Business organisations and environments in a global context

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Business
Organisations and
Environments in a
Global Context

TableofContents
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
Sample Report on Business Organisations and
Environments
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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

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.

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

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

(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

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 anti-
corruption 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

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 countries which
helps it to reduce the
marketing cost in a new
market.
 It provides good quality
products at very low prices
making it affordable for many
people.
 Even when other clothing
companies were unable to
generate profit, Primark made
a growth in its sales and
profitability.
 Being one of the major
weaknesses, the low prices of
the company creates a
perspective for customers of
providing low quality products.
 Primark was reported for
having poor working conditions
in the company and labour
right issues in supply chains.
 With expansion in new markets
of Austria, the revenues will
decrease with the rise in the
cost of new setup and
marketing activity.
Opportunities Threats
 Rise in obesity levels has led to
change the customers
preference of brands from
other fashion clothing
 The company based in UK, will
have an impact of decision of
Brexit on the operations of the
firm (Oliveira and Martins,

companies which lack this
feature.
 With expansion and growth of
the company and opening of
new stores will generate more
revenues.
2011).
 The already established market
in Austria will present a
challenge for Primark to create
its brand image and a risk of
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

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
capita
Inflation Rate (%) 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

effect of rise in employment rate in the country. These factors determine the
gradual growth in Austria.
Sample Report on Business Organisations and
Environments
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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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