Business Environment Sample

SAMPLE ON
BUSINESS
ENVIRONMENT
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TABLE OF CONTENTS
INTRODUCTION.................................................................................................................... 1
TASK 1..................................................................................................................................... 1
AC 1.1 Organisational purpose of business..........................................................1
1.2 Objectives of different stakeholders in Iceland Supermarket................2
1.3
Responsibilities
and
organizational
strategies
to
meet
the
stakeholder objectives................................................................................................. 3
TASK 2..................................................................................................................................... 4
2.1
Different
economic
systems
attempts
to
allocate
resources
effectively..........................................................................................................................4
2.2 Assess the impact of fiscal and monetary policy on Iceland
Supermarket and their activities..............................................................................4
2.3 Evaluation of impact of competition policy and other regulatory
mechanism on activities of Iceland Supermarket ........................................... 5
Task 3...................................................................................................................................... 6
3.1 Explaining How market structure determine the pricing and output
decisions of businesses................................................................................................6
3.2 The way in which market forces shape Iceland Supermarket
responses.......................................................................................................................... 7
3.3 The business and cultural environments shape the behaviour of
business............................................................................................................................. 7
TASK 4..................................................................................................................................... 8
4.1 Significance of international trade to Iceland Supermarket ................. 8
4.2 The impact of global factors on an organization........................................ 9
4.3 Evaluate the impact of policies of the European Union on Iceland
Supermarket.................................................................................................................. 10
Conclusion ..........................................................................................................................11
REFERENCES.......................................................................................................................12
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INTRODUCTION
Business environment comprises all the internal as well as external
factors that affect the organization operations in both the direction.
Internal factors prevails inside the business corporation hence, it can be
controlled by the business. However, external factors comprise all the
market factors that cannot be controlled by the organization (Hamilton
and Webster, 2015). Iceland Supermarket is a subsidiary company of
Associated British Foods shortened to ABF. The company was founded in
the year 1969 in Ireland trading as Penny's headquartered in Deeside,
Wales, UK. In the year 2000, there were 100 Iceland Supermarket stores
across Britain and Ireland. By year 2012, total 238 Supermarket branches
are operating across UK, Ireland and Europe.
Present project report will helps to understand the business
environment of the Supermarket in which the business is operating. The
report will helps to determine the organizational purpose of business.
Moreover, the report will discuss the stakeholders of the business with
their interest and how they are satisfying. On contrary, the types of
economic system and the impact of fiscal and monetary policies and other
regulatory mechanism will be discussed in the report. Furthermore, the
report will determine the role of market structure in pricing and output
decisions. At last, Importance of international trade with the impact of
global factors on Iceland Supermarket will be analysed.
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BUSINESS ENVIRONMENT
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TASK 1
AC 1.1 Organisational purpose of business
Iceland Supermarket: It is a UK retail supermarket chain,
established in the year 1969. It sales frozen and non frozen grocery items
in the market. Frozen goods comprise prepared meals and vegetable
products while non frozen items involves meat, dairy and other kind of dry
products in UK food market. The organization mainly aims at providing
best quality of products to the customers so as to enhance their returns
(Cetindamar, 2015). The organization is regularly satisfying the customer
demands that help to achieve greater the returns for the business.
KFC: Kentucky Fried Chicken (KFC) is the world second fast food
restaurant chain
after McDonald,
headquartered
in Gardiner Lane
Louisville, Kentucky in the United States. The restaurant chain provides

specialised fried chicken products to large number of customers. The
organizational objectives is to enhance the market share, increase their
profit margins and provide greater the return on investment. Achieving
the business objectives helps to ensure organizational growth of the
business.
Transport for London: TFL is a local government body that is
responsible
for
providing
transport
services
to
the
customers.
Headquarter of TFL is established in Windsor House, Victoria Street,

Westminister, UK. The primary objectives of the organization are to invest
billions of amounts in capital transport network. It aims at providing best
quality of transport services to the consumers (Walraven, Laenen and
D'haeseleer, 2015). Therefore, organization is making transport strategy
and manages the transport system effectively.
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Cancer Research: It is the world's largest charitable organization

that has been established in the year 2002 in UK. It was established
through merging two organizations that are Cancer Research Campaign
and the Imperial Cancer Research fund. The purpose of the organization
to aware the citizens about the cancer disease in order to reduce the
number of deaths caused by cancer.
1.2 Objectives of different stakeholders in Iceland Supermarket
There are number of internal and external stakeholders existed in
the Iceland Supermarket. Their objectives are describing here as under:
Customers: The customers are the source of generating income
and profit for the business. Therefore they utilize the products and
services offered by Iceland Supermarket. Iceland Supermarket is fulfilling
their objectives through providing various kinds of qualitative products
and services at affordable prices (Baldwin and Scott, 2013).
Employees: workers are engaging in providing products and
services to the users. Therefore, they are the internal stakeholder of the
company. In Iceland Supermarket, their objectives are satisfying through
providing better monetary terms, better working environment and
working culture.
Suppliers: They provide credit to the business therefore as an
external stakeholder; they have the objectives to ensure security of their
credit (Chiang and Chen, 2015). Increased profitability and good
creditworthiness of Iceland Supermarket helps to satisfying the suppliers
objectives to a great extent.
Managers: Running the business operations successfully is the
primary responsibility of managers. As an internal stakeholder, they have
the objectives to maximize their remuneration, better pay scale and
recognise their position in the organization.
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Government: Government generate tax incomes on the business

profits having objectives of getting larger and regular the tax incomes
ensure legal business practices, business development and creating jobs.
Iceland Supermarket is satisfying the government objectives by paying
regular the tax charges and employing number of people in the
organization
helps
to
reduce
unemployment
rates
(Kumar
and
Siddharthan, 2013).
Lenders: Organization can borrow funds from the lenders at an
implied cost. Their objectives can be satisfying by making regular
payment of interest and having good solvency position. Better availability
of profits, good corporate image and better financial position satisfying
the lenders objectives to a great extent.
1.3 Responsibilities and organizational strategies to meet the stakeholder
objectives
Iceland Supermarket business has certain kind of responsibilities
towards the stakeholders. The business is satisfying their stakeholders
objectives by implementing different strategies that are explained here:
Customers: Iceland Supermarket has the responsibility to provide
large variety of products and services to the customers. Moreover,
organization is meeting their objectives by making product improvement
and giving additional benefits to them (Codro and et. al., 2014). They
create value for the products and the services and providing a convenient
way to purchase variety of products at single place.
Employees: Iceland Supermarket making strategies to provide
better salaries to the workers and maintain good working environment.
The organization decides better pay rates and provides job security to
them. Further, employees are satisfying by achieving good public image.
Their performance are appreciated and rewarded on a regular basis to
motivate them.
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Suppliers: Iceland satisfying their responsibility towards the

suppliers by getting increased revenue, improving relationship and higher
the profit availability (McChesney, Reksulak and Shughart, 2015). This in
turn, suppliers will be highly satisfied because of their credit security.
Iceland is responsible to make timely payment to the suppliers. The
organization is managing adequate liquidity in the business for that
purpose.
Government: All the business organization has the responsibility to
ensure good business operations, following the governmental laws and
regulations and pay tax on time. Therefore, Iceland Supermarket has the
responsibility to calculate their tax obligations and make payments on
right time with right amount (Asche and et. al., 2015). Further, any illegal
and fraud business activities must be eliminated.
Lenders: Iceland Supermarket has the responsibility to make
timely payment of interest to the shareholders. Moreover, enhancing the
revenues, profits and cash generating ability tends to meet the lenders
objectives to a great extent. Another, good solvency position also helps to
satisfy the lenders.
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TASK 2
2.1 Different economic systems attempts to allocate resources effectively
For solving the problem related to allocation of resources as well as
economic issues, it is more important to adopt an economic system
(Nestle, 2013). There are many kinds of economic system by which a
company can allocate the resources in appropriate manner. Some of the
economic systems are as follows.
Free market economy: It is commonly used economic system
where a company can identify market values of its products by
intersection of supply and demand curve. In the following system, the
government has not made any kind of interference. For example, in UK,
the companies can sell the goods at high prices because the demand
of that service is high in the market and customer is ready to pay for it
(Gould, 2012). In the same thing, to increase the supply of good in
market, the employee has required to make more efforts. In this
context, they are demanding high salary and firms are willing to pay it.
Transitional economy: In this system, the present market
related organizations have developed where central plan economy has
transformed into free market economy. The intention behind adopting
the system is developing own industries to give strength to economy of
country (Kissinger, 2012).
Command economy: Here, the government has right to take
decision alone regarding supply of goods and its pricing in market.
Along with this, it may appoint any other organization which helps in
allocation of resources (Mueller, Anderson and Wallington, 2011). For
instance, UK government has restricted the different industries to pay
taxes and then take the decision to utilized that funds in either
development of community or else.
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Mixed economy: It is mixer of command and free market

economic system where both government and industry mutually or
individually towards allocation of resources. For instance, the markets
forces have considered by UK government at first priorities during
allocate resources at grocery industry.
2.2 Assess the impact of fiscal and monetary policy on Iceland

Supermarket and their activities.
The impact of fiscal and monitory policy on Iceland Supermarket is as
follows.
Fiscal Policy:
Government of UK uses fiscal policy for monitoring and influencing
the national economy. It adjusts the government spending and tax rates
for maintaining national economy. The increase and decrease in the taxes
and government spending affects the working of Iceland Supermarket
(Malik, Willett and Hu, 2013). If government increases its spending then it
results to increase in the demand of food products of Supermarket. This
increase in demand results to increase in sales of the food items which
directly results to increase in profitability. But if the spending is decreased
by the UK government than it this case, Supermarket has to suffer a great
loss due to the decrease in demands of food items. On the other hand, if
tax rates are decreased by the UK government than it results to increase
the profitability of the Iceland. And if the tax rates are increased by the
government than in such case Iceland has to suffer (Arrow and Kruz,
2013).
Monetary Policy:
UK government uses this policy for improving the economic
condition of the nation and for this it adjusts the supply of money and
interest rates. Money supply and interest rates are inversely proportional
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to each other as on the rise of money supply, interest rate decreases. This
decrease in interest rates results to give opportunity of taking cheaper
loans to Iceland Supermarket. However increases in interest rates results
to increase inflation in the country which is not good for the nation and
organisations as well. Government can handle the inflation by decreasing
the interest rates but this makes Iceland to suffer due to cut in spending
(Gertler and Karadi, 2011).
2.3 Evaluation of impact of competition policy and other regulatory
mechanism on activities of Iceland Supermarket
Competition is playing a major role in growth of a company and
delivered various benefits. In this context, UK government has developed
various kinds of competition policies for all type of industries. Competition
Act 1998 has ensured that in a market place, there should be a fair
competition between the organizations (Bigliardi and Galati, 2013). The
impact of this framework on Iceland Supermarket is it helps in develop
new services and products for community. With the help of this, firm has
been able to take competitive advantages and survive in the market. On
the other hand, various regulatory mechanism like improved working
conditions, employment opportunities, health and safety at workplace etc
has made impacts on business activities of Iceland Supermarket. In this
regards, company has developed several types of strategies and other
framework to raise the organization as a sustainable company in
marketplace (Ilagan-Manzano, 2013). The result of this it has helped firm
to create a good image between competitors and showing presence at
international level. Overall impacts of both competition and other
regulatory mechanism on Iceland Supermarket are company has able to
meet
the
objectives
of
business
and
provided
greater
satisfaction level.
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customer
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TASK 3
3.1 Explaining how market structure determine the pricing and output
decisions of businesses
Pricing
and
output
decision
within
organization
are
greatly
influenced by market structure. Therefore, Iceland Supermarket takes

several decisions associated with pricing and output with reference to
market structure:
Perfect competition- In the perfect market competition, there
are several companies are offering similar kinds of products and
services. Therefore, there is great competition identified among
companies in prefect competition (Hendrix and Haggard, 2015). In this
context, company takes pricing decision with reference to prices of
similar products of other companies as well as market demand of
particular product.
Monopoly market- In such type of market there is only one
company controls the supply of particular product and service due to
unavailability of other competitors. In addition to that, entry of new
companies is also restricted by particular organization (Mueller,
Anderson and Wallington, 2011). In this context, an organization takes
pricing decision of different products and services with reference to its
profit motive.
Oligopoly market- It is identified as important market structure
in which limited number of companies is managing the demand of
large number of buyers. Therefore, there is high competition addressed
among companies. In the situation, the management of Iceland
Supermarket has to take appropriate pricing decisions with reference
to demand of different products and service as well as level
competition among companies.
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Monopolistic market- In Monopolistic market structure, it

involves limited number of companies that are producing wide range of
substitute products. In context, there is high rivalry among business
addressed due limited number of companies (Kissinger,
2012).
However, the substitute products are differentiated with reference to

branding. In this regard, an organization requires considering several
factors for taking appropriate pricing decisions.
As per the above assessment of different market structure it can be
stated that Iceland Supermarket is operating business within oligopoly
market. Therefore, organization has to consider pricing of similar products
of other companies in order to appropriate pricing decisions. In addition to
that management has to carry out detail evaluation of supply and demand
of different goods and services along with market share of different
companies. These decisions are having direct impact on the overall
growth and profitability of retail organization.
3.2 The way in which market forces shape Iceland Supermarket responses
There several market forces are playing important role for shaping
Iceland Supermarket responses to improve performance of organization.
In this regards, some most important element are discussed below:
Demand and Supply- It is termed as most important market
force which is great impact on the pricing decisions of company. For
example if demand of particular product decreases then organization
has to restructure the pricing different products and services to order
to manage sales of particular product. In addition to that business
entity has to consider demand of other products that are associated
with other companies (Codro and et. al., 2014). This information assists
management of Iceland Supermarket for taking appropriate decision
related to marketing of different products and service as well as pricing
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to manage market competition. Here, for increasing the sales,

Iceland Supermarket is required to manage production cost
Merger and Acquisition- Within merger business merges with
another similar company while at the time of acquisition firm acquires
any company who is incurring losses. Normally such type of condition
arises among sick and healthy firms. This approach finds very effective
in order to increase and market share of company in new oversee
market (McChesney, Reksulak and Shughart, 2015). In regard to this,
Iceland Supermarket can expand the operations in diverse countries by
undertaking merger and acquisition that plays important role for
increasing market share of company along with goodwill of company in
new overseas market.
3.3 The business and cultural environments shape the behavior of
business
For evaluation of various factors of external environment that are
significant impact on management decision, PESTLE analysis is carried out
below:
Political-
Every
business
entity
has
to manage
different
operations and strategies as per the different government rules and

regulations (PEST Analysis: What is PESTLE Analysis?, 2016). It includes
taxation
policies
and
other
regulations
that
influence
business
decisions.
Economic- Iceland organization gets affected due to decrease in
purchasing power of individual and thus it affects the sales and
profitability of firm.
Social- Change in the taste and preference of people about
different products and services is also facing business operations of
Iceland Supermarket. Thus, it is essential for business to determine the
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needs of clients while developing different products and services

(Nestle, 2013).
Environmental- Business has to consider issues associated with
safety of environment so as management has to develop appropriate
strategies
for
reducing
the
carbon
emission
as
it
affects
the
environment of country. However, it increases the cost of Iceland

Supermarket that results in increasing the cost of products.
Legal-
By
introducing
different
competition
policies
by
government it affects the operations of firm. In addition to that

management has to follow different government rules and regulations
in determination of pricing and quality standards.
Technological- By introducing new and innovative technology in
different business operation, business entity is able to produce high
quality products at attractive prices and thus enhances the sales of
firm. It plays important role to increase satisfaction level of consumers.
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TASK 4
4.1 Significance of international trade to Iceland Supermarket
International trade means exchange of good as well as services
between two or more oversees nations. Such type of business has raised
the economic condition of world which has affected demand, supply and
price of goods and services at international level (Nestle, 2013). The
significance of international business to Iceland Supermarket is as follows.
1. By exporting or importing goods at global level, Iceland Supermarket
and UK, both are able to earn valuable foreign currency. It has
supported economic conditions of nation and showing the presence of
company at international level.
2. With the help of international trade, Iceland Supermarket can effective
utilized its resources and decreased wastage of it. It helps UK and
other trade countries to manufacture the goods by sharing of
resources (Gould, 2012).
3. International trade has increased the living standards of people of UK
and it has leads to increase the sales of services of Iceland
Supermarket. The rising of living standards have increased the
spending power of customers which will good for company.
4. Along
with
this,
with
the
help
international
trade
to
Iceland
Supermarket is greater sales volume, increased profitability and raised

ability of firm to compete in retail market (Kissinger, 2012).
5. International trading has improved reputation of Iceland Supermarket
around the world and creates a good image in marketplace.
6. With the help of international trade, the dependency of Iceland
Supermarket on domestic markets has reduced and stabilized the
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7. fluctuations in seasonal market (Mueller, Anderson and Wallington,

2011).
8. Major significance of international trade for Iceland Supermarket is
attracting more and more investors so that it will be easy to open new
stores and plants in different locations of world. In addition to this, it
also helps in taking advantage of new technologies and minimizes
operating costs of manufacturing (What Is the Impact of International
Trade, 2016).
4.2 The impact of global factors on an organization

Organization exchanges their products with many countries in order
to increase their productivity. Global factors influence the operations of
business by considering external factor of business-environment. External
factors includes behaviour of customers and business, risk awareness,
taste and preferences (Kennerley and neely, 2003). Factors influence the
operations of Iceland Supermarket are as given below by modifying the
strategic polices and plans of the business:
Economic: UK has the 2th largest economy if they consider their
GDP and GNP. With the stability in the economics of UK business
require to conduct various operational activities in the business. The
economy of business consists with several factors such as size,
structure, growth and population which help in increasing the sales
faster than their competitors. With the good economy, company
increases its profitability and productivity by maintaining effective
structure.
Political: Political conditions of UK get influenced by business
operation. Government introduced several policies for the organization
and it is compulsory for them to be followed (Batra,
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Kaufmann and Stone, 2003). Factors which company need to

consider such as tax changes, trade barriers and opportunities to
enter into new market.
Social: Social factors influenced the personality of Iceland
Supermarket. In order to improve business activities of company, they
need to considered tastes and preferences of their customers. At the
time of recession people are unemployed so they don't afford to
purchase their products with high rates.
Technology: Business activities affected by adopting various
technologies in business
in order to survive in a competitive
environment. With the help of technology, company enhance its

product quality and reduces the cost. Company need to develop their
services, because people prefer online services to shop goods and
products rather than going store to store.
4.3 Evaluate the impact of policies of the European Union on Iceland
Supermarket
European Union acquires various policies and has direct impact on
Iceland Supermarket. Policies of the European Unions help in increasing
the efficiency of business in order to make Iceland Supermarket as the
leading company (Kennerley and Neely, 2003). They promote high level of
employment by protecting member country rights and powers. The
European Union policies have huge impact on the supermarket business.
Some of the policies are as measures below:
Taxation policy: The EU policy will force the business to pay
huge amount of tax. This has impact on the savings of Iceland
Supermarket. Further, taxation policy will be finding out by considering
two aspects such as, individual and business tax. By considering
individual tax in Iceland Supermarket, if tax rate is high then
consumption will low in the business which affects the demand
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of the product and service (Thomas, 2007). On the other hand, if tax
is low then the cost of purchase the products will be high and
Iceland Supermarket reduces its market.
Employment policy: Through the change in the employment
policy the activities
of Iceland
Supermarket greatly influenced.
Company need to bring changes in its hiring procedure of this policy

(Yew Wong and Aspinwall, 2004). Thus, standards will be maintained
within the firm which would result in increasing its performance in the
business.
Fiscal policy: This policy is generated through government of
the country in order to adjust their spending and taxation rates. Iceland
Supermarket needs to increase its demands for the products they
required to spend more on goods and services in order to increase its
growth.
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CONCLUSION
As per the above assessment, it can be concluded that every
organization has to consider wide range of external and internal elements
such as government and employees for taking appropriate business
decision. This report has addressed that market structure of particular
economy is having significant impact on the management decisions such
as pricing and production. This study has addressed that the business
entity has to manage various element such as international trade
regulations while expanding business in overseas markets.
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REFERENCES
Books and Journals
Asche, F. And et. al., 2015. Fair Enough? Food Security and the
International Trade of Seafood. World Development.
Bah, E.H. and Fang, L., 2015. Impact of the business environment on
output and productivity in Africa. Journal of Development Economics.
Baldwin, W. and Scott, J., 2013. Market structure and technological
change. Taylor & Francis.
Bonilla, P., 2015. Is our food safe? An Assessment: on the European
Union food safety policy, concerning the safety of meat & animalderived food products in the EU.
Cetindamar, D., 2015, August. Organizations with purpose: Benefit
corporations. In Management of Engineering and Technology (PICMET),
2015 Portland International Conference on IEEE.
Chiang, T.C. and Chen, X., 2015. Stock returns and economic
fundamentals in an emerging market: An empirical investigation of
domestic and global market forces. International Review of Economics
& Finance.
Online
PEST Analysis: What is PESTLE Analysis?. 2016. [Online]. Available
through: <http://pestleanalysis.com/>
What Is the Impact of International Trade?. 2016. [Online]. Available
through: <http://www.wisegeek.com/>
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Louisville, Kentucky in the United States. The restaurant chain provides

Headquarter of TFL is established in Windsor House, Victoria Street,

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Cancer Research: It is the world's largest charitable organization

Government: Government generate tax incomes on the business

Suppliers: Iceland satisfying their responsibility towards the

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Mixed economy: It is mixer of command and free market

2.2 Assess the impact of fiscal and monetary policy on Iceland

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influenced by market structure. Therefore, Iceland Supermarket takes

Monopolistic market- In Monopolistic market structure, it

However, the substitute products are differentiated with reference to

to manage market competition. Here, for increasing the sales,

operations and strategies as per the different government rules and

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needs of clients while developing different products and services

environment of country. However, it increases the cost of Iceland

government it affects the operations of firm. In addition to that

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Toll Free : +44 203 3555 345

Supermarket is greater sales volume, increased profitability and raised

7. fluctuations in seasonal market (Mueller, Anderson and Wallington,

4.2 The impact of global factors on an organization

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Kaufmann and Stone, 2003). Factors which company need to

in order to survive in a competitive

environment. With the help of technology, company enhance its

Supermarket greatly influenced.

Company need to bring changes in its hiring procedure of this policy

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Toll Free : +44 203 3555 345

Toll Free : +44 203 3555 345

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