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Report on Business Environment

Giorgio Amani Spa (Armani) is an Italian fashion company, known for its
fashionable design for men and women cloths. The company was founded in 1975
as small fashion company was named after its founder and CEO, Giorgio Amani.
The Unit 1 Business Environment Assignment Armani will throw the light on the
allocation of resources through economic system. The study will assess the
respond of competition, monetary and fiscal policy on the Armani. Armani has
achieved global fashion status in during the companys 40 year history. Armani
operates in 46 countries and in 2011, achieved revenue to almost 1.8 billion and
operating profit of $282m. The company head office is in Milan, Italy.

Task 1

1.1 Provide a brief background of Armani. This should include a description of

its mission, vision, short and long-term objectives, type of sector it belongs
(private or public sector.
Discuss how this organisation has been impacted by changes in its industry.
In this part, focus on the constraints within which Armani has to operate in
its sector. Provide evidence and reference the sources. Identify the purposes
of different types of organisations behaviour and compare them with
purpose of Armani.
Armanis brands or labels include:

Emporio Armani
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Armani jeans
Armani exchange
Armani junior
Armani casa
Giorgio Armani spa


To provide prestigious and high quality products

To add style and pleasure to our customers' lives
To commit to excellence
To provide a unique shopping experience
To accomplish the highest service standards

To be the regional leading company in the management of a prestigious portfolio
of luxurious, fashionable and lifestyle brands. Despite its global brands and large
market operations in 46 countries, Armani is private company and its nature of
business or industry is fashion, hotel and leisure. There are a number of
organisational changes that are having impact every industry including the
fashion industry. These changes include for example, competition, consumers
buying behaviour, regulations, social attitudes, social corporate responsibilities,
ethical issues.
Competition from the market will have impact on sales revenue, market share,
growth and expansion, profitability. Consumers buying behaviour will affect
profitability, sales, growth and its global strategy. Social attitudes and changes in
consumers buying behaviour will have impact on the way Armani design its
product and this may also have cost implications (Botha, Kourie & Snyman,
There are also constraints within which Armani has to operate. These include for
example, financial constraints, technological, market, social and cultural,
economic and legal constraints. As a private seeking global market expansion,
the financial resources require would have huge financial implications. Unlike
public company, access to financial resources would be unlimited. Armani needs
to funds it new market with perhaps, debts or long-term loans, and this will expose
the company to financial risks. Apart from the above, high operating costs will
mean high prices for its function products especially those design and stylish
fashion products at the high-market end (Chavis, Klapper & Love, 2011).
Social and cultural attitudes will be major constraints. For example, each country
product marketing strategy needs changing and also designing product that meets
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local taste and needs. This constraint means changing its market structure and
segmenting the market in each country of operations. Legal constraints and
ethical issues would be a huge challenge for Armani as each market overseas
needs to comply with its customs and legal practices
There are different types of business organisation. These include for example,
sole trader, partnership, private company, and public company, co-operative,
voluntary or charitable sector. Each of this type of organisations has one or
multiple objectives. The private and public companies primary goals and
objectives are to make profit or maximise the value of the company, achieve
higher return capital employed, growth, high market share and satisfy the needs
of other stakeholders, e and improve customer satisfaction. The sole trader aims
to make profit for him/herself and grow the business whilst the partnership
organisation have the same aims and objectives, but for the interest of partners
and close stakeholders.
The voluntary or charitable organisations purpose and objectives are to provide
charitable activities for the interest of general public or specific group
stakeholders. The co-operative society aims and objectives are to provide goods
and services to its members. Armani is not a charity organisation. It is a private
company, and like all private organisations, its primary business objective is to
increase the value of the company. Apart from this objective, it has other
secondary objectives, for example, to provide prestigious and high quality
products add style and pleasure, to our customers' lives, provide a unique
shopping experience and to commit to excellence.
It is to be noted that Armani is one of the few organisations who are still
completely privately owned and because of this; the purpose of the organisation
is always affected by the thinking of one man Mr. Armani, the founder and owner
of the organisation. The main purpose behind opening the organisation was to
bring a change in the fashion industry and Mr. Armani has done it. The purpose
of the organisation is to fulfil the dreams of Mr. Armani to become the world
leader in the fashion industry and make sure that all the stakeholders of the
company whether they are the employees, shareholders or the customers should
receive the profit from the company operations. Armani in the current days not
only dealing with the clothes but also in many other industries such as hotels and
tries to make an impact on the people by not ever compromising with the quality.
But in the end, the main purpose of the company is to make the company owners
wealthy and expand the family business. On the other hand, there are public
organisations which are under the control of the government tries to make the
lives of the people of the country easy and comfortable by providing them the
excellent services for their money which they pay in the form of different taxes.

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The NGOs or Charity Organisation do not work for the profit of the owners or
the trust of the organisation but for the people of the society. Where Armani tries
to provide a luxurious life to the wealthy people, the public organisations and
NGOs try to provide the services to the people of the country which are necessary
for their lives.

1.2 Identify the key stakeholders of Armani?

Identify their interests in and how they influence and impact Armani. How
the organisation is meeting the objectives towards their stakeholders.
The following are the key Armani stakeholders:

Business Partners

Stakeholders are individuals and groups of people or institutions that have interest
in Armani businesses. Customers are interested are interested in the products and
services that Armani produces and supply. They want to ensure the quality of the
products; design and the price meet their expectation. Customers buying
behaviour influences the design of the products in terms of specification and taste.
This also influences the quantity to be purchased and quantities that need to be
supplied, the cost of production and distribution channel chosen by Armani. In
turn, Armani ensure the design of the products meets customers quality and price
expectation or needs (Fanta, 2012).
Management activities are critical to the success of Armani. Management is
responsible for making and influencing investment decisions, technology, design,
choice of market and pricing decision and all this have impact on Armanis
mission of providing prestigious and high quality products to its customers.
Armani senior executives eg board of directors are always meetings management
request to provide the necessary tools and resources for the company to achieve
its objectives. Employees are resources for Armani. They are involved in the day
operations, including designing, development, and production and selling of its
product. They influence all these activities to ensure Armani strategy is
successfully implemented. Armani is putting resources into staff development
and training, providing generous staff incentives including good working
condition of service, salary, and bonuses.

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Suppliers want to ensure that Armani is profitable, have enough liquidity and
reliability of good business relationship. Suppliers influence is the supply of good
and services and contract term of those business for their interest as well as
Armani interest. Armanis responsibilities to ensure suppliers are paid on time
and take necessary steps to ensure good supplier-customer relationship. The
banks and other debt providers interests are the profitability, liquidity availability
and growth of the company. They influence Armani by determining the level
finance to be provided and the cost of the finance, and the terms. Armani ensure
the company meets these debt providers by meeting its financial commitments to
these stakeholders.

1.3 Using the Stakeholder Analysis matrix, plot where, in your opinion, each
stakeholder might stand based on your research and analysis.
Make sure your analysis is based on evidence and research and do NOT
guess or make wild assumptions. Explain Armani responsibilities to its
stakeholders and identify the strategies it adapts to meeting their needs and
Stakeholder Analysis matrix is Engagement Plan, which helps organisations
analyse and identify the key importance of stakeholders and their influence on
the business.

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Box E, F & G are the key stakeholders of Armani. Box E stakeholders e.g.,
employees, suppliers, designers have a high degree of influence in the company
and also high importance for Armanis success. Box F stakeholders- government
are of high importance to Armani success but have low influence. Box G are
stakeholders e.g. government with high influence and these stakeholders actions
impact the Armani performance and long-term business sustainability. Box H
stakeholders have low influence and importance to the fashion business.
Armani responsibility is to ensure each stakeholders needs are met this include
for example, improving quality of goods and services, improving working
conditions for staff, meeting the financial obligations to finance providers and
establishing long-term customer-supplier business relationship.
How Armani tries to fulfil its responsibilities towards the stakeholders is
explained below:

Customers: Customers are the most important stakeholders of Armani.

Customers are the main decision maker of Armani because it is the
customers who actually decide what has to be produced by the
organisation. This is the reason Armani always pays attention to their needs
and tries to fulfil these needs by its products and services. Armani has some
customers who are well known in the fashion industry such as Hollywood
starts and these celebrities create trends in the market which are followed
by millions of fans. Hence, Armani has to design the cloths as per their
requirements. Armani also satisfy the need of the quality products by
providing them luxurious products (Engelen, 2010). Paul Simon, David
Bowie and Eric Clapton are some of the famous musician who have
enjoyed the luxury of the Armani Fashion Clothe and inspired many others
to do the same.
Employees: Armani has around 5,000 employees who have been working
with in the different facilities, departments and across 500 retail stores in
46 countries. Armani always pays good money to the employees as they
are the reason of the success of the company. Armani has worlds best
designers and always takes care of them as per their performance.
Owner: Mr. Armani is the sole owner of the company and he is the only
shareholder who has the absolute power in the company. He is the person
who has gained most from the success of the company
Government: Armani is a completely private organisation and
government does not have any share in the business. In that manner, the
government does not have much say in the company decisions, but still the
organisation has to follow the policies of the government of the countries

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where it operates. Armani also pays huge amount in the form of taxes to
the governments and contributes in the GDP of the country
Suppliers: Most of the suppliers of Armani are associated with the
company for a long time and they are responsible for providing the raw
material to the company. They hold the key to the business because of their
power on providing the customised items and that is also on a reasonable
price. Indirectly, suppliers affect the price of the products of the company
and because of this they are very important for the business.

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