Business Environment Analysis of Primark in the Canadian Market

This report provides a comprehensive analysis of Primark's potential expansion into the Canadian market. It begins with background information on Primark, an Irish fashion retail company, and its global operations. The report then delves into the business environment of Canada, examining its economic, political, social, technological, legal, and environmental factors. A key component of the analysis involves the application of the PESTLE framework to assess the Canadian market. The report explores the political stability, economic indicators, social trends, technological advancements, legal regulations, and environmental considerations that could impact Primark's business operations. The report also examines the legal ownership structure and international operations of Primark. The analysis aims to provide a detailed understanding of the opportunities and challenges Primark may face in the Canadian market, offering valuable insights for strategic decision-making and expansion planning. The report concludes with a summary of the key findings and implications for Primark's foreign direct investment strategy in Canada.

Business organisations and
environments in global
context

Table of Contents
INTRODUCTION...........................................................................................................................1
Background information of Primark......................................................................................1
Background information in the business environment of Canada..........................................3
Appropriate analytical tools with its use, applications and examples....................................5
CONCLUSION................................................................................................................................8
REFERENCES ...............................................................................................................................9

INTRODUCTION
Global business environment may be referred to as an environment that exists in different
countries of the world that is outside the environment of a home country which directly or
indirectly affects the decision-making of the organisation. Primark is a fashion retailing company
with around 70000 employees currently working with the organisation. The company was
founded around 50 years ago that is in the year 1969. The basic objective of the company is to
expand its current business operations in the Canada and hence for this purpose company is
exploring foreign direct investment opportunity in Canada(Lluesma and Ruiz, 2018). This report
will include background information of the Primark as well as background information of
business environment existing in UK. Furthermore, application of appropriate analytical tool
would also be considered.
Background information of Primark
Basic information of a company
Primark is an Irish fashion retail company which has been founded by Arthur Ryan. The
company started its operation with a large store in its home country with the name Penneys but
the company was unable to continue with this name in Europe because the name has already
been registered by some other company. Thus, the company run its business in the name of
'Primark' outside Ireland(Li and Alexander, 2017).
The company soon became very successful and this in turn lead to expansion of Primark
in united kingdom. The success of the company is quite evident from the fact that it has around
368 stores operating in various countries. The company not only deals in clothing and cosmetics
but also deals in the housewares products. Primark has its headquarter in UK and is subsidiary of
ABF(Arriaga, Andreu Domingo and Berlanga Silvente, 2017).
The company even faced lot of controversies regarding its working practices as well as
building collapse but it still overcame it and is currently running the fashion stores smoothly
towards the achievement of their objectives.
Furthermore, organic growth of the company can be achieved through high investment in
marketing. They also focus on development of product and technology as it helps in achievement
of organisational objectives effectively and efficiently.
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Moreover, it was also found that the financial performance of the company was best in 2018.
Size
With the changing time, size of the company has expanded and this is evident from the
fact that the company is now operating at a global level. The largest Primark store is located at
the premium area of England that is at market street at Manchester. The store has occupied the
wide area of around 1,55,000 sq ft and is spread across three floors.
Current international operations
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Illustration 1: organic growth
source:[Organic growth, 2018]
Illustration 2: financial performance
source: [financial performance, 2018]

International expansion of the company was possible because it provided latest items at
affordable prices. This in turn lead to popularity of the company in its home country. Thus, the
company expanded its operations globally as well. Initially company targeted UK, America and
Europe to expand its operations but because of its efficient operations the company was able to
occupy the market of other countries as well such as Portugal, Spain, Austria, Germany,
Netherlands, France, Belgium and Italy(Cook, 2018). Hence, currently the company is operating
at a global level very efficiently towards the attainment of its objectives and is even searching for
foreign direct investment in order to expand its operations in Canada as well.
Legal ownership structure
Every aspect related to the organization is directly or indirectly affected by the structure
of the company. Since, Primark is a private limited company, it's owners have limited liability
for the shares owned by them. The company does not issue its shares to public because of its
nature. Furthermore, the company has highly bureaucratic structure. The structure of Primark
plays a vital role in establishing efficient relationship between structure and motivation(Li and
Alexander, 2017).
Hence, it can be said that structure of the company is flexible which keep its employees
motivated so that they retain in the company for a longer duration of time which in turn fosters
the smooth running of the business.
Background information in the business environment of Canada
The business environment of Canada ranks 9th among the 60 largest economies in the
world which is based on the five growth area of such as technology, labour market, market
growth, financing environment and political environment. The country ranks first for its business
operation environment which considers key indicators such as foreign trade and exchange rates
and control policies towards private enterprise and competition. Canada requires working on
promoting its self as the best choice business destination which supports the growth of the
foreign firms(Fernie, Fernie and Moore, 2015). The business environment of Canada also ranked
on 20th in terms of technology so that they need to put pressure on companies to invest in the
latest innovation to stay competitive in the market place.
The Canada is the largest economy which is ranked at 11th in the world. It also recognised
as one of the most stable economy across the world. It also has its own economic institution and
has well developed social safety net to protect citizens from financials inequities. The main
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industries of Canada's are different from region to region(Appelbaum, 2015). The economy of
country is heavily based on the service industries and other significant industries such as oil &
gas, auto-mobile and aircraft manufacturing. The country also entered into free trade agreement
with various nations and is bargaining with additional agreements. The import and export factors
contributing to the economy. It is strongly relies on exports and was effect by the fall of oil
prices and other raw material. As the worlds fifth largest gas producer which makes Canada to
the second fastest growing economy in G7 after the united states(Kulshreshtha, 2016). The
improvement in the customer spendings, business investment and wage growth are especially
contributed to the economic performance. The Canada is also a largest oil producer among the
world and also ranked at third in terms of oil reserves in the world. The economic performance
of the company is also based upon the level of global crude prices.
The Canada is one of the founding member of the united nations and it maintains better
relation with USA which is the most powerful country in the world as well as it also maintain
good relations with united kingdom, France and other countries across the world. It is the
democratic country along with a parliamentary system in place. The queen Elizabeth is the head
of the state and the governor general is the representative of her who carry out most of royal
duties in the Canada. The head of the government is the prime minister who holds the executive
power in their hands(Lovenduski and Hills, 2018). The business environment of Canada enjoy a
very good political stability as well as it is recognised as the one of the safest country in the
world because it has a very low crime rate and trust worthy policy services. The country position
its self a very good place for tourism and business.
The business environment of Canada in terms of its culture it is very diverse country and
the diversity plays a critical role in the history of Canada. It has a big shortage of skilled workers
in various sectors and although some of businessman say this shortage results in decreasing the
growth of the companies. The finance measure of Canada includes the new Tex write-off scheme
which allows manufacturers to immediately recover the full cost of the machinery and
equipment and also write-off for clean energy equipments that are the part of a wider Tex
incentive programme(Rowell, 2017).
The legal environment of Canada includes the various laws which affect the business
environment. For example certain rights of employee which are protected by the law of Canada.
The Canadian Human Right act protects the discrimination in the business environment which is
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based on the gender, race, ethnicity, age and other various number of grounds. It includes
various method which help to business in the Canada effectively such as cooperation, joint
ventures, trust, limited partnership and branch plan operations are the defines as the most
common in the business environment of the Canada(Rousseau, 2016).
Appropriate analytical tools with its use, applications and examples
There are three major analytical frameworks that have been used with regards to business
environment of Canada. These analytical frameworks are as follows:
 PESTLE analysis of Canada
this analytical framework is used to analyse the business environment on the basis of 6
major elements of environment such as:
Political environment in Canada
It is very important to have a deep knowledge about the political environment of the
country in which the business is running in order to carry out its business activities smoothly.
Political environment is basically concerned with political stability or instability, political parties
rules and regulations, etc.
Canada is one of the most powerful country in the united nation and is known for
maintaining and improving relations with the other powerful countries of the world. Since,
Canada is a democratic country it enjoys political stability which is very beneficial for the
businesses running in Canada(Aithal, 2017).
Moreover, the crime rate in the country is very low and the policing services are very
trustworthy, this in turn has helped the companies of Canada to carry out their business
operations effectively. The businesses can even take advantage to expand their operations at a
global level because the country has a good global image.
Economic environment in Canada
Another important element of pestle analysis is economic environment. It is very
important to have deep knowledge on the economic environment of the country because it would
not only have an impact on the working of the businesses but would also have an impact on the
economy of the country. Economic environment includes factors such as interest rate, exchange
rate, unemployment, growth rate, etc.(Konsolas, I., 2017).
For example: In April 2018, Canadian economy has been ranked as 10th largest economy
in the entire world. The businesses of the country are benefited because of the membership of the
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country in different organisations of the world. Apart from that, economy of Canada is a mixed
economy which in turn gives people as well as government an advantage to make their own
economic choices for the country.
Social environment in Canada
Social environment is concerned with lifestyle, attitude, personality, population growth
and culture of the people. When it comes to social environment of Canada, it is found to be fairly
consistent which is good for businesses to carry out their operations. It is consistent in terms of
population growth and there is no sign that the population would slow down in near future.
Moreover, Canada is a diverse country and encourages immigrants with adequate skills and
experience from any part of the world(Naraine, Dixon and Horton, 2015).
For example: top 100 richest citizens of Canada have assets worth $230 billions.
Technological environment in Canada
Technology plays a huge role in the economy of the Canada. Technological environment
comprises of factors such as innovation, up-gradation in technology, creativity, etc. it is found
that technological environment of the country is growing swiftly. Canada provides a major
platform to both businesses and people to grab the opportunity and grow.
Legal environment in Canada
legal environment is the most important element of pestle analysis as its knowledge is
essential to avoid complexities in working. If a business fails to fulfil all the legal requirement of
the country then it will attract unnecessary government restrictions as well as to prevent the
company from spoiling its image in the market(Oey and Nitihardjo, 2016).
For example: The Canadian Human Rights Act, prohibits discrimination between people
on various grounds such as age, gender, race, ethnicity, etc.
Environmental issues in Canada
It is very important for businesses to show their concern towards the environment in
order to maintain their image in the market.
For example: air pollutants, climate change, acid rain are having a huge impact on
Canada, need have arisen for business firms to take these environmental issues seriously in order
to grow and survive in this competitive world(Porter, 2015).
 Porter's five force model
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it is an important analytical tool which is used in order to determine five major elements
of Primark. The five elements of porters five force model are as follows:
Threat of new entrants
Threat of new entrants to Primark is very high because of very little control in the market.
The basic reason behind high threat from new entrants is that; there are very less entry barriers.
Thus, company has to constantly make efforts in order to survive and grow in this competitive
world(Aithal, 2017).
Threat of new substitutes
The risk of threat from substitute products is very minimum because the company
provides branded products and at reasonable prices. This is a great benefit to the company in
order to run its business smoothly.
Bargaining power of suppliers
Bargaining power of suppliers is very low to Primark because of availability of large
number of suppliers in both domestic and foreign market. Thus, the company is able to keep its
cost low and earn high profits even by charging reasonable prices from customers. Lower the
bargaining power of suppliers, higher the benefit to the company(Aithal, 2017).
Bargaining power of buyers
Bargaining power of customers is very high which is a negative point for Primark
because there are large number of customers along with large number of shops. Thus, buyers
have great influence on businesses to charge reasonable prices from them otherwise they would
shift to other brands.
Competition intensity
There is high competitive intensity in the retail market because of large number of
competitors. Thus, in order to survive in this competitive world; it is very important to bring
innovation.
 Demand and supply scheme
Demand refers to the demand of its product in the market that is the wish of customers to
buy the product. Higher the demand, better for businesses. While on the other hand, supply refers
the quantity of product that the suppliers are willing to sell. Thus, demand and supply scheme
focusses on establishing the relationship between the quantity of products that the supplier is
willing to sell and the buyers are willing to buy(Thompson and McLarney, 2017).
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Demand and supply scheme in clothing industry is very complex. Demand in the fashion
industry is very high but at the same time very fast. Thus, it becomes difficult for business firms
to manage the demand because the supply chain in fashion industry is usually very long and it
takes time to reach clothes of recent trends reach its stores. While the customers demand fast
delivery of products. Hence, the demand and supply scheme in fashion industry is very
dynamic(Rowell, 2017).
CONCLUSION
The above study has been summarised with that the business environment of the Canada
are different from region to region. The political environment of the Canada is parliamentary
democracy which are consistent with its own social and political institution. The legal
environment of the country includes some minimum standard for protecting the employees rights
which are followed by the employee at the time of concerning employee's hours of work,
dismissal, leaves and minimum wage rates in the business environment. In terms of environment
issues in the Canada government takes a number of initiatives to decrease the air-pollution and
minimise the greenhouse gases which are the major cause of the climate change in over all
country.
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