Introduction

Understanding the environment within which a business operates is very important for
running a business unit successfully at any place. The environmental factors influence
almost every aspect of business, be it its nature, its location, the prices of products, the
distribution system, or the personnel policies. Hence, it is important to learn about the
various components of the business environment, which consists of the economic
aspect, the socio-cultural aspects, the political framework, technological and the legal
framework and so on.
Therefore this essay endeavors to discuss the solutions to low performance or low
productivity of EasyTrade with the depreciation of the Kwacha against the Dollar. It
firstly discusses the concept of business environment, and factors affecting Easy
Trades business environment. It further outlines solutions to the problems affecting this
trading company in order to improve its performance as a company.

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Economic Environment
All business activities and operations are directly influenced by the economic policies
framed by the government from time to time. Some of the important economic policies
are: Fiscal Policy, Foreign Investment Policy and ExportImport Policy. The government
constantly changes these policies1 time and again in view of the developments taking
place in the economic scenario, political expediency and the changing requirement. 2
Every business organization has to function strictly within the policy framework and
respond to the changes therein. Business depends on the economic environment for all
the needed inputs. It also depends on the economic environment to sell the finished
goods.3 Naturally, the dependence of business on the economic environment is total
and it is not surprising because as it is rightly said, business is one unit of the total
economy.
Zambias trade regime is more open than that of an average sub-Saharan African or
low-income country. In the case of a depreciation of the Zambian currency, domestically
produced goods would be more competitive and foreign produced goods less
competitive. The country is working towards lower trade barriers especially through the
COMESA and SADC free-trade areas. 4 For this reason the economic environment is
conducive for Easy Trade Ltd to thrive.
With the free fall of the kwacha, it would be prudent for EasyTrade Ltd to export more
than it imports because that way it would have enough foreign exchange to sustain the
business, for it is reported that Zambia exports very little compared to what it imports.
Alternatively, EasyTrade Ltd could consider using a feature called forward exchange
1 www.wipo.int/edocs/lexdocs/laws/en/zm/zm044en.pdf (accessed 28/10/15)
2 Jeffrey F Beatty, Susan S Samuelson & Dean A Bredeson, Business Law and the Legal Environment (6th Edn
South-Western Cengage Learning)

3 Roger Leroy Miller, Frank B Cross & Gaylord A Jentz, Essentials of the Legal Environment (3rd Edn South-Western
Cengage Learning)

4 www.wipo.int/edocs/lexdocs/laws/en/zm/zm044en.pdf (accessed 28/10/15)

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rate.5 The forward exchange contract is a feature which can be used to protect a firm
from eventual loss due to fluctuation in the foreign exchange rates in future.

The Social Environment

Society creates corporations and accords them a special status, including the grant of
limited liability, which insulates the owners from liability for debts the organization incurs.
Society asserts that limited liability and other rights granted to companies carry a
responsibility: corporations, just like any other members of society, must contribute to its
betterment.6 Therefore, companies owe a moral debt to society to contribute to its
overall wellbeing. Society needs a host of improvements, such as pollution control, safe
products, a free marketplace, quality education, cures for illness, and freedom from
crime. Corporations can help in each of these areas. Granted, deciding which social
needs deserve corporate attention is difficult; however, this challenge does not lessen a
companys obligation to choose a cause.7
The more responsibly companies act, the less regulation the government must provide.
If a company can use more flexible, voluntary methods of meeting a social norm such
as partaking in philanthropic activities aimed at poverty reduction, the government will
be less tempted to legislate norms. Not only does anticipatory corporate action lessen
the likelihood of government regulation, but social involvement by companies creates a
climate of trust and respect that reduces the overall inclination of government to
interfere in company business.8

5 S L Gupta, Financial Derivatives: Theory, Concepts and Problems (PHI Learning Pvt Ltd)
6 Richard A Mann & Barry S Roberts, Smith & Robertsons Business Law (14th edn South-Western 2009)
7 Richard A Mann & Barry S Roberts, Smith & Robertsons Business Law (14th edn South-Western 2009)
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Competitor Analysis
There will be need for this firm to gain an understanding of the industry and markets in
which it is competing. They need to do a competitor analysis. A competitor analysis is a
detailed analysis of a firms competition. It helps a firm understand the position of its
major competitors and the opportunities that are available to obtain a competitive
advantage in one or more areas. To do this, a frim must first understand the strategies
and behaviours of its competitors. The information gathered by a firm to learn about its
competitors is referred to as competitive intelligence. The following are examples of
ways a firm can ethically obtain information about its competitors: 9

Attend conferences and trade shows

Read industry related books, magazines and websites

Talk to consumers about why they bought your product rather than your
competitors

Study competitors websites

Purchase competitors
shortcomings

Study websites that provide information about companies

products

to

study

their

features,

benefits

and

It is against the law to collude with other firms in order to limit competition, fix prices or
to divide the market. This practice is against what is contained in The Competition and
Fair Trading Act10 as outlined in Section 7, subsection 2 (a) and (b) which states:
Subject to the provisions of subsection (1), enterprises shall refrain from the
following acts or behavior if, through abuse or acquisition of a dominant position
8 Terry Halbert & Elaine Ingulli, Law & Ethics in the Business Environment (7th edn South-Western 2006)
9 Richard A Mann & Barry S Roberts, Smith & Robertsons Business Law (14th edn South-Western 2009)
10 Cap 417 of the Laws of Zambia
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of market power, they limit access to markets or otherwise unduly restrain

competition, or have or are likely to have adverse effect on trade or the economy
in general;
(a) predatory behavior towards, competition including the use of cost pricing to
eliminate competitors;
(b) discriminatory pricing and discrimination, in terms and conditions, in the
supply or purchase of goods or services, including by means of pricing
policies in transactions between affiliated enterprises which overcharge or
undercharge for goods or services purchased or supplied as compared with
prices for similar or comparable transactions outside the affiliated
enterprises;

Employee Satisfaction / Retention Decisions

A business enterprise must ensure a fair wage or salary to the workers based on the
nature of work involved and the prevailing rates in the market. The labour market in
Zambia is managed by the Industrial and Labour Relations Act 11, The Minimum Wages
and Conditions of Service Act12, Employment Act13 and some other statutes.
The Employment Act is the principal piece of legislation governing employee rights in
Zambia. A distinction is drawn between oral contracts of service, which are governed by
Part IV of the Employment Act, and written contracts of service which are governed by
11 Chapter 269 of the Laws of Zambia
12 Chapter 276 of the Laws of Zambia
13 Chapter 268 of the Laws of Zambia
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Part V. Section 26B of part IV defines the concept of redundancy. However, Part V of
the Employment Act lacks a corresponding provision and is therefore entirely silent on
redundancy. This is evidence in the Barclays Bank Plc v Zambia Union of Financial
Institutions and Allied Workers 14 case in which the Supreme Court of Zambia held
that 26B of the Employment Act does not apply to written contracts on the basis that In
enacting this provision Parliament intended to safeguard the interests of employees
who are employed on oral contracts of service which by nature would not have any
provision for termination by way of redundancy. The Supreme Court of Zambia
reaffirmed its view in the Chilanga Cement Plc v Kasote Singogo 15 case. Orders have
been issued under the Minimum Wages and Conditions of Employment Act to provide
for redundancy benefits for certain occupations.
On the other hand, a huge workforce entails huge expenditure on salaries, wages and
any other employee benefits.

Conclusion
EasyTrade will have to be pliable to the changes relating to government policy so as to
remain relevant in the business. They will have to conduct their business within the
confines of the law and take advantage to the prevailing platforms, notwithstanding the
depreciation of the currency. The firm will also have to play a role in the community so
as to negate governments interference in terms of formulating laws that would make it
hard for the business to thrive. In order to have an upper hand, EasyTrade needs to be
abreast with the happenings regarding their competitors. They should be cautious
though not to employ anti competition behaviour so as to ward off litigations. Employees
also need to be taken care of as they are a potential source of unnecessary litigations.

14 S.C.Z Appeal No. 17 of 2007 (124)

15 (2009) Z.R. 122 (S.C.Z)
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BIBLIOGRAPHY
Books
Beatty J F, Samuelson S S & Bredeson D A, Business Law and the Legal Environment
(6th edn South-Western Cengage Learning)
Gupta S L, Financial Derivatives: Theory, Concepts and Problems (PHI Learning Pvt
Ltd)
Halbert T & Ingulli E, Law & Ethics in the Business Environment (7th edn South-Western
2006)
Mann R A & Roberts B S, Smith & Robertsons Business Law (14th edn South-Western
2009)
Miller R L, Cross F B & Jentz G A, Essentials of the Legal Environment (3rd edn SouthWestern Cengage Learning)
www.wipo.inte/edocs/lexdocs/laws/en/zm/zm044en.pdf (accessed 28/10/15)

Cases
Barclays Bank Plc v Zambia Union of Financial Institutions and Allied Workers [2007]
S.C.Z Appeal No. 17 (124)
Chilanga Cement Plc v Kasote Singogo [2009] Z.R. 122 S.C.Z

Legislation
The Competition and Fair Trading Act, Cap. 417 of the Laws of Zambia
The Industrial and Labour Relations Act, Chapter 269 of the Laws of Zambia
The Minimum Wages and Conditions of Service Act, Chapter 276 of the Laws of Zambia
The Employment Act, Chapter 268 of the Laws of Zambia

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