Detailed Business Environment Analysis Report: Primark's Operations

This report provides a comprehensive analysis of Primark's business environment, examining various aspects of its operations and external factors. It begins with an introduction to the business environment and its components, followed by an analysis of Primark's stakeholders, including employees, customers, shareholders, suppliers, and the government, and how the company fulfills its obligations to each. The report then delves into different economic systems, such as capitalism, socialism, and communism, with examples from Egypt, China, and Cuba, respectively. It further explores monetary and fiscal policies and their impact on the farming and housing sectors, as well as the forces of supply and demand. Finally, the report discusses competition policies and the effects of Brexit on the UK business environment, providing a well-rounded overview of Primark's strategic context.

BUSINESS ENVIRONMENT
Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1................................................................................................................................................1
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1.2................................................................................................................................................2
1.3................................................................................................................................................3
TASK 2............................................................................................................................................4
2.1................................................................................................................................................4
2.2................................................................................................................................................5
2.3................................................................................................................................................6
TASK 3............................................................................................................................................6
3.1................................................................................................................................................6
3.2................................................................................................................................................7
3.3................................................................................................................................................7
TASK 4............................................................................................................................................8
4.1................................................................................................................................................8
4.2................................................................................................................................................8
4.3..............................................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................13
INTRODUCTION
The business environment is composed of all internal and external factors which has an
impact on organisation's activities. The business environment includes various stakeholders as
well like customers, employees, government and different forces that shapes the demand and
supply. It is also evident that both intrinsic and extrinsic elements use to work together so that
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they can affect business. In this sense, there are assorted components that come together to make
a complete environment. In the present report, the business environment will be discussed in
context of Primark, which is a cloth retail firm based in Ireland with most of the operation in UK.
This company is a subsidiary of Associated British Foods and has its manufacturing sources
from different countries. The report will be focussed on organisation's stakeholders and the way
in which it meets their objectives. Besides this, various fiscal and monetary measures will be
discussed in context of farming and housing sectors along with forces which create demand and
supply. Further, the economic systems of different countries have also been focussed. Finally,
the report will be discussing the competition policies and Brexit with all its effects on UK.
TASK 1
1.1
Primark is a private limited company. The Primark was launched in 1969 from
Dublin, Ireland and now it has its expanded business operations in Europe, UK and many other
parts of Britain. The major success behind company is to be innovative in all its processes along
with providing products at very reasonable price thereby maintaining economies of scale in all
operations. The leading products of this cloth retail firm are clothes, shoes, home wares, women
accessories, men's and kids wear and wide range of beauty products. (Chor and Manova, 2012).
Private sector organisation's major purposes: its generate profits by making customers
satisfied with various services delivered to them. Besides this, they work for maximising their
profits so that they can provide good returns to shareholders and investors so that company's
financial assistance can be fulfilled in better way (García, Gómez and Molina, 2012).
Public sector organisation’s objectives: its are referred to those companies who use to be
controlled by government. The major purpose of these organisations is to work for common
welfare of all people of society. Thus, public sector firms use to offer services to society
disregarding their ability to pay. NHS or National Health Service is the best example for such
public sector company that is administered by government authority and use to offer medical and
health services to the general public. Many of its health services are provided free of cost to the
citizens of UK (Caiazza and Audretsch, 2015).
Charity organisation’s objectives: its are basically non profit companies who use to work for
welfare of society or any community rather than making profits (Butler and et.al., 2013).
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The American red cross is an example of such organisation in UK who user to provide blood to
various needy persons at the time of crisis.
Cooperative organisation’ objective: this type of organisation, some people use to make an
association on voluntary basis to achieve a common goal. The Cooperative wholesale society
is an example of such organisation where it use to supply various products to cooperative stores.
1.2
The Stakeholders are those individuals who have an interest in the organisation in any
respect. These stakeholders have a major role in business as they can affect the company as well
as be affected by the policies, objectives and norms of the firm. Therefore, it can be said that the
stakeholders can directly or indirectly affect the organisation. The main stakeholders for
Primark are employees, customers, shareholders, suppliers and government. The way in
which said firm use to fulfil its obligation towards stakeholders are described below:
 Employees: The employees are an important stakeholders of business towards which the
company is responsible to fulfil various obligations. It is important in present days that
employees feel their job secure and satisfying failing to which results in increased rate of
employee turnover. Primark use to provide employment for 700000 people by ensuring
that workers are provided with better working conditions, good and timely pay of wages,
job security and better welfare schemes for them in the form of pension. To satisfy the
employees company have responsibility to provide the effective incentives and
salary.Company should take their participation in the decision making process so as they
can motivated and aware about the business activity and function.
 Customers: They are the significant stakeholders as their decision makes the fate of a
business (Manova, 2013). The major objective of mentioned firm is to retain and make
more customers by providing them high quality products and services which can prove to
be value for money. Besides this, it also takes care that products made available are
reasonable in terms of cost. Moreover, for fashion conscious consumers it makes
innovations in clothes with latest trends.
 Shareholders: They are the persons who use to make investments in the company so that
it can run in smoother way fulfilling all its major operations. Primark is responsible to
give timely returns to investors on their invested amount. Further, entity is also
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responsible to provide necessary information to investors on the company's performance
and other useful data.
 Suppliers: Primark use to source its products from different countries due to which it is
able to provide clothes at comparatively cheaper price than other industries. Its use to
make a close and sound relations with suppliers of different countries and also ensures
that they are provided with good working conditions and timely wages. Besides this, in
Bangladesh which is a supplier country for firm, the company has launched a project
according to which it attempts to bring positive changes in lives of workers specially for
women employees. Company will provide effective order and payment about the semi
finished goods and raw material
 Government: It is the major responsibility of organisation to fulfil all legal requirements
which are instructed by government for different works performed by organisation. The
mentioned enterprise use to fulfil these obligations by performing fair trade practices, fair
competition and also maintaining required environment safety in all operations.
1.3
Each mentioned above stakeholder affected by business decision and activities in
different manner. It is major responsibility of Primark that it should maintain healthy
relationship with all these stakeholders and meet their expectation in an effective manner.
Following are some major responsibilities of Primark towards its stakeholders which are as
follows-
 Keep informed- Primark have responsibility to always keep inform about business
activities and functions to government. Government requires to know the actual financial
condition and status of company so its have responsibility to inform about company’s
financial position and its current status (Netzer, Feldman, Goldenberg and Fresko,
2012). On the other hand customers also requires knowing the information about product
prices, features, service update and discount.
 Manage closely- Employees are major stakeholder of Primark so it is major
responsibility to manage closely them. Employees requires to know the business practices
and policies. Further they wants to take participation in the business decision making
process so as they aware about company process. Organisation has responsibility to
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informed them about business activities and practices. further they also wants to know the
financial condition of company.
 Keep satisfy- Suppliers are major stakeholder of Primark who requires effective order
and regular payment. Its have responsibility to keep satisfy suppliers by make their
regular payment and effective order about raw material and semi finished goods. On the
other hand investor also requires to get satisfy by effective return. Investor are that
person who invest their capital in order to get return. Primark have major responsibility is
to satisfy them by pay their return.
TASK 2
2.1
Every country have their own economic system through which it sets its economic function,
pricing policy. Economic system is a system of combination of various institutes, agencies,
entities, decision making processes and patterns of consumptions that comprise the economic
structure of a given community. (Lakka, Michalakelis, Varoutas and Martakos, 2013).
Economic system are the means by which countries and government distributes resources and
trade goods and services. They are used to control the fives components that is labour, capital,
entrepreneur, physical resources, information resources. Each economic system have major
three question that what to produce, how to produce, in which quantity to produce and who
receives the outputs of production. Different economic systems adopted by various countries
have been explained in following section:
 Capitalism (Egypt)- Under this economic system production and allocation of resources
are owned and controlled by private individuals and institutes. Further in this economic
system only individuals and institutions are decide that how much and what to produced
and distributed. They are at liberty to use any techniques of production and produce
anything they like. In this economic system, internal and external security of country is
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generally take care by state. Further all activities which is related to defence, police, court
of justice are managed and controlled by government.
 Socialism (China)- Under this economic system production and allocation of resources
are generally owned,. Controlled and managed by the state. Private ownership of means
of production is not allowed. This economic system is major aim is to social gains and
personal interest. In this economic system the anti social activities like smuggling and
hoarding find no place. The individuals in socialistic society surrender their economic
freedom in exchange of assurance of freedom in exchange of assurance of freedom from
wants by the sates (Kitzmueller and Shimshack, 2012). The individuals in this economic
system have major responsibility is to render food, lodging and clothing besides other
requirement, by assigning a suitable job to each one of them. China adopt this economic
system. China adopted this economic system as it intends to become an industrialised
nation with increased role of public sector companies.
 Communism (Cuba)- Communism is a part of economic system under which production,
allocation of resources, distributions are managed, controlled by a central state authority
and there is also a restriction on the ownership of personal property communism. Cuba
adopts the communism economy as it assures the better conditions for working class
2.2
Monetary policy is a process under which central bank or currency board controls the
supply of money, often targeting an inflation rate or interest rate to ensure price stability and
general trust in the currency. In other word it can be said that monetary policy are usually to
contributes to economic growth and stability to lower unemployment, and to maintain
predictable exchange rates with other currencies (Schneider and Schmidpeter, 2012). Further it
can be said that monetary policy is how central banks manage liquidity to create economic
growth. Liquidity is how much there is in the money supply. That includes credit, cash, checks
and money market mutual funds. The major objective of monetary policy is to mange the
inflation. The second objective is to reduce unemployment but only after they have controlled
inflations. Monetary policy can largely affect farming business because in order to take raw
material like seed and other resources then farmer have to pay tax owner have to pay the interest
rate. If the government charge high tax rate then farmer may highly affected.
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On the other hand fiscal policy is related to governmental taxation system. In other word
it can be said that fiscal policy involves the decisions that a government makes regarding
collections of revenue, through taxations and about spending that revenue. Fiscal policy is
government spending and taxation that affected the economy. The role of fiscal policy for
economic growth relates to the stabilisations of the rate of growth of an advanced country. It
means the use of taxation and public expenditure by the government for stabilisation or
growth. The major objective of fiscal policy is to maintain and attain full employment.
Further it stabilise the price level and stabilise the growth rate of the economy. Fiscal policy
affects the farming business in a large manner because in order to operate the business in the
farming sector owner have to consider on taxation policy of the country. The impact of
these policies can influence the housing business sector in UK. Housing business is affected
by fiscal policy because when individual take loan for home then they have to pay interest
according to the term and condition of bank. In the context of housing business, fiscal policy
has largely affected this business because in order to take house or land on loan individual
have to pay interest rate according to the government decided rate.
2.3
Competition policy is very important policy which assist business organisation in
securing its business operation and activities. The major objective of this competition policy is to
protect customers as well as company operation in the competitive market. In the context of
Primark, with assistance of competitive policy, it can largely beneficial in the international
market (Asghar, 2013). This policy is basically developed by the government with purpose to
protect and secure customer as well as company. There are various competition policy which are
as follows-
 Office of fair trading- This competition policy is very significant policy which assist ij
protecting the activities and competition among trading firms. The main objective of this
trading policy is to conduct fair trading to make market effective for customer and ensure
that trading firms conduct their fair completion and business operation in the market.
 Training and skill policy- By this policy, Primark employees can gain the opportunity to
improve their personality and professionalism. This legislation assist in providing
effective training programs for personnels of organisation.
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 Impact of regional policy- Eu allocated funds for increasing employment in the country.
It impact positively on Primark, it becomes able to develop itself and become able to
deliver variety of product and services in the UK market. With assistance of this
competition policy, Primark can easily develop its business and deliver various kinds of
commodity and services to customers.
 Impact of industrial policy- By this policy small business enterprise can improve their
existing business operation. Company can modify its existing operation as per the new
guidance. With assistance of this competition policy, small business enterprise can
expand its business.
 Impact of competition act 1998- This act ensures that effectively price competition
between suppliers. Primark can able to give dynamic product to its existing customers
With assistance of this policy company can deliver high quality product nad servioces to
customers.
 Deregulation- It has a huge influence on organisation activities and functions it create
monopoly by preventing mergers /acquisitions , laws for postal services industries to
launch competition , sales of resources are in forced like airports and BAA in the UK
TASK 3
3.1
Market structure is the interconnected characteristics of a market where large number and
relative strength of customers and seller are available. In the market structure there is also
competition, extent of product differentiation and ease of entry into and exit from the market.
There are major four types of market structure which are as follows-
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 Perfect competition- In this market structure, there are large numbers of buyers and
sellers are available in the market. Primark have no choice to charge the market price. It
is price takers in this market. ExampleASDA, TESCO, etc In this market due to the
presence of different sellers the pricing decision cannot be controlled by an individual
seller. In addition to this, the firms in this market have relative share in the industry. In
this prices of the goods Price of the good s equal to the marginal cost
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 Oligopoly- In this market structure there are several large sellers who have some control
over the prices. Further in this market structure, an industry which is dominated by a few
organisations. There are interdependence of firms, and corporations will be influenced by
how other company set price and output (Grigor'ev and Suslova, 2014). In addition to
this, there are differentiation products and advertising is often important. For example:
DIGI Telecom which is mobile service provider in Malaysia. . In addition to this, the
price charged by these firms are comparatively high in other markets. In this market
structure, price setter rather the prices takers. In the output decision maximizes profits by
producing where marginal revenue equals marginal costs
 Monopoly- In this market structure, single seller with considerable control over supply
and prices. A pure monopoly is defined as a single seller of a product that is 100% of
market share. The major problem of monopoly market structure is that firms with
monopoly power can set higher prices than in a competitive market. The firm who has a
monopoly in the market is generally the price maker. The prices of a product is being
charge as per their profitability. Seller based pricing industry has the power to raise its
prices. On the other hand outputs level which would bne most efficient por desirable for
the industry. Example Linux which is owning the Unix-like computer operating system in
UK.
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 Duopoly- A duopoly is a form of oligopoly occurring when two companies control all or
most of the market for a product and services. It is a market situation in which only
sellers supply a particular commodity to many buyers. It is assumed that organization
may agree on their price, that is, they set prices of goods with mutual understanding and
separate the market with either transfer quota or merging with each other as a single unit.
However, in actuality, having this type of market structure is not possible as two
companies can never offer identical commodity with same price.
3.2
Business enterprise ensures that demand and supply of product and services should
implementing a cost effective strategy. The demand and supply of product and services is
directly affected by the prices of goods and services. If prices of product an services will increase
then demand and supply will decrease (Waithaka and Ngugi, 2013). On the other hand if prices
of product and services will decrease then demand and supply of goods and services will
increase. There is inverse relationship between prices and demand and supply. In economics or
business in general market forces would refers to the forces of demand and supply affecting the
price and quantity of items. If any fluctuation in demand and supply can change in a related
factors other than the existing cost of the product and services.
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