Business Environment Analysis of Marks & Spencer

This assignment requires a thorough analysis of the business environment impacting Marks & Spencer (M&S). Students must examine various external factors such as legal regulations, economic trends, technological advancements, societal values, and political influences. The analysis should consider how these factors affect M&S's operations, strategies, and overall performance. Specific instructions include conducting a SWOT analysis, exploring the impact of globalization on M&S, and outlining potential challenges and opportunities for the company in its business environment.

BUSINESS AND
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explain various types of organisation and their legal structure............................................1
P2 Size and scope of various types of organisation....................................................................4
TASK 2............................................................................................................................................6
P3 Relationship between various organisation functions............................................................6
P4 Impact of Macro factors.........................................................................................................7
TASK 3............................................................................................................................................9
P5 SWOT analysis of Marks and Spencer..................................................................................9
P6 Describe how strength and weaknesses are related with external elements........................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment refers to the combination of several internal and external factors that
influence decision making of an organisation. Macro and micro components are included in this
surroundings. These factors are related with operations of company that could be beneficial for
making its activities more effective and efficient. There are several types of organisations that
perform different set of activities (Commander and Svejnar, 2011). It consists of firms like,
private, public and voluntary. There are different legal structures for all these companies and it is
required to follow such laws and regulations to run business in an ethical manner. This report is
based on Marks and Spencer which is a retail enterprise based in the UK. It is famous for its high
qualities in their products related with clothing, home wares and food products. This assignment
will consist of size and scope of different types of enterprises. Relation between various
organisational functions will be explained here as well. Also, factors of business environment
that affect the operations of business in both positive and negative manner will be assessed with
their impact on internal strengths and weaknesses of company.
TASK 1
P1. Various types of organisations and their legal structure
Business organisation refers to the unit of people which is established to fulfil needs and
demands of consumers in order to earn profit. There are set goals and objectives that are to be
attained through group efforts. It includes several characteristics like collective goals, division of
tasks, plurality of employees and coordination. Every person in this organisation is focussed on
achieving common goals and objectives for the purpose of profit making (Craig and Campbell,
2012). Apart from this, there are some firms whose main motive is not to earn revenues as these
are established to provide services of social welfare. Different types of organisations are as
follows-
Private organisation- Such type of enterprises are established by private owners and it is
flexible in nature as there is not so much control of government bodies. Mostly employment is
created by this sector due to huge requirement of workforce. Such companies are suitable for
improving economic condition of UK as it is a free economy. There are several laws and
regulations for these enterprises which are required to be followed. Legal framework of these
firms is as follows-
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Sole proprietors- These are small scale firms that are formed for performing single
operation. It is run by single person and ownership of assets and liabilities is with owner only.
There are limited funds to operate business and profit and losses are concerned with proprietor
himself (Drucker, 2017Fernando, A.C., 2011). All the activities related with day to day
businesses are managed by sole traders. Examples of such businesses are grocery store keepers,
carpenters, plumbers, etc.
Partnership- Such firms are incorporated by two or more persons but their objective is to
achieve the same goals. This type of firm does not have feature of separate legal entity. Every
member is entitled to invest their share of capital. Along with that, profits and losses are divided
between partners on the basis of their shares. Liability of partners is unlimited in this enterprise.
Private limited- It includes small scale firms operated by families and other owners.
There is the limited liability in this kind of organisation. Its shares cannot be hold by general
people due to which it cannot sell its shares in the open market. Such enterprises are regulated by
the rules and regulations under company’s act. This type of business concern is considered to be
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Illustration 1: Legal structure
Source 1: LegalSalah,2016

more flexible in nature. It is required for this firm to develop their MOA and AOA in a proper
manner.
Public organisation- These are the enterprises that are included in public sector. Main
objectives of this type of firm is to produce high quality products and services to fulfil needs and
wants of consumers. Therefore, they do not emphasis too much on revenue generation. There is a
huge control of government on firms operating in public sector. Most of the decisions of such
enterprises are taken by regulatory bodies. The main objective of these organisation is to provide
better services at reasonable prices (Dahan, And et. al., 2010). These are focussed towards
benefits of people of a society and ensure their welfare in an effective manner. Common services
provided in these kinds of firms include education, healthcare, transportation, etc. Central, state
and local governing bodies are included in its legal structure.
They formulate policies, rules and regulations that are required to be followed by these
organisations. Example of this type of company is NHS. Along with that, there is minimum
seven members required to run these entities. Its shares are easily transferable and it could be
sold in stock exchange market. These are freely transferable to other parties who are involved in
trading of stock exchange. It is required for public companies to publish their proper financial
statements on annual basis. So, there is no privacy related with financial conditions. As per the
regulations, it is essential that every information provided by them should be true and accurate.
This helps their shareholders and potential investors to determine the current position of firm so
as to identify actual value of its shares. There is limited liability of its members which is based
on their contribution in capital. Company is not belonged with any person working in it.
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Voluntary organisation- This kind of organisation is incorporated to perform specific
operations that are under several regulations and laws. Main objective of such firms is to provide
social services and charities to a particular segment of society. There is no objective to earn any
profit from the operations carried out by such firms. It usually consists of social welfare
foundations and NGOs. There are committees to manage these firms. Key personnel in these
organisations are executive directors, development managers, volunteers and coaching directors.
They perform different set of activities that are based on their field of expertise. Oxfam could be
a better example for voluntary sector companies.
P2 Size and scope of various types of organisation
Private organisation – M&S is privately own organisation having its store globally. It
deals in variety of products like clothing another domestic products. It has more than 1400 stores
and still planning to expand more. There are around 3000 people working under this brand. The
structure of organisation is flat and having different departments for distinct job responsibility.
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Illustration 2: Legal structures

The departmental heads of various sections are effective enough to resolve the quarries and
problems that are faced by various front lie managers. It has opportunities to explore more
market areas where there are availability of potential customers. There are continuous
development in the technology which can help in the growth of business as a whole. In retail
sector the competition is tough still M&S is capable of covering a greater market (Chesbrough,
2010).
Public Company – British broadcasting corporations is an organisation that falls under
the category of public enterprise. It has its headquarters in London. If this enterprise is compared
with other in the same industry than it holds first position in terms of having greatest number of
employees with having placement of more than 20,000. This Chanel has a great demand in
market. There are a number of languages in which it communicates in the markets and therefore
ensures maximum market coverage. Proper licence is obtained from government in which an
agreement is also done regarding what will be the terms and conditions of its operations. There
are a number of different divisions under this enterprise which are BBC worldwide, BBC world
news etc. Huge investment is made by this organisation which makes it a big budget
organisation. In UK this organisations does not face much competition from other organisation
as it is big budget company which has most effective and efficient resources. By going online it
can further raise the current market share as through this it can further increase the market and
can reach to re customers. More efforts should be done on developing the digital use of
applications as these are useful in raising the total customer satisfaction level.
Voluntary Organisation – These are those enterprise which operates for the betterment
of society. Oxfam is dealing in such sector. It a an institution that receives charity from different
parties which it further invests in the growth of those which are insufficient in developing
themselves. It has around twenty firms working in partnership and other local communities. It
does not have a very big amount of employees but has volunteers in a great number. Different
organisations are connected with the same who are helping this organisation by providing
assistance in different forms (Commander and Svejnar, 2011). The main aim of the refereed
organisation is to remove injustice from the surroundings so that everyone gets equality. Apart
from this it also works in the areas of protecting females from harassments, removes racist
minorities and other similar activities which can effect the society in any manner. It ensures that
unemployment is reduced so that upliftment in the standard of living is done which is required
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for the development of economy as whole. It can start using different tools which are more
effective in brand promotion and are capable of attracting customers. Use of digital platform can
be done to create awareness among the people so that more and more assistance is received
which will be further invested for betterment.
TASK 2
P3 Relationship between various organisation functions
In order to obtain the objective of business it is important that various functions are
performed effectively as only than utilisation of resources can be done to their full extent. In
M&S variety of activities are preformed which has their interrelationships with one another. A
number of divisions which are made in this organisation are of finance, sales, production,
research and development etc. The goal of organisation as whole is common and together they
perform these so that ultimate organisation objective is achieved. Though each department has
their own specific work to be done the influence of other sections can not be ignored. The
interrelationships of various departments are discussed below:
Marketing – It is function that through which brand promotion is done and products are
made available in the market. Different promotion techniques are used which are capable of
reaching more and more market and hence revenue is generated. Before the goods are made
available in the market they go through different department like research and development,
production section etc. Apart from this it is also given care that appropriate funds are provided
for the marketing activities which is financed by the finance department (Craig and Campbell,
2012).
Human resource – To achieve success the most important asset of an organisations is its
employees. It has to ensure that proper recruitment is done so that the resources of organisation
are utilised to their maximum capacity. Human resource should be dedicated so that overall
efficiency level of the firm gets raised. In M&S quality of services is important as there are a
number of competitors which makes it vital to have effective human resource in each division.
Production department – It is that section of M&S which is associated with making the
final product available which can be marketed for costumers. Intervention of different
departments is there in this section as it gets order from the research and development team
which is in direct contact with the customers. They communicate the demand of customers to the
production department so that accordingly changes in the existing products can be done.
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Sales department – This is another division which is responsible for maintaining desired
level of sales in the organisation. It has to perform various functions as to meet the targets is a
difficult task. It receives minimum limits from the management and the person concern with the
sales management takes the responsibility of meeting the same. Intervention of finance
department is also there in this division who takes the sales reports in fixed tenure (Drucker,
2017).
Illustration 3: Organisation structure of M&S, 2017
On the basis of functions performed by different departments division of whole
organisation is done. Each division has their own duties and responsibility which needs to be
fulfilled with the maintenance of balance in other associated sections too.
P4 Impact of Macro factors
In order to analyse the effect which macro factors has on business PESTLE analysis is
done which is a tool to do the audit of external environment. Under this distinct factors like
social, economic, political legal and technological factors are analysis which has indirect
influence on the functions of M&S. The effect of these can not be ignored and as they are present
outside the boundaries of business there is no control of management over them. According to
the requirement changes has to be done within the business context so that survival in the
industry is maintained. PESTLE analysis of M&S is given below:
Political factors – M&S is operating on a global level. This way it becomes important
for this company to understand the present political conditions of different countries so that
export and import can be done smoothly. Distinct political parties favours different business
ideas and it has to be determined that which geographical area offers maximum advantage to the
business so that accordingly choice is made (Fernando, 2011). There is a recent change in the
European committee which has made relaxation in the export and import activities. Government
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is taking more interest in keeping close monitoring over the cross countries trade so that security
of various places is maintained.
Economic factors – Under this study factors related to economic conditions of particular
place are considered. The present state of economy has its great influence on the business of
M&S. Change in exchange rate, taxes GDP etc. has their impact on business. According to the
demand and flow of cash in market M&S needs to fix their prices so that accordingly different
segments of society can be served. It also inured the rate at which employees are made available
in a particular area as it also effects the choice of selection of place and also has a indirect impact
on the profitability of business.
Social factors – Demand for a particular commodity also fluctuates with the change in
current trends of market. It is important that whatever the market is for doing business there are
favourable conditions as only than maximisation of profit can be done. People due to personal
reasons also moves from one place to another which further brings difference in the present
number of customers. M&S is dealing in fashion which keeps on changing. It has to remain
updated with the market as only than it can compete with the other companies dealing in same
industry.
Technological factors – In order to produce best quality products and services it is
required that all the work which is done is carried out using best code of conduct so that effective
work is done. There is continuous change made in the present applications due to globalisation
and rise in the level of awareness in the market. Advance technology needs investment to be
made in huge amount which further add cost of implementing same in M&S. They have to do
capital investment which reduces the cost of company at initial stages but further gives long term
benefits to business (Hamilton and Webster, 2015).
Environmental factors – For M&S or any other company it is important to assure that
the operations of organisation do not effect the surroundings in any manner. According to this
M&S must use the technology which is not effecting environment in any manner. It is due to the
reason that production companies use chemicals which can harm the atmosphere. Therefore laws
are made which promote use of environmental friendly technologies so that revenue is generated
without effecting the nearby surroundings. If it is found that product of M&S is creating problem
in the surroundings than government can take action against the same.
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Legal factors – Different areas has distinct political party at dominance and according to
them the laws related to business are made. These are the guidelines which needs to be followed
while operating in a particular country. Management of M&S has to ensure that practices of this
company are legal and they are not involve in any kind of unfair trade practices as if found than
an action can be taken against the same.
From the above given PESTLE analysis it is observed that all these factors has their
positive and negative impact on business and has to be adopted in the same manner as no
influence of organisation management has on the changes that take present at global level
(Klapper, Lewin and Delgado, 2011).
TASK 3
P5 SWOT analysis of Marks and Spencer
There are certain factors that are present within the boundaries of company also. These
elements has their direct impact on the functions of M&S but since they are present within the
companies boundaries by taking corrective actions effective control can be kept on them. Given
below is the SWOT analysis of M&S which will show the areas in which business is good at and
other sections which needs to be improved to achieve common goals.
Strength- Marks and Spencer is one of the leading retailing brand which place at the top
position in the market. They also have their personal branded labels which help in attracting
large number of customers. There are approx. 1,000 stores of M&S which are exist in 40
countries. There are large number of employees which is more than 80,000 in all over the world.
The company products are know by each and every person who mainly purchase by them. There
are various products which is unique in style and structure that will help customer to select the
best one. Marks and Spencer is the giant in the UK and it has about 900 stores which is situated
in all over the world. There are almost 300 stores in 40 countries. Marks and Spencer has wide
range of brands that is really help the firm. Customers identify high quality goods that includes
vegetables, fruits and superior products in marks and Spencer. Firm has high goodwill and
reputation which focus on customers services (Osterwalder and Pigneur, 2010).
Weakness- There are powerful competition from other merchandising brands which
defines limited market share. It is famous brand so they required to protect their brand from
misuse and fake products. Marks and Spencer has wide variety of various types of products
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which does not used by teenagers and young people. Company has old techniques and methods
which directly or indirectly affect the business growth and success. Large organisation are
mainly focus on latest technologies and methods for work efficiency in proper manner. The other
issue is that marks and Spencer have not required space for storing variety of products.
Opportunities- Marks and Spencer can develop their social media and websites. They
can introduced new market segments which help in earning maximum profitability and
productivity in effective way. Company can expanding their business operations and its major
functions in different locations and places. Marks and Spencer has large opportunity for
enhancing the methods and techniques of marketing segmentations by increasing their branches
in all over the locations but still they focus on rending the customers as per the area of
involvement (Scheer, 2012). Improving the serving and offering clothes range. They mainly
focus on segmenting customers as well as market in proper manner. Firm has an opportunity by
dividing the customers by establishing small size shops that can reduces the cost maintenance
and increasing profit. The main aim of organisation is to focus on business by using market
segmentation. They can adopt new and latest technology which help in improving business
profitability and productivity.
Threats- The major threat for retail shop is their discounted prices. Marks and Spencer is
international retailer that means they are exposed to various political facts and figures in country
and work in proper manner. The authorities plans and policies are directly affect the retail stores.
There are different competitors of Marks and Spencer that includes ALDI, ASDA, TESCO,
Farmfoods and Centra. Firm has major threats in which they analyse that they suffering its range
in the business due to strong competition which are enhancing competition in sector in compare
with other retail competitors. Firm required to make effective strategies which help in
overcoming with occurring issues and barriers that can effect the business operations and its
functions. There is a conflict between shareholders and executives who invest large amount of
money in company growth and success. An organisation newly hired top management are not fit
for corporate and administrate culture. Sometime, improper execution are also help in setting
proposed strategy. The company will also influenced by social environment due to change in
customers choice and taste.
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P6 Describe how strength and weaknesses are related with external elements
From the above discussion the strength and weaknesses of M&S are evaluated which
shows that this organisation is doing an effective business at global level and is earning good
returns. Its major strength is the quality of products and variations of styles in the fashion which
it maintains. It helps the company in reaching at maximum customers who are quality conscious
and are ready to pay a good amount if standardise output is made available to them. It is using
effective marketing techniques as through them the company is able to cover a great number of
customers (Shigang, 2010). Though there are various areas in which M&S is doing excel but
change in the outside factors has their direct influence on business. If the economic conditions
are not good than in that case the strategies adopted by cited organisation will go in vain. The
flow of cash in market is required as only than the purchasing power of various customers can be
raised. If organisation is doing good but the market conditions are not in favour than even if
company takes so much of efforts they can not maximise their business. Sometimes the legal
bodies introduces laws and restrictions on the business practices which makes it difficult to
export and import for M&S. The legal formalities are raised which further raises pressure of
maintaining documentations and other related work functions (Teece, 2010). To cope up with the
advance technology company needs to do expenditures which are not always positive as failure
of an application may lead to loss of investment made by the management.
CONCLUSION
Business is dynamic in nature and get changed with every course of time as well. It is
essential for an association to understand the business environment properly in nature so that
better and appropriate results would be carried down. There are various ventures are operating in
business which are small, large, medium or micro in venture and running through various
individual, government or by partners. There are different types of association are determine like
public, private and voluntary in nature with an specific purpose of each and have to follow a
definite legal structure as well. All these associations are differ in size and scope as well which
impacted and their reflection get determine on number of operations. There are various functions
are operating in an organisation like HR, finance, marketing, sales etc. each one of them are inter
related and linked. Thus, management have to understand this fact and make objectives properly
so that every function could perform duty properly. Thus, all functions or activities get impacted
with external macro environment of business and have specific strength and weakness as well.
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Thus, it is a duty of managers to link all strength and weakness of a company with external
macro factors.
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REFERENCES
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Online
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<http://pestleanalysis.com/swot-analysis-examples/>.
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