Unit 1 Business Environment Assignment - Iceland Supermarket
Diploma in Business
Unit Number and Title
Unit 1 Business Environment Iceland Supermarket
With the verification of various aspects the report is prepared in concentration with “Business Environment”. In this unit 1 business environment assignment Iceland Supermarket information regarding monetary policies, fiscal policies, competition policies and their impact and various regulatory mechanisms will be shared so as to help the business in smooth functioning. Discussion regarding Iceland Supermarket will be done so as to provide effective set of information regarding various markets. Information regarding various global factors and European Union policies will also be shared so as to help the organisation in preparing strategies which could help it in sustaining in the competitive market.
P 1.1 Identify the purposes of these organisations listed below:
- Iceland Supermarket - Iceland super market is a super market serving variety of food products to the target people available in UK. Iceland Supermarket is a private company which aims at serving the quality products to the target population available in the market. Iceland Supermarket is not liable to sell shares without the agreement of shareholders present in the market (Chen, et. al., 2014). Iceland Supermarket have over 100 of stores.
- KFC - KFC is a food chain aims at delivering quality food products in the market. Purpose of KFC is to attain competitive advantage in the market by providing variety of food products in target market. KFC has a second largest fast food chains all over the world with almost 20,000 locations globally in 123 countries (Fernando, 2011). KFC is also a private form which cannot sale its shares with the agreement of its stakeholders present in the market.
- Transport for London (TFL) - Transport for London is a transport company which aims as providing transportation facilities to the people available in London. It is a public company is fully governed by the government of London which is responsible for transport system in Greater London. About 28,000 people work in Transport for London. It has the legal liability to sell out the share of organisation. Public company is owned by the shareholders (oventini, et. al., 2015).
- Cancer Research - Cancer research is a charitable trust which looks after the people who are affected by cancer. It’s a non profit organisation whose main objective is to serve people available in market and not to earn profit. Money raised is used to bring attention for the cause. Company is managed by various pressure groups who work for the charity.
P1.2 Considering Iceland Supermarket, describe the extent to which it meets the objectives of its different stakeholders.
Stakeholders are very important part of the company and it is necessary for every organisation that they should meet their objectives. To gain proper set of information regarding the objectives of stakeholders, firstly it is important to understand who the stakeholders of British Supermarket are. Stakeholders of Iceland Supermarket are owner of the firm, employees working in the organisation, shareholders of the company, government, customers, suppliers, creditors and the society in which it is located. Each stakeholder has some or the other objectives which are necessary to be fulfilled by Iceland Supermarket.
- Owner: Owner of Iceland Supermarket has the objective to earn more revenue and to sustain in the market. It is necessary for Iceland supermarket to meet the objective as it would be beneficial for the organisation with the effect of which it would be able to move on the path of success and sustainability (Zaman, et. al., 2012).
- Employees: Employees are the most important stakeholders attached with the organisation. Employees of Iceland Supermarket have the objective that they should get proper remuneration for the work they are doing. It is necessary that Iceland Supermarket should meet the objectives of employees as if their objectives will get fulfilled then organisational goals will also get fulfilled by the employees working in it.
- Shareholders: Shareholders of the company aims at getting best financial gain out of the money they have invested in the company. Meeting the objectives of shareholders will help in smooth functioning of the organisation (Davig, 2011).
- Government: Government has both direct as well as indirect stakes in the organisations present in market. Direct stakes of government are tax revenue, constructive utilisation of the resources present in the region. On the other hand indirect stakes of government involve economic growth, employment generation and safety and security of the society as well as employees working in the organisation. Meeting the objectives of government will help in organisational sustainability and will help in smooth functioning (Fernando, 2011).
- Suppliers: Suppliers of the company have the objective that they should get proper commissions on the supplies they are providing to the company. Fulfilling the needs of suppliers will help the organisation in attaining competitive advantage in the market.
- Creditors: Creditors of the organisation wants that they should get proper interest on the amount they have invested in the company. Iceland Supermarket should fulfil the objectives of creditors as it will help the company to avail financial help whenever it would be required (Sloman, et. al., 2011).
- Society: society aims at getting proper infrastructure and healthy environment. It is necessary that Iceland Supermarket should fulfil the needs of the society as it will help in smooth functioning of the organisation and will help in organisational growth.
With the help of discussion it could be concluded that stakeholders are a very important part of the company. Looking after the objectives of the stakeholders and fulfilling them is important for Iceland Supermarket (Mensi, et. al., 2014).
P1.3 Considering Iceland Supermarket, explain its various responsibilites as an organisaiton and the strategies it employs to meet them.
As an organisation Iceland Supermarket has various set of responsibilities which are required to be fulfilled by it. As an organisation Iceland Supermarket has the responsibility towards the stakeholders, it has certain legal responsibilities and ethical responsibilities that are required to be fulfilled so as to sustain in the market.
- Responsibilities For Stakeholders - It is necessary that Iceland Supermarket should recognise all its primary as well as secondary stakeholders (Chen, et. al., 2014). Fulfilling the objectives of different stakeholders is also necessary for the organisation. Iceland Supermarket will have to consider all its primary stakeholders while making several important decisions.
- Legal Responsibilities - Iceland Supermarket will have to consider customer’s rights regarding quality of the products and services it is providing, payments that the customers are making on the products and services and complaints made by the customers for the product it has purchased by the organisation (Zaman, et. al., 2012). It is necessary that Iceland supermarket should provide equal opportunities to the staff members working in it. It is also necessary that legal financing should be there and tax payments should be done by the organisation and the staff.
- Ethical Responsibilities - It is necessary that ethical responsibilities should also be fulfilled by the organisation. Which include fair trade, environment protection, honest claims in promotion and responsibilities for non-customers. After gaining information regarding the responsibilities that Iceland Supermarket have, it is also necessary that Iceland Supermarket should make the strategies to which will help it in meeting the responsibilities.
To meet the needs of stakeholders it is necessary that Iceland Supermarket should use stakeholder analysis technique, prepare multi-strategies for multi-objectives and should use participative management styles (Sloman, et. al., 2011). To meet legal responsibilities Iceland Supermarket should use consumer based marketing, should use human resource management. It is necessary that it should focus on the health and safety of the people present in the market and working in the organisation. To manage the tax and financial legislation it is necessary that organisation should use professional finance and accounting system. To meet the ethical responsibilities Iceland Supermarket should provide fair price for the product it is selling, become green organisation by using recycled products. Iceland Supermarket should do ethical marketing of the products and services it is selling in the market, and should understand corporate social responsibilities and work on them (Crutchfield, et. al., 2012).
P 2.1 Giving relevant examples, explain how different economic systems such as command, free enterprise,mixed and transitional systems attempt to allocate resources effectively. Provide any examples from a country of your choice.
To make a better understanding with how various economic systems attempts to allocate resources effectively, it is necessary to understand different types of resources attached with organisation. Therefore, different types of resources attached with the organisation are human resources physical resources, intangible resources, time and information resources and financial resources. There are different economic systems that attempts to allocate resources effectively. They are:
- Command System: In command system allocation of resources is handles by the government agencies present in the market. It is a key feature of every communist society. Countries that use command system to allocate the resources are Cuba, North Korea and former Soviet Union.
- Free Enterprise: In this allocation is done on the basis of the decisions made by individual producers and consumers available in the market. In this interference of government is not there in distribution of resources. Examples of free enterprise are USA and Singapore, these are the countries in which government do not interfere in resource allocation (Gupta, 2013).
- Mixed System: This is an economic system in which government plays a vital role in allocation of resources. In this resources are obtained by the government in the form of taxes by the businesses and workers. It is a most wealth obtaining system. Some of the examples of mixed economic system are Britain, France, and Germany.
- Transitional System: It is a system in which economy moves from command system to free enterprise. In this economies falling into transitions system undergo economic liberalisation, restructuring and privatisation so as to crate financial sectors (ISAC, 2013). Companies moves from public sector to private sector so as to generate more revenue and to reduce government hindrance. Examples of transitional economies are China and Russia.
P2.2 Assess the impact of fiscal and monetary policy on Iceland Supermarket and their activities.
Both the policies have a great impact on various supermarkets and their function. To understand the impact of Fiscal as well as Monetary policies firstly it is necessary to understand both the aspects.
Fiscal Policies: Fiscal Policies are government operated policies that are bring to adjust the level of spending which are presented in order to monitor and influence the economy of nation. These are the policies that affect tax rates, interest rates, and government spending.
Impact of Fiscal Policies
Macroeconomic productivity is influenced by the government by increasing or decreasing the tax levels and spending of the public. Such activities lead to curb inflation which is beneficial to the economy of the country (Chen, et. al., 2014). Fiscal Policies have a positive impact on Iceland Supermarket as it leads to increase employment and helps in maintaining value of money.
Monetary Policies: In monetary policies central banks, currency boards or other regulatory bodies takes the action which determines the size of the rate of growth of the money supplies. These aspects affect the interest rates. These are the aspects that are maintained through actions which include increasing the interest rates or changing the amount of money which banks need to keep in vault (Zaman, et. al., 2012).
Impact of Monetary Policies
Spending behaviour of the organisations changes due to the change in interest rates. With the reduction in interest rates Iceland Supermarket can borrow more money from banks and could manage its finances. It helps in creating new jobs and improving economic growth. Iceland Supermarket could also get influence to start new business with the help of monetary policies and could develop new strategies so as to sustain in the competitive market (Prasad, 2011).
P2.3 Evaluate the impact of competititon policy and other regulatory mechansism on the activities of Iceland Supermarket.
Competition policies are the regulatory mechanism that is provided by the government of the country so as to maintain the decorum of market. Competition policies help in reducing unethical practices used by the companies so as to attain competitive advantage. It ensures fair deals in the market.
- Impact of Competition Policies - Competition policies help in improving the efficiency of the businesses by reducing the costs. Using competition policies Iceland Supermarket can use the resources in better manner and could increase its productivity which will lead to improve the supplies of the business. Competition policies lead to enhance the competitiveness in the market that helps in the better functioning in the market.
- Impact of Regulatory Mechanism - Regulatory policies are the set of regulations by the government which are formulated to organise and guide importance decisions, activities and entities. Regulatory mechanisms ensure national and public benefits and well-beings (Mensi, et. al., 2014).
Several regulatory mechanisms are competition policies, companies act, food policies.
Food policies are the regulations which ensure that the food safety as well as food hygiene could be managed by Iceland Supermarket. Food Standards Agency of UK manages Food policies and keep eye on the activities of Iceland Supermarket. Any breach in the food policy could lead to closure of the company. Companies act are the guidelines which are necessary to be followed by each and every organisation present in the market of UK. It clarifies all the responsibilities of the organisations towards the customers and employees working in it (oventini, et. al., 2015). It is necessary that Iceland Supermarket should frame its policies according to companies act because any violation of the guidelines could affect the goodwill of organisation.
Task 3: The objective of this task is to understand the behaviour of organizations in their marketing environment
3.1 Explain how market structures determine the pricing and output decisions of businesses including Iceland Supermarket
Market is the place where buying and selling of a product or service is being done on the basis of market structure. These market structures are as follows:
- Monopoly – In this type of market organization tries to acquire the whole market by providing products and services having distinctive quality. All the decision regarding the market are taken by single seller only and he can set the product prices accordingly (Gupta, 2013).
- Perfect competition – In this type of market structure organizations have their own choice to enter or exit into the market freely. They all have similar product or service to offer. If Iceland Supermarket follows this structure then it has no choice for product differentiation, it must deal with the similar product with the strategy of cost minimization in order to make profit.
- Monopolistic competition – In this structure organizations are free to enter or exit but all they deal with the different products. Iceland Supermarket can create room in the market by providing different product with the special attributes (Crutchfield, et. al., 2012).
- Oligopoly – In this market structure competitative advantage could be taken by any organization through the customer’s loyalty and brand image.
- Contestable market – In this market entry and exit of a firm is easy because it occurs no cost and it does not have any sunk cost also. In this structure it is not essential to know the number and size of the organizations.
3.2 Illustrate the way in which market forces shape Iceland Supermarket responses using a range of examples.
There are two important features of the market Demand and Supply and on these basis the responses of the Iceland Supermarket can be decided. In the external environment of the market there are various forces such as inflation, changing behaviour and patterns of the customers, recession, etc. make a strong impact on the fluctuation of demand and supply of a product.
Demand – A demand could be defined as the quantity of the product or services demanding by the customers. There can be various factors that can affect the demand of a product such as fluctuation in the fiscal and monetary policy, seasonal changes, changes in the customers behaviour and patterns, etc (Fernando, 2011). For juice manufacturing companies demand of the juice is increasing in the summer season because people like to drink juice in summer as comparatively to the winter season. So, preferences of the customers change according to the season. In Winter demand and Supply of the juice both decrease accordingly so juice manufacturing companies have to face big loss due to seasonal change. For example, Likewise, in the situation of the recession both demand and supply of the products decrease automatically because of their high prices. So, declining the amount of taxes by the government could be the only way to increase the income of the people by which the demand and supply of some items can be influenced.
Supply – Supply describes the quantity of the goods to be offered to the customers in order to fulfill their needs and neccesities. Enterance of a new industry develops more opportunities for the consumers and that makes existing industries to align for a new or better position (Sloman, et. al., 2011). For example, entrance of a company into the new organic product segment into the market which is already available in the different product segment would develop the supply for the product and that will essential for the market.
3.3 Judge how the business and cultural environments shape the behaviour of Iceland Supermarket.
In order to sustain into the existing market it is important for each and every entity to make equal emphasize on the cultural environment. This needs to be understood that any activity of the business should not affect the cultural values and beliefs of the customers. All the products and services should be developed and provided to the customers by taking into consideration their culture and values that are followed by them (Crutchfield, et. al., 2012). For the well known Iceland Supermarket it is important to organize the activity of the organization accordingly. As these two important features of the market Demand and Supply are competely dependant upon the products that are being provided to them are upto their expectation or not.
PESTLE analysis important and usefull terms in order to identify the vulnerability of the business and rectify them accordingly. In PESTLE analysis there are six environment discussed below:
- Political – the viewpoints of different political parties can have both negative or positive aspects and that all are dependant upon the vision of the present ruling party.
- Economic – International economic policies can influence the performance of the organization for the long and short period of time as well (Gupta, 2013).
- Social – the behaviour, lifestyle and attitude of the consumer keep changing and that can be responsible to influence the organization working environment. For example, an impact of social media keeps increasing day by day into the lives of the young generation so it is important for the organizations to make feel their presence among the people through social media.
- Technology – Enhancement in the technology is essential aspect for each organization as new technology keeps developing on daily basis so it is mandatory to remain up to date with the latest technology in order to attain the competitive advantage and maintain their growth into the market (Pandey, 2013).
- Environmental – The issues related with the environment has became the prime concern and that should be concentrated by the govenrnment on the serious note because somewhere it is connected with the lifestyle of the human being. Every organization must follow all rules and regulations which are associated with the environment in order to attain the growth and success in the present market.
- Legal – laws and regulations are regulated by the govenrment of the each country which are helpful to operate business activities (Andrejovská, et. al., 2014). Organizations should properly go through all the regulations and laws and make assure that they meting out each of them or not.
P 4.1 Discuss the significance of international trade to Iceland Supermarket.
International trade avails variety of opportunities to the organisations present in the market. There are various benefits that are availed to the companies indulging in international trade. Some of the benefits of international trade are:
- International trade leads in the increase in the sales and profit of the companies. Indulging in the international market Iceland Supermarket would be able to increase its sales which will help in enhancing the profit of the company
- It helps in extending the potential sales of the existing products. Value of the existing products of Iceland Supermarket will increase which will lead to extend the sales.
- With the help of international trade, Iceland Supermarket will be able to enhance the potential for expansion of its business in the market.
- Iceland Supermarket will be able to gain global market share with the help of international trade.
- Indulging in the international trade will help Iceland Supermarket to reduce dependence on existing markets (Davig, 2011).
- International trade will help in stabilising the seasonal market fluctuations with the effect of which organisation will be able to sustain in the market and will be able to attain competitive advantage in the market.
P 4.2 Analyse the impact of global factors on Iceland Supermarket.
There are certain external environmental factors that have a great impact on Iceland Supermarket. PESTEL analysis will help in developing better understanding with these global factors:
- Political Factor: There are various political factors that could have a great impact on the business processing of Iceland Supermarket like threat of terrorism could affect the business, global copyright, patent and intellectual property disputes could affect the business (oventini, et. al., 2015).
- Economical Factors: Global economic crisis, stock market fluctuations, impact of World Bank and World Trade organisations are some of the factors that could affect the business processing in global market.
- Social Factors: Society has a great impact on the business process like changes in the values of family at global scale, increasing popularity of immigration and migration practices, and greater concern for minorities in society (Zaman, et. al., 2012).
- Technological Factors: Global market has a regular emergence of innovative communication technologies which helps the organisation in making the communication process more effective and helps in managing the organisational functions.
- Environmental Factors: Impact of global market tendencies, increasing level of air and pollution and increase in the level of sensitivity towards green are some of the environmental factors that could affect Iceland Supermarket in globalization of market.
- Legal Factors: There are various rules and regulations that can affect the business process. Certain rules and regulation like data protection act. Safety and security of the employees working in the organisation should be taken into consideration by Iceland Supermarket because any breach could affect the whole business (Mensi, et. al., 2014).
P4.3 Evaluate the impact of policies of the European Union on Iceland Supermarket.
Policies of European Union has a great impact on Iceland Supermarket, there are various benefits that are enjoyed by UK businesses due to the policies of European Union. These benefits are:
- Working in the single market where there are no custom taxes on the products helps Iceland Supermarket to reduce the prices of the product in the market. This will help in attracting more customers towards the organisation and will help in effective utilisation of resources.
- With the help of these policies Iceland Super market can enjoy the freedom of movement. This will help Iceland Supermarket to explore the opportunities across Europe.
- With the help of policies provided by European Union rights of the workers are being protected. There are several rights like right for holidays and working hours are enjoyed by the workers working in Iceland Supermarket (Chen, et. al., 2014).
There are several disadvantages also which are attached with the policies of European Union which could affect the business process of Iceland Supermarket. These disadvantages are:
- Fee that is being paid by the member of European Union is very high. It affects the capital of Iceland Supermarket as it is necessary for it to pay the fees so as to remain the member of European Union.
- Policies imposed by European Union are common for every nation and it is necessary for organisations to follow them as it is. This cause issues at the time when specific needs of country’s economy are not being met. In this case goodwill of Iceland Supermarket could get affected (Prasad, 2011).
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With the help of above discussion it could be concluded that it is necessary that each and every organisation should understand the objectives of the stakeholders attached with the business and should try to fulfil their needs. Understanding the responsibilities and preparing strategies according so as to meet those responsibilities will help in the smooth functioning of the business. Organisations should gain benefits from the fiscal and monetary policies so that they could grow in the market. Competition policies and various regulatory mechanisms will help the organisations in preparing appropriate policies and will help in sustainability.
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