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Business Environment

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TABLE OF CONTENTS INTRODUCTION...........................................................................................................................1 TASK 1............................................................................................................................................1 1.1 Purposes of different organization....................................................................................1 1.2 The extent to which it meets the objectives of its different stakeholders.........................2 1.3 Responsibilities of an organization and strategies employed to meet them.....................3 TASK 2.............................................................................................................................................5 2.1 economic systems attempt to allocate resources effectively............................................5 2.2 The impact of fiscal and monetary policy on business organizations and their activities6 2.3 The impact of competition policy and other regulatory mechanisms on the activities of a selected organization..............................................................................................................6 TASK 3.............................................................................................................................................7 3.1 Market structures determine the pricing and output decisions of businesses...................7 3.2 The way in which market forces shape organizational responses using a range of examples ................................................................................................................................................8 3.3 Way in which the business and cultural environments shape the behavior of a selected organization............................................................................................................................9 TASK 4...........................................................................................................................................10 4.1 The significance of international trade to UK business organizations...........................10 4.2 The impact of global factors on UK business organizations..........................................10 4.3 The impact of policies of the European Union on UK business organizations..............11 CONCLUSION..............................................................................................................................11 REFRENCES.................................................................................................................................13

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INTRODUCTION Business environment refers to the sum total of all the factor that affects the functioning and operations of organizations operating in a country. It inculcates all the factors under the influence of which firm’s functions. In includes both internal and external factors. Latter are those that impact organization on wide scale such as social, economic, technological, political environmental and legal aspects prevailing in the country while prior are its components linked directly to the strategic formulation and direction of working such as its shareholders, customers, employees, suppliers and government organization. Report is prepared to elucidate the way in which organization get affected by these factors. For the purpose, British supermarket chain, Iceland supermarket is taken into account. With approximately, 1.8% share in UK food market, Company sells wide range of frozen and non frozen items such as prepared meals and vegetables; meat, dairy and dry goods.

TASK 1 1.1 Purposes of different organization Iceland Supermarkets Type of organization: Private Purpose: With the significant share in the retail industry, Iceland supermarket is selling large range of products in frozen and non frozen items. It aims to offer quality products without compromising health and hygiene of customers. Private companies function to earn profitability and have a strong hold in market. For that purpose, it adopts different measures such as marketing, discounting, personal interactions with customers and others (Yu and Ramanathan, 2012).

KFC Type of organization: Subsidiary Purpose: Subsidiary of Yum brand, KFC is recognized as the leading fast food chain in the world. It purposes of functioning is to comply with the laws, policies, regulations, objectives and goals of parent firm. Along with this, it desires to establish its prominent position on its own.

Transport of London Type of organization: Government organization TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324

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Purpose: Government aims to stabilize the situation of country in different aspects. In that regard, there are many organizations that function under its control (George and public relations.

2016). Their aim is to provide public services in different sections such as education, health, transport and others. One such organization is transport of London that caters, monitor and maintain the transport condition in UK. Transport of London is a public organization whose primary function is to provide better traffic facilities to the countrymen with good infrastructure and passage.

Cancer research Type of organization: Charitable organization Purpose: Charitable organization or other nonprofit organization functions with the sole aim to bring improvement in the condition of country. Cancer research is the independent research center in UK which conducts research to minimize the deaths of patient due to this terminal illness (Moutinho, 2011). Research activities are carried out to introduce new methods of prevention and cure of cancer.

1.2 The extent to which it meets the objectives of its different stakeholders.

No organization functions in isolation thereby its success and development depends upon the efficiency of its operational management. Similarly, Iceland supermarket is the large family of employees, suppliers, customers and other trading partners. There are many entities associated with it. Entities that are directly or indirectly associated with the working of organization are referred as stakeholders. Major of them are its owners, customers, Government agencies, employees working in it, creditors and many regulatory agencies such as environmental groups. 

Owners: Iceland operates with the number of shareholders who are the owners of the organization. There is a board of directors who frame policies and strategies for the success of organization and make them expand to the larger horizons. Iceland supermarket realizes the importance of their need and always caters to provide the large return on investments to them (Halbert and Ingulli, 2011).



Customers: Central part of the organizational working is their customers. Each operation is done by keeping in consideration their choices and preferences. Iceland supermarket is recognized for its outstanding service it extends to them. Management tends to offer the

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quality products to them as per their need and choices. There is a separate team made by Iceland supermarket to seek customer's choice by maintaining personal interactions with them via telephonic conversation or through using virtual platform that is internet and social media. 

Government agencies: Government and other legislative bodies function to regulate the operations in the country. It has the significant impact on the strategies and policies framed by the organization Iceland supermarkets. Government imposes many rules and regulation with respect to the employee’s related issues, authenticity of its working, quality of products and services offered by it, customer protection, environmental laws and many (Aterido and et.al, 2011). To maintain the legality, Iceland supermarket abides all the norms stated by these organizations.



Environmental Groups: Apart from Government and other regulatory bodies, there are some organizations which work to monitor the specific regions and their operations. Few such firms are environmental groups whose primary aim is to protect the environment from any damage and it also takes steps for its preservation. In this regard, Iceland supermarket is complying with its responsibility towards the environment and understands the need of it (Aula, 2010). For the purpose, it supports these organizations in their campaigns and programs. Further, in its practices, authenticity is maintained along with sourcing of raw material from licensed suppliers.

1.3 Responsibilities of an organization and strategies employed to meet them Iceland supermarket work on the base of providing safe and healthy products to the customers with the outstanding services that are procured from the reliable places and sources.

Along with this, it also provides generous supports for the good cause in the society.

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Illustration 1: Influence matrix of stakeholders (Source: George and Public relations, 2016) On the basis of above grid, stakeholders of the organization are categorized on the basis of four parts as per the degree of power of influence and interest:



Customer: Customers falls in first quadrant and hence should be satisfied. It means that organization Iceland supermarket consider their customers as a core of all the operations undertaken by it. They always intend to provide the quality products and services. The primary product sold by Iceland supermarket that is frozen food are sold with special care in the process of freezing in which texture, taste and nutrition are retained. Organization makes sincere efforts to keep them satisfied at optimum level (Budhwar and Debrah, 2013).



Employees: Work force in an organization intends to give their services at healthy and resourceful place. Realizing the importance of efficiency and their contribution in the organization, Iceland supermarkets make the great place to work for the employees. They provide resourceful environment of working and maintaining good communication level with them. With good sense of team work, Iceland supermarket has efficient leaders who supervise their employees to derive the best outcomes and results.



Government agencies: Legislative bodies and other Government agencies cater to stabilize the situation in country on different aspects such as economic, political, environmental and social. Further, the policies framed by them affects the operations of

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organization such as on its profitability, revenue generation and customer base.

Regulations for capital and interest rates laid by it affect the investment structure of Iceland supermarket (Cantwell and et.al, 2010).



Suppliers: Engaged in number of services, Iceland supermarket is collaborated with many suppliers who provide raw materials, semi-finished goods or prepared items to them. One of the largest employees units of UK is work force in supply chain management. With the efficiency and preciseness of their delivery, Iceland supermarket is able to provide their customers with high degree of optimal level in their services. For the purpose, they are kept informed about the changes and amendments occur in their goods and other related aspects.

TASK 2 2.1 economic systems attempt to allocate resources effectively There are different ways in which economic systems allocate resources in the economy.

On the basis of ways of allocation of resources, economic system is categorized as command economy, free market economy and mixed economy (Craig and Campbell, 2012). 

Command economy: The economic system in which factors of productions are under the control of Government. Organizations operating in it have minimum rights over the processing and output decisions. All the decisions are taken by the Government of the country and other legislative bodies. Iceland supermarkets operating in command economy have no right to decide the process of the frozen and non-frozen items. Further, the factors of production are under the management of Government.



Free market economy: In this economy all the process are held under the influence of market forces that is the forces led by the demand and supply of products and services provided by the organization (Gecevska and et.al, 2010). Operating in free market economy, Iceland supermarkets work under the minimum influence of government on its functions. Board of directors has full control over all the departments and operations.



Mixed economy: It is the combination of both the above mentioned economies that is free market economy and command economy. In this type of economy, organization has control over the pricing and output decision but under certain limitations and obligations

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by the government and other legislative bodies. Such as Iceland supermarkets provide frozen and non frozen items. In that regard there are certain rules and norms laid by legislative bodies about the hygiene and health perspective of products sold by it (Halbert and Ingulli, 2011). In reality, Iceland supermarkets function in this type of structure having rights and powers with some limitations.

2.2 The impact of fiscal and monetary policy on business organizations and their activities In a country there are many organizations who function to stabilize the condition of economy and operations in the country such as Government, central banks and many more. Two such important tools that effectively manage the working in the organization are fiscal and monetary policy. Fiscal policy is the steps adopted by Government in order to check the overall implication in the economy. In fiscal policy government adjusts the level of taxation and spending. Taxation refers to charging fees from the entities in various aspects, on the other hand spending by the Government relaxes the economy with the increased flow of money. Taxation reduces the profit level of the organization such as Iceland super markets (Hill and HernรกndezRequejo, 2011). When government increases taxes on their services, it directly affects the financial position of mentioned supermarket. Inversely when Government take steps such as increasing spending in the retail sector or attracting investments in the country, it helps the organization to expand its venture.

Monetary policy refers to the steps adopted by central bank of the country to control and check the money circulation. By adopting various methods such as changes in interest rates, bank rates, open market operations and many more led to the change in Iceland supermarkets (skanius and et.al, 2010). Changes in interest rates fluctuates the investment status on organization. When interest rates are favorable in nature, investors and creditors has more faith in organization with minimum risk and invest more in the expansion of Iceland supermarkets. Further, open market operations that is selling and purchasing of government securities in market led to the changes in money supply in economy that brings changes in inflation rate.

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2.3 The impact of competition policy and other regulatory mechanisms on the activities of a selected organization Along with the Government and other legislative bodies there are certain organizations that check and monitor the activities of the trade entities working. They have the significant impact on the working of the organization mentioned in different aspects. These organizations make audit on frequent basis to maintain the authenticity and legality. Certain organizations with respect to are office of fair trading, competition and monetary authority and BIS. Office of fair trading functions to check the unfair trade practices by any organization which holds the large share in market. With the imposition of certain rules and norms, it is processed (Iyer and Henderson, 2012). Competition and monitory authority works to check the legality of the mergers and acquisitions taken places by different trade entities. Further, government and other legislative bodies cater to bring efficiency ion the operations undertaken in the trade and business in the country. BIS is one such organization that encourages innovative and creative methods by the businesses so that better methods to resolve the issues are inculcated in the practices of the trade in economy.

TASK 3 3.1 Market structures determine the pricing and output decisions of businesses On the basis of pricing and output decisions of the organizations, market structures are categorized as monopoly, perfect competition, monopolistic competition and oligopolistic market. 

Perfect competition: The market structures where there are many sellers and buyers. In this structure, prices and output decisions are taken as per the forces that are demand and supply of the product and services offered by the organization (Laumer, Eckhardt and Weitzel, 2010). In perfect competition Iceland supermarket has no right to decide their process and charges of their products.



Monopoly: Market structure in which there is only one seller and many consumers. Seller has sole right to decide their prices and output quantum which enable it to make so much of earnings. Though this kind of structure do not exist in reality, even if an organization

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such as Iceland supermarket shapes into Monopoly there large amount of earning to the seller. 

Monopolistic: In this type structure there are few sellers and many buyers with the high degree of competition between them. To build a competitive edge in the market place, Iceland supermarket provides distinguished services as per the choices and preferences of their customers (Moutinho, 2011).



Monopolistic: In this market structure there are many buyers and few sellers which are dependent on the decisions of their rivals for their prices and output. In this if a seller make changes in his price or output structure, it directly reflects on the other. Iceland supermarket operating in this market structure keeps the prices competitive nature.

3.2 The way in which market forces shape organizational responses using a range of examples Market forces prevailing in the market shapes the organizational responses in the very significant manners by bringing changes in the strategic formulation by the management of Iceland supermarkets. This macro-economic forces bring changes in the profitability and productivity of the organization in various aspects in different manner. 

Demand and supply: The major factor that influences the organization's strategy is the nature of demand and supply of products and services provided by it. When there are changes in the demand ratio, alteration in the methods adopted by the organization also came into force. Such as the time of high demand, organization increases its prices to earn more profits on the other hand when demand is low at the time of financial crises, Iceland supermarket lowers the rates of their products to retain the customer base and prevent them to switch to other product (Nickels and et.al, 2011). It also brings changes in supply trends as per the suitability with the situation.



Elasticity of demand: This is the major factor in deciding the revenue generation of Iceland supermarkets. Iceland supermarket is operating of countries with different segments with different elasticity of demand. Elasticity of demand refers to the degree of changes in the demand occur with the fluctuation in prices of product and services offered by the organization. As mentioned there is different elasticity of demand in different segments of market, organization offer products at different prices (Oh, 2010).

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Market with low elasticity experience high price and on the other hand high elasticity region has low prices. 

Customer choices and preferences: Fundamental factor that affects the organization's responses are the customer's choices and preferences with the changing scenario. Needs and requirements of the customers are not static in nature, they change with the fast pace.

For instance, at present time people are very conscious about health and hygiene, keeping that in consideration Iceland supermarket offers products with no preservatives and artificial colors.

3.3 Way in which the business and cultural environments shape the behavior of a selected organization Organization working in country gets influenced by the number of factors prevailing in outer environment. Business and cultural environment that surrounds Iceland supermarket affects policies and decisions taken by it (Porter and Rivkin, 2012). 

Political factors: Political situation prevailing in the country decides the degree of smoothness of functioning undertaken by the organization. Iceland supermarket is operating of countries with different political situation. Favorable and welcoming political conditions have positive impact on the organization's establishment on the other hand if there is unrest in the country it deviates the organization to operate in it or have wrong impact on its operations. Government and other legislative bodies are also involved in the upbringing of the industry such as its engagement in promotion and relaxation in the taxes and tariffs in the concerned industry (Siewiorek and et.al, 201).



Economic factors: Economic situation of the country refers to the value of the currency circulating in the economy, exchange rate, inflation rate, interest rates and other economic determinants that decides the interest of organization to establish its stores in that area. Such as Iceland supermarkets enters the market segment which is economically profound and stable in nature. As it will give lucrative outcomes to it.



Technological factors: Technology is the central part of the operations run on any organization. Such as if the country is technologically sound, operations will be easy in nature. It leads to the better infrastructure facilities allotted such as communication, transport and others (Smallbone and et.al, 2010). Advanced communication led to the

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good coordination between different stores and centers in the world. Managers of the stores can help to meet on virtual platforms to discuss the issues and find relevant measures to solve them. 

Social factors: It led to the social condition of the economy. It creates the base of working in the organization. It accounts into it different components such as customer's choices and preferences, availability of work force and employees etc. If there is restricted labor movement it will hinder the growth and development of organization, as due to this mentioned organization Iceland supermarket has to undergo cost of training and development of new appointed employees (Tayur and et.al, 2012).

TASK 4 4.1 The significance of international trade to UK business organizations When an organization expands its venture to the other place it has the direct impact on the profitability and revenue generation. Though organization expands with the fundamental requirement of mentioned reasons, it avails other supplementary benefits to it. 

Market expansion: When an organization expands its venture to the other country, it increases its customer base. When customer base get widened, sales get maximized with the multipliers effect. It enhances the brand awareness around the Globe.

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Relationship and networking: With the establishment of venture and different stores in other countries, Iceland supermarkets has made good relational constructs around the globe with number of suppliers and trading partners (Ullah and Lai, 2011). With better engagement, organization is enabled to inculcate different and resourceful methods in its operations.

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Low risk: Introducing products in different markets led to the minimization of risk for the organization. With the large domain of working in different sectors, Iceland supermarkets have availed the benefits of differentiation of products and product development.

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Technological advancements: With the increased relational constructs and connectivity, Iceland supermarkets have experienced technological advancements in their operations.

International events and trade fairs organized on global level bring together many potential buyers and trades, connectivity with which enable Iceland supermarkets to

know about the innovative and advanced ways of working (Welford, 2013).

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4.2 The impact of global factors on UK business organizations On business organizations there is the large impact of global factors if it is operating in different countries. These factors affect the profitability and the revenue generation of the selected organization Iceland supermarkets. 

International organization: There are many organizations that run on international grounds to keep a check on the working of trading entities and regulate all the operations.

Few such organizations are World Bank, World trade organization and others. World trade organization runs to minimize the trade restrictions laid down by the states and countries so that competitive environment can be maintained in world (Wetherly and Otter, 2014).

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Emerging economies: Many economies such as India and china are growing with the very fast pace. This growth and development threatens the organizations belonging to other countries hence Iceland supermarket faces fierce competition from these countries.

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Economic changes: Economic situations in different countries are different in nature.

Countries impose many obligations with respect to the entry and establishment of the organization in any country such as tariffs, custom duties, formalities at the entry of country etc.

4.3 The impact of policies of the European Union on UK business organizations.

European Union is the international organization that functions to improve the condition of member countries in all the respect such as economic, social, political and environmental. UK is the member country of EU. Further, UK is the home country of Iceland supermarkets with its establishments in other countries as well. European Union has laid certain rules and regulations to check the condition (Wild, Wild and Han, 2014). 

Labor law: European Union has imposed law for the organization with respect to the protection of employees working there. Iceland supermarket abides by the mentioned law which states the minimum working hours, minimum wage, prescribes standard of work culture and environment etc.



Food and drinks law: According to the law stated by European Union, organization selling food products are required to maintain at-least the minimum level of nutritional

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value and essentials (Xue and et.al, 2010). Iceland supermarkets comply with the law and seal required nutrition in frozen and non frozen items.

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CONCLUSION Business entities function under the influence of several factors that is external factors such as political, social, economic, technological, legal and environmental factors that affect organization on wider scale. On the other hand internal factors are customers, employees, suppliers, creditors who affect the decisions taken by the organizations such as Iceland supermarkets in the considerable manner. From the above study it can be articulated that organization faces impact from the market forces in the form of demand and supply changes, national and international bodies whose rules and regulations are needed be followed by the organization (Yu and Ramanathan, 2012). Further, it can be inferred that international trade enables the Iceland supermarket to expand its venture in different countries.

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Oh, S., 2010. New role-based access control in ubiquitous e-business environment. Journal of Intelligent Manufacturing. 21(5). pp.607-612.

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and public relations.

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Available through:<http://georgeprtrends.blogspot.com/2011/02/stress-testing-stakeholders-modelsin.html>. [Accessed on 28th January 2016].

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