Unit 1 Primark Business Environment Assignment
Diploma in Business
Unit Number and Title
Unit 1 Primark Business Environment
Business organisation functions in such environment that consists government, competitors, suppliers, consumers, clients, and international factors. The business environment impact the functioning of the business and it make inclusion of the taxation policies and many other factors. For an business organisation there are various stakeholders having interest in their respective activities. In primark business environment report there are different aspects such as relationship among stakeholders and business, organisational functions and strategies get discussed in effective manner.
Primark is a limited company which is a subsidiary of international food, ingredients and retail group ABF (Associated British Foods) Group. The company was launched in 1969 in Ireland and basically it is a clothing retailer operating in Austria, Belgium, France, Germany, Ireland, Spain, The United Kingdom and United States. Primark has its headquarters at Ireland and it is not engaged with manufacturing of goods itself rather it get its good from suppliers and sells the goods. As per recent research Primark has more than 300 stores in eleven countries across Europe and America(Lupulescu, 2014).
- Cooperative: An organization which is owned and managed jointly by its members which involves their mutual benefit in working towards a common goal. Each and every member of the cooperative has their defined tasks and the members share the profits among them(Lupulescu, 2014).
- Co-operative Group Limited: Co-operative Group Limited, also known as Co-op which is a British consumer cooperative engaged in retail business of food safety , electrical, finance, insurance and legal services. This group is the largest consumer cooperative in UK in more than 4500 locations with 4.5 million active members.This group has been established as an ethical retailer which has served the society very well. The values and the principles of this group are so high that it has become the largest consumer cooperative group in UK(Lupulescu, 2014).
Purpose of Co-operative Group Limited is as follows:
- To raise a voice over small issues of societies as it’s a cooperative group and working for betterment of society.
- To run the business in such a way this is in the mutual beneficial to all.
- To work upon their commitment on ethical values.
- To recycle their success into strength.
- To provide benefits to members and customers.
- To provide good customer services.
- To provide better prices with good quality.
- To provide all kind of possible benefits to its members and customers.
- To strength their communities so that their members stay connected to them(Sharfstein, 2016).
Stakeholders: Stakeholders are those persons, who hold any interest in the organization, who are directly or indirectly affected by the activities of such organization such as customers, suppliers, creditors, government, shareholders etc., whole business of any organization depends upon its stakeholders. Stakeholders can be internal as well as external(Sharfstein, 2016). Stakeholders of Primark are:
- Suppliers: Who are engaged in production of goods for Primark.
- Customers: Who purchases the goods of Primark and they want to know that they are buying the right product or not.
- Government: Those countries in which stores of Primark are established.
- Trade unions: Those bodies that represent the workers(Sharfstein, 2016).
- Non government organizations: Those organizations who are engaged in solving the issues of workers.
- Shareholders: Investors of the company.
- Employees: People who work in Primark.
- Communities: Those associations which are engaged in providing support(Sharfstein, 2016).
Thus each and every stakeholder of the company is important and consideration of each and every stakeholder is different.
The extent to which Primark meets the objectives of its stakeholders can be described as follows
- Ethical behaviour of Primark: Primark is one of the leading companies because of providing better customer services. The company is based on its ethics and values so it provides fair working conditions to employees, it takes care of its people, the company respects human rights(Voinov&Bousquet, 2010).
- Engagement with stakeholders: Primark uses ethical trading website to engage with its customers in order to know the preferences of customers and to make changes in its policies accordingly even Primark has organized community engagement programs in India also, through this Primark uses different channels to engage with different shareholders of different groups(Voinov&Bousquet, 2010).
- Work with society groups: Primark works with various society groups and trade unions who are engaged in protecting the rights of workers. Primark even listens to the issues of different groups and establishes methods to resolve them(Voinov&Bousquet, 2010).
- Primark’s engagement: Primark is involved with Ethical Trading Initiative and the International marketing Labour Organization for fulfilling its ethical values.
- Engagement towards workers: Primark takes proper of its workers too; it listens to their problems and takes measure to resolve them at its level best.
- Support to customers: Primark is providing the best to its customers by responding to their needsv.
- Shareholder’s satisfaction: Primark is also fulfilling its corporate social responsibility which can be seen through ABF corporate social responsibility report thus it is also satisfying its shareholders.
Primark is involved in doing the things ethicallythrough meeting the objectives of its stakeholders and the main target of Primark is to satisfy those customers who are very concerned about fashion and who want quality in the product in return to their money Primark’s main focus is that every stakeholder should gain something from the business as well everyone is treated fairly and providing the best services to all the people in the society(Ostrom, 2010).
Responsibilities of Primark: Every organization which is running in the market, which earns profit from the customers, in return has some responsibilities. In order to survive in this world of competition every organization shall fulfil its responsibilities(Masango, 2014). Primark’s main target is to make its stakeholders a part of its success so Primark also has some responsibilities as an organization which is as follows:
- To provide equal opportunities to their employees.
- To treat their suppliers fairly.
- To support and respect local communities.
- To fulfil the environment responsibility.
- To behave ethically with its stakeholders.
- To provide the best customer services.
- To take measures to save the environment.
- To fulfil its tax obligations properly.
- To resolve the problems of its employees.
- To engage itself in charity work too.
- To take proper care of code of conduct.
- To fulfil all the responsibilities as a good corporate citizen(Masango, 2014).
Strategies of Primark: Strategies are art of planning for achievement of long term organizational goals. Strategies to important because goals are unlimited and resources are limited so in order to achieve unlimited goals in limited resources every organization need to strategize its plans and procedures. Primark also has some strategies which are as follows:
- Pricing strategy: Primark is adopting the cost based priding that means the price of the product will be depending upon its cost so Primark needs to justify the cost involved in each and every product in order to decide its price as to compete with prices of products of other organizations(Masango, 2014).
- Product strategy: Primark is engaged in retailing of diverse range of products. Primark is mainly dealing in fashionable products at low prices to attract customers so in overallcategories woman wear is a category which need to get more focused so Primark is adopting a strategy to expand its business in the range of woman wear and increasing the varieties in the same field.
- Placestrategy: Primark is currently operating in Austria, Belgium, France, Germany, Ireland, Portugal, Spain, The United Kingdom, The United States and Italy and now Primark is strategizing to expand in business in more places. Primark is almost about to cover the whole United Kingdom and United States. Primark is willing to open its new retail outlets at many more new places(Masango, 2014).
- Promotion strategy: Promotion is very valuable now a day’s it’s like an investment for any company to expense in promotional events in order to get long term return but expending too much on advertisement is not a good policy so Primark has decided to lower its advertisement cost on TV, radio or newspapers rather than to promote the brand through mouth communication and social networking sites.
The above mentioned are the responsibilities and strategies of Primark as an organization(Masango, 2014).
Economic system: An economic system is a system describing the whole procedure of production of goods, their allocation and distribution in a particular area. The whole economy of a particular area is depending upon its economic system(Tsai, 2013). Basically there are four types of economic system which are as follows:
- Traditional Economic System: Where economies are engaged in production of products and services on methods based on customs & traditions.
- Command Economic System: Where economic system is controlled by a centralized power which is mostly federal government, where all the powers are vested with government.
- Market Economic System: Where there is no interference of government in the economy and the whole economy is controlled by organizations in the market itself(Tsai, 2013).
- Mixed Economic System: This is also known as Dual economy. It refers to the mixture of market and command economy.
Cuba: The economic system of Cuba is Command economic system. Cuba is a planned economy which is dominated by State Run enterprises and mostly organizations in Cuba is owned and operated by Government and Cuba has command economic system because the financial system of Cuba is based on the ownership of public and cooperative organizations. The production system in Cuba is based upon usage value depending upon the needs of society and preventing the situation of under production or over production and focusing on right production.
United Kingdom: UK is the largest and most influential economy of this world. UK is a mixed economy and it is the fastest growing economy. UK has the mixed economy this means it is a mixture of market and command economy. So the production of goods and services is controlled by government and organization itself. The great Britain is a free market economy and England is a mixed economy so UK is a mixture of all types of economies hence it is a mixed economy the reason behind that UK is a mixed economy is that all countries in UK are having their own kind of economy some are influenced by government while others are influenced by organizations in the market itself so it is a mixed economy(Agbonlahor, 2014).
China: China’s economy is the second largest economy in this world. China is the world largest economy for manufacturing of goods as well for the export of goods. Consumer market of China’s economy is the fastest growing market. China has an economic system which has the elements of both socialism and capitalism. Chine has Socialist market economy which is based on the dominance of state owned sectors. The economy of China is subject to labour market forces where capitalists are also involved as China is very much engaged in production of goods and services so it is depending upon the sector where the production is to be done whether of goods and services is to be done in order to determine the influence which is subjective and the reason being China has mixed economic system is that China is engaged in production of goods and services in so the influence of government or private organization will be depending upon the area of field where the work is to be done(Agbonlahor, 2014).
- Fiscalpolicy: Fiscal policy is that policy when government adjusts its expenses and tax rates; it is a policy when government changes the level of spending and taxation to influence a nation’s economy.
- Monetary policy: Monetary policy is that process when the monetary authority of a country controls the supply of money targeting to inflation and interest rate(Drinkwater & Jennings, 2016).
- Impact of monetary and fiscal policy on housing: Housing includes newly constructed house, new rental units, any previously occupied unit which is offered for sale and any other occupied unit which is offered for rent. Monetary and fiscal policy can impact housing so much as government can bring changes in the tax rates as per fiscal policy so if tax rates are increased this will directly affect the house property and as per the monetary policy the monitory authorities can change the interest rates and can control the supply of money so interest rate on housing loans and other interest rates can affect buying and selling of house properties as well government can bring any change in the policy for utilization of revenues from housing. This change will bring a drastic change in the field of housing even the fiscal policy can contribute to housing loans by contributing to full employment surplus. These fiscal and monetary policies are needed to control the supply of money and to regulate the expenses of government(Drinkwater & Jennings, 2016).
- Impact of monetary and fiscal policy on farming: Agriculture is the major component of any economy. Government provides many kind of subsidies and grants to agricultural people to purchase agricultural equipments and to enhance their skills for farming but if any changes are made in the fiscal policy regarding to reduction in the subsidies and grants this will directly affect the farming as somewhere agriculture is based upon grants and subsidies of government. If any changes in the tax rates are made on agriculture this will also affect the farming and crops are exported this creates revenue for the government as well as farmers but if any changes are made to the export policy this will impact farming and government imports seeds from other countries too for better production of crops as per its import policy but if any changes are brought like change in the interest rate or tax rate on import policy this will affect the farming(Drinkwater & Jennings, 2016).
These above mentioned are the impacts of monetary and fiscal policy on housing and farming.
- Competition policy: Those policies which are made by the government to promote fair competition in the market. The main target of this policy is to make market work better and with improved efficiency and effectiveness and to remove the monopoly in the market so in order to remove competition from the market following competition policies(Lok&Baldry, 2016).
- Antitrust & Cartels: This is engaged with abolition of all those agreements that restrict competition or creates any kind of monopoly in the market and even this is involved in removal of those firms who holds a dominant position in and controls the market(Lok&Baldry, 2016).
- Market Liberalization: This means introduction of competition in all the private sectors too in order to expand competition and increasing the free trade in the market.
- State aid control: State aid measures are taken by the government to ensure that the level of competition is not eliminated from any market(He & Zhao, 2016).
- Merger control: This involves the investigation on mergers and acquisitions.
- Enactments of various laws and regulations: various laws and regulations such as The Competition act 1998; The Enterprise Act 1992 and various other laws are enacted with a view to remove the monopoly and promote the fair competition in the market(He & Zhao, 2016).
Other competition policies which are in action are privatization, enactment of tough laws on anti-competitive behaviour, reduction in import controls and De-regulations.
Other regulatory mechanisms in UK:
Competition and Market Authority (CMA)
European Union Competition Commission
Impact of competition policy on Primark.
- Primark is providing better prices for all
- Primark is engaged in providing better quality.
- Primark is serving the society from more and better choices.
- Primark is bringing innovations like designs, services etc. in its products.
- There are better competitors of Primark in the global market.
- Primark is providing various range and variety of products(He & Zhao, 2016).
Determination of prices and output under
The perfect competition: Perfect competition is said when there are large number of buyers and sellers in the market producing the same product. Under perfect competition there are no restrictions on entry and exist of firms. This competitive market has the same prices as there is a huge competition and customers are conscious about the marketing prices(Blass, 2014).
In the perfect competition the buyers and sellers cannot determine the market price and are unable to change the market price by changing in purchases and output. The market price in perfect competition is determined by the industry. Market price in the perfect competitive market depends upon the market forces that are market demand and market supply chain. The point at which the demand and supply curve intersect each other determines the market price in perfect competition(Blass, 2014).
Demand refers to the quantity of a product that customers are willing to pay at a particular price, other factors remain constant. If the price for the product is low the demand for the product will be high and with rising prices the demand for the product decreases. Under the perfect competition, the demand curve slopes downward(Blass, 2014). Supply is the quantity which producers are willing to supply at a particular price. The supply of a product increases with the high price and decreases with the low prices because the producers earn high profits by supplying the products at high prices. Under perfect competition the supply curve slopes upward(Blass, 2014).
Equilibrium under perfect competition is the point at which the demands curve and the supply curve intersects each other. The quantity of supplied demand and supply is the equilibrium quantity(Curtis &Samy, 2014).
- The monopoly: The monopoly market refers to the market where there is single seller and has the overall control on the whole market. This market seller or producers are the single sellers of the market and have no substitute product and competitor of the company. That is why there is no difference between the organizations(Curtis &Samy, 2014).Under monopoly competition, the seller is able to determine the prices and can influence the prices of the product by changing the supply. The seller under this market is known as monopolist and can increase the prices to lower the demand for the product and can decrease the prices to increase the demand for the product in the market. Equilibrium under monopoly is the point at which the profit is maximum or where the marginal revenue is equal to marginal cost. Till the marginal revenue will be greater than the marginal cost the producer will produce more units of the product to gain maximum profit(Curtis &Samy, 2014).
- The oligopoly: The oligopoly is that market which describes the state in which there is less competition consisting of lower number of firm dominating the entire market. This market involves two situations, which is “tight”oligopoly situation in which there are two or three firms owning the entire market and “loose” oligopoly situation in which six or seven firms dominate the market(Curtis &Samy, 2014).The prices in this market are inflexible and does not change continuously, if they change the prices of the product firms change their prices together.
- The duopoly: The duopoly market is that in which only two firms or producers dominate the whole market. Duopoly is similar to the oligopoly market of competition. In this the market determines the prices of the product in relation with the demand of the market. The producers or the firms in this market change the prices together(Curtis &Samy, 2014).
In the terms of economics and business market forces refers to demand and supply which affects the price and the quantity of the products. Market forces affect the prices of the product and with those the organizations shape the organizational structure. If the demand for the product is high the organization will increase the prices of the product to decrease the demand. In this we can assume the supply is constant.
On the other hand if the supply increases the organizations will lower the prices for the product to maintain the profitability of the company. In this case, the demand is to be assumed constant. Summarizing, the market forces affects the organizational response regarding prices, profits, promotion, and product.
For e.g. the new range of biscuits are launched in the market. The demand for the biscuits are high this will result in the action by the company in increasing the prices for the product. The supply for the biscuits is greater than the demand. This shows that the relationship between the demand and supply isinverse in nature. The organizations need to be equilibrium where demand and supply meets. This situation is ideal situation for the organization according to the market(Engelmann, 2014).
Every organization has different people having different cultures and backgrounds. This cultural environment influences the organization and its organisations behaviour . Organizations in different countries have different cultural background. If we take the example of United States, the country and its people have adopted the culture of strong individualism because they take care of themselves more than the people affected around them(Allan, et. al., 2011). This shapes their organizational behaviour of autonomous rather than the obligatory. The organizations which work on such culture think more of themselves than the organization which results in less teamwork spirit and cooperation among the employees of the organization. On the other hand if we take the example of some Asian countries like India, they are adopting the culture of communication. Communicative culture of an organization brings out the person totally and improves the skills of presenting himself/herself in the most effective way to the organization. The communication among the employees of the organization improves the teamwork spirit and understanding of each other situation which enhances the overall productivity of the organization. This shapes the organizational behaviour in the understandable manner and flexibility organizational behaviour with the well-defined objectives of the organization to create high visibility in the aims of the organization(Finney, et. al., 2012).
Introduction: International trade is the buying and selling of capital, goods and services between international borders. In most countries international trade represent the major share of gross domestic product. International trade provides the opportunity to the customers and countries to get an exposure of new markets and products. The economy of UK is dependent upon international trade. The government of UK supports free and unrestricted trade. The government organizations of UK promote the competitiveness of UK companies to for free trade through international trade and investments.
UK’s business organizations require support to enter into the market to sustain well their activities and increase the level of international trade to sustain their activities. International trade is a major source of revenue for UK. Without international trade economy of UK will suffer and revenues of UK will be affected below is the significance of international trade to UK organizations(Menon, et. al., 2016).
- Increases the scope of horizons and markets: International market helps in increasing the scope of market as exchange of goods and services through international trade helps in introducing variety of products in the market and thus this helps in increased scope of horizon for the organizations in UK(Menon, et. al., 2016).
- Lower production costs: Those products which costs higher production costs in UK due to some geographical conditions or lack of resources in UK can be imported from other countries this will help in lowering the production costs in UK or other plants and machinery which can help in lowering the production cost of existing product be imported from other countries through international trade(Menon, et. al., 2016).
- Material: UK does not produce every material that is needed specially in food industry all those products which are needed in everyday business are not produced in UK hence all these materials which are needed in UK are imported from other countries(Stassen, et. al., 2010).
- Bringing key contacts to UK: International trade helps in building contacts as import and export including meeting and deals with new people and this helps in building relationships with everyone and through this social contacts of UK are developed and building good relationships helps every company for long run business(Stassen, et. al., 2010).
- Utilization of resources: International trade helps in better utilization of resources as this helps not particularly UK but also every country to utilize their resources properly by exporting the excess of products and importing the products which are lacking and this helps in maintaining a balance in imports and exports and to utilize the resources properly(Stassen, et. al., 2010).
- Increased the Variety of choice of customers: International trade helps the UK business organizations to increase the variety of choice of customers as all those products which cannot be produced in UK can be imported from other countries and can provide better services and variety of choice to customers this helps UK’s business organizations to increase the choice of variety and providing level of satisfaction to its customers(Rustichini&Siconolfi, 2012).
- Import of products that cannot be produced: All those products which cannot be produced in UK due to any reason can be imported from other countries this will reduce time and cost and will help business organization to use the resources efficiently and effectively.
Business organizations are affected by the competitors and they are also affected by the global factors that are the external environment which is beyond the control of any organization these factors can influence the business up to a great extent(Rustichini&Siconolfi, 2012). These global factors can be legal, political, social, technological and economic.
Impact of these global factors on UK business organizations is as follows:
- Political factors: These factors include the changes in government and government policies. These factors greatly influence the UK business organization as the companies’ operating in Europe have to adopt the rules and regulations made by European Union so every UK organization must consider the policies and plans of government. The UK organizations are have a great impact of changes in government policies and procedures so the UK organizations have to have to compete with the political factors to grow in the UK business market(Rustichini&Siconolfi, 2012).
- Economical factors: These factors involves the change in global economy this focuses on the demand and supply of the market this impacts the UK business organizations as if the demand will increase so the price will also increase and reduction in demand results that prices will go down so an organization has to work accordingly keeping in view all these fluctuations and the UK organizations accordingly decides the price of the product and quantity of the product also they focus on all the aspects of the product depending upon the factors like demand and supply and other economical factors affecting the business(Clark, et. al., 2010).
- Social factors: These Factors are related to change in social structure. These factors include behavior, taste and lifestyle of people. All these factors helps organizations to know the market demand of products that what actually people of society wants and to know the preferences of people so the organizations can continue their production accordingly. Customers are known as the king of the market indirectly customers are the one who run the market UK business organizations has to decide the products and services depending upon the need of the society so social factors have a great influence on the business organizations that are running in UK(Clark, et. al., 2010).
- Technological factors: These factors include all the technologies and innovations which are trending in the market. The new technologies are invented with a view to save the time and cost so for a growing organization in UK it is very important to be aware of all the new technologies and innovations to get the competitive advantage and manufacture goods and services at lower cost and lesser time because if any organization does not follow the technological trend it will not be able to cope up with the market demands(Clark, et. al., 2010).
- Legal factors: These factors include the legal changes in policies of government, rules and regulations. This influence the business organization so much that to be successful in the market any organization has to fulfil all the laws, rules and regulations and laws keep changing over a period of time so from the point of view of any organization it is very important to be aware of all these changing laws and follow them(Clark, et. al., 2010).
The European Union is the only largest market in this world which is so free that it can conduct its freely business activities and trade practices throughout other state members. European Union policies have also focused on liberalization of policies and as a result of this many products which were not allowed to trade are free to trade now across different European nations. European Union has taken the policy to provide strength to the existing industries in UK as well it is moving in the direction of eco friendly environment in order to save our environment and it is creating more jobs to provide better employment services to unemployed people in UK. The European Union has gained much more power than before over the policy guidelines for the UK business organizations(Cheeseman, 2016).
The scope of business activities for UK business organizations has increased by international Kodaly Society (IKS) membership and this membership has provided many benefits to UK business organizations like free trade, freedom from other restrictive measures of various policies which were applicable to UK business organizations even the selling tax has reduced which is resulting into higher revenues and they can operate their business more freely without the intervention of government. The European Union membership has provided many benefits to the organization of UK like they are not bound by the regulations and policies of respective nations for which other countries are bound thus the UK business organizations have greater profit margin and greater success rate within the EU(Wetherly& Otter, 2011).
Conclusion: International trade has very many benefits as it increases the scope of market and it provides the variety of choices to the customers of UK as well it helps the UK business organizations to lower their production cost and generating higher revenues. International trade is like a blessing to every country that is doing it as it provides better opportunities for countries to work. It provides the facilities to UK business organizations to import those products which cannot be produced in UK this will help UK business organizations to grab more opportunities. A business organization cannot run in isolation there are many factors which affect them, there are many global factors which affects the working of an organization like legal, economical, technological, social, political etc all these factors are external factors which affects a business environment and even all these factors are beyond the control of any organization. In order to grow, to get success and for free trade in the market every UK organization must keep in view all these factors which can be affecting the business environment.
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In the end it is concluded that there are lot many types of businesses functioning in the environment and there are different factors that put impact over it. There are two type of stakeholders such as internal stakeholders and external stakeholders and both of them having different types of relationship with the organisation. The market environment influence the functioning of the business organisation in positive as well as negative manner. Business get influenced with the global factors such as political, economical, social and many more. The business functionality also get influenced with the policies as they need to perform accordingly. Policies are made in order to safeguard the users.