Submitted By Mr. AMJAD IQBAL INDEX HISTORY OF PRIMARK PESTEL ANALYSIS SWOT ANALYSIS CORPORATE GOVERNANCE CORPORATE SOCIAL RESPONSIBILITY AND ETHICS CONCLUSION REFERENCES Evaluate the internal and external influence on Primark and relate to it to best practices, corporate governance, corporate social responsibility and ethics? Majority organizations need best practices for achieving organizational objectives in the terms of profit, social and ethics issues. Primark’s best practice frame work is discussing below:
PRIMARK’S HISTORY Foundation of Primark in Ireland In June 1969, the first Penneys store opened in Mary Street, Dublin. In 1970, four more stores were added – all in the Greater Dublin area. In 1971, the first large store outside Dublin was opened in Cork and by the end of that year there were 11 more stores in Ireland and one in Northern Ireland. Expansion By 1973, the number of stores had reached 18 in Ireland and Primark began trading in Great Britain with four out-of-town stores.
The following year the Primark was opening the first UK High Street stores in Derby and Bristol. In the next ten years, 18 stores were added in the UK and nine in Ireland, bringing the number of stores in the UK and Ireland to 22 each. Also in 1984, the first multiple acquisition took place with the purchase in Ireland of five Woolworth stores. From 1984 to 1994 a further 13 stores were opened in the UK and 12 in Ireland, bringing the total to 66 stores – 32 in the UK and 34 in Ireland.
A major flagship store was purchased in 1992. Primark opened its first store in the Netherlands (Rotterdam) in December 2008. In May 2009, Primark opened its first store in Portugal (Lisbon) and its first store in Germany (Bremen). In November 2009, a second Primark store opened in Germany (Frankfurt). In December 2009, Primark opened its first store in Belgium (Liege). Number of Stores Trading at 18th May 2010 COUNTRIESNO. OF STORES United Kingdom139 Ireland38 Spain15 Portugal2 Germany2 Netherlands1 Belgium1 Total198
Since the mid 2000s, Primark has emerged as one of the UK’s most successful high street chains, now the country’s second largest clothing retailer by volume according to TNS, and the single largest in the value sector, having overtaken Asda’s George in 2007. It was named as Value Retailer of the Year in that year’s Drapers Record awards. The business is the last UK retail interest controlled by diversified conglomerate Associated British Foods (ABF), whose other divisions are involved mainly in packaged foods and ingredients manufacturing. Primark’s own brands
All of the company’s merchandise is made specifically for the company and as such Primark has its own brand names: PESTEL ANALYSIS PESTEL analysis which stands for Political, Economic, Social, Technological, Environmental and Legal, analysing a framework of macro-environmental factors affecting PRIMARK and Porter’s 5 forces analysis of PRIMARK which is a framework for industry analysis and business strategy development and the bargaining power of customers, bargaining power of suppliers, threat of new entrants and threat of substitute products and intensity of competitive rivalry affecting PRIMARK.
From the beginning Primark gained favour specially in United kingdom, and due to political benefits the number of stores reached 139 in UK, and overall in Europe are 198 stores and creates employment opportunities in all Europe. In very short time specially in UK, technical advisors and experts equipped primark in very high queue in the sense of profit and spreading all over high street and pressurized top class branded stores, almost gained their shares from the market.
According to research almost 60% branded customers are shifting to Primark, because of reasonable price and too much variety and other reason due to recession the buying power of the people are become week, so automatically the majority of the customer moved to primary. In 1973 primarks opened first high street, now the total number of stores are 139. Day by day the profit margin is increasing because of budget products, supply chain management, dedicated staff and unique variety are the add value for primark brand.
In United Kindom the economical contribution of the Primark is very important, and the primark followed business rules and regulation. SCANNING OF ENVIRONMENT Scanning of internal and external environment are key part for decision making and planning for achieving of organizational objectives. Internal and external environment are called SWOT Analysis. SWOT analysis Internal environment are SW which stands for strength and weakness, actually analysis of internal organization and external environment OT stands f opportunities and threats SWOT Analysis of Primark Strengths 1. Europe big chain of the stores 2.
Professional management staff and other technical staff 3. Financially strong position 4. Big share in UK and Ireland 5. Competitive strategies 6. Low cost product with reasonable quality 7. Strong supply and distribution channels 8. Big stores in high streets 9. Primark is a subsidiary company within the Associated British Foods group. 10. Working condition are safe and hygienic 11. Living wages are paid 12. Regular employment provided 13. Working hours are not excessive 14. Primark is a member of the Ethical Trading Initiative (ETI), 15. Standard Code of conduct and almost translated into 26 world languages. 6. Strong public relation strategies (PR) and application of corporate social responsibilities (CSR) Weaknesses 1. In 2005, Primark scored the lowest of all leading clothing chains in the UK – at just 3. 5 out of 20 – on an ethical index that ranks criteria such as workers’ rights and whether they do business with oppressive regimes 2. In December 2008, the UK charity War on Want launched a new report, Fashion Victims II, that showed terms and conditions had not improved in Bangladeshi factories supplying Primark, two years after the charity first visited them. . In 2008, poor working conditions in Indian factories supplying Primark were the subject of an undercover investigative documentary by the BBC’s Panorama. Primark subsequently stopped doing business with the Indian supplier. 4. On 23 June 2008, the BBC broadcast a panorama programme that showed manufacturing practices which it considered to be unethical in Primark’s supply chain. Undercover reporters exposed child labour in three of India’s garment factories sub-contracted by Primark 5.
On 9 January 2009, a supplier was forced by ETI to remove its branding from Primark stores and websites following a BBC/The observer investigation into the employment practices. The investigation alleged use of illegal immigrant labour which was paid less than the UK legal minimum wage. 6. In May 2010 Primark, the discount clothing store, has withdrawn padded bikini tops aimed at girls as young as seven following criticism that the items were sexualizing children. OPPORTUNITIES: 1. Even in economical crises there are more potential in budget products. 2. Europe is powerful marketing in fashion and foods. . Governmental level benefits for business expansion. 4. Third world countries cheap labours are play big contribution for multinational companies. 5. South Asia is big marketing for fashion and technologies. THREADS: 1. Global economical crises have great negative impact on the businesses. 2. Political threats for providing more favour to small and medium sizes business. 3. International conflicts will also big threads for Primark. 4. Tesco and Asda are the main competitors of the Primark. 5. Internal business strict policies regarding human rights, social and ethical issues.
CRITICISM Primark has violating the corporate governance and code of contact such as in 2006- 2008 (illegal workers child labour, excessive work hours and etc in specially in Bangladesh), in 2009 same situation is occurred in India and in May 2010 teenage sexuality dress are introduced. With few negative aspects, there are many good decisions in practice to meet the international benchmark for corporate governance. International benchmarks procedures and policies are introducing specially related to good governance, code of contact and social and ethical responsibilities.
PRINCIPAL OF GOOD CORPORATE GOVERNANCE AND CODE OF BEST PRACTICE According to experts there are three complementary purposes of good corporate governance and code of best practice: 1. To ensure the board, as representatives of the organisation’s owners, protects resources and allocates them to make planned progress towards the organisation’s defined purpose. 2. Must ensure those governing and managing an organisation account appropriately to its stakeholders. 3. Must enable shareholders and other stakeholders (where appropriate) to take boards to task. The objectives of the Primark are:
DELIVERING VALUE, TRADING ETHICALLY Primark is a subsidiary company within the Associated British Foods group. ABF’s core values – Care of our people, being good neighbours and fostering ethical business relationships such as human rights, employment conditions, business practices, suppliers and other stakeholders. Primark motive is to trade ethically as an international business with a global supply chain for ensuring that suppliers live up with their values and behave as well towards their employees, with approximately 600 suppliers in over 16 countries, it is a huge challenge.
Primark buy in very large volumes and aim to build long-term relationships with suppliers. its business directly contributes to the employment of more than 700,000 workers across three continents. Ethical Oriented Policy: Primark is exercising so ethical oriented policy within our supply chain and committed for ensuring for: •Child labour shall not be used •Employment is freely chosen •Freedom of association and the right to collective bargaining are respected •Living wages are paid •No harsh or inhumane treatment is allowed •No discrimination is practised •Regular employment is provided •Working hours are not excessive Working conditions are safe and hygienic CONCLUSION: A popular scholar quotes that “It should not be exaggerated that the human history is the human violation” in these context, majority of the organization violate the human rights, and only focus on profit and ignore the importance of the human social and ethical issues, but today media, socials organization play vital role to enforce the multinational to justify with employees and customers on the humanitarian grounds in transparent way. In the case of Primark, they are trying to get maximum appreciation from the international humanitarian communities.
But still need more adequate employees and customers oriented policies. References: 1. By Andrew Chambers Tuesday, 02 December 2008 – Ten Principles of Corporate governance. (Online Article) 2. Report of the Committee on the Financial Aspects of Corporate Governance: The Code of Best Practice (Cadbury Code) – 1 December 1992 3. Roger, J (1999) Facilitating Group Management Futures Ltd. London 4. A Joshi, NL Erhardt – Journal of management (Chapter SWOT analysis), 2003 5. RS Kaplan, DP Norton – Your Organization on Strategy 2000