Business Structure Report: A PESTLE Analysis of the UK Market

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The Structure of Business

Executive Summary
The report has performed a PESTLE analysis of UK to identify impact of external forces on
new venture. It has discussed principles of GDPR and consumer right to identify its strengths
and weakness upon the new venture. It has considered major sources of finance such as
selling shares, bond, debenture and long-term bank-loan. Three sectors are there such as
primary sector, secondary sector and tertiary sector and these contribute to UK economy. HR
policy such as health and safety policy and equality policy is included in this paper for
conducting the study in an efficient manner.

Table of Contents
1.0 Introduction..........................................................................................................................4
Question One..............................................................................................................................5
2.0 PESTLE ANALYSIS.......................................................................................................5
2.1 Political............................................................................................................................5
2.2 Economic..........................................................................................................................5
2.3 Social................................................................................................................................5
2.4 Technological...................................................................................................................6
2.5 Legal.................................................................................................................................6
2.6 Environmental..................................................................................................................7
3.0 Question Two.......................................................................................................................7
3.1 Table of Legal frameworks in strengths and weakness in making decision....................7
3.2 Consideration in seeking funding.....................................................................................9
4.0 Question Three...................................................................................................................10
4.1 Identification of 3 sectors, their differences and value to UK economy........................10
4.2 Two HR policy and their importance in workplace.......................................................13
4.2.1 Health and safety policies.......................................................................................13
4.2.2 Equality and diversity policies................................................................................14
Reflection.................................................................................................................................14
5.0 Conclusion..........................................................................................................................15
Reference list............................................................................................................................16
Appendix 1...............................................................................................................................19

1.0 Introduction
At present, digital technology holds the market and people prefer to use it for saving their
time. The study is prepared for the attention of conducting online business so that
organisation is able to achieve good position in the merchandise market. Using the case study
of eBay, PESTEL analysis will be conducted for taking appropriate decision related to online
business start-up. In this case, cosmetic products of “V-Cos” will be sold in the online
platform. It will focus on the legal framework table and necessity of funding for a new online
enterprise. Finally, value of three sectors such as primary, secondary and tertiary sectors will
be analysed for understanding its contribution to UK economy. HR policy and its importance
along with reflective statement will be elaborated in this paper.

2.0 Question One
2.1 PESTLE ANALYSIS
The first aspect of assignment on structure of business will focus on PESTLE factors that
may influence success of a new venture. Political, economic, legal, environmental and other
forces of the UK will be analysed to determine impacts on new online cosmetic business.
2.1.1 Political
eBay’s business is influenced by Brexit incidents, corporation tax, stable political
environment and others. The decision taken by UK to leave European Union has resulted in
weak pound value and developed an uncertainty on trade restrictions (Dhingra et al., 2016).
The new venture’s profit margin seems to be affected by Brexit incidents. Online retail
business depends heavily on European market in terms of human resources and supplies
(McGrattan and Waddle, 2017). Therefore, new cosmetic venture may experience a steady
slowdown in areas of revenue and sales. Corporation tax may reduce from 19% to 18%
(Devereux et al., 2014). The venture may enjoy advantages of low tax expenses. UK’s
political environment is stable due to presence of democratic leaders. This may influence the
new cosmetic business in gaining opportunities to expand product lines. UK has remained as
a popular market for FDI. Popular organisations and business leaders have invested in the UK
because of minimum trade restrictions by the Government. If V-Cos establish a new business,
it may welcome foreign business partners to extend its business.
2.1.2 Economic
Economic forces influencing eBay are exchange rates, decline in inflation rate, interest rate,
GDP growth and others. Exchange rate conversion is volatile, which affects negotiation with
eBay’s suppliers. This indicates V-Cos may face conflicts with suppliers on unstable
exchange rates. UK’s quarterly economic growth was 0.2% in December 2018 (Barnett et al.,
2012). Average growth rate is 0.60% from 1955 to 2018 (McLeay et al., 2014). With higher
economic production and expansion, eBay is able to hire more personnel with an attractive
package. Similarly, V-Cos may take advantages of high economic growth to pay employees
higher wages. This shall enhance individual spending power leading to a healthier economy.
Interest rate posed by financial institutions has become high in recent years. This may
increase interest expense of V-Cos putting a financial burden on its online cosmetic business.

2.1.3 Social
eBay is highly influenced by population demographics, fashion requirements, and dynamic
consumer taste and preference. It has succeeded in building large target consumer groups,
who prefer different variants. The country has a large consumer market due to presence of 66
million people (Foot and Gomez, 2014). Consumers have varieties of needs and demands
concerning cosmetics products. Some conscious people are concerned about the use of
organic cosmetic products. V-Cos can work on a new trend in the UK’s consumer markets to
sell organic cosmetics and target more consumers. However, consumer preferences change
with time and competitors’ products. The new venture may require conducting in-depth
analysis to meet consumer needs. This shall increase marketing and advertisement expenses
of V-Cos.
2.1.4 Technological
Smartphone shopping has changed eBay’s online retail business. The company has increased
its engagement with consumers. The online transaction has resulted in an increased number
of consumers in recent years. V-Cos may develop a mobile application to provide consumers
with an enjoyable, convenient and informative shopping experience. With increased online
platforms, consumers prefer conducting online research on products to identify e-commerce
offering low price and quality product (Alqahtani and Goodwin, 2012). V-Cos can use
behavioural analytics tracker to analyse purchase and search history of consumers to provide
them with quality cosmetic goods (Kaptein and Parvinen, 2015). Advancement in technology
can provide V-Cos to give a customised experience to consumers, which shall give business
advantages over competitors.
2.1.5 Legal
Legal framework of the UK helps eBay to protect consumers, ensure health and safety of
staff, and provide equal opportunity to employees. As eBay strictly adheres to employment
legislation, it serves employees and consumers with standardised service resulting in its
higher reputation. V-Cos shall require comply with employment law to maintain a minimum
wage rate, which will make it become a responsible employer. It will able to maintain safety
and well-being of employees by adhering to Health and Safety at work 1974. Following rules
and regulations of all legislation may be expensive to the new venture but it can earn long-
term benefits such as reduced workplace hazards, medical expenses and others (Holt and

Allen, 2015). However, the Government modifies its legal framework with course of time.
This makes eBay update its internal policies leading to greater expenses. Therefore, V-Cos
shall incur cost related to dynamic legal requirements by the Government.
2.1.6 Environmental
Environmental restrictions put by UK Government pressurise eBay to use sustainable
materials and waste products in packaging (Schöder et al., 2016). This saves packaging cost
of eBay. V-Cos require to adopt same practice in packaging system to get advantages of
sustainability. Corporate Social Responsibility practices adopted by eBay enhance its
reputation and strengthen relationship with suppliers and customers. It may be difficult for V-
Cos to carry out CSR initiatives in the initial stage of business operation because of higher
cost.
3.0 Question Two
This section of the report will provide a table on strengths and weakness of legal framework
and consider in seeking funding.
3.1 Table of Legal frameworks in strengths and weakness in making decision
Legal framework Strengths Weakness
New GDPR  GDPR emphasise on
fair, lawful and
transparent
processing of data. As
V-Cos will operate
online, it shall require
protecting its mobile
application, website
and transaction mode.
Principles of GDPR
shall enable it to
secure and process
data fairly (Goddard,
2017).
 The biggest weakness
of GDPR compliance
is the cost to reach
that point.
 In order to comply
with GDPR
principles, updating
internal policies is not
enough. V-Cos shall
require providing
training to employees
to grab in-depth
knowledge on data
protection, and this

 Accuracy is another
feature of GDPR that
forces to keep data up
to date. V-Cos will
able to upgrade data
for customer
convenience.
 GDPR compliance
will ensure customers
that V-Cos is an
effective custodian of
data and it will not
disclose personal
identification of
consumers.
 V-Cos can get
protection from data
breaches by
complying GDPR
principles.
 As an extension of
GDPR, the new
venture can move in
areas to improve its
application, network
and endpoint security
(Tankard, 2016).
process comes at
higher investment
(Tankard, 2016).
 GDPR principles
imply cyber security
features, which need
to be included in
software architecture
resulting in more
work for software
developers. Software
those offer a data loss
prevention system
required featured
infrastructure. All
these infrastructure or
systems may require
greater investment
from V-Cos.
 The major concern of
GDPR is its non-
compliance can pose
massive fines on V-
Cos.
Consumer Right  In adherence to
consumer right shall
enable V-Cos to meet
some standards
including fit for
purpose, satisfactory,
 The greatest
weakness of
consumer rights is V-
Cos shall require
investing to reach a
higher compliance

as described and
others (Howells and
Weatherill, 2017).
 The new venture will
ensure that consumers
are not getting
damaged or faulty
products through
online purchasing.
 Consumers are able to
get products as
described by the
online retailer.
 Maintaining a
standard will ensure
reputation and
responsiveness of the
new venture.
 V-Cos cannot provide
misleading or false
information to
consumers through
marketing activities.
 It will be accountable
for providing
compensation to
consumers in case
they get defective
products.
level.
 Non-compliance to
consumer right Act
shall make V-Cos pay
a large amount of fine
to the UK
Government.
Table 1: strengths and weakness of Legal framework
(Source: Created by the learner)
3.2 Consideration in seeking funding

V-Cos shall consider following modes to fund its online cosmetic business.
Long-term bank loans
This has a fixed interest rate and maturity period along with a monthly and quarterly schedule
for repayment. Generally, long-term loan has a maturity period of 3 to 10 years. It can be
stretched for 20 years depending on the purpose of businesses (Gartner et al., 2012). Long-
term bank loans can be supported with collateral, basically in forms of assets. Such loan
contracts have restrictive covenants that demonstrate what a business can do or cannot do
during loan period. Long-term loans are paid back from cash flow or profits kept for this
purpose. V-Cos can consider this source of the fund because of low interest rate.
Selling shares
It is a source of raising capital that allows businesses to make available shares for trading in
stock market (Gartner et al., 2012). If share price increases, V-Cos can make a higher profit.
It is easy to raise large amounts of capital through selling shares without taking burden of
repayment. This source of fund attracts a large number of investors, as it offers opportunity
for part ownership. V-Cos will able to raise fund immediately and invest profit margins in
new projects to get tax incentives.
Company bond and debenture
Bonds are specific loans secured by some physical assets. A debenture is secured by a
promise to pay principal and interest amount timely (Daskalakis et al., 2013). Issuing bond
and debenture comes at a fixed interest rate so that V-Cos can earn get money at right time.
Additionally, these are tax deductible expense that shall save additional expense of V-Cos.
4.0 Question Three
4.1 Identification of 3 sectors, their differences and value to UK economy
As per the online business ideas, three sectors are there such as primary sector, secondary
sector and tertiary sector, within which, business can be operated (Arent et al., 2015).
Differences between primary sector, secondary sector and tertiary sector
Genre Primary Secondary Tertiary
Concept and It is the extraction of It is popular as a It is popular as

types of business raw materials such as
fishing, mining and
agriculture.
manufacturing sector.
It basically tries to
produce the complete
goods making foods,
toys, cloths, cosmetics,
cars and many others.
service sector such as
nursing, banking,
trade, insurance and
teaching.
Types of usage Goods or services are
taken by exploiting
the natural resources.
Using the resource, it is
transferred to another
form, which is more
perfect.
In this sector, people
provide service to the
secondary and
primary sectors for
their business related
activities.
Usage of
technology
No technological
advancement is
noticed in this sector.
Therefore, traditional
techniques are
followed.
Advanced technology
is used and it is an
organised sector.
Advanced technology
is followed.
Employment
aspect
This sector is a larger
employer, which helps
to develop the nation
This sector is not able
to supply employment
to the excess workers
of primary sectors.
In this sector, number
of employment is
increased rapidly.
Table 2: Difference between secondary, primary and tertiary sector
(Source: Influenced by Roberts, 2018)
As per the viewpoint of Bianchi (2018), it is noticed that primary sector uses natural
recourses for running their business. For example, fishing and agricultural businesses are
under this sector. On the other hand, Gazabon et al. (2017) commented that modified
products from the natural resources are developed in secondary sector for running the
business. However, Gutiérrez and Baquero (2016) argued that tertiary sectors provide
services such as banking, teaching and many others. It is also observed that surplus workers
of primary and secondary sectors are not recruited in the tertiary sector. Therefore, it is
clearly noticed that employees need have specific skills in order to serve in tertiary sector.

Value of sectors in UK economy
In the UK economy, primary sector leave huge impact in the contemporary market. As per
the viewpoint of eminent authors, it is noticed that mining industry in UK generates huge
revenue in their business (Los et al., 2017). For example, in UK, Glencore has developed
around £168.08 billion revenue in 2018 (Douet, 2016).
Figure 1: Annual Revenue value of leading mining industry in UK
(Source: Influenced by Douet, 2016)
Therefore, it denotes that in order to develop UK economy, mining industry has contribution.
Apart from it, in case of agricultural department, it contributes around £24 billion revenue in
UK economy and £8.5 million gross value added in the UK economy (Whitby and Willis,
2017). In 2017, the production rate for supplying crops in new areas was decreased, which
indicated negative impact on UK economy (Bianchi, 2018) (Refer to appendix 1).Thus, it is
clearly stated that primary sector helps to develop the UK economy in an appropriate manner.
Though slight declination in production of crops is noticed, it does not leave huge impact on
UK economy.
On the other hand, Balsalobre-Lorente et al. (2018) stated that secondary sector also
contributes to the UK economy. In the report of UK, it is evident that labour productivity in
manufacturing sector is increased gradually. It denotes huge success in business, in turn; it