Tag Archives: business

A Penney(s) for your Thought: The Economics of Penney’s 

Posted on by Leave a comment

Ayesha Ahmed 

When I think of Dublin-based retailer Penneys, I think of a quote by Tesco’s founder Jack Cohen: “Pile it high, sell it cheap”, something he says when referring to having a successful business. I have yet to learn about Tesco’s economic practices, but Penney’s has taken this to heart and astutely follows this mantra. Penneys (known as Primark outside of Ireland), founded in 1969 in Dublin by Arthur Ryan, has become a global retail phenomenon. With its headquarters on Mary Street, the company has built a reputation for offering “Amazing Fashion, Amazing Prices.” Customers flock to Penneys stores worldwide, including loyal Trinity students who visit weekly to get their “Penneys fix.”

Company Background

Firstly, it is important to obtain some background information on Penneys, which is a subsidiary of Associated British Foods known for selling both food and apparel. Conversely, Penneys, as anybody familiar with the brand would know, has everything in abundance from clothing, accessories, beauty, footwear, and my favourite, homeware. The product line caters to women, children, pets, and men. According to their website, they employ over 79,000 people, and between 2017 and 2018 opened 16 new stores creating over 4,660 jobs. As a company, they provide in-house employee training programmes, from formal induction to customer promise training for retail employees. Today, ABF’s subsidiary has more than 374 stores globally, maintaining a presence in the Republic of Ireland, the UK, Spain, Germany, Portugal, Netherlands, Belgium, Austria, France, Italy, and the Northeast region of the USA, with more to come. 

The business model of Penneys is centred around delivering value to consumers by offering high-quality products at the lowest possible prices; the high-quality label is self-proclaimed and often highly contested. However, such a claim is achieved through tight control over the supply chain and a high-volume, low-margin production strategy. Penneys can minimise costs and pass on significant savings to customers by negotiating favourable contracts with suppliers and maintaining highly efficient distribution channels.

There are various reasons why Penneys is a success story at a time when competitors like Forever 21 filed for ‘Chapter 11 bankruptcy protection’ or the end of Payless ShoeSource. This false ‘luxury’ shoe shop made numerous influencers fall for it in the United States;

the company strategically changed its name from Penneys to Primark to expand its reach beyond Ireland as the name “Penney” was trademarked by JCPenney. Fortunately for the brand, Primark is a high-performing retailer, and JCPenney is dealing with constant store closures. Another success factor can be attributed to the day when Arthur Ryan convinced Galen Weston, ABF’s kingpin, to try his hand at apparel, which was a life-altering decision for the future of Primark and helped secure its financial future. 

Areas of Weakness: Online Presence, Fast Fashion & Ethics

No company is without weakness, and Penneys has three significant areas of concern, mainly limited online presence, unethical labour practices, and a negative environmental impact. Penneys has been criticised for its limited online presence by many critics, from the Irish Times to the Financial Times. This lack of presence may hinder its ability to reach customers in remote locations or adapt to the ever-changing consumer preferences. However, in recent news, Penneys did introduce a click-and-collect trial for kid swear and women’s clothing (in the UK). Penneys has to differentiate itself from competitors; it is essential to consider the long-term implications of this strategy in a rapidly evolving retail landscape. Nevertheless, accounts filed with the Companies Registration Office showed that Primark Limited made a profit before tax of €394 million in 2022. This was a significant increase compared to 2021’s pre-tax profit of €19 million, which was affected by the COVID-19 pandemic. Total turnover for the year was €3.2 billion, up from nearly €2.4 billion in the year before. 

Additionally, Penneys distinguished itself from other fast-fashion brands by having a transnational strategy approach due to their goal of achieving a balance between global integration and local responsiveness. Primark’s ability to source products from Asia and some parts of Europe allows it to provide its diverse range of items at such low prices. Customers can find items such as a pack of three stockings for less than five euros, a testament to the company’s commitment to affordability. Additionally, Penneys quick turnover of styles, wide product range, strong physical presence, and economies of scale contribute to its success. The company’s dependence on brick-and-mortar stores, however, makes it vulnerable to changes in consumer preferences and regional economic shocks. On the flip side, it increases loyalty. The brand has a loyal customer base and enjoys strong brand recognition; the 10.4 billion euros in sales revenue for 2023 can be a testament to its customers’ love for it. Each company is different, and not every new change in the market favours each company. Unlike their €1.50 mittens, they are not one-size-fits-all. 

While Penneys has gained popularity for its affordable fashion and home goods, it has faced criticism and controversy regarding its ethical practices. These concerns can be examined using the company’s annual reports and public disclosures. One striking area of ethical concern is labour practices. Penneys has faced allegations of unethical labour conditions such as low wages, poor working conditions, and exploitation of workers. An infamous example is a Bangladeshi supplier called Rana Plaza in 2013, which had a structural collapse. Penneys has since then tried to address these issues by implementing a Supplier Code of Conduct and building safety programs in five countries, including Bangladesh, to prevent another disaster.

Another ethical concern is the negative environmental impact found in the fast-fashion industry. As mentioned, Penneys’ business model is centred around offering high-volume, low-cost products, contributing to overconsumption, disposal of clothing and environmental degradation. It is essential to assess Penneys’ sustainability initiatives and their effectiveness in mitigating these impacts. The company recently launched a circular product collection scheme based on the Circular Product Standard, highlighting a step in the right direction. However, it is essential to evaluate the scale and impact of this collection on Penneys’ overall product range to determine if it is a substantial effort or merely a form of greenwashing. The percentage of products from this collection relative to the company’s overall product range will provide insight into the scale and impact of Penneys’ sustainability efforts and whether they are substantial or merely tokenistic.

The Future for Penneys

Looking ahead, Penneys has several opportunities for growth and improvement. Despite its rejection of e-commerce expansion, some critics say it might have helped with brand differentiation in an overcrowded market. With growing eco-conscious values augmenting amongst consumers, Penneys could introduce initiatives to improve its ethical and sustainable practices, like competitor H&M’s ‘Conscious’ line. Market expansion is another avenue for Penneys’ future growth. Exploring new markets in Asia, Latin America, and Canada could help the company reduce its reliance on European markets and explore more environmentally friendly operations. 

Penneys can take its sustainability efforts to broader contexts by aligning operative standards with Sustainable Development Goals (SDGs) and potential legislative pressures the company may face. The SDGs, adopted by the United Nations, provide a framework for sustainable development globally. Evaluating Penneys’ initiatives in light of relevant SDGs can highlight areas where the company aligns with or falls short of international sustainability targets. For example, initiatives related to SDG 8, Economic Growth and SDG 12, Responsible Consumption and Production, are particularly relevant to Penneys’ ethical and sustainability concerns; providing concrete evidence of working towards these goals could shift the brand away from its controversial market status. Furthermore, legislative pressures and regulations in the fashion industry, such as extended producer responsibility (EPR) policies and regulations on waste management can impact Penneys’ future strategies from an external perspective. Analysing potential legislative risks and challenges will provide a more holistic understanding of the factors that may influence Penneys’ sustainability efforts and shape its future success.

The Implications of Tech Giant Microsoft’s Acquisition of Blizzard

Posted on by Leave a comment

Earlier this year, Microsoft announced its acquisition of Activision Blizzard, a leading company in “game development and interactive entertainment content publisher,” for $68.7 billion – which is the biggest gaming industry deal to date. Microsoft’s motives in this deal lie in the gaming industry being “the most dynamic and exciting category in entertainment across all platforms today,” and its participation in developing metaverse platforms. After Facebook transformed into Meta Platforms to increase its efforts in virtual reality, other tech companies have now followed suit in placing bets on the metaverse. Microsoft acquiring Activision plays a key role in its involvement in the “metaverse arms race.” It will also bolster Microsoft’s venture to grow its gaming business across different platforms such as mobile, PC, console and cloud. 

Phil Spencer, the CEO of Microsoft Gaming, states that together with Activision, they will be able to “build a future where people can play the games they want virtually anywhere they want.” Activision has released some of the most successful and well known games on the market, including Candy Crush, Call of Duty, and World of Warcraft. Bobby Kotick, CEO of Activision Blizzard, notes that Activision’s “world class talent and extraordinary franchises,” married with “Microsoft’s technology, distribution, access to talent, ambitious vision, and shared commitment to gaming and inclusion will help ensure [their] continued success in an increasingly competitive industry.” 

            Although the prospect of furthering the metaverse and making games more accessible to individuals on more platforms are positive in the advancement of the tech sector, there are antitrust and competition hurdles that Microsoft must jump in order for this acquisition to succeed. The Competition and Markets Authority (CMA), Britain’s antitrust regulator, acknowledges that Microsoft is disposed to be successful in cloud gaming given its leading cloud platform in Azure, PC operating system in Windows OS, and Xbox. However, these strengths combined with ownership of Activision’s games “could damage competition in the nascent market for cloud gaming services.”  If Microsoft refuses competitors’ access to Activision’s games, the gaming industry could be struck with serious damage – which is why the deal requires approval in several major jurisdictions including the United States, China and the EU. 

            The antitrust concerns lie greatly in how the deal would impair game console creators such as Sony and entrants to the new market of gaming subscription services and cloud gaming. Open competition would be severely harmed if Microsoft gains the ability to refuse rivals access to Activision games or provide them on worse terms. The Phase 1 investigation conducted by the CMA requires Microsoft to address its concern over the control the company would gain over popular games post-acquisition. If Microsoft fails to offer remedy solutions, the CMA would initiate its Phase 2 wherein an independent panel would carry out an in depth analysis and examination of competition implications. 

            In response, Microsoft released a statement in an attempt to appease regulators by saying that Call of Duty would not become an exclusive Microsoft Xbox game and would continue to be available on other companies’ game consoles. The company wants to remain committed in its mission to provide people with “more access to games, not less.” Analysts believe that Microsoft should provide specifications around these exclusivities in writing to demonstrate more credibility and legitimacy in its pledges. 

            Microsoft has painted a very exciting picture of its desire to “embrace choice,” for games to “reach the billions of players where they are and no matter what device they play on,” through this expansion. Their Game Pass subscription option and cloud game streaming technology to bring more games to mobile platforms would allow the company to “open up mobile gaming, create new distribution opportunities for game developers outside of mobile app stores and deliver compelling and immersive experiences for players using the power of cloud.”  However, the stricter antitrust regulations, especially on tech giants, stretches out the period of time between the announcement of a deal and its completion – thus increasing the threat of the transaction disintegrating. Microsoft’s response to the antitrust concerns over its acquisition will set an important example and no doubt offer guidance to future mergers and acquisitions, especially in the tech industry where monopolies are scrutinised to prevent giants from gaining and abusing unfettered power. 

A Guide For Incoming Freshers Of Business-Related Degrees

Posted on by Leave a comment

by Jody Murphy

Hello, and welcome! If you’re reading this article, I presume that you are one of two things, an incoming student, or, someone keen on reading insightful business-related content. If you fall into the first category, I hope this article will benefit you greatly as you progress through your first year of study. Anyone else may find that reading this article lacks relevance, and thus I encourage you to explore our website for content better suited to your interests.


I believe a congratulations are in order to all those successful in making it into Trinity’s Class of 2024! I hope this article will assist you in your navigation of academic and social life at Trinity. Although you have started your college career during a global pandemic, with the aid of technology, you can rest assured that it will have only a marginal impact on your life as an undergraduate.

Societies

Trinity is host to many great societies, but there are six focused specifically on business. It is important to note that there are no requirements for becoming a member of these societies. You don’t need to be studying a business-related degree, nor do you need any prior experience or credentials.

Trinity Student Managed Fund (SMF)

I spoke to this year’s Public Relations Officer (PRO), Liam Collins.

“The SMF is Trinity’s premier society for finance, investing, and professional services. Traditionally we run workshops on investment research, trading and professional development alongside our fantastic, highly regarded sponsors. The SMF will be running as close to ‘business as usual’ as possible, running these events online for the first semester. Anyone interested in these workshops is encouraged to apply to be an Analyst on our website (http://www.trinitysmf.com/). Also online this semester will be our annual Women in Business Conference. We are looking forward to running some great events this semester, even with the new normal.”

Trinity Entrepreneur Society (TES)

I spoke to Daryne Kushnir, the society’s PRO.

“There are few societies in Trinity that have hatched multi-million-euro business ideas, but TES prides itself in being able to do so (if you have a multi-million idea, that is). We offer a steppingstone to young inventive students, who want to become the next Steve Jobs or Elon Musk, through programs such as Incubator, Dragon’s Den and through various networking events. TES has always had a fantastic presence on campus, despite being only seven years old. We consistently gather around 2000 members each year, aided by our brilliant Fresher’s Week campaign and our high-quality, professional events. Continuing this standard online will be a challenge, but the current TES committee has worked unstintingly to organise exciting new events for the coming year. We’re starting off with an Information Night, for those new to the university (or anyone who would like to learn about the society in general), an event with Kingsley Aikins (a brilliant storyteller and the CEO of The Networking Institute) and some exciting competitions with goodies, to give students the Freshers Week buzz they might be missing this year. Our Incubator and Dragon’s Den competition will be held online, with applications coming soon. A chance to do these events from home means we can hopefully, gather more students to participate. Pitching and receiving professional guidance will now be a matter of logging onto Zoom and just showing up. We’re also running our Ambassadors program, with applications to come on our social media in the next two weeks. The best piece of advice we can give right now is to head over to Facebook and Instagram and give us a follow. All of our updates, Zoom links and goodie-competitions will be posted out there. We can’t wait to see some fresh new faces and ideas!”

Dublin University Business and Economics Society (DUBES)

The society’s PRO, Sarah Davis, and Careers Convenor, Ana Bellow, gave an introduction to the society.

“DUBES is one of Trinity’s oldest and largest societies founded in 1929. DUBES was established with one clear goal; to provide our members with access to academic, social and professional opportunities that will help prepare them for the professional world.  Although we are facing a significantly different challenge this year, like other successful organisations, we will adapt rather than buckle. As of now, popular social events like the BESS Ball and the Mystery Tour are on hold this year, but the reasons for joining our society are more compelling than ever. We have moved everything online for the upcoming Michaelmas term but have doubled the number of events held this year compared to last year. Our members will have access to an exciting line-up of speakers from companies such as Linkedin, Ernest and Young, Revolut, Salesforce and BP as well as a host of educational events throughout the calendar year. So, DUBES is taking a glass-half-full view of our enforced reality. We will continue planning in accordance with government regulations and guidelines and in the best interests of our members. Of course, if these regulations and guidelines are relaxed in future, DUBES will also begin hosting on-campus events and a range of social events. We are looking forward to engaging with our new members with a sense of hope and optimism. We remain upbeat. We are resilient. This year, Freshers Week will not have the same frenetic buzz that many of us were lucky enough to experience in the past, but Trinity societies still have plenty to offer. We are collaborating with Trinity Hall JCR for a virtual Freshers Week Social Event so keep an eye on our Instagram and Facebook pages for more information. This is hopefully the first of more virtual social events, we are testing how we would be able to run them at the moment.  We will continue to innovate and excite. We will continue to provide the kind of opportunities that have enriched college life for so many students for so many years.”

Dublin University Consulting Society (DUCS)

A new addition to Trinity this year, Conor Perry, an active member of the Irish Student Consulting Group spoke to me about what this new society involves.

“DUCS is the Trinity branch of the Irish Student Consulting Group (ISCG). The ISCG aims to provide a platform for Ireland’s highest achieving students across all disciplines to get real-world business experience and insight into the world of consulting. Within Trinity, the DUCS will aim to attract the highest achieving students within the college and engage them in working with clients to help solve tangible business problems within a real-world business environment. Given the current pandemic, all consulting projects and events will be completed virtually. These include digital information meetings, networking evenings with our alumni network and the likely digitisation of the consulting competitions (both national and international) that DUCS intends to enter. We encourage all students to apply to join and attend one of our information evenings to learn more about the DUCS.”


Trinity’s Developer Student Club (TCD DSC)

Another new addition to Trinity this year, I spoke to society’s Marketing and Relations Lead, Alexandra Ichim.

“TCD DSC is a student-led tech community. It’s open to students from any course with an interest in using Google Developer technologies to solve real-world problems. We’ll be hosting events to cater to members of all skill levels throughout the year featuring talks from guest speakers, technology workshops and ongoing certification programs. TCD DSC is a great opportunity to connect with and learn from students across campus, all while making a real difference in your community. To join, follow the link in our bio on our Instagram account @tcddsc.”

Trinity Business Review (TBR)

Last but certainly not least, the Trinity Business Review. TBR is an online student-run publication that gives its readers unique insights into the business world. The review is an excellent way to meet people from a diverse range of courses and disciplines with an interest in the ever-changing business environment. We are always looking for new correspondents as well as Junior Fresh representatives so if you are interested in writing for TBR, or generating publicity for the review, send an email to trinitybusinessreview@gmail.com.

Modules

Getting to grips with the modules you are studying is essential to avoid any unnecessary confusion. I highly recommend that you use the links below to look up the modules you are taking.

Business modules can be found here:
https://www.tcd.ie/business/undergraduate/module-outlines/

Economics modules can be found here:
https://www.tcd.ie/Economics/undergraduate/modules/

Politics modules can be found here:
https://www.tcd.ie/Political_Science/undergraduate/module-outlines/

Sociology modules can be found here: https://www.tcd.ie/sociology/undergraduate/modules/

Law modules can be found here:
https://www.tcd.ie/law/programmes/undergraduate/modules/

Personal Experience

Recently I’ve been thinking about my first year as a BESS student, and I’ve come up with some advice that I hope you will find useful.

The first is to relax. Making the transition from an environment where you know a great number of people to one where you know few, can be an experience shadowed by anxiety and stress. You may find that prospect of going to your first in-person lecture, attending a society event or interacting with new people somewhat daunting. I can assure you that you are not the only one. It can take some time to fit into college life. The best way to speed this process up is to get involved. Why not become an ambassador for TES, an analyst for the SMF, a consultant for the DUCS or, a correspondent for the Trinity Business Review? You’re in the first year of your degree, there has never been a better time to get stuck in!

The second piece of advice relates to module selection. Towards the end of Hillary term, you will select your second-year modules. It’s important you know that whichever modules you choose to study for second year will determine which modules you can choose for third and fourth years. For example, if you are a BESS student and you chose not to study ‘Mathematical and Statistical Methods A & B’ for your second year, this will limit which economics modules you can study for third and fourth year.

I hope this article serves you well as you progress through Junior Fresh. Be sure to follow the Trinity Business Review on social media to learn of new articles as they are published. On behalf of the TBR team, I would like to wish you the best of luck throughout your years at Trinity.

Demi’s Basic Business Questions: What is Commercial Awareness?

Posted on by Leave a comment

This week instead of looking to myself for the answer to your questions, I looked to you for the answer to the meaning of Commercial Awareness. Commercial awareness is a phrase I’ve been seeing lately all over commercial law applications and all over financial and professional services sectors too. My idea of commercial awareness has always been wishy-washy and recently I’ve wanted to gain a more succinct definition.

To achieve my objective, I asked a few students from Trinity and UCD how they would define commercial awareness. 

I spoke to students from business backgrounds who gave exhaustive responses:

 “Being cognisant of the way businesses operate and affect our lives and how we affect businesses” (1st Year BESS), 

“..being able to tack together different current affair stories and making real sense of them for your industry,” (2nd Year Law and Business)

“..understanding the external environment that impacts the specific industry, i.e the Political. Economic, Social, Technological, Legal and Environmental factors (PESTLE)..” (1st Year Global Business)

I also spoke to law students like myself, who kept things short and simple:

“..an understanding of how businesses work”

“Knowledge of a business or company, which is important if you want to get recruited by that company!”

I spoke to older students whose responses were.. interesting, to say the least:

“It means being aware, commercially of course.” (3rd Year Biomedical Sciences)

“Being able to tell the difference between all the ads or commercials on TV” (3rd Year Children’s and General Nursing)

Not only was I able to get student insight, I was able to get some industry perspective on commercial awareness too. My application for Legal Cheek’s Commercial Awareness Question Time with Matheson, Barbri, Pinsent Masons and Arthur Cox was successful so I was invited to attend the event at the Law Society.

The Commercial Awareness Question Time taught me the wide range of issues that commercial awareness encompasses. It ranges from having an in-depth knowledge of what the implications of Brexit are on the legal sector to knowing that a company is a brand that has to sell and distinguish itself from competitors. 

Nearing the end of my search for “commercial awareness”, I’ve come to the realization that commercial awareness is as broad or as succinct a definition as we want it to be. It really is as simple as taking a little time out of your week to become “..aware, commercially of course” by following some financial institutions, newspapers or even keeping up with my Basic Business Questions.

If you have any more Basic Business Questions you are interested in me tackling, please do not hesitate to email me at dadenira@tcd.ie

Yours in Learning,

Demilade

Demi’s Basic Business Questions: What is Corporation Tax?

Posted on by Leave a comment

We often see headlines about Ireland’s low corporation tax – some are critical, others ecstatic about it. A pretty common question people have is what exactly is corporation tax, and how does the tax big corporations like Google and Facebook pay affect someone like me, the average college student. The aim of the following article is to give a bite-sized introduction to corporation tax and give some guidance on whether it is to be loved or hated.

Firstly, a definition. Corporation tax is the tax companies pay in countries they are resident in on the profit they earn from their business. In Ireland, the tax is at 12.5%, significantly lower than other countries. The average corporation tax rate in Europe is 25.3%, for example. 

Similarly to when we looked at why it is not feasible to print more money in order to combat financial crises, we are brought back to one of the fundamentals of economics – the law of demand. Generally, when something costs more money, less people want it. When something costs less, more people want it. Pretty reasonable, right?

The law of demand can easily be applied to our low corporation tax scenario. If it costs less money to make profits in Ireland (due to the low corporation tax), more corporations will want to set up here. It is argued that this is a positive phenomenon as it leads to Ireland becoming an international hub for multinational companies. Where there are increased companies, there are increased jobs. This reduces the number of skilled young people, university graduates etc. emigrating in search of work. Increased employment boosts the Irish economy and is often something to smile about. 

However, on the other side of the coin, those who are against our competitively low corporation tax level make strong arguments. They point to the profits that corporations such as Twitter and Facebook make and suggest better use for those profits, such as contributing to social welfare schemes. It is also argued that we are putting ourselves at an advantage at the expense of fellow European countries. The discrepancy between corporation tax rates is so high that it is a significant challenge for them to compete. This can be seen as unethical. 

There are numerous points to be made on either side of the debate but it is up to you decide where your opinions lie. 

If you have any more Basic Business Questions you are interested in me tackling, please do not hesitate to email me at dadenira@tcd.ie

Yours in Learning,

Demilade

« Older Entries