Marks & Spencer Business Environment Analysis

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Different types and purposes of organisation and their legal structure ................................1
P 2 Size and Scope of different types of Organisation................................................................2
LO 2.................................................................................................................................................3
P 3 Relationship between different organisational function and their link to objectives of the
organisation and its structure .....................................................................................................3
LO 3.................................................................................................................................................4
P4 Positive and negative impact of macro environmental factors on business...........................4
LO4..................................................................................................................................................7
P5 Internal and external analysis of Marks and Spencer in order to identify their strength and
weakness.....................................................................................................................................7
P6 Interrelationship between strength and weakness with macro factors...................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
This study is about Business and business environment. Business is related to production
and buying and selling of good and services to the public in order to earn profit. Business
environment includes the factors which have their impact on working of organisation. Marks and
Spencer will be part of this assignment to explain different task of this study. Marks& Spencer
(M&S) is involved in Retail industry and produce various products such as clothing for men,
women and kids, Home products etc. Marks & Spencer is having its presence all over the
regions. This study will explain about various types of organisation which exist in the
environment and their size and scope. This assignment will also explain the relationship between
different organisation functions. Furthermore, It will include about various factors which have
their impact on business such as internal and external.
LO 1
P1 Different types and purposes of organisation and their legal structure
There are different types of organisation present in the economy such as public sector,
private sector and voluntary sector which have their different purposes.
Public sector
Public sector company is regulated by the government. It provides services for the
citizens of the country. Public sector company provide various products and services to the
public and are meant for the welfare of the citizens (Deasy and et.al., 2016). The goods and
services are provided by the government. Government provided various services relating to
education, health, police services etc. This sector exist at national, regional, local levels. Purpose
of public sector company is that it provide public services rather that making a profit. This sector
provide subsidises products and services to the public. Public sector is funded with the taxation
and government departmental funding. For example, National health service (NHS) is the
biggest public sector organisation in the world. NHS provide healthcare services to the UK
citizens and this organisation is funded by taxes. Public sector organisation are accountable to
central and local government.
Private sector
Private sector organisation are run by the individuals. This sector of the economy is established
in order to make profit by providing various products and services to the customers. This
organisation are not regulated and controlled by the government (Prajogo, 2016). Private sector
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organisation consists of sole proprietors, partnerships, small and medium sizes businesses, large
multinationals, trade associations etc. the main purpose of this sector is to make profit by selling
their product in the market and increase their revenue. The purpose of this sector is to survive in
the market to grow their business and increase their profitability level. Marks & Spencer is the
private sector organisation which is producing various products for increasing their profitability
level. Legal structure of private company defines that the business is a separate entity from the
owner.
Voluntary sector
The voluntary sector involve various social services undertaken by the organisation which are
performing their activities for society. This organisation are not controlled by the government
and also they are non profit organisation (Hamilton and Webster, 2015). The main purpose of
this sector is to create social impact rather than profit. Cancer trust in UK is providing voluntary
services to the public. This organisation provide cancer treatment to public. There are three legal
structure used by voluntary organisation such as an unincorporated association, a trust and a
company limited by guarantee.
P 2 Size and Scope of different types of Organisation
Public sector organisation involve NHS which is the largest public sector organisation in
the world. This is organisation is the largest in the size and consist of various services which are
provided to the public . It is a non profit organisation performing its various activities for serving
the society. These are funded with the help of taxes collected from various sources. NHS provide
medical treatment facilities, dental care and various other services. NHS main objective is
improving life of the public, commitment to quality for care, working together for patients etc
(Hair And et.al., 2015.).
NHS vision include improving the health and well-being of the people. Mission of the NHS is to
provide quality for care. Legal structure of NHS include the department of health and social care
which is responsible for strategic leadership and funding for health and social care in England.
Private sector organisation involve Marks & Spencer which is involved in retail business
and provide products and services relating to clothing , home products etc. Vision for marks and
Spencer include that ton make the firm the leading producer in the world. Mission of Marks &
Spencer involve providing customers with high quality services and different range of products
to its customers and its main objective its increase their market share and generate more profit.
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Marks and Spencer is a separate legal entity different from its owner and it is governed by
companies act followed by the country.
Voluntary sector involves cancer trust which is a voluntary organisation. It is involved in
cancer treatment of the public affected by the cancer. Cancer trust main motive is to provide their
patient a good health and a cancer free life. There main mission is to find ways to reduce causes
of cancer (Voluntary Sector, 2016). This organisation is a non profit organisation working for the
treatment of the public to provide them a safe and healthy life.
LO 2
P 3 Relationship between different organisational function and their link to objectives of the
organisation and its structure
There are different functions which are performed by Marks & Spencer. They are as follows :
 Production function: These function of Marks & Spencer is related to production of
goods and services. This department of M&S is concerned with converting raw materials
into finished products.
 Research and development : Research and development function performed by Marks &
Spencer consists of various analysis and research relating to demand of the customer,
various factors which may affect the activities of the business (Kolk, 2016.).
 Marketing function : This Function performed by marketing manager consist of various
marketing tool which are used by manager in order to sell the product to customer.
 Human resource management : This function of marks & Spencer is involved in
recruitment and selection of individual for performing various activities of the firm.
Human resource manager perform various activities which assist the employees in
increasing their efficiency level. HR management is involved in conducting various
training and development programs.
 Accounting and finance : This function is related to recording of transaction and
providing financial information in order to identify the position of Marks & Spencer.
There is a relationship between different functions performed by Marks & Spencer.
Production function is related to the marketing function of the organisation (Rastogi,
N.I.T.A.N.K. and Trivedi, 2016). Production function is involved in creating new products,
managing the quantity and quality of product etc. whereas marking function is involved in
satisfying the needs of customers by providing them good quality products. Marks and Spencer
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in order to satisfy demand of customer and provide them with quality product ensure that there
is a proper coordination between this function which helps in increasing the profitability of the
firm. Also, human resource management and research & development functions of Marks and
Spencer are related to each other as research and development department provide various
information to Human resource management department regarding vacancies and various other
development things.
Marks & Spencer follows Flat organisational structure. In this type of organisational
structure there are limited levels of management. This organisational structure involve
employees in decision- making process. It helps in improving the communication between
employees. There is a close relationship between organisation structure and its function because
different functions are performed according to the organisational structure. Flat organisational
structure followed by Marks & Spencer help them in improving communication between
different department of the organisation (Policy, 2016). Flat Organisational structure of M&S
provide motivation to the employees and thus there is a close relationship between Human
resource management and its organisational structure which helps in improving the overall
efficiency of the firm.
LO 3
P4 Positive and negative impact of macro environmental factors on business
Macro environmental factors are the external forces which have its influence on the
working environment of the business. Macro environmental factors include political factor ,
technological factors, environmental factors, social factors, economic factors and legal factors.
Pestle analysis consist of the macro environmental factors. They are :
 Political and legal factors : these are those factors which affect the working
environment of the business if there are various changes in these factors. These factors
are regulated by the government and thus include various changes made by the
government of the country. It includes various political factors such as government
policies , tax rate , trade policy etc (Racz and et.al., 2018). Political factors include
different rules and regulation which are implemented by the government on companies
and which the company have to follow. Marks and Spencer
have a great influence of the political factors on their working :
Positive impact
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1. Decrease in the tax rate will have a positive impact on Marks and Spencer. Thus, marks and
Spencer will be able to operated its functions smoothly and also more profits will be attracted by
the company.
2. Political stability will positively affect the business as there will be no changes in the political
environment and marks and Spencer will be able to perform its various functions.
Negative impact
1. Increase in tax will affect the working of the marks and Spencer and thus they
will not be able to generate more revenue.
2. Lack of political instability will affect the various operations of the Marks &
Spencer. Political instability is related to changes in government and their
policies.
 Economic factors : These are those factors which are present in environment in the form
Inflation rate, Interest rate, foreign exchange rates etc. Which affect the working
environment of marks & Spencer (Bohari, Hin and Fuad, 2017). These factors affect the
economic performance that directly affect the company. Marks and Spencer in order to
reduce the impact of economic factor must analyse the economy in order to know about
changers in economy.
Positive impact
1. Economic stability assist the firm in avoiding various economic and financial problems and
also there are less fluctuation in an economy which helps the firm in growing their business.
2. Rise in the income level of consumers will be profitable for the Marks and Spencer as they
will be able to purchase higher quality goods and products which will attract more profit for the
firm.
Negative impact
1. Rise in inflation rate will affect the company as consumer purchasing power will be low
because of high prices of the products and services available in the market.
2. Economic instability situation will have a great influence on the working environment of the
firm as there will various fluctuation in the economy which hampers the working of Marks &
Spencer (Pestle analysis of Marks and Spencer, 2017).
 Social factors : Social factors are those which are related to society such as their cultural
aspect, age distribution etc. which have its impact on the performance of the company.
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There are various factors which are related to society such as their buying habits ,
lifestyles, religion and belief etc.
Positive impact
1.Marks And Spencer with the help of social media marketing can attract customers and identify
various taste and preference of the customers (Tools, 2018).
2. Providing products and services according to the market trend assist Marks and Spencer in
increasing their market share.
Negative impact
1.Decrease in purchasing power of the people will adversely affect the growth and profitability
of marks and Spencer.
2. Decrease in the trend will reduce the demand of the products produced by marks and
Spencer.
 Environmental factors : these are the factors which affect business environment with the
change in various natural disasters such as flood, earthquakes, pollination etc. Marks and
Spencer have launched an initiative of “plan A “ which will assist them in becoming
'worlds most sustainable retailer' (Roth, 2017).
Positive impact
1. Increase in environmental friendly policies help Marks and Spencer in reducing negative
impact on the local and global environment.
2. Natural resources are properly utilised in order to reduce scarcity of resources.
Negative impact
1. Increase in pollution level will increase the cost of raw material .
2. Climatic changes affect the business adversely.
 Technological factors : technological factors are related to technology which is used by
the organisation to operate its various activities.
Positive impact
11 Technology advancement adopted by the marks and Spencer will help in
increasing their growth and profitability.11 Digital marketing assist the firm in attracting more customers.
Negative impact
11 Technology changes attract more crimes which affect the business environment.
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11 Competition increases if the technology advancement are adopted by rivalry.
LO4
P5 Internal and external analysis of Marks and Spencer in order to identify their strength and
weakness
Internal and external analysis are conducted in order to identify various determinants
which have their impact on the business activities. Internal analysis of Marks and Spencer
Includes strength and weakness of business and external analysis include opportunities and
threats existing in the external market which have their impact on business environment.
Internal analysis External analysis
Strength
 Strength of the business consist of
its strong points which assist the
organisation in increasing their
growth and profitability.
 Marks and Spencer have a Strong E-
commerce infrastructure.
 Marks And Spencer focus on
increasing their customer
experiences by providing them with
high quality products.
 Marks and Spencer is involved in
maintaining highly effective
corporate social responsibility.
Opportunity
 Technology advancement will assist marks
and Spencer to increase their market share
by increasing their online presence.
 Marks and Spencer have the Opportunity
to extend their market in different
countries in order to increase their market.
 Segmenting the clothes so that it will look
attractive and more customers will be
attracted.
 Marks and Spencer have an opportunity to
grow its market by way of diversification
in product line.
Weakness
 Marks and Spencer is having poor
financial performance according to
the reports maintained by M&S.
 There is lack of segmentation in
clothing maintained in the store.
 Marks and Spencer rely too much on
Threat
 Changes in trend affect the Marks and
Spencer business.
 Increasing competition day by day is
becoming challenging for Marks and
Spencer.
 Demand and supply changes affect the
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UK market due to which market
condition in local are affected for
M&S.
 Frequent product recalls leads to
reduce in consumer confidence.
Marks and Spencer operating activities.
 Decrease in income and purchasing power
of customer affect the M&S to a great
extent.
 Threat of political changes.
Impact of internal and external analysis on decision -making
Internal and external factors have their effect on the decision -making process. Marks and
Spencer in order to Grab opportunities and reduce various threats such as strong competitors,
threat of political changes etc. formulate various strategies and planning. Strength assist Marks
And Spencer in decision – making regarding various threats for the company existing in the
environment. Opportunities helps the company in reducing their weakness such as poor financial
performance, dependent on a particular market etc (Hillson and Murray-Webster, 2017).
Decision making process becomes easy when the company know about its internal and
external factors. By analysing these factors marks and Spencer can accordingly make strategies
and decision to improve their productivity and market share.
P6 Interrelationship between strength and weakness with macro factors.
 Strength and weaknesses are interrelated with macro factors. Macro factors include
Political, legal, economic , technological , social and cultural factors. Strength of Marks
and Spencer include strong E- commerce infrastructure which is related to the technology
factor of macro environment. Technology advancement assist in increasing their online
presence and building strong market in E – commerce market.
 Weaknesses of Marks & Spencer are related to social factors of macro. Weakness of
Marks & Spencer include low customer retention due to frequent product recall which is
related to social factor that include customers taste and preferences and customer
satisfaction. Marks and Spencer is incompetent to face changes relating to government
policies which is a political factor and thus weakness of M&S is related to its macro
factor (Becker And et.al., 2016).
 Strength of marks and Spencer is related to various external factors such as political
stability, technological advancement, products designed according to customers taste and
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preference etc. which act as a strength for the company and this all assist in increasing the
profitability of the marks & Spencer and also assist in increasing their market share.
 Weaknesses of Marks and Spencer are related to various external factors such as political
instability, trends are not followed, increase in tax rate, increase in inflation rate etc. this
all become weakness for the Marks & Spencer and due to these factors working
environment of marks and Spencer is hampered.
 Internal factors of marks and Spencer are related to macro factors of the environment as
positive changes in the macro factor will act as strength for the organisation and negative
factors will act as weakness for marks & Spencer.
CONCLUSION
From the above study it has concluded about various types of organisation present in the
industry which has included public sector, private sector and voluntary sector. This study has
also explained about size and scope of organisation. Furthermore, this study has provided with
different functions of the organisation such as marketing, human resource management, research
and development and production function of marks and Spencer and their link with
organisational structure. Moreover, this study has provided with impact of internal and external
analysis on the business decision-making which has included strength , weakness, opportunity
and threat. This study has also provided with macro environmental factors which has included
pestle analysis that involves factors such as political , economical, social, environmental and
legal.
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Online
Pestle analysis of Marks and Spencer. 2017. [Online]. Available through
:<http://freepestelanalysis.com/pestle-analysis-of-mark-and-spencer-ms/>
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