Positive and Negative Impact of Macro Environment Factors on Business Operations

This report discusses the positive and negative impacts of macro environment factors on business operations, using the example of Mark and Spencer. It also includes a SWOT analysis and the interrelation of strengths and weaknesses with macro environmental factors.

BUSINESS AND
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
P4 : Positive and Negative impact of Macro Environment Factor over Business Operations1
M3 Applying appropriately the PESTLE model to support a detailed analysis of the macro
environment within an organization.......................................................................................4
P5. SWOT analysis of Mark and Spencer..............................................................................5
M4 Applying appropriately SWOT/TOWS analysis and justify how they influence decision-
making....................................................................................................................................8
P6: Interrelation of weakness and strengths with macro environmental factors....................8
D2 Impact of micro and macro factors on business objectives and decision making process 10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment refers to all the internal as well as external factors or components of
an environment that directly affects organisation operational activities. These operational
activities mainly involves with management, employees, demand and supply and customers
satisfaction. External Business environment is a set of political, economic, social and
technological forces that are largely outside the control and influence the business. This report
mainly emphasis on the Mark and Spencer which is one of the private company that deals in
retail industry and it was founded in 1884. This report mainly emphasis and covers the positive
and negative impacts of the macro environment upon business operations. This report also covers
about the internal as well as external analysis of Mark and Spencer in order to identify the
strength and weakness of the organisations. This report explain about strength and weakness that
is interrelated with external macro factors.
P4 : Positive and Negative impact of Macro Environment Factor over Business Operations
PESTLE analysis is one of the most crucial strategic tool that is used and implemented by
the organisation to identify the overall external factors in order to achieve competitive advantage.
It is mainly conducted to identify and analysis the present situation of the organisation as it
allows to find out what are the factors which are faced by an organisations (Pulver, 2012).The
factors mainly involves economical, social, technological, environmental, political and legal. It is
very crucial for the managers and high authorities of Marks and Spencer to analyse these factors
to work on this along with their negative and positive impact. These are further explained as
follows:
Political Factors
Marks and Spencer operates in various countries so that they can face various political
issues due to various rules and regulations of different countries. Government plays very crucial
role for organisation by imposing various policies, rules and regulations. It also directly or
indirectly affect the formulation of any brand name. Policies and rules of government creates a
deep impact on the performance of Marks and Spencer due to which their operational activities
are also affected. Marks and Spencer should focus on different political factors like taxation
policy, import export tax, stability of the government etc.
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Positive Impact: Recent going taxes as well as import export policies of various
countries are in favour of the organisation that allows and provide it excellent opportunities in
order to expand their business world wide. Moreover, this will strengthen the condition and
position of Marks and Spencer in the global markets.
Negative Impact: The changes in the tax as well as import-export policies creates
negative affect on the organisation as it directly and indirectly affect the sales revenue rate due to
decrease in purchasing power of the targeted market(Reed and et. al., 2013).
Source: PESTLE analysis,(2019).
Economical Factors:
Marks and Spencer operates in different countries and each of these countries has
different level of development. Economical factor play a vital role to make impact on
organisational activities of Marks and Spencer. It includes national income, GDP , value of
money etc.
Positive Impact: Marks and Spencer need to focus and work in online sectors for their
customers lookout their deals and it also helps to reduce the cost and time. Preparation and
regular analysis of report helps to gather proper knowledge in context with the inflation rates and
different income levels which creates a positive impact.
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Illustration: PESTLE analysis

Negative Impact: Low income and low economic conditions of customers affects the
demand and supply of the products and services. Marks and Spencer is affected by the various
plans that are regulated by various competitors that mainly involves with cashback, discount
pricing. It also affect profits of company in negative manner as customers wants value for
money.
Social Factors:
Social factors mainly includes culture and norms of society that directly affect the
business practices of Marks and Spencer. In order to achieve success it is important to analyse
the lifestyle and preferences of customers. Social factors also includes the behaviour, belief and
values of customers that directly affect the business operations of firm (Reinhardt and Stavins,
2010).
Positive impact: Offer products as per the needs and preferences of customers provides
an advantage to Marks and Spencer in market. It provides competitive edge to company over its
rivals and helps in generating high revenues.. Marks and Spencer should implement trendy styles
in their stores which is profitable for their business.
Negative impact: Marks and Spencer provides quality products and services to their
customers with fair price policy but over dependency on single brand gave negative impact on
the organisation. There are many global competitors that are giving tough competition by
various options in product line to attract the customers.
Technological Factors:
Technological factors mainly involves the uses of latest tools and technology which
provides the opportunity to the company to develop innovative product and services. This factors
is connected with the advancement of various technology in an organisation. It also helps in
improving the productivity of Marks and Spencer and make strong communication in a firm. It
is very essentials for Marks and Spencer to use high and advance technology in its
manufacturing processes to achieve competitive advantage (Shigang, 2010).
Positive Impact: Marks and Spencer have to use and implement online marketing
strategy in order to attract customers and take competitive advantage. Use of advance latest tools
and techniques in marketing will help in improvement of sales rate and organisation can
communicate to customers directly.
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Negative impact: Use of outdated technology impacts firm negatively and lowers down
the quality of its products. It will directly affect the sales and production rates along with
product development. There are many competitors who are using advanced technology and paper
less operations which is affecting the brand image of Marks and Spencer in the market.
Environmental Factors:
Environmental factors mainly involves with the cultural responsibility of the organisation
to safeguard the natural resources and make optimum utilisation of available resources. Marks
and Spencer should use those machineries in production processes that are ozone-friendly and do
not cause any harm to environment (Trevino and Nelson, 2016).
Positive Impact: Marks and Spencer should uses ozone-friendly raw material as it
enables to gain more customer reliability Use of such machineries and tools in production
processes that do not harm environment provides an advantage to company in society and create
a good image of firm in eyes of people.
Negative Impact: Due to climatic changes or any disaster there is delay in transportation
of products on time. Through this, customers will not get product on time and become a negative
impact on Marks and Spencer.
Legal Factors:
Legal factors mainly includes laws and legislation that should be followed by each
organisation which mainly includes employment law, protection laws. Marks and Spencer
requires to follow all the implemented laws and regulations by government in order to run its
operations smoothly.
Positive Impact: Marks and Spencer have to follow and implement the rules and
regulations made by governments. It helps to build a brand image in market which impacts
positively on operations of company.
Negative Impact: If Marks and Spencer fails to follow laws then they have to face
penalties and it also make a negative impact on brand image of Marks and Spencer.
M3 Applying appropriately the PESTLE model to support a detailed analysis of the macro
environment within an organization
On the basis of above explained PESTLE analysis of Marks and Spencer, it can be said
that each factor has its favorable as well as unfavorable impact over performance of company.
From this, it has been known that stable United Kingdom political stake of United Kingdom
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government, adoption of advance technological, compliance with legislation, etc. gives help to
M&S and allows them to gain maximum opportunities. On the other hand, PESTLE analysis also
have negative influence on business performance and growth of Marks and Spencer. It can be
seen in the form of changes in preferences and taste of clients from social factor, adoption of
new technology by competitors and inflation could place unfavorable effects over their
performance that could also impact their sustainability.
P5. SWOT analysis of Mark and Spencer
It is an overall analysis of internal factors which mainly involves as employee's morale,
technological capacity and management supports which directly influence the performance level
of an organisation. SWOT analysis helps in identifying strengths, weakness, opportunities and
threats of an organisation(Kolk, 2016). It also helps organisation’s management for developing
and implementing new strategies and gain competitive advantage in order to give tough
competition to their challengers through analysis of these factors.
Every organisation wants to provide good quality products and services to their
customers for their satisfaction. SWOT analysis is used by the organisations to find out basic
internal and external factors that influences the growth of the organisation. Strength and
weakness are considered as the internal factors and opportunities and threats are considered as
external factors. For this purpose, the management of Marks &Spencer conduct such internal
analysis which are given as follows:-
Strengths  Large number of customer base and
stores is the major strength for the
company.
 It has a big brand value which help in
attract large number of customers.
 Strong portfolio/varieties of products
and services.
 It has a huge range of brands which
helps to attract customers to their
stores.
 It operates large number of stores in
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over 40 countries which makes strength
of it.
 Improved use of technology in
operations and heavy investment in
R&D
 Enhancement of technology increases
brand value of Marks &Spencer in the
market.
Weakness
 Lack of experience in some emerging
market where the company wants to
enter.
 Over dependency on high brands or out
fashioned stock gave a wrong impact on
their customers.
 Marks &Spencer has poor supply chain,
so that they can’t deliver product at all
locations.
 They have less experienced staff so
that, they can-not satisfy to their
customers.
 It is not adopting new and advanced
techniques which could saves their
money and time. But, due to lack of this
reason, they can’t get efficiency in
their work.
Threats  Various environmental laws and
regulations for carbon emission could
pose a huge threat for the company.
 Rising cost of raw materials will affect
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the profit of company.
 Intense competition in European
countries is a threat. As, most of the
rivals are offering their products at a
cheaper rate.
 Rules and regulations of various
countries in all over the world may
affect their business operations. As this
would be lowering down the
operational process.
 It has a huge brand image so there may
be threat due to their over dependence
on out fashioned products.
Opportunities  Mergers with various technological
companies can provide opportunities to
enhance its operation with latest
technology.
 It has opportunity for expanding
business in Asian countries.
 Due to brand recognition of company, it
could enter in new market segments
which will profitable for them.
 It has connectivity in various countries,
which helps to expand of their business
all over the world.
 In countries where growth of Marks
&Spencer is slow, there are
opportunities for joint ventures to
improve the market share in such
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countries.
 Improvement in online and home
delivery services can open new
opportunities for the company.
M4 Applying appropriately SWOT/TOWS analysis and justify how they influence decision-
making.
SWOT analysis helps managers and top authorities of the organisation to take effective
decisions and make required improvement to gain competitive advantage. It also helps the
organisations to set goals and objectives and develop marketing strategies for achieving it.
SWOT analysis allows to grab the opportunities in order to attain vision and mission of the
organisations(Werther Jr and Chandler, 2010). In context of Marks &Spencer, SWOT analysis
allows to identify threat and weakness and overcome this by implementing strategic methods that
helps in increasing their sales revenue and productivity. By analysing opportunities,
organisation are able to implement advance technology to achieve efficiencies tha assists in
achieveing organisation goals and objectives. Management is also required to make relevant
changes in their existing plans and policies so as to grab competitive opportunities.
P6: Interrelation of weakness and strengths with macro environmental factors
The strength and weakness of Marks &Spencer have the interrelationship with the
external factors of macro environment which are mentioned below:
Political: These are the factors which are controlled and governed by the government
like trade policy, trade restriction and many more. Marks &Spencer has achieved their major
strength just because they are working as per the policy traded by government (Moutinho,
2011).When Marks &Spencer follows all the rules and regulations and pay tax timely which
helps in creating a positive brand image of company in compare with other firms .The reason
for weakness of Marks &Spencer is that the company is not able to adopt some changes which
are taking place due to political factor that directly impacts on profit ratios of company. When
Marks &Spencer follows all the rules and regulations and pay tax timely then it create a positive
brand image of company in compare with other firms Thus, it can be said that strength and
weakness of the Marks &Spencer have close relationship with the political factors. Political
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factor include policies, rules and regulation made by government which make impact on strength
and weakness of Marks &Spencer.
Economical: Brand image of the Marks &Spencer is the major strength for the company
which has improved just because the company has adopted the changes related to inflation rate,
exchange rate and many more(Trevino and Nelson, 2016) Weakness for Marks &Spencer is that
company doesn't have appropriate funds in order to conducts business effectively and
efficiently. When inflation is arises in a country then price of goods and services become high. It
become a weakness of Marks &Spencer because high prices indicates less demand and low
demand is a sign of low profitability for companies.
Social : Social factors includes culture and norms of society and purchasing power of
consumers and society. It may become a strength as well as weakness of Mark and Spencer.
When company follow culture of society then it helps to increase demand of products and
become a strength of a company which increase profitability as well as sustainability. If Marks
&Spencer does not follow culture and climate of society and not focuses on customers' demand
then reduce sales and become a weakness of a firm (Shigang, 2010).
Technological: This factor is related with technology up gradation and advancement.
Use of updated technology helps in execute business operations more smoothly. The strength of
Mark and Spencer is its brand image in the market and main reason behind this company is
working and adopting the changes taking place in the technology It become a strength of Marks
&Spencer to sale their products on digital marketing which helps to get huge customer support.
If Marks &Spencer using outdated technology then it increase cost of production and become a
weakness of a company.
Environmental: This factor affiliated with the environment, climate, atmosphere and
weather etc. In M&S, the management of the company utilise ozone friendly raw material as it
help in gaining more customer retention which is the strengths of the firm. Whereas change in
climate and any disaster can delay the transportation which negatively affect the company and its
consumers loyalty in terms of decrement.
Legal: This factor I related to laws and regulations which are developed and f9ormulated
by the national authorities for the effective running of the company. M&S operate its business
globally and properly follows the rules and regulation of the government which positively affect
the business of the company in term of trading and others. Whereas when the government make
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change in its laws and legislations then it affect unfavourably to the company ijn term of
decrement in its production.
D2 Impact of micro and macro factors on business objectives and decision making process
Both micro and macro factors have direct impact on business objectives and decision
making process of M&S. Identification of strengths, weaknesses, opportunities and threats
supports manager of Marks & Spencer in taking effective and accurate decisions about
improving productivity and performance of company. Along with this, accurate identification of
political, social, technological, economical, legal and environmental factors will also support
M&S by reducing chances of risk in country where they like to expand their business. As both
factors have positive influence and support an organisation to attain long term goals and
objectives within given time duration.
CONCLUSION
From this report, It has been concluded that the internal and external factors plays a very
important role in the growth of the Marks &Spencer. Management of Marks &Spencer should
implement suitable strategies for overcoming these factors in the development of Company. This
report will also discussed the different functions and objectives of various departments and their
interrelation in the development of company. External environment make both positive and
negative impact on a business activity so company has to use these factors which generate
opportunities of a firm and increase strength with positive impact. It is very necessary for Mark
and Spencer to properly analyse the surrounding environments and expand their business to
achieve more profit Various macro environmental factors has been identified with both negative
and positive impacts on the growth of the organisation through PESTLE analysis. Strengths and
weakness identified by SWOT analysis are interrelated with the macro environmental factors.
These various identified factors can be helpful in implementing suitable policies which will
strengthen the position of company in the marketplace.
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