Introduction Business Environment

Business Environment is combination of internal and external elements which affects the business and their stakeholders. Internal factors affects internal environment of the firm which includes policies, practices, employees, etc. whereas external factors are competitors, laws, market structure, etc. It is easy to handle internal factors as compare to the external. So it is important to gather information about these factors including social, political, economic and legal aspects for working effectively in  achieving decided objectives (Hamilton and Webster, 2012). Different organisations have different purpose and objectives while  some focus on earning profit and some on social welfare. Each company has its size and type on the basis of which it achieves its targets and goals. Stakeholders plays important role in success and growth of any company, they have their area of interest and affects the firm in either positive or negative way and it is the prime responsibility of the company to fulfil  demands of stakeholders (Wetherly and Otter,  2014).

For explaining all these factors, Iceland Supermarket is taken into consideration in this report. It is a chain of supermarket in Britain which gives emphasis on frozen foods which includes meals and vegetables. They also sell meat, dairy products and dry goods.  The study focus on the purpose of various organisations, stakeholders of Iceland Supermarket, their responsibilities towards stakeholders, market structure, various policies, global factors and international trade. In the end, report is concluded in the form of summary with the key findings.

Purpose of various organisations listed below:

The purpose of various organisations is explained below:

Iceland Supermarket: This supermarket is a limited company which has 1.8% share of UK food market. Private Limited firms do not provide their shares to the public or we can say that these organisations are not accessible for the public. The capital of these firms is either more or less as compare to public limited firms. The purpose of this supermarket is to provide frozen meal to the customers that include prepared meals and vegetables. It does not compromise with the quality and value of food and works according to the statement “the food you can trust” by delivering healthy and tasty meals to the customers (The Iceland Story) .

KFC (Kentucky Fried Chicken): It is an incorporate type of firm whose purpose is to deliver fast food especially non- vegetarian to the customers and using the earned profit in the growth of the company. Owner of KFC does not use the revenue for his personal use. KFC is a customer focused chain of fast food which specializes in fried chicken. It sells fast food which appeals to the customers who are price as well as health conscious. By investing the profit, firm increases its product items and improves the quality of food (Guay, 2014).

Transport for London (TFL): It is public government organization whose shares are available to the public and is added to the stock exchange. The main purpose of this firm is social welfare and then profit earning. The main aim of this firm is to use such transport strategies which can manage transport services across London. It focuses on creating values for their users by providing them with high quality and innovative solutions. For public welfare, it concentrates on friendly, safe and sustainable environment by minimizing impact of its operations and pursuing all business policies for continue improvement in environment (Brinkman,  Navarroand Harper,  2014).

Cancer Research: It is a non government organisation which works for cancer patients and its awareness among the people. It is neither a part of UK government nor a private firm which focuses on earning profit. It is a world's largest charity whose purpose is to minimize the number of cancer deaths. It provides information about various types of cancers, their symptoms, treatments, medicines and many more by researching into the prevention, diagnosis and treatment of cancer disease. For influencing people it also conducts various campaigns and activities.

The extent to which Iceland Supermarket meets the objectives of its different stakeholders

Stakeholder is a person, group and society who is affected by the decisions and actions of the organisation or affects the working of the organisation. There are different stakeholders who have different areas of interest. The various stakeholders of Iceland Supermarket are explained below:

Employees: Employees are the most important assets of any organisation. The objectives of them are job satisfaction which includes good working environment, good salary and many more. To meet these objectives, Iceland Supermarket offer their employees a good salary, conduct training programmes for their career growth and conduct employee engagement activities to improve the worker relations. All these things, keeps the workers satisfied and motivated. The staffs of the supermarket are trained properly in dealing with the customers in an effective manner (Wetherly and Otter,  2014).

Government: For running any business and achieving the targets it is necessary to cooperate with the government as it monitor the working of companies. The objectives of UK government are social welfare with the development of country and for this it monitors whether the companies are following the policies and practices introduced by it or not. Iceland Supermarket follows all  polices which includes policies related to the sustainable environment, corporate responsibilities, etc. It follows various policies for animal welfare which includes Fish Sustainability Policy, animal welfare policy, etc (Craig and Campbell,  2012).

Customers: The objectives of customers are to get quality, valuable products at affordable price. Now days, they are health conscious and prefer a good diet. To fulfil all these objectives, Iceland Supermarket takes care of the quality and value of the food and provides them in fast and effective manner with friendly environment. They provide various easy and accessible services to the customers so that they can enjoy the shopping with them. Customers feels that environment of supermarket is not friendly as staff does not guide them properly so at this point firm is required to improve their environment and staff members (Groza And Ragland, 2016).

Suppliers: The objective of suppliers is to maintain  good relation with the firm and to work in proper cooperation and coordination.  To meet the objectives of the suppliers, Iceland coordinates with its suppliers and also ensures that they meet high standards of animal welfare. All the suppliers who supplies meat to the firm have CCTV cameras installed in their slaughterhouse which is monitored by the Supermarket time to time. Suppliers possess written Fish Sustainability Policy for fish welfare (Hamilton and Webster, 2015).

Various responsibilities as an organisation and the strategies Iceland employ to meet them.

It is prime responsibility of any organisation to fulfil the demands and objectives of their stakeholders for achieving their goals and to enhance the business. Iceland Supermarket uses different kinds of strategies for meeting the objectives of the stakeholders. The responsibilities varies with the type of stakeholder and their interest. The responsibilities of Supermarket towards their stakeholders with the strategies used are explained below (Daniels, Radebaughand Sullivan,  2011).

Responsibility towards Employees: Iceland ensures that it is paying the right amount of salary to its workers as per the type of work. It provide them various facilities which includes medical facility, health and safety facility, retirement benefits and leave benefits. It uses various strategies for enhancing the skills and knowledge of their workers such as conducting trainings for communication skills, technical skills, employee engagement skills and many more. By offering informal meetings, it tries to maintain good relations among workers. It needs to improve the strategies as customers feels unfriendliness while communicating with the staff (Upton, 2010).

Responsibility towards Government: The responsibility of supermarket is to follow the various policies and procedures of the government. It follows all the guidelines of government while setting the business in UK. There are various policies precedes by the supermarket which includes policies related to the animal welfare, economic situation, customer health, food quality, sustainable environment and many more. It pays the taxes on time with full honesty and conduct the business in lawful way (Reddy,  2016).

Responsibility towards Costumers: Iceland works for satisfying their customer's needs and demands and for this, it provide high quality food to them in an affordable price. It is the first food firm in UK which stops using artificial colours, flavourings and non essential preservatives. It uses the freezing process in natural way which does not consist of any preservatives. They take care that food does not loses their freshness, vitamins and minerals while packaging. They try to keep the honesty and loyalty to the users so that they prefer to buy products from their supermarket (Xu, Kaye,  and Duan, 2003).

Responsibility towards Suppliers: Supermarket fulfil responsibilities towards their suppliers by dealing at good price and coordinating with them. To maintain the quality of food, firm takes care that they follow all the animal welfare policies and supply good quality of raw materials. Firm give various offers to the suppliers for satisfying them and to reduce their switching tendency (Hodgkinson,1997).

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Different economic factors helpful in allocating resources effectively.

There is a presence of varied kinds of economic systems that carry out appropriate resource allocation. These are as follows:

Command economy- Government is authorized to decide on both quality and quantity parameters of resources in this economy. The process of allocating resources is carried out by licensed administrative bodies . Government also determines the cost of products in this economic system. The advantage of this economy are easily availability of mobilised resources, have power to transform the society. China and North Korea posses command economy which helps in building up companies and helps them achieving their particular goals (Spence,  Jeurissen and Rutherfoord,  2000).

Free enterprise economy- In this economic system, the economy plays a vital role in dealing advantageous between customers and producers and moreover system trust on marketplace for resolution of economical difficulties. The allotment of resources is through action of independent and self governing forces in industry. This method of economy allows consumers to determine goods and how to produce is judged by producers. The advantage of this economy are availability of wide variety of products and fast response to the needs and desires of the users. Along with it, disadvantage is that it encourage companies to use harmful products. The countries which are using this system are Canada, Germany and Japan. These countries allow the independent actions of the industries for utilisation and allotment of resources (Hitt, Lee and Yucel, 2002) .

Mixed economy- It is a profitable scheme that includes every characteristics of rules and market schemes. This scheme allows a trade firm to decide on both resource allotment and commodity manufacture with jointly abiding by administrative rules. The authorities are involved in business organization to accomplish goals of economical process. This economy provides benefits to the firm by controlling insufficient behaviour, providing essential services and products and many more. United States, United Kingdom, etc uses this policy as they have combination of government spendings and free market systems (Hamilton and Webster, 2012) .

Transitional economy- This economical scheme is shifting from key planning to marketplace. The scheme considers economical easing which results in firm cost of products. Russia has transitional economy as it has macroeconomic stabilization and liberalisation (Hill, 2008).

Consequences on Iceland Supermarket due to fiscal and monetary policies

Monetary and financial policies are fixed concepts and actions which are utilized for working of a business organization effectively. In Fiscal Policy, government uses its taxes and spendings for the welfare and development of the nation and its economy. When government increase the spendings demands of food products increases and this impacts the working of Iceland in right way otherwise decrease in spendings leads to decrease in demand and results to effect product sales.

On the other hand, In Monetary Policy, government of UK controls the supply of money and takes decisions regarding the interest rates. With the decrease and increase in the interest rates sales and customers of supermarket increases and decreases. These administrative regulations affects on the functioning of Iceland supermarket (Telecommunications Business Environment. 2014). The consequences of the above set of rules on the working of Iceland Supermarket have been discussed below:

Exchange rates  

This charge per unit on the sum is gained from customers by changing the form of payment manner. Any variation due to decrease or increase in rates reflects on credit firm which leads to trouble in the firm. Higher rates decrease sales of supermarket and number of clients. Customers starts switching which is creates problem for the Iceland (Higón,  2012).

Interest rates

The authorities issue certain set of rules and regulations so  that interest rates are confined to certain limits. Any alterations in these rates directly has an impact on the role of firm as  increase in rates will certainly lead to increase in expenditure level. This situation will further result in increase demand of productivity of Iceland Supermarket. (definition of 'Monetary Policy')

Tax rates

The government also plays a significant role in changing the productiveness by elevating and dropping the charge per unit which leads to changes in cost value. Still due to the increase in tax values there is a eventual decrease in expenditure level which has a impact on Iceland Supermarket. Increased taxes create burden on supermarket which results to higher food product prices and lower customers (Kim, Lee,  Chun and Benbasat,  2014).

Outcomes of competition policy and regulatory mechanism on Iceland Supermarket.

 In a commercial enterprise, Iceland Supermarket competes with different rivals of Tesco and ASDA etc. And hence the functioning of company is directly affected by the various competition norms and regulatory mechanism. Discussed below are the outcomes on functioning of a company:

Competition policy

This plan of action includes certain set of rules which are characterized for the company's functioning. If a company owns inordinate industrial abilities this policy helps in assuring security to the firm. The prior focus of Iceland Supermarket is to provide quality food products, enhancing customers contentment and building trust for the firm. The motive of enforcing this policy is to enhance proper functioning of firm without any limitations. This policy also enables a credit firm to evaluate costing scheme for a company's product and as result, alterations are noticed in transactions of Iceland Supermarket. Any change in the pricing of food products leads to affect the business of all the food markets. To compete with its competitors, Iceland Supermarket uses various innovative strategies which includes lucky draw, food product sale, free home delivery, etc. It stops using artificial colours, flavours and preservatives for making food healthy and tasty (Wang,  and Altinay2012)

Regulatory mechanism

An undeviating outcome can be clearly noticed on the business patterns and supply of the organization. In order to direct an organization in  a more efficacious  manner, Iceland Supermarket obeys all the standards, agreements and rules implemented by authorities. For instance, if administrative body redirects alteration in customers safety then its the responsibility of the organization to evolve with safety measures as reported. Iceland follows all the EU, international and government policies and procedures which includes sustainability policy, policy related to the nutritional food, policies related to the animal welfare, Fish welfare policy, environmental protection policy and many more. It invest more on the quality of food to maintain their freshness and naturalness (Improve business environment, simplify tax regime. 2015).

Companies act 2006

The formation of primary company law is take place under this act of the UK.  Under this act, Iceland Supermarket is able to reduce its share capital without requirement to get orders of the court. Along with this, supermarket is conducting meeting with the shareholders quickly which results to prevent the time and resources and they are easily communicate with each other by the help of emails and websites (Shokri and Nabhani, 2015). By this, firm is able to understand the expectations of the shareholders more easily with simple access. Supermarket needs to follow this act appropriate for getting benefits and to increase the business effectively.

Food policy

It is that area of public policy which is concerned with producing, processing, diosytubuting as well as purchasing foods. In this regard, Iceland supermarket is required to adhere with the food policy while making decisions with respect to processing techniques, marketing, and making the food available to consumers. The management of supermarket is thus required to ensure the safety of food by focussing on expiry date. It is also required to use ethical marketing while advertising food products to consumers (Wilde, 2013).

In any business the most typical thing is to decide the price of the products. Companies including Iceland Supermarket try to take right decision as per their knowledge and obtained information from the surveys and research. While determining the prices, it is important to have information related to the market structure. Market structure consists of buyers and sellers which keep in touch with each other while exchanging goods and services. Market structure of food market has influenced the supermarkets to a great extent (Doing business in the UK. 2016.). If the competition among the firms is strong then it affects the supply of food commodities as each company tries to dominate the market. Iceland Supermarket is one of the leading supermarket of UK so it has many competitors which includes J Sainsbury PLC, ASDA Group limited and Tesco Plc. To compete with them Iceland offers the products in affordable price. It also offer one Bonus Card to the customers, the winner gets the entire cost of Iceland's shop for free. Affordable price with high quality of food attracts more customers and make them to keep supermarket at their top priority. In food industry, firms have their hold on the prices for earning profit and competing with the competitors (Shokri and Nabhani,2015).

The prices of the products are decided by keeping various elements in mind which are number of customers, suppliers, agents; level of production; market position and brand image; types of products and type of competition. These all elements are interconnected with each other and helps firms in deciding their product prices. Iceland Structure keeps the loyalty, honesty and clarity with their users so that its competitors does not pull the customers towards them. The food market also takes care the demand and supply of the food items while deciding their prices (Wetherly and Otter,  2014). The main emphasis of Iceland is on frozen food and the demand of this is also high. The price of frozen food is high as there is not such competitor who provide such a quality of natural food without preservatives. People pay for it as they prefer good quality and healthy food. Companies also takes care of their profit while deciding the prices as they also wants to grow and enhance their business. Due to the wrong decisions, firms face losses and financial crisis. For earning profit and popularity, Iceland keeps all the factors in mind and on the basis of various elements and market researches they decides the affordable prices of their food products (British business culture. 2014).

Significance of International trade to Iceland Supermarket

International Trade is one of the essential part of any business as it provides the opportunity to grow globally. It plays crucial role in global market and economic integration of the companies and countries. Iceland is a chain of supermarket in UK whose specialization is frozen food which includes prepared meal and vegetables. There were 760 stores of it in the year of 2004 throughout the UK which are now increased to a huge number. The fishes and fishery products are export to the firm from other countries for example Iceland.

UK imports the food items from hot countries as it is cold country such as mangoes. International trade policies such as agricultural polices, nutritional policies, environmental protection policies and many more has role in food security at global level (Craig and Campbell,  2012). The trade increases the food availability in the world by supplying the food from various sources. By the help of these international policies, food products are easily available to the Iceland Supermarket which helps in growing the food range. This availability of foods from the various countries and export and import of food items increases the food diversities for Supermarket.

Supermarket follows the policy of sustainable environment by keeping the clean and safe environment around it. It recycle the products and use them in eco-friendly manner (World food security and international trade. 2016). It keeps the stores hygienic for preventing customers from any kind of disease or problem. The fresh and natural products also helps in maintaining the clean and safe environment. It adopts the concept of organised retailing for providing all the food items at same place which increases the growth opportunities of the firm and prevents wastage of time of users (Business and the environment. 2015). This international concept helps in growing and competing with competitors.

The global tariff on the agricultural products are four time more than the global tariff of industrial food products. This policy of World Trade Organisation (WTO) leads to increase the prices of the food items. Increase in price of food items leads to decrease the umber of customers. But to maintain the quality of food and to keep the users healthy it uses agricultural food products which shows that how much firm is loyal and devoted towards the health and safety of the users. By following the policies and procedures of the international trade, Iceland Supermarket is able to provide the diversified food products to the customers in various countries (Reddy,  2016).


From the above study, it is concluded that business environment plays crucial role in the growth and success of any organisation. All factors are need to be consider at the time of decision making or strategy formation. Iceland Supermarket is one of the leading private food market of UK which is also working at global level with a purpose to provide fresh and healthy froze food to the customers. With its growth, firm is also giving full emphasis to its stakeholders by fulfilling their objectives. It is obeying all the government policies, procedures and regulations and working in legal manner. The market structure of food industry is oligopoly and to maintain in the market firm is using creative and innovative ways to attract more customers towards it.


  • Groza, D.M. And Ragland, B.C., 2016. Developments in Marketing Science: Proceedings of the Academy of Marketing Science. Berlin:Springer.
  • Guay, R.T., 2014. The Business Environment of Europe: Firms, Governments, and Institutions. England:Cambridge University Press.
  • Hamilton, L. and Webster, P., 2012. The International Business Environment. Oxford: OUP Oxford.  
  • Harrison, A., 2013. Business Environment in a Global Context. Oxford: OUP Oxford.  
  • Hill, C., 2008. International business: Competing in the global market place. Strategic Direction.
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