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Unit 1 Business Environment Assignment – Primark
Primark as a cloth retailer is a popular name all over United Kingdom. The company has its origin and headquarters in Dublin, Ireland. Ireland is also the registered international headquarter for this popular retail company. Furthermore Associated British Food (ABF) the international food, ingredient and retail group identifies Primark as a subsidiary of itself.UK people define the popularity of Primark with a unique slogan and according to the slogan most UK natives had felt the touch of Primark at least single time. Primark has unique and vast collection of clothing and accessories but the company’s range includes varieties of other products also.
The public sector: According to the civil rules public sector organizations are completely under governmental control. Therefore these kinds of organizations aim benefits of civilians as private sector cannot interfere in PSO’s work culture and execution. Furthermore the establishment of public sector organization comes with a clear agenda and that is increasing the well-being and prosperity of society (Goh, 2012).
The full form of OECD is Organization for Economic Co-operation and Development which aims the developmental and promotional views of government policies. The organization is established to increase the socio-economic and living culture of the people in community.
The major Agendas of OECD are given below:
- Improving the society from the core and unit level
- Developing and promoting the economic development policies for the community
- Sharing a common interface for all people for their queries collectively
- Welcoming social, economic and ecological development of society
- Increasing the overall standard of living for all kinds of people in society
- Opening a path for future with sustainable community growth
- Welcoming the new path of technology in an innovative way so that it support the economic development in a cost-effective way
- Identifying the job satisfaction level for the people to increase efficiency in an effective way
- Checking the quality and standard of the existing organization in the competitive market and finding ways to enhancing their standard and quality
- Identifying all the factors of society improvement and collecting the practical results of those factors for society elevation with an increasing living standard to enhance the overall growth factor
All the ten points of agendas are the reason behind the establishment of public sector organization OECD.
1.2 Primark’s engagement with stakeholders
The high level of varieties in the product range of Primark is devouring the UK retail market rapidly with a major factor of satisfied stakeholders. Furthermore the high growth rate of any company cannot be maintained in isolation therefore Primark must have a well-communicated network of happy stakeholders who have minor or no issues for their objectives.
Stakeholders of Primark: Stakeholders are effected by the direct and indirect approaches of Primark as stakeholders are strongly related to the activities of Primark. Furthermore the stakeholders of Primark comes from all the economic levels and they are creditors, employees, shareholders, government and others to influence the major activities of Primark (Voinov & Bousquet, 2010). The high success rate of meeting the objectives of stakeholders are dependent on some major activities of Primark and they are all highlighted below:
- High level of competitive performance of Primark: Primark has gained high brand name and value in the retail industry of UK therefore in competitive market the company is a tough competitor for other retailer with its huge range of products
- Standard corporate governance execution in Primark: The Company consistently maintains all the standard corporate governance rules and the company has a healthy work culture. The corporate governance rules include timely payment of income tax and maintaining government rules. Therefore Primark aims high profit and standard corporate culture.
- Primark’s high quality maintenance: Rapid rate of increasing customers reflects that Primark is satisfying the customers with high quality products
- Customer’s satisfaction: Customers of Primark are happy as they find huge varieties of product range in cost-effective way with maintenance of quality. Rapid increasing rate of revenue is another proof of satisfied customers.
- Enhancing employment opportunity in the society: Most of the metropolitans are covered with the outlets and branches of Primark in UK. Moreover the company is increasing its small business with new branches in other areas of UK. Thus its brand value in market and growth rate is increasing job opportunities for people.
- Good competition: In UK there are various other retailers in the clothing industry but with increasing rate of revenue and high reputation Primark is reaching a unique level in market. So the brand name is highly competitive for other companies of same industry.
- Behavioral ethics of Primark: From the points of behavior Primark maintains ethics, quality and good communication with all its shareholders. So the company’s ethical behavior is major turn-on.
- Revenue growth of Primark: The stakeholders’ expectation is reaching the satisfactory level and the burning proof is the rapid growth rate of revenue. Moreover touching expectation means Primark observes the interests of its shareholders continuously.
All the above mentioned eight points show the level of seriousness of Primark to meet the objectives of its highly satisfied stakeholders.
1.3 Responsibilities and strategies of Primark as an organisation
Any organization with high networking level relates a lot of people in its organizational culture. Primark is not any different. Therefore high weightage of Primark also brings high responsibility on the people related to the company. The related people are stakeholders, employees and government agents and employees and the mutual level of interactions effect both the Primark and the people. Therefore as an organization Primark has some responsibilities which are given below:
- Equal opportunity: Employees are essential elements of any company and high profile Primark feels the same about it. Therefore Primark provides equal opportunities to all the employees considering their responsibilities toward Primark.
- Fair treatment to suppliers: Primark’s suppliers are fairly treated as they built the inner core structure of the products in the company. Moreover company reputation depends on them so Primark treat them fair.
- Respecting local communities: To run business with reputation and fairness Primark has to respect the local community the company working with (Dinu, 2014).
- Environmental responsibility fulfilment: Now a day environment is an essential factor for any business. Therefore as a socially responsible brand name Primark takes care that no harm is done by the products and services to the environment.
- Standard corporate governance: Satisfied stakeholders are the core strength of the brand name Primark. Therefore to maintain this satisfaction level Primark maintains standard corporate governance.
- Involvement in charity works: Society is another responsibility of any brand name. Therefore Primark shares a part of its revenue in charity work for social-improvement.
Strategies employed by Primark to meet the responsibilities as an organisation
Primark fulfils its overall responsibilities with certain standard strategies and they are:
Aiming target customers: The major aim of the company Primark is to satisfy its target customers in high extent. Moreover satisfied customers can increase the amount of revenue for the company as the company meets their expectation levels (Enst, et.al, 2016).
Including all marketing mixing as elements: A successful business gives major importance to its marketing strategy and Primark shows no difference in this case. The company uses all the marketing mix elements for its various ranges of products considering the important role of marketing.
Product portfolio analysis: The risk factor of any product of Primark is removed via portfolio analysis therefore the products never fails in the competitive market.
Brand strategies of Primark: Primark’s brand strategy aims building brand image with the help of product quality and reasonable product prices to satisfy people.
2.1 Economic system of various countries
The process through which the country and government distributes its resources and services are known as Economic system. Practice of steady economic system lets the government maintain proper distribution of resources, which further brings balance and equality within the country. A proper balance and equality in the country is essential for the steady growth of the country, and economic system strengthens the roots, which finally leads to growth of the country. In order to maintain the economic growth, there are four types of economic system followed, they ae stated as below:
- Traditional Economic System: This is the oldest form of economic system, where the
products and services are produced on basis of ancient customs. For this reason, this kind of economy is also referred as ancient kind of economic system.
- Command Economic system: In this type of economic system, the government’s initiation and decision is considered as final for production of products and services. The private sectors have no control or power for making decision in this regard.
- Market Economic System: In this type of economic system, the government plays the least role. All initiation and decisions regarding the products and services are handled by the private sectors. Thus, this kind of economy is also known as Free Economy.
- Mixed Economic System: In this type of economic system, the command and market economic system are present in equal proportionate. This kind of economic system is also known as Dual Economy.
Every country has its own economic system, which are adapted according to the above mentioned four types. Some of the economic system of various countries are discussed as below:
Cuba: The Cuban economy is an isolated kind of economy, which are dominated by the organizations owned by the state, such as military or political bodies of the country. Command economy system is the system, which exists in Cuba. Most of the private sector has expanded as there has been lack of support from government, which in turn has given poor business environment for growth and expansion of business. Cuba also lacks in provide concrete regulatory framework for conducting stable and balanced method of business.
United Kingdom: The economy of UK is considered as the one of the largest economy in world. There has been rapid growth in the service, construction and manufacturing sector. The economic system is mixed economic system, where the state and private sector equally share the initiative on products and services. The economy of UK holds a big contribution on the development of global market, there has been increasing growth in the GDP of the country, thus making it a strong economic market in the world.
China: The Chinese market has also mixed economic system, its strength lies in the manufacturing and production sector. In last few years, there has been volatility and slowdown in the economy of China, but it has also been able to recover because of the rising demand in the global market. The largest manufacturing hub and largest exporter makes the Chinese economy keep growing.
2.2 Impact of monetary and fiscal policy on various sectors of UK
Monetary and fiscal policy - Monetary policies are the policies of the government, which are practiced to control the supply of liquidity within the market. Whereas, Fiscal policies are the initiations taken by the government on tax rates and other expense frameworks of the economy.
Impact of monetary and fiscal policy on housing - One of the most effective impact of monetary and fiscal policy is on the housing services. The housing service denotes the living standard of people which further impact the economic growth of the country, so the monetary and fiscal policy acted in favour of the citizen of UK. There has been reduction of taxes on home loans through fiscal policy, which has in turn given broader opportunity to the residents of UK to get their own homes. The government also concentrates on giving broader prospect on employment of the people as through monetary policy there will be limited supply of money, which would make properties more expensive. The focus of government remains on supply of money on housing services (Miles, 2014).
Impact of monetary and fiscal policy on farming - Agriculture is another sector, where government’s fiscal policy upholded the economic growth of the country. Agriculture is the most traditional source of generating economic growth for the country, which had seen a consistent down fall in past couple of years, but the changes in fiscal policy, where tax rates has been reduced, has helped in regenerating the revenue from this sector. This initiative from government was necessary as growth in agriculture would also give growth in the export sector, which finally effects the overall economic growth. Whereas, the monetary policy has brought a stronger control over supply of money in the agriculture sector, this initiative also acts in favour of the people part of agriculture sector, as government aims to provide all possible facilities for better farming. Government initiates with various types of subsidies for the people who are part of farming business. These kind of initiative and support from government leads to economic growth of the sector and finally contributing to country’s economic growth (Boinet& Martin, 2010).
2.3 Competition policies by government
Competition policy is an initiation of government to conduct fair means of trade within the market. This kind of policies stops any actions and activities of traders, which are harmful for the consumers and finally acting against the economic growth. Further, these policies let in conduct of free trade within the market and further no other factor could affect the business. There are several competition policies, which are been established by the government to improve the trading culture and keep the business flexible and transparent. These policies also monitor the benefits of consumers, some of the policies are discussed below:
Laws enacted by the government to reduce monopoly power - Monopoly power within the market leads to unfair competition and to reduce these kind of practices, the government of UK introduced laws, which would prevent from getting the market monopoly. The unfair competition within the market can lead to dissatisfaction of the consumers in regards to prices of the products and services. This kind of feedback from the consumers can bring huge impact on overall economic growth of the country (Drinkwater & Jennings, 2016).
Privatisation - Privatisation policy is another important competition policy, which aims to prevent any kind of unfair act of any organization, like preserving copyrights. This kind of policy lets the organization the freedom to proceed with their business policies and benefit the customers through free trade.
Laws onanti-competitivebehaviour - The government of UK has strict laws, which are against price fixing or collusion or any kind of activity, which are against fair means of competition. These laws prevent the government from unfair means of trade and preserve the rights of the consumers as well.
Reduction in imports - There has been initiative taken from government in reduction of imports. For such initiative, less products are imported and thus, it gives a fair chance to the domestic countries to produce. This in turn helps in increasing employment as well.
Role of Competition and Markets Authority - Competition and Markets Authority (CMA) is the lead law, which is formed for competition. According to this law, the regulators are appointed to monitor over the market. Their main aim of monitoring is to promote fair co petition within the market. (Chaney, 2013).
Impact of competition policies on Primark - The competition policies have proven to provide a strong impact on fair competition, which is visible in organization like Primark. Primark engages itself in fair competition and is able to provide quality products and services to its consumers. The prices are reasonable, which attracts more consumers, though there has been increase competition for Primark but it continues to conduct its business through fair means of competition and also through adapting latest technologies.
3.1 Various market structures
There are two kinds of decisions, which are considered as major decisions of every business, these are:
- Pricing decision
- Output decision
These are the decisions, which impacts on the growth of the business and economy. These decisions vary according to the type of economy a country is following. As the policies and plans differ so the methods to determine the price and output of the products also differs. Thus, overall market decision differs in various countries, it is as per the economy followed by the country.
- Perfect competition : In this kind of competition, there is presence of large numbers of buyers and sellers, which gives easy availability of substitutes within the market. The process of entry and exit is also simple. Further, in this kind of competition, the firms are unable to control the prices as the demand and supply ratio determines the prices. The level of output helps in determining the level of profit and allocation of efficiency can also be seen in Perfect Competition. (McDermott, 2015).
- Monopoly : In this kind of market, the firms get the advantage of isolated rights of non-differentiated products. This kind of market is able to control prices, this occurs when the consumers are ready to pay any price for the differentiated products. There is complete absence of substitutes within the market, which gives monopoly right, where the price control is enjoyed by the firm. The Consumer have to pay more price of the goods as there is unavailability of substitute, lack of option acts as advantage to the firms.
- Oligopoly: In this kind of market, there is presence of few firms. The costing effects of oligopoly is similar to other markets but the profitability of the firms are higher as there is less number of competitors within the market. The prices in Oligopoly market is comparatively higher than perfect competition market and monopoly market. But output wise, it has lower production than other market types. Though the cost is higher but the demand of these firms never decreases.
- Duopoly: In this kind of market, there are presence of two sellers of the same products, selling almost same kind of product or services. In this kind of market, both the sellers have the authority to decide on the prices or can also mutually decide on single price. Further, both the firms get authority to make other decisions related to the products and services they are selling. (Shuai, 2016).
3.2 Market forces
Demand and Supply can be considered as the basic rule of any market as these terms controls the entire motion of the market, this is also referred as Market Force. Demand and Supply are two important factors, on basis of which any organization conducts business. Demand is the requirements, needs or desires of the buyer, which is measured in regard to quantity of products or services. Whereas, Supply is the quantity and variation of products and services, which market offers against the demands of the consumers.
Demand: Demand of the product lets the organizations shape the law of demand. The law of demand lets the organization understand the factors, such as : the increase in price, decreases the demand of the product. And also when the prices decreases, there is increase in demand.
There is a co relation between price and demand, if the price increases, then there are less buyer who would be buying products at higher price. Thus, price fluctuations also brings fluctuations in demand, which in turn brings effects on generating revenue for the organisation.
Demand curve Supply: Supply is an integral part of market supply as it is responsible for quantity available in the market. The law of supply states that, assuming all other factors constant, the price of products effects the supply of products. Higher the price, higher is the supply and lower the price, lower will be supply. The analysis of this equation is essential for analysing the revenue generation for the organization, which finally reflects the market economy. (Lok, & Baldry, 2016).
Definition of Equilibrium:
The incident of the equal of the demand and the supply curve from the economic aspect is called the equilibrium. This is the cross section point of the demand and the supply curve where all the demand are met by the supply of the tangible and the intangible goods. The full utilization of the resources can be observed here. All the market factors use to get satisficed with the economic condition of the market at the point.
Figure : Equilibrium point
Source: (Case, et al., 2012)
Demand and supply curve
3.3 Business and cultural environment
It is the responsibility each and every business along with Primark to cope up with the social and the cultural differences with their strategy implementation so that they will be able to sustain in the business for the long run and also will be able to bring the competitive advantage for their organisations in an effective manner(Memarzadeh, et al., 2014). The impact of the different factors have been discussed as below:
- Political factors: the political stability can be experienced by Primark in UK to run their business without any additional difficulty.
- Economic factors: with the recent growth of the economic condition of UK market, Primark is getting the opportunity to expand their business by introducing the variety category products to the clusters with the increment in the disposal income of the population.
- Social factors: the moderate to high standard living status use to facilitate the business operations of Primark with the offering of the high fashion products(Kotler, et al., 2015).
- Technical factors: With the help of the technical advancement in terms of the online website presence and the social media marketing, Primark use to get the variety opportunity to make their customers satisfied in a large manner.
- Legal factors: The good corporate governance is maintained by the business operations of Primark by abiding by the legal rules of the UK government(Primark, 2015).
- Environment factors: the bets ethical practices along with the environment conservation is highly considered by Primark to highlight the SCR activities of the business.
Change in the preference of the people in market is required by Primark to have the close look in the change in fashion trend in UK as Primark use to deal with the fashion garments to meet the taste and preferences of the customers so that customers will sustain with them. On the other hand ,the wide variety of clothing service use to cover the change in demographic need irrespective of gender, castes and preferences from the aspect of the Change in the demographics.
Primark internal environment: the strong leadership approach along with the good controlling and monitoring ability of the management, Primark is well able to move towards the fulfilment of the objective as well as to earn more revenue in an effective manner.
Along with these, there are other factors as well such as the role of the human resource management and the ability of the high levelled managers to make the employees motivated and satisfied with the job responsibility and the other rewards system so that the proper integration between the departments will be maintained to support the successfulness of the Primark.
4.1 Significance of international trade to the organisation of UK
International trade involves in the buying, selling of different types of goods across the domain. International trade is very important for UK as it helps UK to import various kinds of goods from other countries. UK business organizational import those products that they cannot made in their country. UK business organisations export their products in other countries. UK business organisation gain huge amount of revenue, business advantages from the exported products. Therefore, The international trade has a great impact on the business of UK.
Utilisation of resources : International trade helps UK business organisation to use the resources for their business profit. This utilisation gives a chance to UK organisation to import those products that they cannot make in UK and this helps them to export their products in other countries to collect revenue from this business transaction (Johnson, 2013, p.36)
Mutual benefits : Both UK organisations and the other countries get huge profit by using international trade as their business medium. UK organisations and the other countries get profit from each other. Other countries import those products that they cannot make in their country and export their products to UK to increase their business profit.
Variation of products for the customers of UK : International trade helps UK business organisation to give their customers different kinds of products which they cannot make in their country. The Business organisation of UK buy the products from the other countries to satisfy, fulfil their customer's’ demand. This helps them to extend their business across the domain (Feenstra, 2015, p.43).
Low cost of imported products : The business organisation of UK critically analyze their buying and selling and try to find that the buying product is more profitable for them or the selling their products is more profitable for them. They find that if they can import various products from other countries at low price, they it will be profitable for them.
Comparison of advantages : International trade gives the UK organisation a scope to compare the prices of various products with various countries and helps them to identify which country can provide them the same quality products at lower price from the others. This opportunity provides them a chance to gain huge benefits from the business.
Export revenue : The UK business organisations export their products in various countries as only they can make the products which are available in their market. It helps them to maximize the percentage of revenue.
4.2 Impact of global factors on business organisation of UK
The global factors have a great effect on the business of UK. The organisation identifies the global factors such as political factor, economic factor, legal factor, environmental factor by using the pestle analysis.
- Social factors : Social factors effects on the business growth of UK as the social factors changes the perceptions, choices of the customers. Therefore, the business organisation has to changes their productivity due to changes in customers’ demand (Botha et al.2014, 23)
- Political factors : Political factors have great effect on the UK business as the political interference is very high in UK. In UK, social media has great power and it helps the UK business organisation in better advertising. The terrorist attack from international level can hamper the business growth of UK. The rules, regulation of business between the countries provide UK business huge benefit (Wetherly and Otter, 2014, p.19).
- Economic factors : The major crisis in economic factors also hampers the UK business organisation. However, The World trade Bank and The World Trade organisation help the UK organisation in their business and help them to extend their business (Sarooghi et al 2015, p.721)
- Environmental factors : Environmental factors include the pollution, global warming, greenhouse gas that effect in the business. The organisations follow the environmental policies to attract their customer and to prove their trustworthiness towards their customers.
- Technological factors : Business organisation of UK holds the best position in technological advancement and they are using the modern technology that helps them to increase the level of customers’ satisfaction.
- Legal factors : Legal factors include the laws, rules, regulations and legislation. The UK organisation follows all the rules and regulation to achieve success. The business regulation helps them to promote their business successfully.
4.3 Effect of European Union’s policy on business organisations of UK
The European Union satisfies an important role in the UK business organisation’s activities by creating laws along with the new legislations. In addition to that, the European Union also encourages the different activities regarding the various business operations. It is considered the greatest support of the European Union to the UK organisations by producing ample amount of service and the support to the UK business organisations. There are some different policies of the European Union which creates impact over the UK business environment. These are
Employment policy : The European Union plays a vital role, which encourages the employment of the UK organisations. They mainly put focus over enhancing the efficiency of the business organisations. This mainly results in creation of ample amount of job vacancies. The European Union mainly focusing over the creation of ample amount of job vacancies for the people of the UK, who are facing several problems in order to find a proper job for them (Richardson and Mazey, 2015, p.41).
Regional policy : The regional policy of the European Union puts focus over the fact that how the need of funds can be meet at the regional level. Along with that, the main point of fact about this particular policy is to fulfil the financial needs of the UK based organisations. It also provides them a chance in order to develop themselves.
Inflation policy : European Union has made this particular policy in order to ensure the fact there would be no sudden rise or downfall in the product prices. This can cause an ample amount of loss to the UK organisations. It also ensures the fact that the interest rate, which are subject to change in the UK, can be afforded by the normal people of UK. Therefore, no individual can take advantage of this aspect from them.
Education and training policy : Along with the regional policy and the inflation policy, the European Union have also contributed towards the training and educational policy in the UK. this can easily enhance the level ,of knowledge, skills along with the abilities of the people residing in UK. this can be resulted in a large number of educated and skilled employees who can directly enhance the growth of the economy (Mason and Harrison, 2015, p.51).
Taxation policy : Each business organisation needs to pay a proper amount of tax. This amount received from the tax can be used in order to enhance the growth of the economy. The European Union has introduced such taxation policies in which the gathered tax can be easily used for all those activities in which the UK organisations are lacking of. This can be considered as a practice that is being used for the betterment of the entire economy (Radaelli, 2013, p.21)
International policy : It is the most important policy that European Union has introduced. They promoted the international policies in which they mainly encourage the import and the export facilities to the UK business organisations. It makes them able to create a huge amount of revenue. Along with that, they can provide an ample amount of variety in their products in order to attract the, large customer base. This is also helpful to enhance the proper relationship with other countries and have a suitable position in the world economy.
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