Enterprise act 2002:
The Enterprise Act 2002 has wide-ranging implications for businesses and consumers. The Act makes a number of important reforms, which are designed to crack down on abuses that harm customers and fair-trading businesses alike and they encourage productivity and enterprise.
- Sale and supply of goods act 1994
The sale of goods act 1994 is an act to amend the law relating to the sale of goods to make provision as to the terms to be implied in certain agreements for the transfer of property in or the hire of goods. The sales act has effect in relation to contracts of sales of goods, hire purchase agreements, and contracts for the transfer of goods, contracts for the hire of goods and redemptions of trading stamps for goods.
Economic Influences
There are a lot of economic influences which affect the running of ASDA. These influences are as follows:
The Business Cycle
SLUMP – When the economy is in slump the income is very low because of:
Slump is the point of the business cycle where the economy is not doing very well. There is less production being made for things that are needed for the ASDA, such as goods and luxuries.
In slump, interest rates will be high as lots of people will be borrowing money. This will result in people having more debts, which will take longer for them to pay off, and will prevent them from spending money on things they want, including food.
Also in the case of slump, unemployment will be an issue, meaning people will have less money to spend on luxury products, so a drop in our customers may occur resulting in less people using the supermarket and a negative effect on our profit. This will also affect the supermarket directly as we will have less money to fund the buying of new goods, and may have to loose members of our staff as we may not have the money to pay for them to work for us, or be specially trained if this is necessary.
Unemployment rates in the case of slump are high and there is a lack of skilled workers as they would already have been employed by other businesses. This is not very good for ASDA as we would have to spend considerable amounts of money training staff up to appropriate standards to be able to do the job in hand.
Inflation is a general rise in prices, or fall in the value of money. It means that year after year, £100 buys gradually less and less. When inflation rates are high then the costs for ASDA products will increase and this will eventually have to be transferred to the consumer, this might put off potential consumers- reducing its market and ultimately profits.
Wage-price spiral
Price increases lead to higher wage demands as workers seek to maintain their real living standards. If ASDA puts it prices up for higher profit margins, then automatically employees would want to have their wages increased as well. This process is known as a wage-price spiral. Rising inflation leads to a build-up of inflation expectations that can worsen the trade-off between unemployment and inflation.
Inflation can also disrupt the business planning. Budgeting becomes difficult and this may reduce planned capital investment spending. Inflation is also a possible cause of higher unemployment.
Fear of excess borrowing by customers/rising interest rates.
If there are high taxes then the prices will also affect how ASDA prices its products. The business will have to pay tax so when the taxes increases there will be less money for investment. Direct tax affects the amount of money people will spend, taxation by government will also further increase its expenses; this will reduce the profit level of our business, which obviously isn’t favourable for ASDA. However if inflation increases as well as consumers income, then it will most probably diminish or cancel the extra cost pressures. It will also reduce disposable income- reduce consumer spending, and reduce benefits from financial investment.
The business will be in a slump if too many people are borrowing money. Firstly ASDA will get affected by the borrowing money that would be through an increase in sales with customers having more money; however the government is trying to discourage people from borrowing money and to do that they increase the interest rates. This will affect our business because our customers would be thinking of paying the bank back before they decide to purchase our luxury products.
Unemployment Levels
When the economy is in slump, production levels are low and we do not require a large amount of employees this means overall all employment levels are low.
Shortage in Skills:
When unemployment levels are high there is normally lack of workers with skills as all of the skilled workers are already employed at different work places. Employing unskilled worker means loss to our business as it will cost us money to ensure that they are trained up to the level of their work.
Opportunity cost of lost income and output:
- Resources are not fully employed (inefficiency)
- Lower total output: lower incomes + lower expenditure, less savings + less investment.
- Opportunity costs of welfare payments to unemployed.
- Loss of skill
The UK had very low levels of unemployment in the 1960s. These relatively low levels were maintained in the 1970s, despite troubles caused by big increases in the price of oil. But in the economics recessions of the 1980s and early 90s, unemployment rose rapidly, peaking at over 3 million in 1983-86. Since then, unemployment has fallen steadily, although 2005-6 jobless levels began to rise.
The business cycle affects ASDA by telling us about the long-term growth trend. The cycle involves shifts over time between periods of relatively rapid growth of output, alternating with periods of relative stagnation or decline.
However, business cycles affect small firm’s more than larger firms. ASDA is not really affected by the business cycle. Some industries can benefit from a downturn in another sector. This is why ASDA would be able to benefit from it because people tend to shop more when the economy is doing well. The business cycle describes overall economic trends, but the impact of any particular set of economic circumstances on businesses in the same industry with the same customer base will not be identical. Some businesses will fail during a recession; others will survive.
Competition refers to government action to open up UK industries to greater competition by:
- Prevention- competition can be maintained by blocking the creation of monopolies threatened by a proposed merges or takeover.
- Regulation of Monopolies- appointing an industry regulator to introduce competition.
- Cartel- busting- banning price fixing so that competition is sustained.
-
Consumer protection- e.g. against scams/ illegal trading.
Competitor’s actions affect the ability of ASDA to make profits, because competitors will continually seek to gain an advantage over each other, by differentiating their product and service, and by seeking to provide better value for money.
RECOVERY
When the economy is in recovery, this will mean that our income is steady because of a number of reasons. Firstly, it means that any debts that customers have, they will be able to pay off; meaning that the money in their bank account is steadily increasing and their interest rates are gradually decreasing. This means that customers will again be able to spend money on luxuries, which would result in an increase in custom for ASDA.
During the time of recovery, it is also good for unemployment levels, as demands for the supermarket will be higher, meaning that they will need to employ more staff to deal with the day-to-day running of the business. Also, whist the business is in recovery, it means that ASDA have a suitable income, meaning we have the financial capabilities to employ more workers, and be able to pay them the rate they deserve for the job they do, and on time.
Inflation:
The current interest rate as of August 2007 is 4.8%. This has increased since July 2007 which was 3.8%. Therefore, in one month the rate of inflation has increased by 1%. Although the amount has increased the income
The UK had very low levels of unemployment in the 1960’s. These relatively low levels were maintained in the 1970’s, despite troubles caused by big increases in the price of oil. But in the economics recessions of the 1980’s and the early 90’s, unemployment rose rapidly, peaking at over 3 million in 1983-86. The current interest rate as of August 2007 is 4.8%. This has increased since July 2007 which was 3.8%. Therefore, in one month the rate of inflation has increased by 1%. Although the amount has increased the income since then unemployment has decreased steadily.
Unemployment Levels:
At ASDA unemployment is high, because most of the employees are from the local community, and this is why it is easy for them to attract young workers, when the business is in recovery and production levels are increasing we an employee more workers which will result in the unemployment levels decreasing.
Fear of excess borrowing by customers/rising interest rates:
The recovery stage will be, when the customers have paid back their debts and then would steadily be increasing the money in their bank accounts. They will then have money to spend on luxury items which we sell at ASDA.
BOOM
Boom is when the economy is doing well. This means that income will increase considerably. Rates of inflation during the boom period will be low, meaning consumers will have to worry less about rates on bills, or petrol etc and are able carry out activities they want to as they have extra money available to them. Also, if a larger amount of money is available to each customer, this may lead to them spending more on purchasing our luxury goods.
Unemployment levels during the time of boom will decrease as there will be more jobs available as the ASDA will be constantly be busier than before and will require more workers to deal with the demand. This means employment rates in the local area, and surrounding areas, will increase as jobs will go to people who live locally.
Whilst within the economy is boom, ASDA will have plenty of workers who are trained and therefore know how the business works and how to deal with customers. This subsequently leads to fewer workers with skill shortages and more money for us as a business to invest, rather than use to train our staff.
Also, during the boom period, our consumers are likely to be borrowing less money from the bank, so will therefore not be paying money on interest. This means they will have more money to spend on luxuries, meaning they are likely to visit ASDA more.
Inflation:
When ASDA would be considered ‘at a boom’ the inflation rates would have to decrease substantially from what they are now. With inflation rates being low customers would earn bigger amount of money which means they would afford to purchase ASDA luxury items like our clothes and electronic goods. Meaning when there being more money available to each customer, they may tend to spend a larger amount then usual thus which would result in us generating a larger income.
Unemployment levels:
When there is a boom the production lines are constantly in progress and the supermarket will be far busier, therefore we require more staff that is why we take on more workers so instantly the unemployment levels would be low.
Fear of excess borrowing by customers/rising interest rates:
At ASDA we view a boom stage in two different ways:
- During a boom stage for us many of our customers will not be borrowing money from the banks and will therefore not have to pay any interest. By paying more interest customers will have extra money to spend on our luxury items which we at ASDA sell in different types of goods.
- For ASDA a boom stage could also mean that the majority of our customers are borrowing from the banks and this money is spent on our luxury items.
RECCESSIOIN
When a business is in recession for example ASDA it is described as s ‘long term slump’ this is where we will gradually be heading for a slump. Inflation during this period will be increasing which means that because consumers will have to pay extra money on this, they will again have less money than before, affecting the amount of money they are likely to spend on activities which are classified as luxuries. Even though this is seen as a problem, inflation rates have not been too bad in recent years, meaning recession is unlikely to occur and we are unlikely to be put in this position.
Inflation
Threat of terrorism
A lot of our luxury items come from China four our gifts, fireworks (around November) and Christmas items we reply on other businesses providing us with products. However, if there is ever a threat of terrorism in the United Kingdom then these businesses may restrict (or remove) their products from our shelves because they feel threatened. If this happened then our business may lose important suppliers. The threat of terrorism may also affect our customers and workers. If our customers feel threatened whilst within our shop premises then they will go elsewhere rather than put their lives at risk. This will result in loss of loyal customers and also profit. If our employees also feel threatened then they may not turn up to work in which case the business will be short staffed and we may lose customers as a result.
War and its threats
When England is at war, the government require more money to spend on fire arms and soldiers. During the war, the government may increase tax and interest rates etc which will result in our customers having less money to spend on luxury items which we sell at ASDA. Whilst in the war, essential requirements like oil could become a shortage and therefore prices are increased. This means at our petrol pumps the petrol and diesel money increases so we would be forced to increase the petrol and diesel amount. The result of this could be loss of customers and a loss of sales because of the extra expenses. Although, on the other hand during a war a lot of land is destroyed we may be awarded the job of reconstruction. On the positive note foreign residents may move to the United Kingdom to escape the war which could potentially mean more customers for our business.
Relocating jobs to developing countries
At ASDA we do not believe in relocating our jobs in developing counties. The majority of ASDA clothes come from abroad i.e. Bangladesh and our food are locally grown or come around the UK. The reasons we do not relocate jobs to developing countries is because:
- It would take longer for our goods to arrive from other countries.
- Our employees in the UK would be made redundant. This would outcome in a negative effect for our business because UK residents would not have as much money and hence would not be able to purchase our goods.
- The cost of importing our goods would cost more which will result in increase of prices.
- We would be taking advantage of lower labour costs and in effect using workers for cheap slavery.
Expansion of the EU
- Expansion – ASDA is a franchise company which is already around the European Union and it is trading with in most of the areas around England.
- Migrants – with more people migrating over to England there is less money within the economy. Instead of money being spent on English businesses, locations and people the government are spending more money on teaching migrants the English law and providing them with the help and guidance which they require.
Environmental Issues
Environmental issues affect businesses in many ways. There is no doubt that the environment is a very important issue. On the other hand, the debate, to which business is subject, is very confused and often based on half-truths.
How ASDA looks in the eyes of its potential customers and investors of its vital importance to the whole company. Every effort is made to present ASDA as a caring business offering wholesome food and goods such as clothes. Its communication department keeps the media up to date with company developments, presents positive stories in the form of press releases, answers criticisms and copes with controversies.
UK Legislations and regulations for the control of pollution:
At ASDA we adhere to the regulations of pollution by:
Traffic
At all our ASDA stores in the UK we have a large car park with all the facilities of disabled parking and parent and toddler parking. We rarely have a problem with parking or traffic congestion. At most of our stores we have a huge entrance which is controlled by roundabouts to control the traffic flows.
Cutting Waste
Waste reduction and the re-use of materials are also a concern for ASDA. Wherever possible they use materials that can be recycled. Waste packaging can be sold for charity.
ASDA will reuse delivery packaging wherever possible goods returned that are slightly damaged will be re-used or would be donated to charity to sell or use. This avoids the significant amounts of cardboard.
UK legislation requires ASDA to recycle a proportion of the packaging that they sell to customers. They currently meet this responsibility by paying an annual fee to the Valpak compliance scheme. Valpak use this fee to recycle packaging waste on their behalf.
Litter
At ASDA we provide litter bins outside all of their supermarkets and their cafés and are one of the biggest sponsors of council provided litterbins in UK. This presents our land/environment healthy and looking beautiful. All of their packaging carries an anti-littering symbol to actively encourage their customers to dispose of their litter responsibly. This message is supported by anti-littering signage in their restaurants and car parks.
Sound and Noise
ASDA is in a surrounding where there are not any houses attached with the store, however there are houses which are near by but they still would not be able to hear much noise as its just public noises which are on every road and parking. That’s why we have never had any noise problems as all our firms that make ASDA goods where machinery is used are in residential areas.
Disposal
Where we cannot reduce, reuse or recycle the waste, we make sure that we use the most responsible means of waste disposable available. We also make sure that all of our waste contractors hold the necessary licenses to collect the waste and provide them with the appropriate legal documentation for each waste collection.
Impact on global warming:
ASDA have both positive and negative impact of global warming, these are as follows:
- Delivery/landscape vehicles: these are not good for global warming as the vehicles release harmful emissions which affect the environment and contribute to the destruction of the ozone layer.
- There is large increase in ASDA power as the world has become more open and the dominance of market liberalism since the demise of communism: states opposed to market principles have nowhere to run, unless they opt out of the global economy completely.
ASDA mission is to be the UK’s top supermarket and they believe this is by protecting the environment at the local and global level. Their goal is to achieve continuous environmental improvement. They will comply with all current legislations, and where possible act in anticipation of future environmental legislation. They base their environmental programme around the hierarchy of ‘reduce, reuse, and recycle’ and are committed to continuous review, evaluation and improvement of the programme. This includes setting targets, and monitoring and reporting on progress towards meeting them
Methods and benefits of waste reduction:
As a supermarket environmental business, we are totally against huge quantities of waste and are therefore constantly looking at ways to reduce waste. The following is how ASDA helps to reduce the environment:
- Reducing the amount of materials they use initially.
- Using products made from recycled materials.
- In our supermarkets the main method of helping to reduce waste is by providing our customers with recyclable packaging. Where possible we offer our customers paper bags or boxes and in some case they don’t take any bags because of the trolleys/baskets we supply.
- The bags and boxes are then recycled and repackaged for different goods which can be recycled again and again.
Underlying concepts in environmental legislations:
Landfill tax: in recent years (1996), a new law was introduced by the government to reduce the amount of waste entering landfill areas. This law states that a certain amount of tax must be paid on all waste and this amount is dependent on the weight. At ASDA we try to reduce our amount of weight by recycling our products such as boxes and plastics. Since 1990, ASDA has worked with the Environment Defence to reduce waste in their operations. They have learnt to control solid wastes by:
- Reducing the amount of materials they use initially.
- Recycling what they can.
- Using products made from recycled materials.
- By keeping separate bins for different types of product so that it is easier to get the recycling products recycled.
Charges: ASDA are aware of the charges/penalties that we could get if we do not obey to the law (environmental legislations law):
- Traffic
- Sound and noise
- Air quality
- Visual pollution
- Water quality
- Safe disposal of waste and land quality
The charges or penalties which we could receive would depend on which law we are contravention and how long for. We try our best to ensure that we do not break these laws; we are very caring for the environment and want to defend it for as long as possible.
Technological Influences
At ASDA we use a variety of different software programmes for different aspects of the business, and they are:
Self serve
We give our customers the privilege of self serve where our customers can scan there items and serve themselves; which means they wont have to queue up for long, they don’t have to go through putting everything on the counter and waiting for it to be scanned. Through self serve they have the option to pay by either cash or card.
Scanner
We have a special till scanner on all our tills available in ASDA, which scans each product and the price is sent to the till which helps us to waste time finding out the prices.
CCTV cameras
We are fully equipped with CCTV cameras all throughout our ASDA buildings so this prevents people from stealing. This is a technology which allows staff to look through television on how well everything is running in the supermarket.
Supermarket Tills
Throughout the supermarkets we have specially designed tills. Each product has been scanned through the till which the cashier just needs to scan so the till can read the price. The till is very easy to use and the cashier is not required to learn all the prices for goods in ASDA. The only disadvantage for the till would be every time a new product is brought in the supermarket they have to scan it in the till and feed the price and data in it.
Microsoft word
This database is used when we are writing letters to our staff, this is a very easy method of writing letters as it is very quick and general letter description can be wrote through an experienced worker.
Microphone
We use microphones when our senior or junior staff needs to make an announcement to their colleagues to come to the counter or wherever support is required. The microphone can also be used when there is a customer announcement i.e. if a child is lost, or if there are any latest offers.
General Advantages
New technology has changed the way business is carried out. The technology available to any business today is completely different from that available 15 years ago. Advances in technology have meant that more and more jobs can be done by machines- automatically. This automation means that fewer unskilled workers are needed to do the boring, repetitive tasks they did in the past. Machines are cheaper, stronger and more reliable. Because they are cheaper, prices can be lowered to attract more sales. More sales means more jobs for people with talent and skills, so people looking for jobs should get as much experience and training as they can.
ASDA has access to cheaper, more powerful computers, with vastly improved human-computer interface technologies and with integration packages that allows data to be easily transferred between applications. They use sophisticated and relatively inexpensive software, including graphics packages, desktop publishing, word processing, spreadsheets and data bases.
Along with most other UK retailers, we are evaluating chip- and- Pin payment card readers for its UK branch network. The restaurant has rolled out readers in all its Scottish branches; through a project with technology provide Ingenico. Using ADSL broadband connections to authorise transactions, we have been able to reduce the time to process card payments from thirty seconds to four.
Evaluation
Future of ASDA
During this report analysis it has been clearly noted that we have a number of aspects of our business which need to be transformed. In the future at ASDA we intend to:
Consumer Legislation:
- We will continue to improve our packaging to meet the general product safety regulations 2005, and updated versions.
- We will persist to treat disabled employees and customers with full respect as any other employee would receive and they will not discriminate from training because of their disability.
- We will carry on keeping good relations with our employees and trade union to avoid any further problems and to keep all their data safe to comply with the relations act 2004.
- We will regularly re-evaluate our employees wage to comply with the employment legislations 2003 act by paying our employees more then the national minimum wage.
- We will continue to coach our staff so that they can identify under age customers so they do not serve them alcohol cigarettes or any other under age goods.
Economic Influence
- We must observe the economy to make sure our business is reflecting the economy condition i.e. when the economy is in slump our prices may have to be increased to cover our extra costs e.g. petrol.
Environmental Influence
- We must carry on checking how we can improve our environment by checking out on how we can improve the traffic, cutting waste, litter, sound and noise and disposal.
- We may carry on putting roundabouts to maintain traffic so there is less pollution and sound and noise.
- We will put out more bins so that we can recycle them separately which will help us to keep litter in a limited amount.
