Business Organisations and Environments in a Global Context Buy our Best Business Environment Assignment Writing Service Online by Expert Academic Writers.
TableofC ontents EXECUTIVE SUMMARY............................................................................................................. 1 INTRODUCTION..........................................................................................................................1 TASK 1...........................................................................................................................................1 Background of business organisation.......................................................................... 1 TASK 2...........................................................................................................................................3 Background of the country...............................................................................................3 TASK 3...........................................................................................................................................4 Analysis of business environment................................................................................. 4 TASK 4...........................................................................................................................................7 Interpretation with examples and statistics.............................................................. 7 CONCLUSION.............................................................................................................................. 9 REFERENCES............................................................................................................................ 10
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INTRODUCTION Business organisation is a group of people who collaborate in order to achieve a common goal. These are usually formed to generate profits by providing products and services to the customers fulfilling their demands (Alshamaila, Papagiannidis and Li, 2013). Whereas, some which only work for the welfare of the society are the non profit organisations. The business organisations comprises of different members, employees, shareholders, etc. For a business to operate in any country some factors are needed to be considered known as internal and external factors. These are the major elements which guide the working operations of any firm as well as provide base for the future planning and strategies. The internal environment of the organisation can be controlled by the management whereas, the external environment includes such factors which have huge impact and cannot be controlled by the company. In the given report, a retail company Primark of UK is taken as an example to evaluate these factors for operating in the country of Austria (Bachmann and Inkpen, 2011).
TASK 1 Background of business organisation Primark is an Irish retail clothing store chain started by Arthur Ryan in 1969. It was established in Dublin with the name Penneys and is a subsidiary of Associated British Foods. It became a huge success in the region which made it expand the company outside to other countries. However, another store operating with the name of Penneys in Europe and being already established in the area became the reason for the company to change its name to Primark as now widely known. The company deals in the range of clothes for everyone, footwear, accessories, beauty products, etc. The main factor for the success of the organisation despite of many clothing retailers in the market is providing quality products at low costs making it affordable for every class of people. This factor has helped the company to grow and Buy our Best Business Environment Assignment Writing Service Online by Expert Academic Writers.
expand continuously even in the cut throat competition of fashion clothing industry (Caligiuri and Tarique, 2012). The performance of the company can be analysed through its annual reports and financial statements. To measure the recent growth in the operation of the store a collective evaluation of reports for the period of previous 3 years is conducted. According to those, Primark has been the top performer for its holding company Associated British Foods. The profits of the business have recorded a rise of more than 30 percent and sales by 17 percent as it expands the low cost high quality products in international markets. It has performed exceptionally well even when the sales of some major fashion houses dipped in the years. The experts reasons this with the focus of Primark on its physical stores more than online which have been estimated to be above 330 store across the globe. The company is also responsible for the employment of over 22000 people all over. There are many strategies for entering the international market for Primark.
Globalisation: The process of globalisation involves developing, manufacturing and marketing of the product for its distribution in the foreign market (Farndale, Scullion and Sparrow, 2010). Primark has used this method to capture the clothing industry in the international market. It has located its stores in many countries and penetrated the new market with its marketing strategies.
Internationalization:
The
process
of
internationalization
includes
generalizing the product for localization. In this the product is developed according to the taste and preferences of the public and then reintroduced in the market. Primark can use this strategy to modify its products and provide better services to its customers.
Localization: The approach of modifying the product according to the culture and preferences of the local region is known as localization (Garavan and McGuire, 2010). This includes making the product more accessible and compatible for the local needs of the people to create a brand image. Buy our Best Business Environment Assignment Writing Service Online by Expert Academic Writers.
Primark used this strategy to enter the local markets of Ireland and other neighbouring regions. The company has expanded in several countries which has raised its financial needs higher. Primark needs to invest a large amount of capital to open its store and introduce in the market of a new region. The situation of tough challenge makes it difficult to promote and attract customers in new regions. Therefore, it needs to invest a huge amount in marketing strategies for promotion and branding of the products (Gilbert, Rasche and Waddock, 2011).
TASK 2 Background of the country Austria is an European country also known as Republic of Austria. It comprises of nine federal states being a democracy. It is one of richest countries in world having a high standard of living for the people and ranked high for its Human Development Index in the world. Being a member of UN and EU it is also a founder of Organisation for Economic Cooperation and Buy our Best Business Environment Assignment Writing Service Online by Expert Academic Writers.
Development. The country has a well developed social market and high GDP rate. It has major sources of renewable energy to produce sufficient power for the people. It has sustainable infrastructure which provides many opportunities for various business industries (Gray, 2010). Business environment of any company consists of the internal and external factors which affect its working. The factors having major impact and cannot be controlled by the organisation are the external factors being political, social, cultural, etc. Austria is a small country in the European continent, but having most stable and richest economy available. Sharing its boundaries with many countries it has a large range of business prospects for any industry. It is considered as a hub for East and West relations (Hill, Cronk and Wickramasekera, 2013). Having stable political and economical environment it provides opportunities for many new ventures to be established here. The economic stability can be measured with the Gross Domestic Product of the country which provides a better evaluation of financial conditions of the place. Austria's GDP per capita at present is more than $ 44500 which makes it a well developed country. The major population of the country has high literacy rate and skilled labour force (Low, Chen and Wu, 2011). The major sector driving the economy is service sector which make it all the more important to have more industries and business ventures for further development. The other industries contributing to the GDP factor are tourism, agriculture and industrial sector. The employment rate in the country is increasing every year being more than 70 percent in the past years. The inflation rate in the country recorded less than one percent increase the margin of profitability for the companies. The decreasing rate of inflation can be a matter of concern for the industries in Austria as a very low rate of inflation can also have a negative impact on the profit margins of small firms. However, the large firms have minimum effect from this. This inflation has led to rise in the administered prices and labour costs in Austria Buy our Best Business Environment Assignment Writing Service Online by Expert Academic Writers.
(Mellahi and Collings, 2010). Whereas, this did not have an effect on the prices of food, fuel and living conditions in the country.
TASK 3 Analysis of business environment The
business
environment
of
a
country
includes
the
political,
economical, social, technological, environmental and legal factors which have an impact on the working of a business enterprise. These factors can be work as a determinant for Primark to plan its operations and location of the store in Austria. To analyse these factors PESTLE analysis is conducted which includes environmental scanning, strategic management and market research. The external factors for Primark in Austria can be evaluated through PESTLE analysis as:
Political factor- The political factor of a country includes its government, and its policies relating to tax, environmental laws, trade and tariff restrictions, labour law, etc. These are the factors which guide the political stability in a country which effects the working conditions for industries (Nadkarni and Herrmann, 2010). Austria being a politically stable country provides a stable working environment and policies for industries to develop. The favourable policies of tax for corporate companies create a higher profitability margin which will generate higher revenues for Primark. The country being a member of EU provides several opportunities of trade for Primark which will help it to capture new markets and expand further.
Economic factor- The economic factors of a country being economic growth, exchange rates, interest rates, and inflation affects the financial conditions of the people in the country. These factors guide the strategies and plans for the working operations of a business entity (Nahavandi, 2016). Primark planning to setup its stores in Austria, requires labour and machines which are available in abundant in the region. The population consisting majorly of skilled and literate people helps to reduce the cost of training and recruitment for the company. Balanced inflation rate as well as developed Buy our Best Business Environment Assignment Writing Service Online by Expert Academic Writers.
economy provides favourable conditions for Primark in order to enter a new market and create customer base.
Social factor- The social factors of a country includes its cultural aspects such as population, age distribution, safety and career prospects, etc. Austria having major river port situated in its capital adds to the facilities for trading and other business transactions. Primark can use this factor as an advantage for its business operations (Nam and Pardo, 2011). The developed infrastructure and living standards of people will provide better opportunities for the company to expand in the country.
Technological factor- The technological factors in a country includes research and development activity, changes and updates in technology, etc. These factors are crucial for a business to operate and compete in market. Primark having a range of clothes and beauty products requires latest technological developments to establish its brand and products in the market of Austria. Even though it offers low cost products the quality needs to be maintained.
Legal factor- The legal factors of the external environment of a firm consists of the laws and regulations relating to various aspects of a business firm. It can include consumer law, employment law, health and safety law and discrimination law, etc. The country has strong implementation of anticorruption law to reduce corruption level as well as human rights law guiding the policies for trade union, assembly, strikes, in the organisation. Primark can benefit from the fixed rules and policies for these as it will consume less time to solve the disputes (Needle, 2010).
Environmental factors- The environmental factors include country's ecology, climate, weather, etc. which affect the working conditions of industries. To identify the type of climate and weather in Austria is crucial for Primark as it will help to analyse the trends and preferences of the customers in the area. Being a mountainous region, the people mostly prefer Buy our Best Business Environment Assignment Writing Service Online by Expert Academic Writers.
warm clothes in most seasons which will decide the production and plans for the company (Ebert and et. al., 2014). The business enterprise entering a new market needs to identify the opportunities and threats in the market industry of the country. Primark being a new entrant in Austria's fashion clothing market needs to assess the market conditions as well as internal strength and weaknesses to plan operations accordingly. The company can create a SWOT analysis as follows: Strengths
Weaknesses
Primark is an established brand in
various
helps
countries
it
to
marketing
which
reduce
cost
in
the
a
new
market. It
Being
one
of
the
major
weaknesses, the low prices of the
company
creates
a
perspective for customers of providing low quality products.
provides
good
quality
Primark
was
reported
for
products at very low prices
having poor working conditions
making it affordable for many
in the company and labour
people.
right issues in supply chains.
Even
when
companies
other were
clothing to
of Austria, the revenues will
generate profit, Primark made
decrease with the rise in the
a
cost
growth
in
unable
With expansion in new markets
its
sales
and
profitability.
other
setup
and
Threats
Rise in obesity levels has led to preference
new
marketing activity.
Opportunities
change
of
the of
customers brands
fashion
from
clothing
The company based in UK, will have an impact of decision of Brexit on the operations of the firm
(Oliveira
and
Martins,
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companies
which
lack
this
feature.  With expansion and growth of
2011).  The already established market in
Austria
will
present
a
the company and opening of
challenge for Primark to create
new stores will generate more
its brand image and a risk of
revenues.
failure is present.
The Porter's Five Force model describes the forces which drive the business operations for a firm. It helps the company to determine its current position along with the future position the company wants to reach. It analysis the level of competition for the company in industry. Primark planning to enter new market in Austria, needs to analyse the competition and market position to plan future strategies (Tarique and Schuler, 2010).
New entrant: The threat of new entrant coming in the market is a major threat for already established firms in the market. Primark entering the clothing market in Austria will pose a threat to the established player in the country. Therefore, the company needs to plan accordingly to present itself as healthy competitor and not a rival threat.
Customer: The customers have the power of bargaining which force the companies to keep their prices high (Wang, and et. al., 2010). Primark being a provider of low cost products does not surrender to theis factor as the customers do not need to bargain with such low price products.
Suppliers: The suppliers of the raw material also have the power to bargain which enables them to provide material at higher cost. Austria being a member of EU does not contain the this factor as according to agreement the trade between European nations is done at very low costs.
Rivalry: The business environment of a industry can be determined by the level of competition in it. Austria being a small country does not have a Buy our Best Business Environment Assignment Writing Service Online by Expert Academic Writers.
large number of organisations and Primark has a fair chance to establish its operations in the market (Module descriptions for MA Global Management, 2016).
TASK 4 Interpretation with examples and statistics Year
(Nominal) GDP per
Inflation Rate (%)
capita
Employment Rate (%)
2013
50500
2
70
2014
51000
1.5
71
2015
43000
1
71
2016
44500
1
72
As per the above acquired data, the economic condition of Austria can be analysed along with its growth rate and business opportunities. In the last 5 years, the Gross Domestic Product for per capita income in Austria is decreased as the reason being financial crisis of 2014 in the European Union of which the country is a member (Leadership in a Global Environment, 2017). The inflation has also decreased with a small difference which is the
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effect of rise in employment rate in the country. These factors determine the
gradual growth in Austria.
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CONCLUSION In the above report, the factors of a country affecting the business operations are described. The case of a fashion clothing chain based in UK is taken as an example for starting new stores in Austria. The economic, social and political background of the country is explained along with the elements affecting the business environment for a new entrant for the country. The analysis of the data for last few years is taken and interpreted for further use by the company. Thus, providing various factors to analyse the business conditions for Primark to enter fashion industry in Austria.
REFERENCES Books and Journal Alshamaila, Y., Papagiannidis, S and Li, F., 2013. Cloud computing adoption by SMEs in the north east of England: A multi-perspective framework. Journal
of Enterprise Information Management. 26(3). pp.250-275. Bachmann, R and Inkpen, A.C., 2011. Understanding institutional-based trust building processes in inter-organizational relationships. Organization Studies.
32(2). pp.281-301. Caligiuri, P and Tarique, I., 2012. Dynamic cross-cultural competencies and global leadership effectiveness. Journal of World Business. 47(4). pp.612-622. Ebert, R.J., and et. al., 2014. Business essentials. Pearson Education Canada. Farndale, E., Scullion, H and Sparrow, P., 2010. The role of the corporate HR function in global talent management. Journal of World Business.45(2). pp.161-168. Garavan, T.N and McGuire, D., 2010. Human resource development and society: Human resource development’s role in embedding corporate social responsibility, sustainability, and ethics in organizations. Advances in
Developing
Human
Resources.
12(5).
pp.487-507.
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