Business Environment Analysis and Impact

This assignment requires students to analyze a business environment using various theoretical frameworks such as PESTLE, SWOT, and stakeholder theory. The analysis should explore the impact of the external environment on organizational change and strategic decision-making. Students will need to demonstrate their understanding of key concepts and apply them to real-world business scenarios.

BUSINESS AND BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. The purpose of private (M&S), public and voluntary organisation and their legal structure.
.....................................................................................................................................................3
P2. Scope of private (M&S), public and voluntary organization...............................................4
P3. Find out the relationship between the various functions within M&S for achieving the
organisational mission and objectives.........................................................................................7
TASK 2............................................................................................................................................8
P4- Identify the positive and negative impacts the macro environment will have upon the
business operations of M&S.......................................................................................................8
P5. Conduct internal and external analysis i.e. pestle and SWOT model to identify strengths
and weaknesses of M&S...........................................................................................................10
P6. Using M&S as your example, explain how strengths and weaknesses interrelate with
external macro factors...............................................................................................................14
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Marks & Spencer is a British multinational retailer. .present report is based on Marks &
Spencer which is the leading store in the world. It is UK based company with 1433 stores around
the world. They provide different services with online serving high quality, own-brand food and
clothing and home products. Company needs to identify all factors which affect internally and
externally. Customers. Report will include purpose of private, public organizations. Furthermore,
study will explain strengths and weakness of the organization and its interrelationship with
macro factors.
TASK 1
P1. The purpose of private (M&S), public and voluntary organisation and their legal structure.
Private company:
A private company is private ownership. In it they have liability towards their
shareholders, investors etc. a private company always have some names. In private sector
minimum 2 and maximum 200 employees. This rules as per company act 2013.
A private company always have some directors. The minimum no. of directors is 2. It
will be increase as per condition. In it liability are minimum toward customers, shareholders,
investors etc. Marks and Spencer is operating its business as private organization (Berman and
et.al., 2009).
Purpose
The private sector is the part of a country's economic system that is run by individuals
and companies, rather than the government. Profit maximisation or profit growth is the primary
aim of most private sector organisational. Private sector organisations are generally funded by
own resources. Similarly, the Marks and Spencer main purpose is to providing quality products
and services with competitive price and also the company would like to become a sustainable,
international, multi-channel retailer in the world.
Legal structure of private company
In UK, mostly private company legal structure are follows some rules. Rules are explained
here. Every private organization at least one director. Number of directors are depended
upon company structure. It may be increase and decrease as per requirement. Private
company does not compulsory to have company secretary. Sometimes board of directors

play role of company secretary (Capon, 2009). It is depended or corporation body of
organization. Private company issue share to their costumer.
A shareholder also known as part of company members. Private company can be issue share as
choice means there are no limits of issuing share. Shareholders are residents of any country in
the world.
Public Company
A public company run by local people (public), invest by public (equity/debt.). In a
public company ownership is shared between the shareholder including board of management
and public shareholder.
Purpose
The public sector is usually composed of organizations that are owned and operated by
the government. In it some main reason are (a) to gain control of the commanding heights of the
economy, (b) to promote critical development in terms of social gain or strategic value rather
than on consideration of profit, and (c) to provide commercial surplus with which to finance
further economic development (Cheng and et .al., 2007). The main contributions of public
enterprises to the country's economy. It's also helps to generate employment in public sectors. It
helps to filling the gap between rich and poor. With help of these we can make stability in the
economy.
Legal structure of public company:
Public In company minimum 2 boards of director’s compulsory and maximum 12.
The board of directors are elected annually by shareholder of the company. In public sector
Company, the advantage of owning a private limited company is that the financial liability of
shareholders is limited to their shares. (monetary/non-monetary). Public company have at least 7
member’s minimum and maximum number are not limited Company directors numbers
depended upon how much shareholding existing Directors have in company (Fernando, 2011). In
public company if a shareholder died or any board of directors died, company cannot close. The
duty of directors are transferred to other person and the new board of directors are elected by
shareholder. Public company strictly regulated by laws. It is compulsory to declare annual report
to shareholder. It shows true financial position of any company (European commission. 2010).
M&S organisational structure has less number of management levels between upper level and
lower level. This structure is followed in the organisation to make decision making process. It is

the legal structure of M&S that help it is making good business decisions. Currently, firm is
offering number of products to its customers of best quality and at affordable price. This ensured
that firm will be able to create and retain more customers in its business.
Voluntary Organization:
Voluntary organization is group of individuals, who work for a benefit of people it is
characterized by autonomy of state and self governance, . Main motive is not earning profit. .
Purpose
The purpose of the voluntary sector is to improve and enrich society. It exists to create social
wealth rather than material wealth. It is sometimes referred to as civil society, the third sector,
the voluntary and community, non-profit, not-for-profit, charity, social and even beyond profit
sector. Organised voluntary action helps needy people to get rid of problems,it also s promote
socialism among the people (Jennings, 2010). British Red Cross is a charity organisation which
creates charity to the local public. It performs various charity programmes for raising funds in
the charity organisation. Various types of programmes are being conducted in the raising of
funds in the organisation. Employees of the company are given various charity related schemes
Various social events are being organised by this charity organisation to increase awareness
among the local public.
Legal structure:
In voluntary organization liability is limited. They are liable to donator, because donator
have rights to ask about way in which funds are utilized in performance of non-profitable
activities. Legal structure of voluntary organization lies on association. In voluntary organization
there are small groups of members, low income and short terms goals. It is a private retail firm
with minimum of 98000 employees and their main shareholders are their employees. The John
Lewis Partnership is considered most growing businesses with an employee-owned structure. It
is also included in the member of the Employee Ownership Association (EOA), the not
considered as not-for-profit membership body representing the sector. This firm has a large
growth in the upcoming business environment.

P2. Scope of private (M&S), public and voluntary organization
Private Company (M&S)
Size
It is multinational company and expand its business all around the world. They have 1400
stores and more than 82000 employees in present year. M&S have 959 stores through the UK as
well as many international storeses in India, 48 stores in Turkey, 37 in Russia, 27 in Greece, 17
in Ireland and14 in France. . The revenue of company is 10.68 billion GBP (2017)
Scope
It maintaining its leading position in retail industry since 1984 and is offering products
related to clothing, home products and luxury food items in current time period. M&S main
objective is to make available best quality of product to people. (Kusluvan, 2013). In future
they looking toward the online marketing expansion in luxury food and clothes.
Social
They basically focus on charity and social work. In 2011 they charity women's clothes to
breakthrough breast cancer event for many years. Apart it, they provide education to poor
children in developing countries.
Environmental policy
In 2006, they encourage pepole by performsnce different activities activities like
campaigning which help to environment directly or indirectly. In their store they started label
marketing of products to aware about ethical and environmental factor regarding production and
sourcing (Adler and Gundersen, 2015).
Economic
The main issue of M&S is fulfilling demand of customers in limited resources. Because
demand are increase day by day in clothing and food. To maintain they launch online marketing
of their products.
Public company (Network Rail):
Network rail is public company in UK. It is owned by government.
The customers of Network Rail are private train operating companies, transport companies and
freight operating all around the UK.
Size

Network Rail was founded in October 2002. Currently 34000 employees working there.
Since September 1, 2014 Networks Rails declare as 'Public sector body'. Network Rail owns,
operates and develops Britain’s railway – the 20,000 miles of track, 40,000 bridges, tunnels and
viaducts and the thousands of signals, level crossings and stations.
Scope
The main aim of Network Rail is to ensure safe and reliable journey. They divide it into 5
parts which are, System Operators, Local Authority, Services Directorate, Infra structure project
and Digital railways (Ahmad, 2009). They also focus on safety issue related to the traveller and
in this regard it formulate, lifesaving rules and emergency procedures, acknowledging their
personal responsibility etc. They plan to the biggest transformation of Britain’s railway in 150
years.
Voluntary organization (National Trust)
National trust is organization dedicated to secure culture heritage of a particular
geographical area. They work for preserving historical places and conserve areas of natural
beauty. This organization is non-profit organization (Booth, 2014).
Scope
National trust is basically work for preserving heritage. Now the organization wants to
expand their branches all around the world. National Trust for Places of Historic Interest or
Natural Beauty,sub part of national trust was founded in 1985 in England. In 2007 difrrent
NGO's meet at New Delhi, India, to support collaboration and best practice among the national
trust and similar organization. Now it has member from over 50 countries (Brooks, 2013). The
goal of The National Trust is to preserve the heritage and by doing so, to enhance aesthetic
nature of heritage property..
Sr.
no
Particular M&S Network Rail National Trust
1 Type Private Public Voluntary
2 Nature Business profit Government profit non-profit
3 Duration Momentary Permanent Temporary
4 Resources Customers Citizen Charity

from
Table 1: comparison of private, public and voluntary organization
P3. Find out the relationship between the various functions within M&S for achieving the
organisational mission and objectives.
Vision and Mission- Marks and Spencer Marks and Spencer Mission is to make
inspirational quality accessible to others. Marks & Spencer has experience of more than 100
years of retailing. Dating back to the formation of the Marks & Spencer partnership in 1894.
Various function within M&S
In an organization two types of factors work first internally and second externally. M&S
working good externally by doing competitor analysis, marketing (Field/Digital) and maintain
good relation with their partner and customers Now the focus on internally environment (Cloud,
2010). The organization internally seems poor. The main issues are occurred financial, HR
management.
Financial Function
Main function of finance department is to estimate cost of each activity and allocate
resources well. If financial department perform their function well then it can support in
conducting other activities easily without any trouble (Daft, 2009). By this company will have
sufficient monitory resources which will support in improving its products and services? By this
way cited firm will be able to satisfy its customers by providing them products as per their
requirements. For example, this department is responsible to create a budget and forecasting the
growth. They are the one who can make suggestion to invest for expansion. One of the key
department for every company including Marks and Spencer.
Operational function
M&S improve their supply chain management to fulfil costumer demand in effective
way. To increase sell they start maintain CRM as a customer is crucial for every business.
Company focus on reviews and experience regarding products and services, (Bud lender, 2010).
Website of company connect with social media and interaction also increase as to website people
can comment on from Facebook page. In 2016 they setup a new place approx. 90000 sq. feet for
E-commerce. The result is sales increase 9% from previous year.

HR function
M&S ensures employees at all level work together to achieve company targets and
objective. To fulfil it they always find a mid-way which is cost effective and providing better
results. In recent times they change their HR policy.HR management working proactively.
Human resources play important role in any organization. M&S prime motive is to providing
customer better facility with satisfaction. In it customer customers is first priority. M&S need
right person to right position (Carr, Marilyn, Martha and Jane 2010). HR theories highlights the
importance of adopting a systematic scientific approach to maintain ongoing development of
employee skills in order to achieve wider objectives. In M&S this systematic development
includes identifying needs, planning and developing. Evaluation and appraisal is one of the
challenging issues company face. These helps to formalize recognition and makes way for
progression. M&S make an image of Environmental friendly in customer’s customer mind
through their Plan A. To maintain this they allocate there resources naturally without harming
any (Fisher, 2013). Also promote social activity to aware about environmental damages. They
resourcing raw material with responsibility and using it effectively.
TASK 2
P4- Identify the positive and negative impacts the macro environment will have upon the
business operations of M&S.
Macro environment are those factors which effect externally to organization. It cannot be
controlled easily. These factors are Political, Economic, Social, Technological, Environmental
and Legal. It is important for every company to carry out an analysis on its business environment
and take into considerations factors such as the company’s micro and macro environment.

Illustration 1: PESTLE analysis
(Source: External environment theory, 2014)
POLITICAL
Free trade agreement and Brexit are issue for M&S. Theses both policy helps other companies to
import and export from other countries in cheaper rate. The European country provide better
quality in minimum cost. On the other hand, M&S get full support of Government because of
great history record in fair trade value. This will affect VAT (value added tax) policy to M&S.
Marks & Spencer was first company to achieved fair trade policy rules (External environment
theory. 2014)
Economical
Economical issue is affected by fiscal policy, inflation rate, FDI (foreign direct
investment). M&S is popular image in retails sector.In 2009, when the world facing recession
problem, sales of Marks & Spencer products decline . Afterwards they again come up with
new idea in order to improve their performance (Hillary, 2010). Now they targeting local
customers as well as tourist through online medium. Current economic situation is healthy in
UKand in order to capitalize opportunity M&S need to do analysis of market trends and it must

focus on young generation clothing. They also focus on advertising with a new face to attract the
youngsters
Social
Social environment heavily affect business firm. A social environment refers to is
costumer’s choice, llifestyle, taste, trends, changes that frequently comes in their preference
which ultimately affect firm sales. M&S have huge amount of share in retail market and this
reflect that its product get wide acceptance of people(Batra, Kaufmann and Stone, 2013). M&S
provide different type of facility to their customers like, online paying (credit card), and discount
and rewards cards so that it can successfully attract those people who prefer online shopping.
Technological
Constant changes in technology is good for business but some time also create
threat for firms. It ensure that work will be done in better manner at minimum cost. In recent
times there is tremendous change in technology and M&S also need to equip with it. They invest
huge amount of money in online marketing of their products. In retails store they provide free
Wi-Fi to the costumer. In store they manage digital marketing or product specification through
LED display. Sales person also have iPad which help to provide full specification of particular
product (Berman and et.al., 2009). The negative point in it they invest lot of money for single
project. To maintain all they need human resources as well. Overall cost will be increase and it
will affect directly or indirectly to the organization.
Legal
Like any other firms M&S faces legal issue in recent times. In past years it is identified
that firm failed to completely comply with labour laws. For M&Semployee selection process was
carried out by third party.. Laws of labour give penalty to M&S 1 million GBP because firm
breached rules as in 2008 they faced a case. In it company did not give proper amount to salary
to labour and due to this reason they file a case against business firm.
Environmental
Every organization works eco-friendly. The main aim of doing this that cannot harm
environment. They start charges on plastic bags and the earning of this money they invest in
social work, Park, Education etc. they start campaign to aware about healthy environmental
(Capon, 2009).

P5. Conduct internal and external analysis i.e. pestle and SWOT model to identify strengths and
weaknesses of M&S.
SWOT analysis of M&S
SWOT analysis helps to find internal and external factors of an organization. It reflect
Strength, Weaknesses, Opportunity, Threats. Strength and weakness are internal part and
opportunity and threats are external parts of organization.
Strengths
M&S leading retail store in UK. It will expand their business across the world. The main
strength are they provide high quality of product to customers which create their good brand
image. Customer satisfaction important part in current market scenario. M&S provide better
facility to its employees and management which lead to high level of employee satisfaction at
workplace. They trained their manager to give full services to the customers (Cheng and et.al.,
2007). In addition, the brand name is one of the key strengths for the company and all the trusts
Illustration 2: SWOT analysis
(Source: External environment theory, 2014)

rely on the brand name. The company has ranked 32 in the world in 2016 ( Brand Ranking,
2017).
Weaknesses
Organization have strength so also have weakness. The reason of falling sales of M&S
are they provide old fashion clothes which is firm major weak point. According to market
consumer always demand something new and firm failed to make available relevant products to
customers which is its major weakness. M&S targeting 40-50 years old segmentation in clothing
and this reflect that firm is not focusing on highly profitable customer segment. Another issue is
less stocking of clothes and due to this reason firm failed to meet demand completely (Fernando,
2011).
Opportunity
M&S using old technology which causes increasing cost and working capability of
employee. In UK market retails store working for localise people. Now M&S using online
marketing for their product and services. It is huge market and growth in digital marketing is
extremely high. Apart them marketing segmentation also important (Freeman, 2010). In it
dividing of costumer as per need and demand of costumer. It is very helpful because we can full
fill it in effectively.
Expansion of business give new opportunity in particular area. Currently they working with
1400+ stores in world. The company has intention to expand business in BRIC countries as these
four countries ( Brazil, Russia, India and China) are growing fast in the world.
Threats
M&S facing new challenges in market every time. The growth of any company depend
upon facing new task and overcome from it. The main challenge is competitor analysis. M&S
faces it mostly times (Jennings, 2010). In it they need for work on cost, raw material allocation,
marketing trends etc. in recent time M&S charges for chemical pollution, production of clothing
and food items. Environmental issue also plays important role in business.
Porter five forces analysis
Porter five models helps to find external environment of organization like competitor
analysis, pricing strategy, market growth etc. M&S organization analysis describe here
Threat of new entrant

M&S is brand value that providing quality products. A new entrant facing this issue because
M&S already setup there for long time. For M&S maintain clothing and food items also difficult.
Retails stores competition is high. Pricing also low by newcomer. In its huge capital investment
needed with high effectiveness and efficiency (Klapper, Laeven and Rajan, 2014). M&S already
have a large number of loyal customers. For newcomer, it is difficult to break it. In retails store
for competition they give discount, credit and other facility to attract the costumer.
Threat of substitute
M&S are leading in clothing and food provider, but there is no substitute of food and
clothes. Compromising on rates are issue. The competitor gives cheaper rate than M&S or
providing better quality in same rate. Solution is M&S always try for something new or
innovative thing to compete in market (Kusluvan, 2013). Example in clothing new style, shape
and according to trends they change the things, if we talk about foods providing quality product
with cost effectiveness.
Bargaining power of Buyers
Customers are price sensitive. In current market options are available to costumer. On
behalf of cost costumer switching frequently. M&S needs to provide best rates in the market that
cannot be match able to others. Innovative ideas helps to cutting the cost because competitor also
work for it. They maintain CRM with customers. Communication also a part of it. Sales after
service increase customer loyalty (Adler and Gundersen, 2015).
Bargaining power of Suppliers
M&S is own manufacturing goods so they do not need finished goods. But they purchase
last amount of raw material. Competitive analysis in raw material need. Purchasing raw material
with minimum cost are the solution of it.
Industries Rivalry
Competition is very high in retail market where it home goods, clothes, foods etc. to
manage it marketers doing new thing where they can reach to costumer and provide good and
services. Online marketing is new trend where costumer get all thing in single click. It is helpful
because its reduces time and give minimum cost (Ahmad, 2009).

P6. Using M&S as your example, explain how strengths and weaknesses interrelate with external
macro factors.
Macros factors are those factors which is uncontrollable and can handle easily by
organization. In it Economical, Demographical, Legal, Technological, Environmental and Social
factors included. M&S facing issue technological. They using old technology which causes lose.
customers always need some new and quality product. Company strengths is high market share
which is interrelated with economic and demographic factors. Weakness of organization is
technology. M&S needs to focus on technology update. Online marketing strategy give costumer
the best facility and easily reach to the product (Booth, 2014). M&S successful expansion credit
goes to their marketing policy and demographic area. UK is country with rich resources. M&S
benefit it and they get raw material in minimum cost. Maintaining high quality comes up with
the cost of M&S. The competitor import product from abroad in less cost, the economic affect
also weaknesses of M&S. The good relationship with government also helps in growth of M&S.
It helps in taxation policy and other value added services. The relation is based upon past
performance of company and trading policy of M&S. Some time they also face legal issue
regarding product and raw material. For silicon using in clothing completely banned (Brooks,
2013). Decision making is a major task which is being considered for every business. If we see
from theswot analysis then it is seen that due to the production of high quality of the products
being produced we can see that local products are not produced by the company and thus only
brand products are produced which leads to growth but every customer can’t afford to produce
the product and prices are also high and this leads to less economic growth. If we see the pestal
analysis we can see that the restrictions are being removed due to liberalisation and this lead to
the loss in the business-environment and all the materials are being easily transported from one
country to another so proper decision making process does not takes place with regards to price
as well as economic growth.
CONCLUSION
Marks and SpencerMarks and Spencer working globally and main aim is to provide
better quality. For study above this case it concludes that company internal environment is good
now they focus on external environment like technology. Company should concentrate on online
marketing and provide a platform where any can reach easily. M&S focus on developing country

or Asian continent where economy growth is high and huge market opportunity. They also
change their advertising policy and targeting youth generation.

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