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Unit 1 Business Environment Solution Assignment
Diploma in Business
Unit Number and Title
Unit 1 – Business Environment
In any business environment there are numerous aspects which enable a business to focus on its functioning. Aspects such as regulatory environment, degree of competition, pricing strategy, market structure etc. are some of the important factors which govern the way a company focuses on its business (Wetherly& Otter, 2014).
Success or failure of a company ultimately depends on the fact that how well a company is adapting itself well in rapidly changing business environment. That is why it has become important for organisational to be more agile in theirbusiness strategy so that it can integrate well with the existing business environment.
Thus, purpose of this task is to immediate, general and international/global environment of company selected in the case study. Focus of this report will be based on two companies which follow public limited company (PLC) structure.
Firstly, Premier Foods which is a fast moving consumer goods (FMCG) company and is responsible for producing various food brands in UK today. Second company in focus will be Vodafone Group, which is a multinational telecommunication corporation.
Thus, this report will focus on understanding various aspects related to their proposed partnership, and their relationship to their environment.
Task2. The general business environment
2.1 PESTEL analysis of Premier Foods’ business environment
Political factors: Over a period of time it has been observed that government of UK has been encouraging its population to consume more fresh fruit and vegetable in order to tackle the issue such as obesity and blood sugar. This has created a unique opportunity for companies like Premier Foods which can capitalize on the increased awareness, and accordingly has launched several food products to fulfil these requirements. This is one major reason that Premier Food’s brands are positioning themselves as the brand which offers high nutrition food items with low fat content, and high levels of dietary fibre, minerals and vitamins (Sapir, 1998, pp.717-732). With outbreak of many diseases due to non-vegetarian food, government has been promoting more of vegetarian food. This is one major reason behind surge in popularity of food products from manufacturers like Premier Foods.
Vodafone needs to set up the foundation to bolster the system as a rule obliges taking authorization from the legislature and other regulative body. So Vodafone needs to give the brand picture and resources for take the favourable position and entering the market.
Economic factors: Retail food product market has shown tremendous growth over a period of time. Premier Food’s revenue for 2013 was more than 850 million GBP. However, despite of tremendous potential of food sector, Premier Foods has been unable to take advantage of current market, partially due to other competitors such as Northern Foods, Green core, Associated British Foods, and Unilever etc. Despite of its moderate success, Premier Foods is focusing more on the aspect of consolidation, due to which it is now focusing more on its ‘power brands’ which consists of brands like Mr Kipling, Ambrosia, Sherwood’s, Lloyd Grossman, Oxon, Bistro and Bachelors.
Last year retreat periods additionally impact of the business sector so the client not purchasing new item but rather doing a spring so the it's impact to the Vodafone development so they need to change their arrangement identified with the retreat periods and draw into the client to purchase a telephone.
Expense of New Licensing: In the current 3G innovation presented so Telmex additionally utilizing this innovation to cover the entire telecom market. It's making the rivalry between the telecom suppliers and the Vodafone. New innovation dependably needs a high use to procuring new innovation.
Social Factors: Social factors have played a major role in the development of the Premier Foods group. Initially people were not much inclined towards packaged food items. Over a period of time, and improvement in the quality of the food offered by companies like Premier Foods there has been significant shift towards packaged and processed food industry. This change in attitude has benefited company like Premier Foods, even though expansion in the sector has also ensured that various new similar companies have also entered the market, which has made the overall market structure and environment competitive enough.
Education level will be between 80 to 90 percentages so the people take a good decision for which product and company better for them so it's also effect to the Vodafone. They have to targeting people and fulfil they need then Vodafone will be the success in the market.
Technological Factors: Food industry has seen rapid advancement in the technology used in the production of food items from raw materials. Today, food production has become more clean and hygienic due to which people have trust in buying packaged food items. Similarly Premier Foods has also incorporated various new food processing technologies to process food items in a highly automated environment (Blanchet et al,2004).
Business sector is the developing and settled market such a variety of organizations needs to enter into the business and procuring a considerable measure. So they doing something else to the nearby organization so they generally give better and redesigned item contrast with the organization so it's generally impact to the Vodafone that by what method would they be able to give the new innovation to the client and persuade then to utilize this innovation. And so on. Wi-Max and 3G
Environmental Factors: Various section of the society has emphasized on the ill effects of packaged food products. Especially due to the reason since these items are nowhere close to natural food items in term of the nutritional value. Also, due to more focus on the packaged and processed foods, there has been pressure on increasing the yield of the crops etc. so that more and more raw material can be used in the industry. This is not a right direction for the companies like Premier Foods, as it is not environmentally sustainable in nature.
2.2 How the following macroeconomic factors affect Premier Foods’ business.
Rank#1: CPI inflation: Consumer Price Index (CPI) measure can be defined as the price level changes of the market basket of consumer goods and services purchased by the households. This has impacted Premier Food’s business in a major way, as in UK, since last five years there has been constant increase in CPI inflation on an average of 2.5% per year. This has resulted into impact on the purchase power of the common people whose grocery budget has impacted. Since CPI inflation has directly impacted the consumer’s buying behaviour hence it has been ranked on top position (Grajek&Röller, 2012, pp.189-216).
Rank#2: RPI Inflation: Retail Price Index has also impacted the company in a major way. This measure basically measures the inflation, which is published on monthly basis in UK. Increase in inflation means, direct impact on the price of goods sold by the company. Over a period of time Premier Foods has seen a gradual increase in the RPI inflation, especially post-recession.
Rank#3: Interest rate: This is also a major factor which impacts the business of group. Interest rate increase directly impacts the lending rate; hence any loan which is taken form bank becomes expensive.
Rank#4: Exchange rate: This factor from time to time impacts business of Premier Foods. For example, at times when a raw material is sourced from a different country, then due to strong valuation of UK currency, Premier Foods can source the material in much lower value and save money on import.
Vodafone: Macroeconomic conditions and weakening in the worldwide monetary environment, for example, further financial stoppage in the business environmentsectors in which we work, may prompt a lessening in the level of interest from our clients for existing and new items and administrations. In monetary conditions, customers may look to optional spending by diminishing their utilization of our items and administrations, including information administrations, or by changing to lower-cost choices offered by our rivals. So also, under these conditions the venture clients that we serve may postpone buying choices, defer full usage of administration offerings or lessen their utilization of our administrations. Moreover antagonistic monetary conditions may prompt an expanded number of our buyer and venture clients that are not able to pay for existing or extra administrations. In the event that these occasions were to happen it could have a material antagonistic impact on our consequences of operations.
Our key of liquidity inside of a sensible timeline are obligated to be cash made operations and borrowings through whole deal and transient issuances in the capital markets and furthermore presented bank workplaces. On account of the late unusualness experienced in capital and credit showcases around the world, new issuances of commitment securities may experience reduced hobby.
The focal point of competition in quantities of our business areas continues moving from customer acquirement to customer support as the business segment for adaptable data exchanges has end up being continuously penetrated. Customer are measured by our blend rate. There can be no assertion that we won't encounter augments in upset rates, particularly as contention reinforces. An addition in beat rates could unfairly impact advantage in light of the fact that we would experience lower wage and additional offering costs to supplant customers or recoup lost wage
2.3 What are the social and cultural factors affecting consumers which lie behind Premier Foods’ decision to split its business into ‘Power Brands’ and ‘support brands’?
Power brands are the ones which are highly popular among the customers. However important observation regarding the power brands and support brands of Premier Foods is, that power brands consists of the food items which are used more. Whereas support brands are more of a lifestyle food items, hence it has been observed that people tend to focus more on items which they consume on regular basis. Thus projecting those products in the portfolio will impact the overall business of the group. That is why, Premier Foods has also mentioned in its strategic report that the reason behind creating segmentation of ‘Power Brands’ and ‘Support Brands’ was due to the fact that power brands were more important to the business from strategic point of view as it helps the organisation to gain more market share.
Consumers also focus more on those food products which are already well established in the market. This is the main reason they opt for products under the power brand category often.
2.4 Is Premier Foods’ current strategy to stop growing its business by buying up other businesses, and to concentrate instead on consolidation and organic growth, the right one?
No, current strategy of Premier Foods is not correct. Rather focusing on acquiring new companies, it should focus more on consolidating its existing product portfolio. Acquiring new company might help the company in gaining more market share, but important to understand is that it will also erode crucial capital available with company, which it could have used for other purposes such as improving its product visibility in the market or launching some new product. That is why Premier Foods should focus more on improving and growing its already established brands rather than acquiring new companies (Garzaniti&O'Regan, 2010).
Task3. The international legal and regulatory environment
3.1 Will this be good or bad news for Premier Foods in terms of the company’s inputs? What about its outputs?
In a situation if UK decides to leave EU membership, then this will definitely not be good for Premier Foods. Currently, EU in itself is a major market for Premier Foods, and due to one single market, there are various tax rebates etc. on import and export of products. This has helped the company to grow further. However, if EU membership remains no more then it will have negative impact on the business growth of Premier Foods as well. Then it has to face various types of tax hurdles and regulatory framework in order to conduct its business in different countries of Europe. Thus, both input as well as output will be impacted for Premier Foods as it will not only increase the cost of raw material which it might be sourcing from different European countries, but it might also end up losing significant market share which it has gained over a period of time.
Competition:A business structure where there are unmistakable shippers of the same thing then the organization's worth determination and the decision depends on the enthusiasm for their things. In a forceful business segment buyers truly center the expense and firm take the yield decisions as diverge from the enthusiasm for the thing in light of the way that every firm tries to offer lower expenses to their customer to extend their bit of the general business.
Forcing plan of action:It is the business area structure where it has syndication and is the sole supplier then esteem determination and yield decision lies by the firm because in a monopolistic business segment the firm is the quality maker and they can charge whatever worth they need and customer need to pay in light of the way that customers won't have the choice to buy some spot else with a lower worth, firm will convey with its full breaking point in light of the way that the they will be sure to fulfill the enthusiasm for general for their things, usually multinational firms work in such market structures.
Oligopoly:A business segment structure where there are a couple of far reaching merchants of the same things then the sellers have some control over the expense in light of the way that generous traders commonly set an advancing rate for their things i-e they all charge the same expense and after that it depends on the customers from whom to buy. Traders may charge the same cost yet there will be refinement in the way they promote their things and attract customers to purchase their things, in oligopolistic business division firms take decision of yield in the light of the enthusiasm from their customers towards their things.
3.2 Which of our two companies, Premier Foods and Vodafone, might have more to lose by the UK being outside of the European Economic Area (EEA)?
Premier Foods will lose more as compared to Vodafone, since Vodafone itis known at global level, and it can also do its business with a subsidiary. However same is not the case with Premier Foods. Company’s presence is restricted majorly to UK and other parts of Europe. Hence in a situation where UK moves outside the EEA, then various tax benefits which Premier Foods might be getting will be lost, and it will impact the overall growth of the business environment
3.3 Which of our two companies, Premier Foods and Vodafone, might have more to lose by the UK being outside of a common regulatory framework for business?
Vodafone will lose more if UK decides to move outside of a common regulatory framework for business. Telecommunication business is a highly regulated business. Thus for a company like Vodafone it is easy to work under a common framework rather than going through different framework and conducting its business. Also, each country will then have its own set of regulatory framework which Vodafone had to follow, and it will increase the operational cost of the business to a large level. Also, common regulatory framework has helped Vodafone to compete other telecommunication players in Europe as the framework provided a competitive environment for all the companies. Moving out of it will impact the overall competitiveness of Vodafone.
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