Business and Business Environment Report

This report analyzes the business environment of Marks & Spencer, a leading UK-based multinational retailer. It examines different types of firms, legal structures, and the scope and size of organizations. The report also explores the interlink between different functions of an organization and its objectives, identifying the positive and negative impacts of external factors. It concludes with an internal analysis of Marks & Spencer's strengths and weaknesses and their interrelation with macro factors. This report is available on Desklib, a website that provides past papers and solved assignments for students.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Types and functions of different firms and its legal structures..............................................1
P2 Scope and Size of different types of organization ................................................................4
TASK 2............................................................................................................................................6
P3 Interlink between different functions of organisation and their relation with its objectives. 6
TASK 3............................................................................................................................................9
P4 Negative and positive impact of external factors ..................................................................9
TASK 4..........................................................................................................................................11
P5 Internal analysis to determine strength and weakness ........................................................11
P6 Interrelation of strengths and weaknesses with macro macro factors..................................12
CONCLUSION..............................................................................................................................13
REFERENCES .............................................................................................................................14

INTRODUCTION
Business environment means combination of all internal and external factors that affect
the performance and profitability of an organization at large. Basically it is a sum total of all
micro and macro forces that have direct or indirect impact on business and its operation. It
include suppliers, competitors, owners, clients, customer, social and economic trend, change in
technology, laws and regulation etc. It is important for all managers to view such forces that
directly affect working of the company (Asif, Garvare and Ahmad, 2011). The given report is
based on Marks and Spencer which is a leading UK-based multinational retailer. The selected
firm specialise in selling luxury food products, home products and clothing. It covers different
purpose, size and type of organisation including voluntary, public and private. It also includes
relationship between various functions of company and how they related with its objective,
identifying positive and negative impact of external forces and its inter-relation with internal
elements.
TASK 1
P1 Types and purposes of different firms and its legal structures
One of the main objectives of existence of every business firm is to attain high
profitability ratio by offering innovative products & services to target audience. In order to
maintaing long term sustainability in market, it is very important to satisfy needs and wants of
customers. In today's competitive business environment, various organisations are performing its
operations such as public, private & voluntary. Each have its own legal structure and puropse as
well which distinguish it from others. It is crucial for every business enterprise to follow all the
laws and regulations frame by government so that activities can run smoothly. Types of
organisation as well as its legal structure and purposes are defined below:
Private Organisations:
Private individuals are the one who owned and controlled such kind of organisations.
Involvement of government in activities and operations of private firms is less. Contribution of
this sector in growth and development of economy is very high. The main purpose behind
running of private organisations is to yield high revenues and profits. Around 89% of
contribution is given by private companies in gross domestic product of country. Their main aim
is to expand their business operations area and cover market share. Marks & Spencer is fall
under the category of private organisation.

Company overview:
Marks & Spencer is a British multinational retailer which is headquartered in London. It
offers clothes, luxury food and home products to its target customers. The company was
established in 1884 and perform its operations in various countries of the world. Its primary
purpose is to earn high revenues by effectively satisfying needs and requirements of customers.
Purpose of firm:
 To administer those goods and services to target customers which are of high quality.
 Satisfy customers by providing them some value for money.
 To improve profit ratios of firm and acquire large portion of market share. To enhance and expand operations of business on constant basis.
Types of legal structures of private organisation:
Partnership: When any business is started by two or more persons then it referred as
partnership firms. For starting such kinds of firm, a legal document or an agereement is signed
by all the partners which considers as a legal proof of business ownership. Profits and losses are
divided among all partners equally on the basis of their share in firm.
Sole proprietorship: Single person is responsible for operatintg and managing all
operations and activities of business in such kind of firms. They enjoy all profits but at the same
time, they have to bear all losses of company solely. Decision making is quick and effective
related to business functioning as there is single owner in such kind of legal structure.
Limited companies: These firms are bifurcate into two types – limited by share and
limited by grantee.
Advantages and disadvantages of private firm:
Merits Demerits
Interference of legal authority in activities of
firm is less.
They ignore society from their area of interest
and emphasize only on earning high profits.
Highly innovative goods & services are offered
by company for meeting consumer needs.
People has less confidence in such firms as its
affairs are not known.
Public sector organisation:

These are the organisations that are fully managed and controlled by legal authority of
respective nation. They emphasize more on development & welfare of society rather then
earning profits. Educational departments, health care institutions, electricity board etc. are the
sectors that comes under public organisations. For instance: National Health Services is the
organisation which works for earning profits as well as society welfare.
Company overview:
NHS is publicly funded organisation which deals in providing health care services to
population of respective country. It also administers free of cost services to local residents of
country. In case of emergency as well as treatment of infectious diseases, some facilities are also
rendered to visitors free of cost.
Purpose of NHS:
 Provide medical facilities free of cost to domestic people and visitors as well.
 Constant improvement in delivery of health services. Contribute in administering healthy life to people.
Types of legal structure of public firm:
Central government: Affairs of whole nation is regulated & controlled by central
government. Main activities that comes under this legal authority are printing of denomination &
collection of taxes.
State government: All the functions of state government is performed by the support of
central government. Their main aim is to improve standard of society by giving them better
educational facilities.
Local government: This legal authority handles affairs of particular city, area or town. It
performs their duties at local level only.
Merits & demerits of public sector enterprise:
Merits Demerits
Along with earning profits, society welfare is
also the main purpose of public firms.
These firms are restricted to comply with all
regulations and laws made by government.
Financial assistance is provided by government
to public firms for running its operations.
High involvement of legal authority in
operations of company.

Voluntary sector firm:
These are the organisation which are run and perform its activities with assistance of
volunteers. These are non profit firms which exists only for purpose of well being of society.
Oxfam is comes under this sector. They needs to take government permission for running
activities.
Company overview:
Oxfam is a voluntary enterprise which works and perform functions for the purpose of
declining poverty from society. Volunteers highly contributes in smooth running of operations of
firm. They fulfil basic needs of needy population of society by providing them food facility.
Purpose of firm:
 Bringing effective solutions for eliminating poverty from world.
 Administer food assistance to poor population of society.
P2 Scope and Size of different types of organization
The size and scope of every business association is distinct from one other. Size can be
measured in term of firm's operation that is carried out all across the globe. On the other hand,
Scope can be determined by vast number of products or services offered to general public.
Mark and Spencer: It is a private limited company whose size and scope are mentioned below:
Size: It is major British multinational retailer that is located in Westminster, London. It deals in
offering clothes, luxury food items and household products. It was founder in the year 1884 and
from past 184 year, the firm gained popularity by operating in more than 10 major countries
including Dutch, Germany, Belgian, Austria and so on. It has strong market base in United
Kingdom including more than 615 stores that only sells food items. Number of employees
employed in M&S is near about 84,939 and its annual revenue as of 2017 was computed as
£10.622 billion.
Scope: It specialize in delivering household products, clothing, food products to vast number of
customers. It's cloth range normally categorise into woman, children and men as well as food and
home products. Apart from these, M&S also offers products that is made under its home brand
including Indigo Collection, Collection Junior. It had 6 sub-brand within its men wear range and
10 sub-brands within its women wear range. M&S food product line encompasses lunches,
sweets, main meals and savoury items.

Vision: “Serving good quality products to target customer that values their each and every
penny”.
Mission: “To make products that are made of aspirational quality and approachable to all”.
NHS:
Size: National Health Services is a UK-based public sector company that mainly deals in
providing services related to the health care to general public. It normally operates in countries
like Northern Ireland, England, Wales, Scotland etc. The main purpose of this association is to
promote the interest and welfare of local people of the country and also bring social reform that
makes country a better place to live. Presently, around 1.8 million people are working with NHS
and rendering healthcare services to vast number of people.
Scope: The public sector firm provides basic health and medical facilities to poor people of the
respective country. Apart from this, it also specialize in offering dental and optical services.
Following are the scope of National Health Care :-
 Conveying important information related with health care to society and its members. Together we make nation a better place to live
Vision: “To create a world where equal opportunity is render to disabled people”.
Mission: “To ensure that every disabled person have equal right like any other normal person to
exercise control and choice over all decision that help in shaping its future covering products,
support programmes and services they normally taken into account”.
Oxfam:
Size: It is an independent charitable trust that is made up of 20 people or volunteers who provide
services to citizen of the country. It specialise in providing services that is maily related with
eradicating poverty or reduce poverty level all across the globe.
Scope: Apart from removal of poverty, it also render services involving pro-migration, disaster
relief, advocacy, policy research etc. Also giving food relief facility to poor people of the coutry.
All work is done with the proper assistance and contribution of its volunteers.
Vision: “To extinguish poverty level worldwide”
Mission: “Providing services that increase the living standard of domestic residents of the
country”
Stakeholder analysis: It can be viewed as a concept of evaluating stakeholders. It is mainly used
by businesses so as to determine the various needs and contribution of different stakeholders

including employees, supplies, investors, government, customer etc. It is essential for every firm
to meet the requirement of all stakeholder as they posses direct or indirect influence on its
operation and activities. In order to determine the impact of key stakeholders, Mark and Spencer
do stakeholder analysis which is classified into four categories namely:
 High power: Fascinated people.
 High power: Less fascinated people
 Low power: Fascinated people
 Low power: Less fascinated people
TASK 2
P3 Interlink between different functions of organisation and their relation with its objectives
Marks & Spencer is a renowned company which provides their high quality goods to
various customers. Prime objective of firm is to meet needs and requirements of customers by
offering them high quality products and yield high revenues from them (Bhaduri and Ha-
Brookshire, 2011). Their are several departments within firm which works collectively for

attainment of set targets and objectives of company. It assists in performing their operations
smoothly and effectively. Various functional departments of referred firm and their link with its
objectives are defined below:
Human resource department: Crucial role is played by this department in attaining goals
and objectives of company. Its main responsibility is to recruit candidates and select individual
who have high skills and ability to meet objectives of company. Human resource managers
performs various activities that are concerned with this department such as employee motivation,
compensation, training and development, performance appraisal, maintain healthy employment
relation, provide health and safety to workforce etc. All these activities assists manager of Marks
& Spencer in increasing motivation of employees and encourage them to perform towards
achieving goals and objectives of company (Cavusgil and et. al., 2014).
Finance department: It is the department without which no operations of firm can be
performed. A vital role is played by financial manager in assigning budget and allocating funds
to various departments so that their activities can be performed effectively and on specified time.
They also have responsibility to maintain adequate funds within firm so that day to day
operations are running effectively. This ensures accomplishment of objectives and targets of
company in an effective and efficient manner.
Operations and production department: This is the department in which inputs are
transformed into finished goods. Controlling production cost and make optimum utilization of
resources are the two major responsibilities of manager of operations department. Operations
department highly contributes in manufacturing high quality clothes for meeting needs and
preferences of potential customers. This will assists in attaining objectives of firm and at the
same time increases its productivity and profits (Chetwood and et. al, 2014).
Types of organisational structure:
 Divisional: Functions of firm are grouped into division in this type of organisational
structure. It assists in bringing operational flexibility within company. Required resources
and functions are included in each division which facilitates product line or geography.

 Functional: One of the most common structure is functional which is used by most
firms. Based on specialized functional areas, functions are segmented in small groups. It
brings greater efficiency in operations as shared skills and knowledgable manpower are
collectively grouped by function (Crane and Matten, 2013).
 Matrix: By 2 different perspective of operations, individuals are grouped simultaneously
in this structure. These are complex and inherently versatile that makes it more befitting
for large firms which operates in various countries (Gharajedaghi, 2011).

TASK 3
P4 Negative and positive impact of external factors
Mark and Spencer is a globally renowned British Retailer, operating worldwide. In UK, it
is the largest clothing and food retailer. The company has expanded its product line into
furniture, technology and home-wares. However, there are some external factors that are
available in market place that have either positive or negative impact on its overall business
operation and activities. External factors include social, political, technological, environmental,
economical and legal forces that are defined below;
Political: There are certain laws and regulation that has been fixed by government for business
entities related with risk assessment, risk control and hazard identification (Gilboy , 2016).
However, if somehow company was unable to follow these specified regulation or standards
then they have to go through adverse consequence in the form heavy penalty or forced to close
down in some cases. In addition to that, political instability in country due to Brexit also affect
M&S business operation.

 Positive Impact: Due to political instability that may takes place due to Brexit, the
company laid stress on not only fulfilling customer requirement but also focuses on
providing them such clothing and food products that are made carefully. Negative Impact: The negative impact can be in the form of not following the regulation
forced by Government. M&S was neglecting the laws associated with British Standard
(Kian Chong, Shafaghi and Leing Tan, 2011).
Economical: The economic outlook of United Kingdom is very uncertain and it is strongly
influenced by sales of retail sector as their citizens are not having adequate time or cash to spend
on luxury food products clothes. Recently, the firm undergo recession and as a result, approx.
70,000 people loses its job. In addition to that, M&S has decided to give two day discount to
local people at the time of Christmas so to overcome the bad affect of recession on them.
 Positive Impact: The company has launched a 20% of all Champagne and Wine so as to
attain high competitive edge in the market place over its rivals. Negative Impact: Many of its workers loses its job that indirectly increase the rate or
level of unemployment in the country.
Social: In 2006, M&S chief executive had decided to stretch its brand by selling its food product
online which ultimately makes them multi-channel retailer. Now a days consumer are much
influenced by social, cultural and psychological and personal characteristics and providing
products according to this is the main purpose of Mark and Spencer. In order to keep its potential
buyers attracted, they ensure to deliver updated clothes and other products.
 Positive Impact: The entity was famous for offering goods and services as per the
current needs and wants of customers which aid in making their customer and market
base much stronger (Li, and et. al., 2011). Negative Impact: Taste and likes of customers are changing frequently which might
create difficulty for M&S to keep changing its business practising on frequent basis.
Technological: In order to make its business process and operation more effective and efficient,
it is important for every company to embed high end technology. Taking the advantage of latest
and advance technology, M&S has decided to launch its online application.
 Positive Impact: By introducing its own mobile app, the company can extensively
increase the ratio of its potential buyers.

 Negative Impact: Large investment or cost is associated with adapting high end
technology.
Environmental: With current environmental situation, every organization is formulating plans
and strategies with aim of promoting environmental awareness among general public. In-fact all
companies are required to change its way when it comes to producing products.
 Positive Impact: M&S have established its own Green Policy called as “Plan A”. Under
this plan, firm wants to re-engineer itself so as to become zero-waste-to landfill, carbon
neutral etc. Negative Impact: Any adherence to environmental related policy might result in creating
bad image of the company in the minds of consumers (López-Gamero, Molina-Azorín
and Claver-Cortés, 2011).
Legal: Legislations are keep on changing frequently. Thus, it is necessary for all business
enterprise to keep up-dating its laws and legislation. For instance: With change in re-training
laws, M&S has change its training policy. This implies that, the referred firm is continuing to
adapt new laws and policies.
 Positive Impact: By performing the business operation as per new laws, the company is
able to improve its goodwill and brand image.
 Negative Impact: Non-compliance of legal laws may results in making customer shift to
some other brand.
TASK 4
P5 Internal analysis to determine strength and weakness
Strength:  It is the most compelling and well- known retail brand
 It also sells products that are labelled under their own brand name
 Strong market presence in UK with over 919 stores (Meiners,
Ringleb and Edwards, 2014).
 More than 80,000 workers are working with M&S
 It presence in more than 40 countries with over 1000 stores
 It's products are often perceived as “value for money”
Weakness:  Strong competition from other already established and sound retail

brands.
 High chance of fake imitation products
Opportunities:  It can develop its own website and mobile application
 Expand its product line into different segments
 Future Opportunities in terms of expanding its business operation in
developing countries like India and China (Sekaran and Bougie,
2016).
Threats:  Frequent change in policies formulated by Government
 Other retail stores are providing huge discount that instantly attract
ample number of customer
 It is a global retailer which means its business operation and
activities are much exposed to political situation of the respective
country in which they are operating.
P6 Interrelation of strengths and weaknesses with macro macro factors
Strengths & weaknesses of a business enterprise is largely interlinked with macro factors
of external environment. For exploiting opportunities and gaining high competitive edge in
market, determination of their interrelationship is very assistive for firm.
Political:
All enactments and regulations are required to be executed by company which allows
them in building effective teams (Tayur, Ganeshan and Magazine, 2012).
Strength: Consideration of political variables assists firm in running their operations
effectively and efficiently.
Weaknesses: Ignorance of these forces may hampers activities and operations of business
as Marks & Spencer operates in many countries and it is very difficult to understand all laws.
Economic:
Interest rates, inflation, GDP, deflation etc. are the constituents that affects functioning of
business.
Strengths: Strong economy of country facilitates in development and growth of company
as well as helps in generating high profits.

Weaknesses: At the time of inflation, customer's buying power is low which highly
affects demand of product in market (Türetken and et. al., 2011, June).
Social:
For improving society's living standard, it is essential for enterprise to fulfil its needs.
Strength: Various social activities are conducted by firm which assists in creating its
good image in market and minds of customers.
Weaknesses: Manufacturing of lower quality goods may decline sales of products &
profits of company.
Technological:
Awareness regarding technological changes is very necessary for firm in order to attain
high competitive advantage.
Strength: Keep updating with latest technology provides competitive edge to company in
market.
Weakness: Ignorance of technological changes and use of obsolete technology may
decline growth of company (Vaiman, Sigurjonsson and Davidsson, 2011).
CONCLUSION
As per the above mentioned report, it has been concluded that business environment is
identified as the surroundings where firm perform its operations and activities. It involves
various internal and external variables that put high influence on functioning of business in both
negative and positive manner. It is essential for managers to evaluate and take into consideration
all these factors so that they will get assistance in framing appropriate policies and strategies.
Execution of such policies helps in attainment of goals and targets and firm leads towards high
success and growth. Various types of organisations are running within business environment,
i.e., public, voluntary and private & each have itsn own scope, size, objective, purpose and legal
structure. Marketing, production & operations, research and development, human resource
development, finance etc. are several departments that are running within an organisation and are
interrelated with its objectives. Collective working of all these departments assists in
accomplishment of goals and objectives.

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(Asif, Garvare and Ahmad, 2011)(Bhaduri and Ha-Brookshire, 2011)(Cavusgil and et. al., 2014)
(Chetwood and et. al, 2014)(Crane and Matten, 2013)(Gharajedaghi, 2011)(Gilboy ,
2016)(Kian Chong, Shafaghi and Leing Tan, 2011)(Li, and et. al., 2011)(López-
Gamero, Molina-Azorín and Claver-Cortés, 2011)(Meiners, Ringleb and Edwards,
2014)(Sekaran and Bougie, 2016)(Tayur, Ganeshan and Magazine, 2012)(Türetken and
et. al., 2011, June)(Vaiman, Sigurjonsson and Davidsson, 2011)(Wack, 2017)(Yu and
Ramanathan, 2013)(Zeng, Li and Duan, 2012)(Zsambok and Klein, 2014)