Business Environment
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TABLE OF CONTENTS INTRODUCTION ..........................................................................................................................3 TASK 1............................................................................................................................................3 1.1 Purposes of different organization.........................................................................................3 1.2 Extent to which Iceland supermarket meets the objectives of different stakeholders...........4 1.3 Various responsibility as an organization and strategies it employs to meet them................5 TASK 2............................................................................................................................................6 2.1 How different economic systems attempt to allocate resources effectively..........................6 2.2 The impact of fiscal and monetary policy..............................................................................7 2.3 The impact of competition policy and other regulatory mechanism.....................................7 TASK 3............................................................................................................................................8 3.1 How market structure determine the pricing and output decisions of businesses.................8 3.2 Ways in which market forces shapes Iceland supermarket responses...................................9 3.3 Business and cultural environments shape the behaviour of Iceland supermarket..............10 TASK 4...........................................................................................................................................11 4.1 Significance of international trade.......................................................................................11 4.2 Impact of global factors on the organization.......................................................................12 4.3 Impact of policies of the European union on the Iceland supermarket................................12 CONCLUSION..............................................................................................................................13 REFERENCES..............................................................................................................................14
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INTRODUCTION Business Environment consists of different external and internal factors that directly and indirectly affect the operations of business organization. In order to survive in the contemporary marketplace, establishment mainly centres upon to examining both the factors (Wetherly and Otter, 2014). However, in the globalized scenario, business environment plays a pivotal role in most of the enterprises as it will assist in knowing the internal, external environment as well as it will also realizes the current market trend under which establishment is operating their businesses. In the present context, report focuses on the Iceland supermarket one of the private retailing company in the UK that deals in providing frozen foods and groceries products. The company covers approximately 1.8% to UK food market share. However, the supermarket is primarily impressed and influence by the external and internal environment under which they operates their functions. Furthermore, the present report will discuss the main purposes of the different form of organization that exists in the contemporary environment. However, the report will also understand the nature of national environment under which businesses operates and addresses the needs and requirement of the different customers. In addition to this the report will also understand the behaviour of the organization in the different market structure as it will support the organization in determining their pricing and output decisions of the business.
TASK 1 1.1 Purposes of different organization Organizations may have different purposes and goals that they need to achieve while establishing the business in the market. However, some businesses mainly operates their functions to earn maximum profits whilst some other enterprise mainly runs to meet the requirement of their customers (Wild, Wild and Han, 2014). Therefore, the intention of all the organization are not precisely same. There are different organization existing in the market that is private organization, public organization as well as governmental organization. The different purposes of different organization are;
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a) Iceland Supermarket- The supermarket is a private organization in the retail sector that mainly sells frozen foods and groceries products in the market (Dragoi, Rosu and Draghici, 2013). The supermarket is mainly direct by the single owners in the form of partnership or sole proprietorship. However, the main purpose or goal of the Iceland supermarket is to earn maximum profit by serving the different requirement of the customers and to attain higher share of UK food market (Alqahtani and Saba, 2013). b) KFC- KFC (Kentucky fried chicken) is the subsidiary company of Yum! Brand one of the famous restaurant company. It is also considered as the private company that mainly exists to earn profit and increase their market share by expanding their activities in the other countries. c) Transport for London (TFL)- It is considered as the local governmental body that is primarily accountable for the transport systems within the London area. However, TFL mainly serve the areas within the UK and also manage the transport services crosswise the London. The main purpose of TFL is to serve the areas of UK and focus on the up-liftment of the area by developing the transport systems (Cavusgil and et.al., 2014). d) Cancer Research- Another form of organization include cancer research one of the voluntary organization that researches into the cancer to determine their causes, treatment and prevention strategies to cure the diseases. It is an non-profit organization in UK whose main purpose is to serve the societal needs and requirement. 1.2 Extent to which Iceland supermarket meets the objectives of different stakeholders Stakeholders are the key people those are present within and outside the organization. However, they are one that may get affected or would impact the overall operations of the organization. The key stakeholders of Iceland supermarket are customers, suppliers, society, employees etc. there are different objectives of their stakeholder that need to be fulfilled by the Iceland supermarket to sustain their stakeholders (Allen and Raynor, 2004). The objectives of different stakeholders and extent to which supermarket meet their objectives are: Customers- One of the key stakeholder of Iceland supermarket is their customers those purchase variety of products from the supermarket to meet their requirement. However, the main objective of Iceland supermarket customers is that they may get quality and healthy food TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324
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products from the supermarket, they must get required information about the new products etc (BlaĹževic and JeluĹĄic, 2006). Therefore, to meet the objectives of their customers organization must focus on maintaining the quality standard of their products according to the preferences of the customers. Suppliers- Another key stakeholder of Iceland supermarket is their suppliers from whom they purchases the food products and raw material. The main objective of supermarket's suppliers is to strive for long term corporation with the organization. As, building long term relationship with the supplier would assist the company in gaining competitive edge in the market. However, to meet the objective of their supplier supermarket must focus on rewarding their suppliers performance by monetary and non-monetary incentives (Chaiprasit and Swierczek, 2011). Employees- Although employees or staff who renders services and directly contact with the customers are also termed as an essential stakeholder of Iceland supermarket. As without their employees supermarket will not able to perform their activities and serve the target customers. The main objectives of employees is to get fair remunerations for rendering superior services to their customers who visits their store to purchase the products (Cheng and et .al., 2007). For accomplishing this objective of the organization supermarket must boost the morale of their employees so that they may render proper services to their customers. 1.3 Various responsibility as an organization and strategies it employs to meet them Iceland supermarket is one of the responsible retailer that is pledged to provide healthy and safe frozen foods to the UK customers. The different responsibilities of Iceland supermarket as an organization is toProvide quality and healthy frozen food products to the customers. Work with different governmental agencies to promote public health. Protect the external environment under which Iceland supermarket operates their business (Kennerley and Neely, 2003). Therefore, to meet the above responsibilities of Iceland supermarket as an organization they need to employ different strategies that would support the organization in meeting the TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324
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responsibility of supermarket. However, to meet the responsibility of providing healthy and safe frozen food to their customers supermarket must focus on freezing the range of frozen food. It is termed as natural process that require no preservation to safe the food. Another responsibility of supermarket is to promote the public health within the society (Nimwegen, and et al., 2008). therefore, to meet the responsibility supermarket would work with different governmental agencies to promote public health within the community. Iceland supermarket is in the collaboration with UK government Public health responsibility deal that mainly focuses on removing the artificial trans from the food products, prohibit the under age sale of alcohol within the stores etc. Other responsibility of Iceland supermarket is to protect the environment under which they operates their business activities (Archer, 2008). For accomplishing this supermarket focuses on different strategies like reducing carbon footprint by installing energy-efficient lighting as well as different air conditioning equipment within the stores to reduce the wastage of energy by heating and cooling. However, another strategy that may be employed by the supermarket to protect the environment include by promoting recycling.
TASK 2 2.1 How different economic systems attempt to allocate resources effectively Economic systems depicts the market under which nation or other states allocates their resources for trading goods and services. There are mainly four form of economic systems such as command, free enterprise, mixed and transnational systems that attempt to allocate and assign the resources effectively. The different economic systems areCommand economy- Command economy is also termed as centrally planned economy that focuses on higher role of government (Arnold, 2004). Organization functioning within the command economy is mainly governed by the governmental authorities as well as all the decisions regarding the business is being taken by the government. Example of command economy is Cuba, organization in this region is highly influenced by the government as well as government mainly allocate the resources. Free enterprise- Another type of economic system include free enterprise economy that is also known as free market economy. Resources under this economic system is privately owned TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324
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and held by the individual and private owners (Begg, 2009). All the decisions regarding allocation of the resources are taken by the private owners of the organization. Example of free economy is America where organization are owned by the individual or an entrepreneur as well as they have power to allocate resources effectively earn maximum profit. Mixed economy- Another economic system include mixed economy that consists of public ownership as well as private ownership companies (Moon, 2010). Example of mixed economy is UK that consists of private and public enterprise. Under mixed economy private enterprise can allocate resources by their own by considering the demand of customers. Iceland supermarket renders their services within the mixed economy that is influenced by private owners as well as government while taking any decisions. 2.2 The impact of fiscal and monetary policy Fiscal policy and monetary policy both have huge impact on the performance of Iceland supermarket as well as on their different business activities. Fiscal policy is often used by the government to steer the economy in the correct direction (Sawyer, 2004). However, the fiscal policy mainly focuses on prompting investment by the company in the different areas as well as it will also create job opportunities for the unemployed candidate. Fiscal policies main aim is to control the level of economy through enabling taxation and government spending. For instance, if UK government increases the tax rates then supermarket will have fewer funds to invest and employ. Thus, it affects the Iceland supermarket in charging higher prices for their products and services. However, if government decreases the tax rate then Iceland supermarket would higher their spending in the UK economy and generates employment opportunities for people (Neubaum, Dibrell and Craig, 2012). Another policy is monetary policy that attempts to manage macroeconomic variables in an economy with the help of interest rate. This policy not only impacts the Iceland supermarket but it also affects the entire UK economy. For instance, higher in the interest rates will reduced the demand and prevent the UK economy to expand fast. However, if the UK economy growth is slow-moving then they may cut the interest rate as lowering the rates will support the economy in boosting their growth and also reduces unemployment (Miller and Friesen, 2003). TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324
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2.3 The impact of competition policy and other regulatory mechanism Competition policy mainly focuses on promoting fair competition within the market that mainly contribute in improving the competitive market condition by encouraging innovation so that it can enable their customers to purchase their goods and services at fair and affordable prices. The impact of competition policy on the Iceland supermarket is that it will mainly aims to ensure effective price competition between their different suppliers. However, competition policy also aims to make better market by improving efficiency of organization within the market and also to enhance competitiveness of the UK businesses. In addition to this, other impact of competition policy on the Iceland supermarket would be to provide improved quality products at the fair prices (Cottarelli and ViĂąals, 2009). There are numerous competition policies that need to be followed by the Iceland supermarket so that they can render ethical services in the market for instance office of fair trading (OFT), competition commission (CC) etc. that will support the organization in ethical competition to their rival companies existing in the retail segment. There are other regulatory mechanism like like regional policy, standard quality policy, industrial policy as well as training and skills policy that need to be focused by the Iceland supermarket so that they can render proper activities (Krkoska and Robeck, 2007). For instance, if the UK government has imposed a new standard quality policy that Iceland supermarket need to implement within their processes. Thus, supermarket need to produce and sell the frozen food items as per the guidelines provided by the government. Therefore, in this situation supermarket has to change their internal strategy and policy to maintain the standard of products that they are serving in the marketplace.
TASK 3 3.1 How market structure determine the pricing and output decisions of businesses In the contemporary scenario, it is an important aspect for the economy to determine the pricing decisions of products and services. There are basically three type of market structure existing within the economy that mainly determine the pricing and output decisions of the businesses. Different form of market structure are perfect competition, monopoly and oligopoly market structure. First market structure is perfect competition under which there are numerous TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324
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buyers and sellers existing in the market as well as individual buyers and sellers are not in the condition to determine the pricing decisions (Lynch, 2005). Basically within the perfect competition market structure prices are mainly determine by considering the demand and supply of the products within the market. For instance, Iceland supermarket possess perfect competition market structure under which prices and output decisions of the businesses are taken by measuring the elasticity of demand and supply. Another market structure include monopoly that possess large number of buyers with single seller existing in the marketplace. However, the single seller is in the position to determine and take the decision regarding the pricing and output decisions of the businesses. For instance, if the demand of certain product is high within the market then company would rises the prices of products (Bertsch and et.al., 2013). However, increasing the prices of products sometime may also result in influencing the demand of products. In addition to this, other form of market structure include oligopoly market where competition is not perfect whilst the competition among the businesses are certainly high. However, in this market situation only few firms or organizations are competing within the market for the similar products thus, the rate of substitution is high in the oligopoly market. 3.2 Ways in which market forces shapes Iceland supermarket responses There are different market forces existing within the economy that shapes business activities of the Iceland supermarket and also responses in accomplishing the stated objectives of the firm (About us- Competition commission, 2013). The different market forces areDemand- One of the major market forces that shapes the Iceland supermarket responses is the demand of their frozen food in the market. For instance, if the demand of frozen food increases in the market then Iceland supermarket will hire more workers that will produce and keep frozen food in the proper manner that it may not be get contaminated. However, with the increasing demand in the product will also response the supermarket in buying cooling refrigerator for preserving the frozen food. Employees- Another force that mainly shapes the supermarket responses is their employees. The behaviour of employees constantly keeps on changing the need to be focused by TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324
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the organization. For instance, with the modification in the governmental legislation regarding the minimum wage then supermarket must implement within their system. If the organization do not pay the specified amount then employees will result in quitting the job (Differences between private limited companies and public limited companies, 2013). Customers- The main purpose of Iceland supermarket is to satisfy their customers by providing quality and healthy food products. Therefore, organization must focus on determining the changing requirement of the customers and responses their services according to the customers. 3.3 Business and cultural environments shape the behaviour of Iceland supermarket There are different environments that mainly shapes the behaviour of Iceland supermarket it include: Political- The foremost business environment that shapes the behaviour of the Iceland supermarket include political environment it basically include all the policies and regulation that are framed by the UK government. For instance, with the modification in the tax rate by the government will mainly affect the supermarket pricing strategy of their frozen foods (Economic System, 2013). Economical- Another environment that shapes the behaviour of supermarket include economic factor it basically include interest rate, inflation and economic development etc. for instance, with the higher inflation rate within the UK economy supermarket will higher the prices of their products that results in reducing the purchasing power of the customers. However, with the lower inflation rate it results in increasing the purchasing power of the customers as they will prefer to purchase the products relative at the low costs (Wetherly and Otter, 2014). Social- Another business environment factor is social factor that mainly focuses on changing taste and preferences of the customers, income level, change in fashion etc. for instance, for selling the frozen food items requires huge investment for preserving the food items as with the change in taste of the customers it will result in ensuring loss for the firm as from the frozen food people will shifty towards purchasing fresh and healthy raw food items.
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Technological- Another environment that shapes the behaviour of Iceland supermarket include technological environment. With the increasing or adoption in the technology it will result shaping the promotional activities of the supermarket (Alqahtani and Saba, 2013).
TASK 4 4.1 Significance of international trade In the contemporary environment international trade has gained an significance pace in the overall market. As with the help of international trade business organization can easily expand their activities in the different other regions and also results in expanding their market share (Cavusgil and et.al., 2014). International trade is also reviewed as the backbone of the contemporary scenario that enhances the business performance as well as it also support in developing the economy. The significance of international trade includeEnhances the profitability and market share- The major significance of the international trade to Iceland supermarket include that it mainly enhances the market share of the supermarket as well as it also focus on enhancing the profit margin of the company. With the help of expanding the business activities in the different region rather than UK, supermarket would result in increasing their profit margins (Chaiprasit and Swierczek, 2011). Develop the brand image- Another significance of international trade to Iceland supermarket is that with the help of international trade the company can easily develop and enhance their brand image in the different region. However, in the contemporary scenario it is essential for company to expand their activities in the different region so that they can easily generate and enhance their presence in the retail market. Developing brand image will support the Iceland supermarket in increasing their base of customers in the market (Archer, 2008). Broaden the market reach- Another importance of international trade to supermarket is that is broaden and enhances the market reach. Global or international trade results in increasing the traffic as well as sales of the frozen food items in the global countries that outcome in serving large market area. However, with the international trade supermarket will also gain steady growth in the competitive retail market among the giant firms like Tesco, Sainsbury, Asda etc (Arnold, 2004). TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324
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4.2 Impact of global factors on the organization There are numerous of global factors that mainly impact and influences the business activities of the Iceland supermarket (Begg, 2009). The different global factors include that impact the organization include taxation policies, developing technology, cost of labour or workforce etc. For instance, developing technology is considers as the effective global factor that positively impact the business organization that is with the help of advanced technology supermarket can easily promote their services and products information among different region customers. However, with the help of increasing technology it may also impact the supermarket in adopting online platform for selling their goods and services to the distant consumer through one click (Sawyer, 2004). In the assistance of this, it can be declared that the business organization who are focusing on the expanding their business in any developing nation may expand with the help of technological advancement. In this state management of Iceland supermarket should focus on acquiring technological resources so that they may easily enter in the international market. However, another global factor include low cost of labour this may also impact the organization activities. For instance, Iceland supermarket focuses on expanding their activities in the emerging countries like china that mainly provide low cost labour for the organization. Therefore it will positively impact the supermarket in lowering their cost of production as due to availability of cheap workforce (Neubaum, Dibrell and Craig, 2012). Moreover, the taxation policies differs from country to country that may also impact the operation of Iceland supermarket. For instance, if the tax rate in the other economy is higher than the UK economy then supermarket will modify the prices of their product as per the economy tax rate. 4.3 Impact of policies of the European union on the Iceland supermarket There are different policies that is being undertaken by the EU it mainly include regional policy, social policy, industrial policy etc. that mainly impact the operational activities of the Iceland supermarket. The impact of different policies areRegional policy- The main of EU for framing the regional policy is to develop and improve those areas of the region where unemployment rate is quite higher as compared to the TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324
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other region. With the help of government support supermarket will develop and grow the area by generating employment opportunities (Miller and Friesen, 2003). However, the certain impact of the regional policy on the operations of Iceland supermarket is that organization would expand their activities and stores in the underdeveloped region to attract wide range of customers (Cottarelli and ViĂąals, 2009). International policy- UK governance authorities plays an significant role in heighten the situation of import and export within the economy. Therefore, the EU also mainly devise the international policy that mainly support the firm to sustain in the international market for the long time period. However, the certain impact of international policy on the Iceland supermarket that it will reduces the obstacles and barriers that were existing in the market while enabling the international trade. However, it will also positively impact the organization in enhancing their market share as well as market reach (Bertsch and et.al., 2013).
CONCLUSION From the above report it can be stated that it is essential for the organization to measure and examine various internal and external business environmental factors while preceding in the international market. It has also been stated that business environment plays a pivotal role in most of the enterprises as it will assist in knowing the internal, external environment as well as it will also realizes the current market trend under which establishment is operating their businesses. Furthermore, the report has also concluded that it is necessary for business organizations to have developed focus on he different European Union policies in order to meet the standardized and achieving the stated organizational goals.
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