Trends that affect businesses
Social – People are living longer
This could have a grave impact on Iceland Food as a business in both a positive and negative way. The fact that if people were living longer there will be an increase in more people requesting there state pension and less people working and paying income taxes. This therefore has a ripple affect which is that the government will require higher tax rates on the decreasing workforce. So this implies that if the working society are having to give away more of their earnings to tax they will have less money in their own back pocket. This could lead into a fall in the growth of the economy due to firms like Iceland having less money to invest because of the increase in taxation. Linking this all back to Iceland Food for one, if taxes are raising Iceland is going to find it harder to meet there aim and objectives. This is due to if there customers income is decreasing because of tax they are going to have less money to spend and indicating that there weekly or monthly budget for shopping will go down and portraying the overall companies’ sales revenue will fall.
But if the current population lived longer this can also lead to benefits for Iceland. By the population living longer this therefore implies that the death rate is slowing down, and also means that the population is increasing. Consequently there will be more customers to provide a service for. Furthermore loyal customers will be shopping at Iceland for a greater amount of time due to the fact that they will be living longer. If there are more customers in Iceland stores more stock would have to be brought in to meet with the consumers demand this will have an outcome of an increase in the company’s retained income. Also if people have less money to spend it could actually increase Iceland’s customer productivity due to the company’s such good value for money. If people no longer can afford to pay for the prices of their previous supermarket they will have to look for a different alternative, therefore this is where Iceland steps in. Because most of their prices are in the region of £1 to £3 if clearly makes it affordable for all to shop due to the good value for money.
Social – more single parents
More single parents in society do have a grave impact on businesses such as Iceland. In 1971, just eight per cent of households were run by a lone parent, but by 2012 that figure had reached 22 per cent. Therefore implying that there has been a gradual increase in the percentage of people becoming single a parent. Still other than having only one stable income in the household there are problems to come in the near future. As Lone parents can expect to lose around 8.5% of their yearly salary by 2015, which is equivalent to a month's income every year due to changes to the tax and welfare system. This can cause consumer demand to decrease for normal goods and therefore a ripple effect that can cause problems for most businesses. Unlike most business a company like Iceland, more single parents may help increase productivity even though there customers may have a lower disposable income, let me elaborate for you.
Normal and inferior goods are considered in the following example. Let’s use steak because it is a desired food, and as people have less expendable income they will purchase less of this in particular good. Therefore many people, boxed readymade cheap meals are classed as inferior goods. Some people purchase boxed ready meals because they prefer the product, but consumers buy it as a lower-cost alternative to foods that they prefer, such as steak. When a consumer has less disposable income, they will increase their spending on substitute good like ready meals rather than a higher quality of goods. So bring this example back to how Iceland is effected by more single parents isn’t as bad as you first may assume. The company’s such good value for money helps bring the lower income consumers into the store. If people no longer can afford to pay for the prices of normal goods such as fresh meat they will have to look for a different also cheaper alternative. Because most of their prices are in the region of £1 to £3 if clearly makes it affordable for all to shop.
As an example of normal and inferior goods, consider the following examples. In general, steak is normal goods because it is a desirable food, and as people have more expendable income they purchase more steak. For many, boxed macaroni and cheese are inferior goods. Some people purchase boxed macaroni and cheese because they prefer the product, but many buy it as a lower-cost alternative to foods that they prefer, such as steak. When income is increased, people substitute away from macaroni and cheese to a higher quality of goods, causing the demand curve to move to the left, as does the demand curve for any other inferior product.As an example of normal and inferior goods, consider the following examples. In general, steak is normal goods because it is a desirable food, and as people have more expendable income they purchase more steak. For many, boxed macaroni and cheese are inferior goods. Some people purchase boxed macaroni and cheese because they prefer the product, but many buy it as a lower-cost alternative to foods that they prefer, such as steak. When income is increased, people substitute away from macaroni and cheese to a higher quality of goods, causing the demand curve to move to the left, as does the demand curve for any other inferior product.Social – higher GCSE and A-level pass rates As the younger society are achieving a higher pass rate it does influence the economy and the way businesses employ there staff. Just over a quarter of exam entries 26.3% were given A or A* grades, which is actually small fall on 2012's figure of 26.6%. But the overall results show that the UK pass rate has risen to 98.1%. It has been rising for pretty much the past 30 years. Linking all these increases in pass rates back to how Iceland would change, would be the way the companies rises there expectations. As there is an increase in people achieving the right qualifications for a certain job and more people will be applying for the same job which therefore leading to an increase in completion. This hence leads to Iceland taking advantage of this and increasing the standards required to get the certain job role. So as a result in more people applying for a job it will help Iceland pick top quality staff. This therefore follows on to how well the shop is run and providing a higher quality service for customers.
Technology – social media sites
Both technology and the internet have changes drastically over the years. With more and more people using the internet, communication across the globe has made it easier for businesses to advertise their goods and services to the consumer market. In 2013, 36 million people that is 73% in Great Britain use the Internet every day, 20 million more than in 2006. So with millions of people using social media sites everyday it is easy for stores like Iceland to advertise sales and new promotions and reach a large market. Even though at the moment Iceland Foods hasn’t yet reach their business out far enough to be classed as a global corporation, promotions and sales can be tailored to the a certain region, location or country. Also with such an age range of people using social media networks it’s a good way to bring new customers to the store as you can advertise products that Iceland are selling to lots of people at the same time.
Technology – online shopping
In the UK online shopping is growing at a fairly rapid rate due to the constant increase in computer technology. From the graph on the right it evidently shows that shopping online has brought the overall grocery UK revenue up during the period of 2012 to 2013. A staggering rise of 18.7% and now has reached 5.1% of the total grocery sales in the UK. This is due to the internet being more widely used for shopping, 72% of adults in the UK are using the internet for shopping. This is why Iceland has decided to enrol an online shopping feature on their website for the customers. Iceland’s reasoning for doing this is that they belief with the majority of consumers using the internet for shopping it will increase their sales revenue. It gives there loyal customers another way to shop other than in store and it also brings new customers who normally shop online now have another supermarket to choose from. The online shopping rollout has been performing strongly and seems to be continuously growing bring in new customers and increasing sales revenue. With the online shopping rollout being so successful Iceland is reaching its shopping services further and further throughout the UK. So as online shoppers increase, Iceland has an advantage as they have the ability to advertise more products and deals on their website with a much wider range of consumers. Their website was mainly just a source of advertisement mainly for their store but now they have the capability of giving more incentives to their customers such as with online shopping discounts.
Inflation –
With the UK inflation rate at 2.8% one of the highest percentages out the majority of the more developed contries it does have grave effects on the economy; influencing problems for both the consumer and businesses. The behaviour of Employees due to inflation rates will affect such company’s such as Iceland Foods Ltd. During the course of inflation prices will rise, so therefore a demand in an increase in salaries will follow. This creates a ripple effect due to the fact that with employees asking for a higher pay, firms then increase the price of its goods to keep up with costs or if they don’t profit margins will decrease. So therefore this indicates that higher prices cause employees to expect more inflation and demand another pay rise in the next year, thus continuing the cycle of inflation. The only problem with this is that the rise in inflation doesn’t always match to the percentage rise in wages. The Office for National Statistics said “total pay rose at an annual rate of just 0.7% between June and August. Excluding bonuses, pay growth was marginally stronger, at just 0.8% – the weakest figure since comparable records began in 2001. Inflation was running at 2.7% in August”. Bringing this back to how it effect Iceland, if prices are rising and wages aren’t matching consumers salaries they will have less disposable income; therefore imply that they have less money to spend in store. With consumers having less money to spend the company will have less sales productivity and therefore less net profit. This causes Iceland’s aim in expanding there company to a more global presence to not halt but will effect how fast progression will occur is the company has less net profit they will consequently have less money to invest back into the business.
Consumer law - The Consumer Protection Act and the Trades Description Act.
There are lots of different consumer laws that have effects on business such as The Consumer Protection Act and the Trades Description Act. Within this paticular policy to protect the consumers against misleading selling and advertisement. A misleading product or advertsiement ocurs when it fails to meet the standard of "professional diligence". This essentially means it blurs the consumer's ability to make the right decision, causing the consumer to make a decision they would not otherwise have made. Bringing this now to how Iceland could be affected by consumer laws such as The Consumer Protection Act and the Trades Description Act is by the way it Iceland advertises its new bonus card scheme. The idea of Iceland is to tailor the bonus card rewards more to what their customer want rather that what Iceland choose to put on offer. So therefore if Iceland is all talk no action and do not comply to what they are stating there could be consequences to the company. In certain cases for example if Iceland do not act upon what they state and the company is found guilty of an offence they could face an unlimited fine. A manager such as someone working directly with the scheme/advertisement and if they are personally aware with what they are stating something the company cannot provide. That person can be found liable and penalties can occur or in worse cases sentences for up to two years in prison.
Interest rates –

There are two different ways interest rates can affect a business such as Iceland due to either interest rates being low or high. So if interest rate is low, the costs of living and investing is therefore also low. This speeds up the growth in the economy because things like houses and bank loans are more affordable for both the consumer and businesses. Basically if people and companies can borrow more, they can spend more. Low interest rates also generally weaken the mount the pound is worth, which (in the short term) can be a good thing. But in the long run when the pound is worth less, foreign goods become more expensive. This enhances the growth of the economy even future due to the higher demand for British goods.
So if the interest rates become higher the cost of living and investing overseas increases. This indicates that’s the growth in the economy will gradually plummet and cease to grow. This is due to both the consumer and businesses cannot afford to borrow as much implying that they have less disposable income. So indicating that higher interest rates can affect businesses that are considering expansion. This is because when the interest rate increases, most businesses and investors trying to invest will stand down on taking out loans until the payback of the loan decreases.
As we can see on the graph to the right of the page interest rates have droped drastically over the last couple of decades. This is key in helping making it easier for Iceland to achieve its main aim which is exspanding its presences overseas outside of the UK. This is due to with a lower intrest rate the pound is worth less and is thus cheaper to borrow. Hence reenforcing that with more disposable income businesses such as Iceland have more money to invest on exspantion.
Competition -

Every business has competition no matter how big or small it’s all down to different businesses supplying their goods or services to the same group of consumers. Competition is mainly from large, well-funded firms due to larger firms have lower operating cost. Therefore have the ability to take greater financial risks when it comes to pricing up there goods, making the companies goods more competitive. With a more competitive market it influences an increase in productivity. This is down to that fact that if there are more competitive businesses, the consumer will have more choice to get a product or service from. This is great for the consumer due to businesses offering a better value for money on their product because of the fight for the lowest prices for consumers.
The current grocery market share growth is rising slowly therefore according to Malcolm Walker the best way to increase its shares would be by taking other supermarkets. According to Iceland “the benchmark for every Iceland brand product is simple: it must offer better quality than the equivalent line sold by our major British supermarket competitors, at the same price, or comparable quality at a significantly lower price.” So Linking competition on to Iceland and the current market share status, Iceland is in competing with the constant price war with Farm Foods and ALDI. But moving away from price Iceland is trying to match its food quality to supermarkets such as Waitrose.
As Iceland keeps its profit margins of each product per unit to a minimum it struggles to lower its prices any more. Iceland are capable of such low prices due to vast amount of goods they sell, with Iceland feeding over 40 million families per week in the UK. Iceland’s ready meals are able to be such good value for money selling over 100 million ready meals every year at 2 pound or less. Competitors just can’t provide that sort of quality food at such a low price. But with supermarkets such as Farm Foods and ALDI starting to match Iceland’s products; Iceland is struggling to stand out as a cheap, good value for money store when there are competitors starting to following the same price’s. A way of standing out from other competition and a good way to boost sales, Malcolm’s idea is it to produce products that have not yet been put on the shelves in other supermarket basically creating his own unique selling point. He has asked his team to come up with inventive and new ideas both food and marketing strategies to keeps customer productivity flowing.
Environmental issues - carbon footprint
Carbon footprint is all down to the amount of carbon dioxide that is distributed into the earth’s Ozone layer caused by productivity by the individual and business population .The UK Government has stated that under the Companies Act 2006 (Strategic and Directors’ Reports) Regulations of 2013, companies are required to report yearly carbon emissions in their directors’ report. Carbon reporting is an important for companies to reduce their emissions. By measuring and reporting carbon emissions businesses now can begin setting targets and put in place carbon reduction schemes to reduce their carbon footprint in the future. Carbon reporting will help businesses such as Iceland understand its carbon emissions and discover ways to reduce costs and improve the businesses reputation
Overall Iceland has made a real term year on year decrease of carbon emissions of 2.5% during the period of 2010-2013. This is down to all the changes that Iceland has made to be certified as having attained the Carbon Trust Standard. Some of the main parts of Iceland’s business that were changed to allow the company to achieve the Carbon Trust Standard include the instalment of energy-saving lights and air conditioning equipment throughout stores. Iceland, were possible always tries to purchase is equipment from a selected “Energy Technology List” which has been selected by the UK’s Government’s for its power efficiency. Malcom Walker has devised an internal energy management team which monitors systems that gathers data at all Iceland stores to highlight areas of electricity waste. Iceland has invested £3 million in energy saving equipment including Voltage Optimisation and High Efficiency lighting in 2011 alone. These investments for reducing energy costs in the future are already showing improvements throughout the selected stores that were targeted for energy wastage. These equipment improvements have further reduced Iceland’s carbon footprint by over 5% in the selected stores. http://www.iceland.co.uk/about-iceland/corporate-responsibility/ Environmental – waste of food and recycling
Waste effects the environment more than people would think. The rotting food that is being thrown into landfill sites releases a gas called methane; this is a greenhouse gas which makes a large contribution to the cause of global warming. The gas Methane itself traps 23 times as much heat in to the earth’s atmosphere as the same amount of Carbon Dioxide (CO2). The Energy Saving Trust estimated that around one third of all the food in the UK is being thrown away and ends up in these landfill sites. But as Iceland is a frozen food store customers don’t tend to waste as much as they would normally compared to fresh and chilled products. To the environment there are advantages of stores like Iceland that sell frozen food. Due to the fact that it is easier to keep and store for a longer time so therefore if the product itself last longer consumers have more time to consume the product implying that there is a lot less waste.
It’s not just food that is thrown into landfill sites it is also the packaging of the food and the bags the customers use to carry their shopping out of the store with. One of Iceland’s policies with minimising packaging waste is that suppliers are required to reduce the weight and size of packaging as much as possible. The plastic film and cardboard which is used to protect the Iceland’s products, four distribution depots are set up around the UK to maximise recycling. Each has a recycle centre specifically set up for the purpose of recycling. All outer film is collected from each delivery to Iceland by suppliers and is brought to the depots for recycling. There is also the same system in place to ensure that all cardboard boxes are taken from stores to the distribution centres, where they are also collected for recycling.
Ethical – supporting charities
Iceland has played a massive part in helping raise money for charities. Over a period of five years Iceland has raised over £8 million for charities such as Help for Heroes, Prostate and ARUK. Also to entice staff to supporting their local community and doing charity events all employees have the opportunity to contribute voluntary charitable events during working hours without losing pay.
In the period of 2012 to 2013 Iceland aimed to raising money for two different charities. One was for Alzheimer’s Research UK (ARUK), they raising a staggering £1 million to support the research towards the prevention and cure of dementia. Also a charity called Walking With The Wounded, Iceland helped support the re-education and re-training of injured service men and women.
It’s not just recently Iceland has started supporting charities; Iceland has been helping numerous amounts of charities and good causes. In the early 1990s they raised £1 million to help build a new National Institute of Conductive Education which is a leading charity in the UK which works to enhance the lives of children and adults with Neurological Motor Disorders. Also in the late 1990s, Iceland obtained a partnership with Cancer Research UK to encourage the health benefits of eating more frozen products such as vegetables.
Government – nick clegg

http://www.ehow.com/info_8122947_happens-interest-rates-high.html#ixzz2jd9LGLx6 http://money.howstuffworks.com/fed-change-interest-rate1.htm http://www.out-law.com/page-9050 http://www.theguardian.com/business/2013/oct/16/uk-unemployment-average-pay-rise-inflation http://www.ehow.com/info_11404828_inflation-affect-business-environment.html#ixzz2jWNNIekf http://www.ehow.com/info_11404828_inflation-affect-business-environment.html http://blog.profitero.com/2013/09/retail-intelligence-more-uk-retail.html information was gained from the Iceland foods – life in a freezer documentary on BBC 2 they did three 1 hour long episodes information was gained from Malcom Walker’s life in a freezer book
Whitney Huston I don’t have nothing