour of Primark.....................9
TASK 4..........................................................................................................................................10
4.1 The significance of international trade to UK business organisations ...............................10
4.2 Analysis of the impact of global factors on UK business organisations.............................11
4.3 Evaluate the impact of policies of the European Union on UK business organisations.....11
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Business Environment consists of number of elements which can affect operations of a
business. It includes all internal and external factors that affect entity and its operations. Business
environment is a collective name of various stakeholders like employees, government, suppliers
and shareholders etc. In this report it has been discussed that how these elements of business
environment affect the operations of companies like Primark which is the subsidiary organization
of Associated British Foods Group. It's having a good growth from last few years. I t has 238
branches across UK. As other fashion retails chains, Primark also outsource its goods rather than
manufacturing it by themselves. So it has various parties which can affect its operations. Further
this report also mentions and explains BREXIT. The word BREXIT is used for the prospective
withdrawal of UK from European Union.(Chavis, L.W., Klapper, L.F. and Love, I., 2011)
TASK 1
1.1 Identification of Primark and its purpose
Primark is an Irish retail company. Primark has branded as Penneys in ireland. It deals in
retailing of clothes. Primark has its headquarters situated at Dublin. Associated British Food
is the parent company of it which makes Primark its subsidiary company. Primark offers a
wide range of clothing products. It sells fashionable clothes for every generation. Other than
clothing, Primark also deals in the footwear and accessories. It has more than 290 stores
located in UK. This company has been with other top fashion brands like ZARA and H&M.
It has a policy to sell such products at a very low price which helps in achieving the market
share. As low price with high quality is the only thing which a customer wants and primark
is offering them what they want and is providing them the immense satisfaction.(Chow, A.T
and et.al., 2011) The purpose of company includes the following:
 To offer the products and services which its customers wants.
 To provide them with products at a lower rate so that they can easily afford them.
 Drafting strategy to increase the profit of company so that it can propose a good amount
of dividend for its shareholders.(Commander, S. and Svejnar, J., 2011)
 Further, company wants to maintain every aspect so that it will be helpful in case of
highly competitive market.(Fernando, A.C., 2011)

 Organisation belongs from public sector like Primark works which works as a retail store
chain, its main business is to supply various range of the products. It deals in clothing,
groceries and stationeries etc.
 Primark also has a motive to approach customers with good quality of products at the low
price.
 On the other hand, it also maintains good business environment in the premises of its
company.
 Providing incentives to company is one of the various policy of Primark.
 On the other hand, the purpose of Charity organisations is to render services to the
society without having a motive to gain profit.
 Co-operative organisation can be defined as a jointly owned entity. It has members who
have a mutual interest and they engage themselves in production and selling of goods and
providing services for that particular interest.(Halbert, T. and Ingulli, E., 2011)
1.2 Extent to which Primark meets the objectives of its different stakeholders Primark is an Irish company which deals in fashionable clothing, footwear and
accessories. In a business environment, there are various elements towards which a
company needs to be accountable. Those elements are collectively known as the
Stakeholders. Managerial team needs to make such policies and take such decisions so
that the goals of primark could be achieved. As well as the stakeholders can be dealt in an
efficient way. Various stakeholders of Primark are as follows: Employees: Employees are the internal elements of a business environment. Manpower is
the strength of the entity. But if they are not satisfied and managed in a proper way then
they can easily affect organisational objectives in an adverse way. Primark and its
management have opted for various policies which is beneficial for its employees. For
example, Primark give reward to those employees who perform well in their concerned
duties. This will motivate them to do a better job next time.(skanius, P., Page, T. and
Anbuudayasankar, S.P., 2010) Customers: customers are the soul for any business enterprise. They need to be
concentrated properly. Primark has an objective for the customer satisfaction. If the
customers will not get what they want then they will shift themselves towards other
entities which are providing the same products and services with high quality. So Primark
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needs to frame such policies which helps them to achieve customer satisfaction. As
primark deals in fashionable clothes so they need to provide customers those clothes
which are in trend. (Klapper, L., Lewin, A. and Delgado, J.M.Q., 2011)
 Suppliers: Suppliers are the external elements of business environment which are needed
to deal in an appropriate way. High price of raw material will ultimately affects the price
of product. As Primark not itself produces its product, they outsource its products from
others. Further, this also affects the revenue and profitability of an entity. Primark deals
with its suppliers in a good way. It provides them with better price for the products they
buy from them (Kubasek,Brennan and Browne, 2016). Which ensures them for good
quality. Primark used to give equitable business opportunities to its suppliers.
1.3 Responsibilities of Primark as an organisation and the strategies employed to meet them
Management of primark needs to frame its strategies in a way so that it cannot gets in
contradiction with the legal policies. For an entity reputation and faith of customers and various
other stakeholders decides the its existence in the business environment. Primark needs to
manage good human relation in its business premises (Moutinho, 2011). Which helps its
employees to easily remove the conflicts. Primark need to frame such policies so that they can
easily understand what employees wants and they need to communicate their vision and mission
with their employees so that employees can understand what the management of Primark wants
from them. Some other responsibilities towards society are mentioned below : Government : Government frames policies which are mandatory in nature so the entities
like primark needs to follow such policies and norms therein.
◦ Strategies which can be employed : Primark should follow all rules and regulations
which are framed by government. Further it needs to properly file the tax returns and
avoid unethical practices like tax evasion (Pulver, 2012). Customers : They are the soul of a business enterprise. They needs to be considered
before framing any policy in an organisation. As everything will ultimately is related with
customers so they can be classified as an important element of business environment.
◦ Strategies which can be employed : Primark should acquire best quality from their
suppliers and then they should provide such products at a lower price to their
customers so that they can easily afford them. Further as Primark deals in fashionable
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clothing and accessories so they need to serve their customers with the updated and
trending apparels (Siewiorek and et. al., 2012).
 Employees : workforce considered as the main strength for any entity. It doesn't matter
weather it is a manufacturing company or service providing company. A good human
relation can provide immense growth to an entity.
◦ Strategies which can be employed : Leaders and managers of primark needs to adapt
various theories like human relation, chaos and behavioural theory. So that they can
easily quantify the targets of Primark and can communicate those targets with their
subordinates (Welford, 2013). So that employees can easily fulfil their responsibilities
towards cited entity. And further this will assist in maintaining good human relation,
which allows them fulfil responsibilities of primax towards its employees.
TASK 2
2.1 How economic systems attempt to allocate resources effectively
Economic system is an organised system. Which organises the economic aspects of a
country. In it various steps has been taken to allocate the resources of a countries. There are
certain factors which can affect an economic system. These factors are labour, resources, owners
capital, resources, enterprises (Xue, Shen and Ren, 2010). There are a number of economic
system which are operating around the world. Various economic systems occupied by different
countries are as follows : Economic system of Cuba : Cuba has Planned economy, which is dominated by state run
enterprises. The industries running in Cuba are mostly owned and operated by
government of Cuba. And the labour force working there are employed by state. In year
2000, in Cuba public sector employment was 76% and private sector employment was
nearly about 23%. the reason behind opting for this economic system is to access the
control over the industries so that the customers will not be treated unethically. As well
this provides a better utilization of natural resources. Further planned economy provides
benefit for employment security. This will allow the workers to have a good and reputed
lifestyle (Al-Debei and Avison, 2010). Economic system of United Kingdom : As per the measurement of GDP, the economy of
United Kingdom is 5th largest economy of world. And as per purchasing power parity, its
economy is 9th largest economy of world. Its economy is one of the most globalised
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economy of world consisting the economy of England, Wales and Scotland and Northern
Ireland. Service sector is the main part of its economy as it contributes nearly 78% of the
total GDP (Aula, 2010). United Kingdom is the member of EU. It is part of single
market, which allows free movement of goods and services within the boundaries of
member states. UK maintains its own economy by not converting its currency Pound
sterling to Euro. The benefit of this type of economy is it thoroughly encourages
industries and allow them to sale out their goods and services without any hurdle of cross
country boundaries. This encourages the globalised economy which increases the
boundaries of market for industries (Bill Pasmore and CMC, 2010).
 Economic System of China : China has Socialist market economy. It ranks second
among the economy of world as per the measurement of Gross domestic product (GDP)
but as per purchasing power parity its the largest economy of the world. China has
become the global hub for manufacturing industries. It also ranks first as largest exporter
of goods. This type of economy allows the government to have control over the industries
and this also encourages export of goods and services. Which increases the foreign
exchange of a country (Boons and Lüdeke-Freund, 2013).
2.2 Assessment of the impact of fiscal and monetary policy on business organisations and their
activities
The chancellor of Exchequer is a senior official person within government of United
Kingdom. Chancellor is responsible for drafting strategies regarding each and every fiscal and
economic matters. The chancellor of Exchequer used to control monetary and fiscal policy of
United Kingdom until 1997 after that Bank of England was granted independent control of its
interest (Cantwell,Dunning and Lundan, 2010). Fiscal Policy : Fiscal Policy is a tool through which government of any country can
adjust the spending level as well as it can maintain tax rates to manage its revenue. Its a
way through which the central bank of any country can make a control over or manage a
country's supply of money.
 Monetary policy : it is the process through which central bank of a country can make a
control over the supply of money. Monetary policy has some other objectives also as it
concentrates over economic growth also by reducing the rate of unemployment.
Monetary policy is classified into two types first one is expansionary and the second one
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contractionary (Cavusgil and et. al., 2014). An expansionary policy assist to increase the
supply of money in economy. On the other hand Contractionary monetary policy reduces
the growth rate in money supply.
Impact of fiscal and monetary policy : Farming : farming or agriculture is a sector which is purely depends on the policies
framed by government. In under developing countries, Fiscal and monetary policy make
a significant impact over agriculture as in those countries, revenue is mainly based on
agriculture and farming. So maintaining those policies as per the needs and requirement
of farming is very necessary (Czinkota and et.al., 2010). As fiscal policy concentrates
over reducing unemployment hence if farming and agriculture gets adversely affected
due to any clause of such policies then it will lead to unemployment.
 Housing : Housing industry is a significant source of revenue for UK government.
Through out the year after world war fiscal and monetary policy has made a significant
impact over the housing industry. As this industry deals in building the infrastructure so it
has become so important to consider before framing any policy (Hadjiconstantinou,
2012).
2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the activities
UK government has made certain laws which deals in framing such rules and regulations
which can make a control over unethical practices. They have introduced an act The Equality Act
2010 which restrain the discrimination practices prevailing in industries. Further Competition
Act 1998, and Enterprise Act 2002 which was introduced to stop unethical trade practices. These
act can put a significant impact over Primark (Solomon, 2014). Hence the management of
primark needs to manage its organisational structure in an way so that their policies will not
contradicts with the rules and norms of legislation. Unfair trade practices can reduce the
reputation of an entity and its also decreases the rate of revenue. As the customers will not like to
buy the products from a firm which has any contradiction with the laws and regulation. And if
they are avoiding such rules and regulation then a negative image will be set in the mind of
customers. As Primark has its stores located across the UK so to manage those stores they
require a work force (Tayur, Ganeshan and Magazine, 2012). Work force can be determined as
the strength of any entity but to manage that work force Primark needs to have a good human
relation system in its organisational system. By following competition policy
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an entity can enjoy the trading without any malfunction. There are different kinds competition
policies which are as follows :
 Privatisation Policy : privatisation refers to transferring of ownership to the
private owners. Royal mail was a postal company which transferred its ownership
and now its working as a industry in United Kingdom (Wild, and Han, 2014).
 Price based Competition : in this type of policy most of the sellers sale their
products at the same price so that the competition will not prevail in the market.
But some of the industries tries to sale their products slightly at low price so that
they can attract consumers towards their products and services.
 Deregulation : it is a process through which the industries tries to remove the
regulations of state. Further primark can apply those rules to reduce monopoly in
the market (Yoon, 2012.).
 Anti-competitive Behaviour Policy : In UK many companies apply the anti-
competitive behaviour policy. Anti competitive behaviour is termed as a
behaviour when businesses agrees to prevent their competition to affect trade.
TASK 3
3.1 How market structures determine the pricing and output decisions of businesses
Market refers to a place where sellers can sale their products and services and buyers can
buy their desired product and services. Market is itself a broad term. It is not limited up to our
localities. But market has its limit where buyers can sale their product and services. The various
types of markets are described below :
 Perfect Competition market : in this type of market there are a number of buyers and
sellers. And there are many sellers who are selling the same product and services so it
becomes very hard to increase the price of a particular product (Chavis, Klapper, and
Love, 2011). As in this case the buyer will shift towards the other seller who is providing
the same product at comparatively low price. In this type of market its very hard to gain
profit as there is competition so because of this the buyers cant be attracted towards the
product easily. In case of perfect competition market the primark requires to provide
better quality of product as it cant attract the customers through the lower price. So the
only alternative which Primark have is to provide good quality of products which are in
fashion trend to their customers (Chow and et.al., 2011).
7

 Monopoly Market : in this type of market there is only one seller for a particular product.
The seller can entertain a lot of buyers and it can also sale its products comparatively at a
high rate, only drawback of this market structure is the entry and exit from this market
are tough. In this type of market Primark can charge the desirable price from the
customers as customers cant get shift to other sellers. Hence they need to buy product
weather or not the products are economical or not. Primark can have full control over the
market in absence of any other competitor (Commander and Svejnar, 2011).
 Oligopoly Market : An oligopoly market is something in which an industry is dominated
by other large organisation which exist in the same market. In such market structure
entity sell products which may or may not be identical to the products of other entities
working in the same industry. But in oligopolistic market it is tough to get entry in the
market but it is comparatively less than the in case of monopolistic market. If Primark
works in such market structure, it will be dominated by other companies working in retail
sector only (Fernando, 2011).
3.2 The way in which market forces shape organisational responses
The forces which exist in the market affects the objectives of a cited entity. 3.2
The market forces affect the organisation in many ways. The market forces includes the
demand and supply. The objectives of Primark are influenced by the forces of demand and
supply. The firm have to do proper market research to properly understand the market structure.
Sometimes the market forces puts pressure on the business enterprise to offer those products
which are highly in demand whether the firm is not able to produce that products or services
(Halbert and Ingulli, 2011).
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(Demand and Supply, 2017 )
From the above diagram it can be understood that when demand and supply intersect
each other then the company determine the equilibrium point. The downward slope of demand
curve shows that there is a low price of products and services which are offered by the company.
But through this Primark can easily calculate the future earning profits (Iskanius, Page and
Anbuudayasankar, 2010). On the other side, the upward slope of supply curve indicate that the
price of the products are increasing and more people are not purchasing the products due to rise
in price. At the equilibrium point, the firm is satisfied because demand and supply of products
and services are balance in the economy. Their will be cause of demand and supply curve due to
change in taste and preference of customers time to time. The prices of products and services
reflect the company earning which are to be projected in the future. For example, if the prices of
products are high then no customer will purchase the product and it will directly impact on the
supply of product and vice versa (Klapper, Lewin and Delgado, 2011).
3.3 How the business and cultural environments shape the behaviour of Primark
Business environment significantly affects the enterprise. It consists of various elements
which induces the operations of business enterprise which exits in it. These factors can be
9
Image 1: Curve of Demand and supply, 2017

divided into two categories like internal and external. Internal factors are those factors which
exists inside the entity and these can be controlled easily if a better managerial strategy is
framed. But there are certain other factors which cannot be controlled easily and these factors are
termed as external factors (Kubasek,Brennan and Browne, 2016). Primark can opt for PESTEL
analysis through which it can easily analysis the internal and external factors which affects its
business operations. PESTEL elements are as follows :
 Political Analysis : Political factors are those factors which cannot be ignored as
ignoring them will lead to contradiction against the legislation. Primark through a
detailed analysis of policies which are framed by the government officials, can sustain
or survive in long run (Moutinho, 2011).
 Economical Analysis : Through a detailed analysis of economic factors which
influences the organisational structure of Primark can assist the managers and leaders of
it to make a effective strategies against some economical issues like inflation, recession,
fiscal and monetary policy.
 Social Analysis : Society has given Primark to exist in the market and sell their products
and services in an open market. But Primark will not support the sustainable
development. And if they will not satisfy the needs and requirements of the society then
the license of its existence may gets revoked by the society (Pulver, 2012).
 Technological Analysis : The customers of Primark demands updated products which
are in trending. Hence the management team needs to use such technological resources
which updated and they can meet the requirement level of customers.
TASK 4
4.1 The significance of international trade to UK business organisations
In the new age of modern world, every market is now having an intense competition
environment. This type of environment which prevails in the market which is full of competitors
gives rise to many unethical issues. It reduces the overall growth of the market further it also
reduces the overall growth and profitability (Siewiorek and et. al., 2012). It is not beneficial for a
company like Primark because in such business-environment its not easy to sell the products to
buyers. As Primark is dealing in sale fashionable clothing, accessories and footwear. Hence they
need to sell it to customers during the trend of those products. Once the products has not remain
in the trend of fashion then customers will not buy such products. Enlarging the size of market
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will assist an entity to earn more revenue and that will generate more profitability. International
trade allows a cited entity to grow faster than ever. It helps an organisation to take its business on
international level which allows it access the cross country buyers (Welford, 2013).
4.2 Analysis of the impact of global factors on UK business organisations
For carrying out the operations of a cited entity smoothly and without any hurdle, it needs
to consider the global factors before making any strategy. Primark needs to make a detailed
analysis over the global factors which can assist it to trade on international level without any
hurdle (Xue, Shen and Ren, 2010). Further PESTEL analysis can be made by Primark to get a
detailed anysis of global factors like Political, economical, social, technological, environmental
and legal are some factors which can make an significant impact over organisational structure of
Primark. Economic downturn can lead reduced sales of an entity. Factors like technology can
also impact the business operations of Primark. In this modern age the brand is required to be
upgraded technology on a continues basis in order to ensure or carry out the operations of a
business flow in smooth way regarding all operations and activities (Al-Debei and Avison,
2010). The negative effect of technological factors is that it can increases the overall cost of
operations of the business enterprise.
4.3 Evaluate the impact of policies of the European Union on UK business organisations
There are various economic system with different ideologies for an example socialistic
economy endorses government owned and regulated industry. In this policy the companies of
UK can freely sale or purchase goods and services with the other members of EU (Aula, 2010).
But still there are some policies which affects the operation of business organisation of UK and
these are as follows :
 International Policy : restriction has been put on the entities by EU on increasing their
exports and decreasing their imports. In this way, this policy can help Primark to promote
its products on iternational level.
 Taxation policy : if an entity contributes in making deposits of tax. Then it automatically
become valuable for government and public as well (Bill Pasmore and CMC, 2010). This
will also reduces the interruption of government into business operations.
CONCLUSION
As per the above mentioned facts in the report it can be concluded that business-environment can
be severally affects the operations of an enterprise through its factors. The responsibility of an
11

entity is to serve its stakeholders. Every department of an entity is responsible to provide certain
services which will ultimately results in the actual product. Primarks needs to follow the rules
and norms mentioned in legislation. In this report it is also explained that how the BREXIT has
affected the organisation of UK. Further various types of economic structures are also explained
by giving examples of countries like Cuba, United Kingdom and China. The impact of policies
of the European Union on UK business organisations has been explained in detailed manner.
This report also consists factors affecting business operations which are explained through
PESTEL Analysis.
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