Business Environment of Primark: UK Market and Competition Report

This report provides a comprehensive analysis of Primark's business environment, focusing on its operations within the UK market. It begins by defining the business environment and identifying Primark as a private subsidiary of Associated British Foods (ABF). The report delves into the different types of organizations, including private companies, co-operatives, and non-governmental organizations, highlighting Primark's status and objectives. It explores Primark's stakeholders—shareholders, employees, customers, suppliers, trade unions, and society—and their respective objectives, emphasizing the importance of stakeholder management. The report further examines Primark's responsibilities, including ethical, legal, and corporate social responsibilities, and the strategies employed to fulfill them, such as stakeholder analysis and consumer-based marketing. The analysis extends to the UK's mixed economic system, fiscal and monetary policies' impact on housing and farming, and the role of competition policy, including the Office of Fair Trading and the Competition Commission, in regulating the market. The report concludes by discussing the impact of competition policy on Primark, providing a holistic overview of its business environment.

BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION.........................................................................................................................................3
TASK 1..........................................................................................................................................................3
1.1...............................................................................................................................................................3
1.2...............................................................................................................................................................4
1.3...............................................................................................................................................................4
TASK 2..........................................................................................................................................................5
2.1...............................................................................................................................................................5
2.2...............................................................................................................................................................6
2.3...............................................................................................................................................................7
TASK 3..........................................................................................................................................................8
3.1...............................................................................................................................................................8
3.2...............................................................................................................................................................9
3.3.............................................................................................................................................................10
TASK 4........................................................................................................................................................11
4.1.............................................................................................................................................................11
4.2.............................................................................................................................................................12
4.3.............................................................................................................................................................13
CONCLUSION............................................................................................................................................13
REFERENCES............................................................................................................................................14

INTRODUCTION
Business environment compress of internal and external factors which influence various activities
and functions of an organization. This report describes the business environment of Primark which is a
private entity of UK and is part of fashion world. This study will help reader to understand various types
of organizations of UK along with its purposes. Here, different economic systems are to be discussed
along with competition policy of businesses of UK. Learner will come to know about various market
structures which are affects by pricing and output decisions of entity (Solomon, 2014). Through this
report, reader will be able to assess the importance of global factors which shape the national business
activities.
TASK 1
1.1
A business unit is an entity that establishes its business with an aim to accomplish its targets and
goals. There are many types of organization exists in a business environment such as sole trader,
partnership, private and public companies, corporations, government and non government entities,
municipal enterprises, etc. Here Primark is a private subsidiary company of Associated British Foods
(ABF) Group. Let’s discuss this in detail:
 Private company: Private enterprise is such where two or more individuals or group of people
owns an entity (Boons and Lüdeke-Freund, 2013). Here, shares are traded only with the
agreement of shareholders. Primark comes under this type of organization where it enjoys a legal
status of corporation. Owners under this have a limited liability status. Primark may raise large
amount of capital compare to partnership firms and sole traders. Aim behind establishment of this
business unit is to generate profit, increase in sales, making more business partners, to avoid
risks, creating jobs for owners of the firm, etc. Therefore, main purpose of this subsidiary is to
make more and more profit and other purposes are created to fulfill this aim. Co-operatives: These businesses are owned by members involved in this such as consumers,
employees, suppliers, etc. They work together with an aim to generate profits and facilitate equal
share of profits to its members (Bill Pasmore PhD and CMC, 2010). Along with generation of
profit, the purposes of these entities are to increase in sales, providing jobs to members at any
position, sharing risks, making partners (outsiders), etc.
 Non government organization: It is a not profit organization that operates its activities
independently without any intervenes of any government and its main purpose is to do public
welfare. It is totally different from the above two types of businesses. Other purposes of this

entity is supporting rights of people, helping poor persons, educating and informing individuals
about various things like dangers, deceases, etc.
1.2
Every organization establishes with an aim to accomplish its goals and targets. Each
establishment has different objectives and make many strategies to meets them. Objectives of private
entity like Primark are to make profit, growth, satisfying people, market share and survival. Primark
includes many stakeholders such as shareholders, consumers, employees, suppliers, trade unions,
government and society. All of them are connected with this firm to obtain different objectives. These are
discussed as under:
 Shareholders: These are members of the enterprise and objectives of these persons to earn profit,
aware people about their brands, expansion of business, etc.
 Employees: Employees are engaged in the various business operations of this unit is to earn
money in the form for incentives, salary, bonus, for career progression and prestige.
 Customers: Objectives of customers of Primark is to get good quality products at low rate or
price.
 Suppliers: Their goal is to make profit, promote payments, brad awareness, receive fair price of
the goods supplied to Primark, etc.
 Trade unions: Their intention is to create employee and industrial relations along with to earn
minimum salary or wages on time.
 Society: It is a type of secondary stakeholder and their objectives are to allocate efficiency, fair
competitive market, cost of living, sustainability, etc.
All the above objectives of stakeholders of Primark are fulfilled by its management by proper
planning and strategies. There are two types of stakeholders exist in an organization i.e. primary and
secondary (Commander and Svejnar, 2011). Primary are those who have a direct interest in the firm
like suppliers, employees and investors whereas secondary have indirect interest in the company such
as government, society, etc. Firstly, management of Primark tries to fulfill goals of its primary
stakeholders because they are very important part of the entity. After it, they meet objective of their
secondary stakeholders with least costs.
1.3
Every establishment comes up with different responsibilities towards eternal and internal forces
of company. Primark includes following responsibilities:

 Responsibilities for stakeholders: It is very necessary for an entity to recognize its responsibility
towards its stakeholders before fulfilling those. First of all Primark recognizes the various
objectives of its different stakeholders and then fulfill them by making various stragegies.
 Ethical responsibility: This includes fair trading, environment protection, responsibilities towards
non customers and honesty in promotions. Primark should not sell products at high rates which it
buys at very low price (Yoon, 2012). It is very unethical to harm the environment by various
means like smoke, industrial wastage, etc. It is another responsibility of this firm is to care about
general public who are not the customers of it.
 Legal responsibility: Legal responsibility of Primark includes various legislations related to
consumers, employees, their health and safety, tax and financial, etc.
Primark has created many strategies to meet the above responsibilities which are as follows:
 Stakeholder analysis technique: It is the technique through which it is determine that whose
objective is to be fulfilled.
 Making multi strategies: In Primark various stakeholders have different objectives so, for
this, multi strategies are made by management to meet their requirements effectively.
 Fair pricing and contracts: In this strategy, products and services are facilitates to customers
at reasonable price. Suppliers are also treated fairly by Primark.
 Corporate social responsibility: A company should make such strategy that care about well
being of society and other then consumers of the firm.
 Become a green organization: As per this strategy, organization should produce such
products which are not harmful for the environment and avoid industrial wastage that pollute
environment.
 Consumer based marketing: Primark involved in such activities that aim to satisfy its
customers related to production, promotion, pricing and distribution. Therefore, business
should be based on fulfilling customers’ wants and needs.
 Health and safety measures: Management of Primark should take care about health and
safety of its workers and employees. For this, various provisions have to be made by mangers
of the firm.
TASK 2
2.1
Economic system is an organized and systematic way by which a country allocates its resources
in the community of nation (Teece, 2012). It involves various institutions, agencies, entities and units that

form the economic structure for such community. Different nations have different economic systems as
per the requirement of their economy. The different economic systems are described as below:
 Mixed economy: It is such economic system that consists of the characteristics of both markets
capitalistic and socialistic. It facilitates a private entity to do business with freedom and also
allow an intervention of government in economic activities. Therefore, all decisions under this
system is determine partly by individuals and partly by government (Iskanius, Page and
Anbuudayasankar, 2010). UK has this type of economic system where corporations generate
more wealth with the help of government. The reason to follow this system is that it facilitates
enterprises to operate their business activities freely and to make more profits along social
welfare.
 Transactional economy: This system facilitates an entity to move its business from command to
free market system. China has transactional economy that undergoes economic liberalization,
privatization and restructuring of financial sector. Many years ago, this nation had a command
system where no body was allow to do business with freedom, government always interfered in
various activities, but then it has changed its economy and turn it to transactional.
 Command economic system: it is the system where all resources are allocated by state or
government. Here, freedom is not provided to companies to run their businesses. All objectives,
decisions, availing resources and many other functions are performed by the state. Cuba is an
example of this type of economic system (Zsambok and Klein, 2014). As goods and resources are
allocated as per the directions of government of nation so, it avoids the duplication and wastage
of available resources. It helps the state to achieve its own political and social goals and targets.
2.2
Fiscal policy is such that influence the economic activities by changes in rates of taxes and
investments of government. On the other side, monetary policy is such which controls the supply of
money with the help of various interest rates. Impact of these policies on farming and housing are
explained below:
 Housing: Changes in the government fiscal policy affects the gross national product. Any
changes in GNP in turn affect the personal income, distribution of income, prices level of goods,
employment, etc. The revenue policies such as personal income tax rates, corporate tax rates,
contribution to social insurance, etc. will affects housing market. Decrease and increase in GNP
will indirectly affects the housing market because any changes in rate of taxes will directly affects

some demographic variables. Monetary policy also affects the housing business because any
changes in supply of money in market will directly affects housing market.
 Farming: Farming business is also very much affected by fiscal and monetary policy. If there is
more supply of money in market them farmers may buy more seeds and many other agriculture
products and may sale their products at high rates (Turban, Sharda and Delen, 2011). But when
there is less or no money available in market then agriculture products are to be sold at low rates
due to survival of farmers. The farming companies also have to face these problems. Government
imposes may tax rate which may affects business of farming enterprises.
2.3
Competition is such market situation where organizations bid for consumers without any
restrictions. In other words, it is an activity of an enterprise to win from another by satisfying customers’
needs and demands. It can be happen in relation to design, price and quality of goods. It encourages
entities, innovation, and efficiency of company like Primark. Through this people will buy products at
best and reasonable price and rates (CGA, 2010). The government of UK makes the policies to reduce
and prevent abuse of monopoly because it may lead to market failure and against public interest.
Therefore, competition policy is made by state of UK to protect interest of consumers.
Competition policy facilitates low prices for all, more choice, innovation, better quality and better
competitors in global markets. Here, are the following competition policies created by UK government:
 Office of fair trading: Office of fair trading (OFT) is the reason behind investigating abuses of
monopoly power and prohibited practices. Here, two types of behavior are discussed such as
collusive behavior and abuse of market power. Collusive behavior appears when enterprises
engaged or enter into an agreement of fix production and their pricing. This activity helps firms to
generate more revenue at low expense (Strumickas and Valanciene, 2015). A firm has a market
power when it has more than 40% of market share with it. Taking wrong advantage of this power
is known as abuse of market power. It may happen through predatory pricing, charging higher
prices, tie in sales, etc. These are illegal activities and therefore, are investigated by OFT.
 Competition commission: It is an independent body which is established to promote completion
in UK. It is non departmental public body that investigates mergers, markets and other enquiries
related to industries under this competition law in UK.
Impact of competition policy on Primark

Competition policy protects consumers against unfair trade policy and supports them in the
situation of changing in the prices and rates of goods and services by different companies. It also
facilitates management of Primark to improve its efficiency by optimum utilization of all resources and
reduces its costs. This policy boosts the competitiveness of businesses if UK which helps in creating
markets much better.
TASK 3
3.1
Price is an amount in terms of money which is charged for a product and service provided by a
person to another. Various types of market structures which influence the pricing policy of a company are
discussed below:
 Perfect competition: It is such market where there is not any restriction in entry and exit of any
firm in the industry. It includes large number of buyers and sellers and therefore no single seller
can affects the pricing policy of products (Wild, Wild and Han, 2014). In this competitive market,
homogeneous products are bought and sold which cannot be distinguished by products of
competitive entity. Enterprises under this have no control over the price of their goods and
services because they are price taker not maker. Financial markets such as stock exchange,
currency and bond markets are examples of this competition market.
 Oligopoly: In this market very few number of large entities are involved which deals in selling of
identical or similar products. It is quite difficult for a new enterprise to enter into the industry.
Branding and loyalty is the source of competitive advantage in this type of competition. As it
includes small number of sellers so they have some control over the prices of commodities. Prices
are generally remains constant here.
 Duopoly: It is the market situation where only two large manufacturers or sellers are involved.
Prices of goods and services in this are relatively high then other markets. Two equally dominant
firms exist in this market. Examples of units involved in this are Airbus and Boeing. Here, not
more than one competitor exists and they compete with each other by reducing and increasing
prices for their products.
 Monopoly: Monopoly is a structure of market where only one manufacturer or seller sales its
unique products. It does not involve any competition because a firm is treated as market. The
prices of commodities are very high in this situation (Wirtz, Schilke and Ullrich, 2010). Here, all
products are produced by one company only and manufacture a unique item so no close substitute

is possible in the market. The organization has whole control over prices of goods and creates a
situation of price discrimination.
3.2
Demand
Demand is the willingness, desire and ability of a person to buy goods and services. A demand
curve generally slopes downward which shows that people are willing to purchase less goods at high rates
and more at low price. As per the law of demand, price and quantity demanded move in the reverse
directions. The following factors are responsible for change in demand curve:
 Buyers: Changes in the number of consumers affects the demand of particular product.
 Tastes: Changes in the behavior and preferences of purchasers also affects its demand in the
market.
 Income: Individual purchases items according to their income, so changes in income of
individuals have direct effects on demand of products.
 Related goods: These can be any substitute and complimentary goods whose availability and non
availability may decrease or increase the demand of specific products respectively.
From the above discussion it is clear that if demand increases the price of products and services
increases and vise versa (Li and Wang, 2010). Primark may generate more revenue if demand for its
products increase but it should not increase rates for its goods and services very high because that
may decrease its demands.
Figure 1: Demand Curve
(Source: Iskanius, Page and Anbuudayasankar, 2010)
Supply

Supply refers to the various quantities of products and services which manufacturers are willing
to sell them at all possible market prices. If the prices of goods increase, quantity supply also raises and
quantity demanded decrease and vise versa. According to law of supply, companies facilitate more sales
at high rates and less at low rates. The supply curve generally slopes upwards and that is due to costs and
profits of a corporation. Factors that affect supply of Primark are:
 Subsidies and taxes: The government subsidies encourage production where as taxation policies
have opposite effect.
 Technology: New and latest technology helps management to improve the production and
increase the efficiency of organizations to supply.
 Number of sellers: Number of sellers in market also affects the supply of the company.
 Resource costs: Cost of purchase factors production also influence the decisions of business unit.
Changes in any factor except price is responsible for shift in supply curve. Decrease in supply shift
the curve to left and vise versa. Supply is very closely related to demand of products and services for
a particular price. Supply of specific product will increase with the rise in price of it because it
facilitates Primark to maximize its profits.
Figure 2: Supply Curve
(Source: Wheelen and Hunger, 2011)
3.3
Organizational culture refers to the beliefs, ways, methods and values to run a business
effectively (López-Gamero, Molina-Azorín and Claver-Cortés, 2011). It is reflected by structure of
enterprise and people behavior and attitude of people working there. Business environment of Primark is
affected by various factors which are as under:

 Political environment: This involves various types of political activities that affects the functions
of an organization. Government encourages foreign corporations to operates their business within
the boundary of nation which may create problems for those entities who compete with foreign
companies.
 Economic environment: It includes economic growth, taxation, inflation and exchange rates, etc.
which have a direct impact on operations and activities of an enterprise.
 Social environment: It is related to the level of education, population, living standard of people,
etc. This environment has direct impact on what people buy, how much they purchase, their
ability to pay and their preferences.
 Technical environment: Primark follows latest technology for operating various functions of
company such as production, distribution, sales, marketing, promotions, procurement, etc.
 Legal environment: The government of every country makes some rules and regulations for
various organizations to run their businesses in effective manner (Tayur, Ganeshan and
Magazine, 2012). UK government also has some regulations and policies which control business
activities of all entities. Due to many laws and regulations will create a negative impact on
business activities.
 Environmental environment: This environment is important for not only general public but also
firms because today every entity perform legal and ethical responsibilities. Under this, Primark is
responsible for avoiding polluting weather, water and other areas.
 Cultural environment: As discussed above, every corporation has its own organizational culture
which is influenced by culture of such nation. The culture of Primark is affected values, attitudes,
assumptions, and behavior of both employer and employee within the workplace.
TASK 4
4.1
International trade refers to exchange of capital, goods and services worldwide. It includes import
and export of products and services across international territories and boundaries. Globalization is a
recent trend where entities buys and sales products in all over the world (Carroll and Shabana, 2010). It is
very important for a company to expand its business internationally. Significance of international trade to
UK business organizations are:
 Access to new customers: When a corporation expands its business outside its parent country
then it will help such firm to get connected with many new consumers. A local company has a

limited market area to operate its business but international trade provides completely new
customers and users.
 Creating new opportunities: By entering into new or foreign market, government facilitates
much better business opportunities to organizations of other nations. It may provide a chance of
findings more investors and partners to the firms of UK.
 Access to latest technology: There are many counties with invention of different technologies
which may be helpful in operating day to day business functions. It is not possible for UK to
invent all technology so international trade facilitates it to enjoy the benefits of latest
technologies invented by other nations.
 Access to resources: Companies of UK manufacture many products but it is not always possible
for it to produce all types of goods (Bansal and Hoffman, 2012). For example, there are some
countries which are rich in producing fuel, minerals, spices, etc. and it not possible for other
nations to produces all these things. Therefore, by this trade UK may import such products from
other countries.
 Access to quality products: There are many countries in world which produces many unique and
quality goods within their national territory. So, UK firms may import such quality products into
the country and many generate more revenue.
4.2
Organizations are affected by external environment such as political, social environmental,
technological, legal and economical. These global factors have both positive and negative impact on the
business activities of UK firms. These are as follows:
 Emerging markets: Emerging markets are those which are new in market and, possibility for
those of grow rapidly in future. It includes the counties; Brazil, Russia, India and China (BRIC)
(Hadjiconstantinou, 2012). These nations are growing very fast in recent period and may lead
market in future. Any development in these markets will affect the businesses of UK.
 Government impact: Government of every country makes many rules and regulations regarding
export and import of goods and services. They impose heavy taxes on any transactions related or
between different nations. These policies affect the production and distribution of goods of UK
because government of other nations charged high tax over imports and exports.
 Market opportunities: The global factors also facilitate better market opportunities for firms of
UK which helps in expanding its business worldwide.

4.3
European Union (EU) is a single market where no tax is charged on export and import among the
member of this Union (Vitale, Giglierano and Pfoertsch, 2010). As per the recent report, more than 50%
of exports of UK go to the EU nations.
Impact of policies of European Union on UK business organizations
 Agriculture policy: After Brexit of UK, it becomes a part of EU where it has to follows this
policy. This is created by EU for food security at global level where food production must be
double till 2050 to feed population of whole world. Through this policy, food production in UK
has increased and also produces many new food items for people.
 Business policy: This policy includes the four freedoms of movement such as goods, services,
people and capital. It is very essential for a company to achieve objectives of single market. There
is a great opportunity and responsibility for UK to do business in EU as a single market. By
adopting these policy firms of UK generated more profits by increase in sales of products.
 Tax policy: After Brexit, taxation policy of EU affected the performance of various business
units of UK (Wheelen and Hunger, 2011). A lower company tax in UK will facilitate a
competitive advantage to other entities in that country. Sometimes it has a negative impact on
competition for UK.
 Employment policy: As per this policy any company whether European or non European who
want to work with EU has to follows this employment policy which includes recruitment,
payment, etc. Thus, UK also follows this policy as it works with EU.
 EU standards: According to these standards, if any country of EU wants to export its products
and services to another EU country then it must have CE marking on them. UK also exports
goods to different countries of EU and therefore, CE marking helps it in such process. This
marking shows that the company has fulfilled all technical requirements and valid for goods
produced both outside and inside of EU.
CONCLUSION
This study concluded that Primark is a private entity which developed various strategies to meet
the objectives of its stakeholders. UK has mixed economy which is mixture of both capitalism and
socialism. Pricing policy of businesses of UK influence the market forces such as demand and supply.
Various business environmental factors i.e. political, social, legal, and technological, cultural, etc. affect
the behavior of Primark. It is very important for UK to engage in international trade to expand its business
worldwide.

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