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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
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products from the supermarket, they must get required information about the new products etc
(Blaevic and Jeluic, 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
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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
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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).
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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 Vials, 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
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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
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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).
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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
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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 Vials, 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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