Business and Business Environment: A Comprehensive Analysis of Marks & Spencer

This study delves into the complexities of the business environment, examining the different types and purposes of organizations, including public, private, and voluntary sectors. It analyzes the size and scope of organizations like Marks & Spencer, Network Rail, and Oxfam, highlighting their internal functions and how they contribute to organizational objectives. The study further explores the impact of the macro environment on business operations, using M&S as a case study to illustrate the positive and negative effects of political, economic, social, technological, and legal factors. By conducting an internal and external analysis of M&S, the study identifies its strengths, weaknesses, opportunities, and threats, demonstrating how these factors interrelate with the macro environment. The conclusion emphasizes the importance of understanding and managing these factors for organizational success.

BUSINESS AND BUSINESS ENVIRONMENT
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Table of Contents
Introduction:...............................................................................................................................3
LO 1...........................................................................................................................................4
P1 Explain different types and purposes of organizations; public, private and voluntary sector
and legal structures.....................................................................................................................4
P2. Explain the size and scope of a range of different types of organizations...........................6
LO 3.........................................................................................................................................10
P4: Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.............................................................................10
LO4..........................................................................................................................................12
P5 : Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses.........................................................................................................12
P6 : Explain how strengths and weaknesses interrelate with external macro factors..............13
Conclusion:..............................................................................................................................15
References :..............................................................................................................................16
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Introduction:
Every business or company is affected to a great extent by several external and
internal factors, which form the business environment. Therefore every company
has to consider the business environment which includes political, economic, social
technological and legal situation of the country which helps its leaders to design
strategies in accordance with these situations to meet its goal. Considering these
factors, the company has to alter its strategies, so that it doesn't suffer losses and is
able to maintain its position global market.
The chosen company in this context is Marks and Spencer. This study mainly
focuses on the different types, scopes and size of organization along with the
different departments of the organization and how they function to match up to the
goals of the company. From this study we also try to understand the various macro
environmental factors affecting business and how these factors influence the
strengths and weaknesses of a company.
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LO 1
P1 Explain different types and purposes of organizations; public, private and
voluntary sector and legal structures
An organization can be defined as an association or an institution, which
incorporates hundreds of people for the sole purpose of achieving the company’s
goal. However, there are various types of organization such as corporations,
nongovernmental organizations, governmental organizations, international
organization and partnerships. However, these organizations can be either public
sector or private sector based or voluntary as well.
Thus, the three organizations which would be further explained based on their
origination, legal structure and profit turnovers are Marks &Spencer which is a
private sector based organization, Network Rail which is a public sector based
association and Oxfam which is a voluntary based association.
Marks & Spencer is a major British multinational retailer which has it’s headquarter in
the City of Westminster, London (Scott and Walker, 2017). It was established in
1894 .It was founded by a partnership between Michael Marks and Thomas
Spencer. It gradually made its reputation in the 20th century throughout U.K as the
only company selling British made goods. Later, time-by-time many departments of
different types of products got incorporated into the promotion section .Around 1928
M&S started the clothes section under the brand name of “St Michael” (Ritch, 2018).
Therefore, with time it began to specialize in clothing department, home products
and luxury food products. Since 1960, it began to expand globally also in these
departments.
The purpose of this organization since its establishment is to
 Cater to the needs of the employees.
 Provide them with best quality of products.
 Provide employment to many sections of people.
On the other hand, Network Rail which was a government – owned company, has
been since September 2014 been termed as “public sector body”. It was founded in
2002 with its headquarter being in London, England .Network Rail can be termed
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as an owner company of Railtrack group since October 2002 which looked after “
railway administration ”(Nash,2018). Therefore, it is a company, which owns the
infrastructure such as signals, overhead wires, railway tracks, tunnels, bridges, most
stations and many more. Despite of it owning 2,500 stations, it only manages only
19 of the biggest and busiest stations whereas; Train Operating Companies operate
the other stations. However, Network Rail should not be merely confused with
National Rail as the latter is just a brand name used for promoting Great Britain’s -
wide network of passenger railway services (Jupe and Funnell 2015). However, the
purpose of Network Rail Company is to
 Expand its operations.
 Ensure smooth flow of passengers.
 Ensure the availability of vehicles with proper duration.
 Provide employment to many sections of people.
The other voluntary based organization which would be further classified is Oxfam
which is a merger of 20 autonomous charitable organizations focusing on the
eradication of global poverty (Butler and Wilson, 2015). It was founded in 1942 and
has its headquarters in Oxfam International, which is in Oxford, England. This
organization is spread worldwide and its Executive Director mainly is Winnie
Byanyima .
The basic purpose of the organization mainly is to
 Eradicate Poverty
 Manage disaster and relief operations smoothly.
 Focus on advocacy, policy research and pro-migration.
Being an International non-governmental organization, it recognizes the universality
and indivisibility of human rights and has adopted certain aims like the right to
sustainable livelihood, the right to be heard and identify and the right to life, security
and basic social services (Griffith, 2015).
The legal structure of Mark & Spencer is partnership. On the other hand, the legal
structure of Network Rail is public sector organization.
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However , the legal structure of Oxfam is a merger of 20 autonomous charitable
group .
P2. Explain the size and scope of a range of different types of organizations.
The size and scope can be termed as two leading key features, which lead an
organization to be progressive as well as profit – orientated.
Marks & Spencer since 1960 started its operation of business expansion and up until
now, it has more than hundred stores spread across worldwide (Buckley, 2018).
According to a statistics of 2017, it has employed around 84,939 employees and
operates on an income of £690.6 million and has a net income of £115.7 million .It
also generates a revenue of around £10.622 billion as of 2017. According to a
journal , M&S since the beginning of year 2018 is running in losses where news is on
the prowl that many stores are going to be closed affecting employment rates .Earlier
the target for closing number of shops worldwide was 60 but by 2022 ,it is expected
that around 100 shops will close..
On the other hand, Network Rail being an organization looks after public transport
facilities and has employed around 37,000 workers. Annually it generates revenue of
around £ 6,259 million.
However, the strategic plans for the future of Network Rail include:
 There will be 7,000 new carriages on the railway network by 2021.
 There will be 6,400 new train services.
 More frequent train services will come into being.
 There will be improvement services delivered to around 178 stations.
 To continue to remain the top-rated major railway in Europe for commuter
satisfaction
Oxfam on the other hand, due to working on diverse fields in diverse countries ,it
workers are estimated to be more than 20,000.In terms of operation costs ,it
functions from the money received as funding from eminent tycoon companies and
barons .
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Therefore, the structure, size and scope of organizations like Marks & Spencer,
Network Rail and Oxfam contribute to business objective in various manners.
It leads the companies to maintain its promises it does to the companies, which in
turn leads them to profitability and recognition giving them more and more
opportunities to expand further, and having an appropriate Human Resource
Management helps the companies to be stable in a legal manner.
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LO 2
P3: Explain the relationship between different organizational functions and
how they link to organizational objectives and structure.
Every successful organization is a result of amalgamation of the various departments
of the organization. Any business organization has the chief functions. of
production, research and development, purchasing, marketing, human
resource management and accounting and finance.
Production : This refers to the manufacture of goods or services that the company
provides. An efficient production team of the company will not only increase in
productivity and profit, but will also minimize the production of defective items (Belás
et al., 2014). A good production team will also ensure that maximum production can
be achieved from minimum raw materials. In M&S, the aim is to maximize the
production of consumable food products, whereas network rails focuses on providing
uninterrupted transport services.
Research and development : This department ensures that, the company
constantly incorporates newer techniques and ideas to develop its production
strategies to compete and leave an impact in the global market. The R&D
department ensures that maximum production can be achieved in minimum time and
using the least raw materials so that the organization can achieve maximum profit
margins. The R&D department of M&S focuses on food safety, food availability and
packaging, whereas Network rails mainly focuses on the technological development
of trains, for example the battery powered train.
Purchasing: This department deals with procuring the various raw materials
required for production, or daily operation of the organization, by investing minimum
capital (Botha et al., 2014) . M&S is involved in procuring of various edible raw
materials required for the production food products, or directly buying food products
from the suppliers whereas this department of network rails deals with procuring
materials required for the construction of trains and railways.
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Marketing: Promoting the vision and goals of the organization is the key function of
this department. M&S promotes a nutritious balanced diet , safe drinking and a
healthy lifestyle as a part of its marketing strategies. Automated ticket gates, are
used by network rails as an important part of its marketing strategy which attract a lot
of it customers. Advertisements also form an important part of its marketing strategy.
Human Resource Management: This department treats its employees as its sole
precious asset. Recruitment, training and development of the employees are the key
functions of this department (Cai and Yang, 2014). The HR department of
M&S ,moulds its employees in such a way that alters the personality of the employee
and inculcates loyalty within them, that improves the way they serve the company.
The HR department of Network rails, hires its employees from diverse cultures
cutting across geographical boundaries that brings in new ideas to the company
Accounting and finance: This department is involved in the keeping records of the
cash flow and various transactions taking place in the company. This department of
M&S mainly functions to keep records of the investments made in the buying of raw
materials and also the investments made on its employees and tries to ensure that
the company gains maximum revenues.
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LO 3
P4: Identify the positive and negative impacts the macro environment has
upon business operations, supported by specific examples.
Businesses are affected to a large extent by macro environment. Macro
environment refers to the various the external factors that cannot be controlled by
the company. These include political environment, economic environment,
social environment, technological environment and legal environment which
are analyzed by a technique known as pestel analysis. The present economic
condition in UK and Brexit have had a massive impact on the business of M&S.
 Political environment: M&S being a UK based company has been suffering
a tough time since Brexit. In the recent past the production or cost price of
food products and cosmetics have seen a significant rise, thus reducing the
profit margins of the company which will have a huge negative impact on the
company (Charter et al 2015). Though the UK government encourages the
growth of supermarket chains a lot as it provides employment to many young
people, but M&S is facing a huge competition from competitors like Tesco
which is also have a negative effect on organization.
 Economic environment : Since the price of basic commodities have
experienced a major inflation since 2008 in UK, and also due to Brexit the
supermarket chain is in the verge of suffering financial losses, due to massive
decrease in profit margins (Drucker,2017.). Also another major factor of
concern is the fact that unemployment levels are on the rise, due to which the
demand levels for goods are suffering a major fall, resulting in an extremely
reduced demand for the production of these commodities. Since the
production level falls, the company is at the verge of suffering major losses
 Social environment : The massive rise in price of basic commodities
required for production of food products , has resulted in the inevitable rise in
the cost price and hence the selling price of these commodities. Such high
prices, are pushing away the customers from buying these stuff and hence
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resulting is a decreased revenues for the company . Therefore to optimize the
production levels with the demands of the people, the company is now
conducting surveys in various regions to understand the needs of a particular
location.
 Technological environment: Hygienic manufacturing procedures, packaging
of food products, especially the frozen ones, are matters of utmost importance
in the supermarket chains (Eling and Schaper, 2017) . M&S has devised
newer technologies, to keep up with the advancements in the world of
science. Also the company has launched online website to reach the global
market. These sites should have all information about the product including
the ingredients and taxes included and should be operated by well trained
personnel who can receive and manage orders and consumers all over the
globe. But technological advancements also mean that the company has to
invest a lot to avail these technologies and train its employees in a way that
they become well acquainted with the technologies.
 Legal environment: To avoid all kinds of legal restrictions, the company
follows fair taxation and also must give detailed information about duties
which are applicable for imported food products. The company should also
procure proper license from the UK government. A very restricted political
environment wont allow the company to function well as there might be laws
that prohibit the selling of certain food products.
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LO4
P5 : Conduct internal and external analysis of specific organisations in order
to identify strengths and weaknesses.
The identification of strengths and weaknesses of a company, is extremely important
to understand and improve the position of a company in the global market. A
technique known as SWOT analysis is used for this purpose. SWOT stands for
strengths, weaknesses, opportunities and threats. It is a technique used to determine
a company's position with respect to its competitors in the global market. Every
company has an external and an internal environment, both of which can affect its
strengths and weaknesses. The internal environment mainly deals with the
employees of the organization, whereas the external environment includes the
competitors and the customers.
Strengths of M&S : M&S being a UK based company can easily avail the market
advantages in UK. Also due to the high rates of unemployment in the recent times,
there has been a sharp decrease in labour cost , thus increasing the company's
profit margins. Being one of the largest supermarket chains in UK, the company has
received a huge financial assistance from the UK government, to overcome the
effects of Brexit (Frösén et al,2016). According to the 2017 reports a total of 84939
employees have been serving the company. M&S brings an annual revenue of
1062.2 crore GBP according to the reports of 2017.Apart from these, the huge range
of products M&S provides, widespread presence all over the world, makes it one of
the most recognisable brands across the globe.
Weaknesses of M&S: Though M&S procures its products from a wide range of
brands, but when it comes to the kinds of garments that are sold, M&S is known to
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be an old fashioned brand that, doesn't upgrade the products according to the
changing market demands and the latest trends. M&S prefers man power over
automated machines, which is one of its major weaknesses as it decreases the
productivity, by increasing the production time and leads to a huge investment in
human labour, thus decreasing profit margins.
Opportunities of M&S: The main opportunities for the company include increasing
its global presence and market segmentation. The company was internalised earlier
due to domestic factors, but thereafter the company expanded its business
worldwide, dominating the global market (Georgescu and Popescul, 2015). To
further improve its position n compete globally, the company needs to spread its
branches further so that it can reach the huge ocean of consumers all across the
globe. Market segmentation on the other hand will allow the company to segregate
its customers according to their interests, by opting for small stores instead of mega
stores, which will thereby reduce the man power required and hence maximise
profits.
Threats of M&S : A huge market competition, that the company is facing from other
supermarket chains in UK such as Sainsbury's and Tesco are the posing major
threats to the company. This is because Sainsbury's and Tesco have already opted
for small stores whereas M&S is still continuing with its mega stores and therefore
procuring much lesser revenues (Huang-Horowitz, 2015). Therefore the company
needs to design newer strategies to face the highly competitive global market.
P6 : Explain how strengths and weaknesses interrelate with external macro
factors.
Every company has its own set of strengths and weaknesses. The company's
strengths and weaknesses are also correlated to a huge extent with the macro or
external environmental factors such as political, economical, social, technological
and legal factors.
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M&S is a highly recognised brand and therefore even in an extremely unfavourable
political situation in the country; M&S won't suffer a huge loss, as the company will
be its customer’s first choice (Kolk, 2016). Another major strength of M&S is it has a
huge number of employees working in the organization. Therefore it will be very easy
for the company to adapt to newer technologies or to the changes in technology due
to its strong and efficient manpower. But this huge manpower might serve as a threat
when the country is having a fall in its economy. After Brexit, in recent times,
investing a huge capital on the employees reduces the company's profit margin to a
huge extent (Moroni et al., 2015). Also the reduced use of automated machines and
increased dependence on its employees, increases the time of production and
reduces the efficiency of production and also increases the chances of production of
a defective good.
One of the major weaknesses of M&S is that in today's fashion conscious world; it
doesn't keep up with trends. Therefore most of the customers, especially the young
customers of this brand are being pushed away by the old fashioned garments the
stores are showcasing. Also keeping in mind the socio economic scenario of UK in
the recent times, the prices of the goods should be kept such so that all sections of
the society can afford it at all times. Otherwise if the prices are too high, the
company can only target the upper strata of the society.
The company hasn't yet shifted to small stores from mega stores, and this is
decreasing the profit margins to a huge extent, which is dangerous taking into
account the socio-economic condition of (Trevino and Nelson, 2016). Therefore
shifting to small stores from mega stores is of major importance as it will decrease
the number of employees and will also segregate the customers on the basis of
common interests and thus lead to increased profit margins.
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Conclusion:
From the study conducted, we can conclude that the aim of the private sector
company is to maximize profits, whereas the public sector companies mainly focuses
production of goods and services that are essential for the people. Human
resources, the annual turnover, and market shares comprise the organizational size.
Every company has several organizational functions which aims at meeting the goals
of the company and each and every company has several strengths and
weaknesses which are strongly influenced by various macro environmental factors.
The success of a company and its position in the global market is strongly
determined by how it can channelize its strengths and weaknesses and uses its
opportunities and minimize its threats to gain maximum revenue in the current socio-
economic of the country.
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