Business and Business Environment - M&S Assignment

Business and business environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1 Types & purpose of organisation and its legal structures......................................................1
P2 The size and scope of differences types of organisation............................................................3
LO2..................................................................................................................................................5
P3 the relationship
between organisational functions its objectives and structure....................................................5
LO3..................................................................................................................................................8
P4 negative and positive impacts of macro environment upon business operation ...................8
LO4................................................................................................................................................10
P5 Internal analysis of organization in order to identify their strength and weakness.............10
P6 Strength and weakness interrelated with external factors....................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment includes all those external and internal factors (ex. Legal, political,
economical, sociological, ecological factors) that influence business and for analysing business
environment there are various tools like SWOT, PESTLE etc. Present study is based on Marks
and Spencer, it is a multinational retail organisation is a private company has its own legal rules
and business environment. The report will explain purpose and legal structure of about different
public, private, voluntary enterprises. Furthermore, it will explain size, scope of these companies.
In addition, report will conduct pestle analyses of M&S and will describe positive and negative
impact of these factors on business.
LO1
P1 Types & purpose of organisation and its legal structures
Types of organisation
Public company
A public company comprise of organisations which are owned and operated by
government with the motive of providing services to society with no motive to earning profit.
National Health services is and health and social care organisation of UK. The firm is considered
to fifth largest employer across the globe. The firm provided different kind of health care
services like mental health, learning disability and children's nurses. Purpose of NHS is to meet
responsibilities and commitments which are in interests of patient and staff. The vision of firm is
to operate fairly regardless of any differences. Legal structure of NHS is governed by the present
version of the National Health Service Act 2006. In accordance with this Act organisation
provides comprehensive health services and the act is completely influenced by Health h and
Social Care Act 2012.
Private company
A private company is the company set up directly by registering the company with
company’s house .it has its own separate legal entity to its shareholder and directors. For
example - Marks and Spencer is the private co. it has to complete various legal formalities to
register itself as a private company. Purpose of this company is to maximise profit and expand
operations globally (Quinlan and et.al, 2019)
There should be an Article of Association and Memorandum of Association that should
cover following details - the objectives of the business, its headquarters and registered office, the
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amount of capital to be raised from sale of shares, details concerning meetings within the
business , the arrangements for auditing the accounts of business.
Voluntary company
A voluntary company is the company or an association where members enter into an
agreement , usually as a volunteer to achieve a common goal, it do not have separate legal entity,
cannot own property in its own name , both members of the association and member of the
committee may incur personal liability and it is governed usually by a constitution .It includes
trade associations, professional associations, environmental associations and trade unions. The
main purpose of such organisation is to improve wellbeing of people and offer them satisfactory
health services (Hamilton and Webster, 2018)
For e.g. Welcome trust is a voluntary association, composed of members, power is
delegated to management committee to carry out association's activities.
Micro small and medium enterprise (MSME's):
Micro business has less than 10 employees in its organisation and turnover under £2
million, small enterprises should have less than 50 employees and turnover under £10 million
and medium enterprises can be defined as the business carrying its activities with less than 250
employees and turnover under £50 million. For example - Craft Brewery is a small enterprise
that produce 6 million barrels of beer or less and less than 25 percent of the craft brewery is
owned and controlled by a beverage alcohol industry member that is not itself a Craft Brewer
Profit and non-profit organisations
Basis Profit organization Non-profit organizations
Meaning Organization formed for the
purpose of earning profit is
known as for-profit
organization.
Organization formed for the
purpose of serving society as a
whole and has legal entity is
known as Non-Profit
Organization.
Type of organizations Sole proprietorship and
partnership firm
Public hospitals, trust, club etc.
Sources of revenue Sale of goods and services of Subscription, membership
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Marks and Spencer ((Malesios
and et.al, 2018.)
fees, donation etc. of Welcome
Trust
Financial statement Income statement, Balance
sheet and cash flow statement
Reciept and payment A/C,
Income and Expenditure A/C
and Balance Sheet.
P2 The size and scope of differences types of organisation
Public
Organisation
(NHS)
Private-organization
M&S
Voluntary
Organisation
(Welcome, Trust)
Objective Objective of NHS is
to reduce health
inequalities and keep
people healthy. To
achieve this
organisation, aim ta
respecting
confidentiality of
patient information
and provides open
access to
information about
treatment,
performance and
health care services.
The objectives of
marks and spencer is to
develop the new
varieties of product and
provide best service to
their customers with
satisfying their needs
and wants.
Objective of this
Welcome Trust
voluntary organisation
is to provide the social
services to needy, old
aged and poor people.
Vision & mission Vision of NHS is to
deliver better health
to society with
individual focused
Vision and mission of
marks & spencer is to
create new products
and change their
products according to
Vision and mission of
the Welcome Trust is to
follow long duration
sustainable strategies.
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initiatives.
Mission of NHS is
to maximize health
and wellbeing and
prevent illness and
therefore firm also
focuses on
promoting health by
organising health
check campaigns
and educational
programmes.
customers’ needs and
wants.
Products\ services The major services
of NHS comprise
dentist to hospital,
emergency care and
GP’s. However, to
manage emergency
care NHS own
smartphone
application where
the person in need
can seek for medical
help.
It produces variety of
products like clothing,
footwear, groceries,
health and beauty
products etc.
Scope Scope of
organisation is wide
and is focused on
improving the
experience of care
for people which is
Marks & spencer
transforming
themselves in more
relevant and more
often to delivery top
quality products.
Welcome trust has
emerged as big global
force today. It has a
definite place but
performs various tasks
and functions for the
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managed by referral
from the Department
of Health.
needy and neglected
people.
Legal Structure Legal structure of
NHS is governed by
the present version
of the National
Health Service Act
2006.
Board of director and
shareholders have right
to vote in the
organisation. The
government have right
checked any financial
document in any time.
This association is
governed by the
constitution, legal
documents which
govern the association
Stakeholder Clinical
commissioning,
Consultant medical
staff Clinical coding
manager, Medical
director, group
Clinical governance
lead,
Clinical coding staff,
Junior doctor’s IT
systems manager,
Medical records
staff Medical
secretaries, Finance
director, etc.
Marks and spencer's
stakeholders are
customers, government
and communities etc.
Primary Stakeholder-
Board members,
communities,
employees, volunteers.
Secondary Stakeholder
– Government, Interest
groups, investors.
Market Size, and
Share, No. of
Employees
Market size of NHS
can be demonstrated
by its position in
world which is fifth
It is working across the
world. Its generated
revenue in the year
2018 is £10.7 billion.
This voluntary
organisation has
invested £125.9 billion
in the year of 2017. And
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largest pubic
function health care
organisation.
Expenditure of NHS
accounts for 7.4 %
of Gross Domestic
Product (Statistics
Research
Development, 2017).
NHS is considered
as largest employer
with 1.3 million staff
consisting od
nursing staff of
317.7, 351 support
staff members and
110 doctors.
Every year shares of
NHS England are
1000 Billion Pound.
Its gross profit is £ 4
billion and net worth
income is 29.1 million
in year 2018. It has
80,787 employees,
who work for the
organisation.
currently working with
2,057 employees for the
betterment of the
society.
Organisational
structure
NHS consist of
‘tripartite system
structure.
Flat organisation
structure
Tall organisation
structure
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Figure 1: National Health Service (NHS) UK
(Source: Statistics Research Development, 2017)
LO2
P3 The relationship between organisational functions its objectives and structure.
Organisation structure: -
It defines certain activities such as coordination, direction and supervision in order to
achieve the organisations goal.
Organisation structure have several types but it mainly divided into two types: -
1. Flat organisation structure
2. Tall organisation structures
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Illustration 1: Organisation Structure
(Source: )
Flat organisation structure: -
In this organisation structure, there are few or no levels between management and
employee. The involvement of the employees is higher in the decision-making process of the
organisation. This structure is eliminated the hierarchy between the higher-level management
and staff level employees that helps to save money. In this structure the employees need less
supervision for their work. The communication will improve between management and
employees in flat organisation structure because of less levels. This structure is a flexible and
changes are easily acceptable.
Illustration 2: Flat organisation structure
(Source:)
Marks & Spencer follows flat organisation structure because they want to eliminate the
level of hierarchy between the management and employee. Marks & Spencer motivates their
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employees by involving them in decision making process that enhance the performance of the
employee and contributes in achieve the targets of the organisation.
Tall organisation structure: -
In this structure, this organisation has number of levels and extremely complex. The
communication between management and employee is very difficult because of levels of
hierarchy. Employees have no right to speaks in decision making process of organisation and
bound to follow the instruction of their supervisor. The changes are not easily acceptable because
of number of levels.
Illustration 3: Tall organisational structure
(Source: Push vs. pull: who wins, 2019)
Objectives of Marks & Spencer: -
The objectives of marks and spencer is to develop the new varieties of product and
provide best service to their customers with satisfying their needs and wants.
Relationship between various function of organisation: -
Human resource and finance function: -
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Human resource function is recruiting, interviewing and placing in various function.
Finance function is concerned with cost and money. Human resource department recruits
qualified people for the organisation and that people help in enhance the profitability of the
organisation by optimum utilization of resources. This profit helps to finance department for
future investments and provide funds for promotional activities of the organisation.
Production and marketing department: -
Production function includes creating new products and managing the quality and
quantity of existing as well as new product. Marketing function includes making marketing
strategy for promoting new products and keep maintain existing customers. The production or
marketing function of the Marks & Spencer corporates each other in their work. marketing
functions provides the customers data about their needs and wants to the production department.
So, the production department produces goods according to customer's need and wants.
Indirectly both departments help in enhance the profitability of the marks & spencer.
Sales and marketing function: -
The marks & spencer have separate Marketing and Sales department. The marketing
department of marks & spencer promotes their products through T.V and newspaper and through
survey they identify their target market then the sales department directly meet their target.
They do not need to find-out their market that save money. This money used for further
advertising of their product.
LO3
P4 negative and positive impacts of macro environment upon business operation
Macro environment of Marks and Spencer includes political, economic, socio-cultural,
technological, legal and ecological factors that has direct or indirect impact on its business.
Impact of political factors
Negative impact- Marks and Spencer was not following the standards made by
government and was charged for neglecting the safety regulation. The two main political factors
that affect M&S are political stability and VAT. Political stability is the government works
according to them and M&S wants things differently and VAT is value added tax paid by the
companies to the government ,it has huge impact on M&S company if government increases
VAT then it has to increase its prices otherwise it will decrease firm's revenue.
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Positive impact- Marks and Spencer has good interaction and work with government to
protect itself from legal procedures and to develop policies to protect interest of general public. It
responds to the government queries available on their sites. The company has full support from
government because of its rich historic values and fair-trade practices (Stefanova, M. and
Todorova, S., 2018)
Impact of economic factors
Negative impact- If there is a inflation in the economy of UK then probably purchasing
power of consumer will decrease and prices of goods and services of M&S will also increase.
Positive impact-The economy of the UK is an open economy, its fiscal and monetary
policies are managed properly and it has plenty of disposable income that is a good sign for the
business so M&S should spend this disposable income on its clothing as it need to concentrate
more on fashion arena.
Impact of sociological factor
Negative impact- M&S is of conservative nature as it has customer aged over 40, but
nowadays people's choices ,tastes and preferences are changing that can make its negative image
in international market .
Positive impact - If Marks and Spencer will change and improve its outdated stock and
manufacture products as per the demand of the consumer then definitely there will be a change in
its business revenue.
Impact of technological factors
Negative impact – To operate any new technology and software there should be
availability of skilled and technical people or employees in the organization, it is dangerous for
Marks and Spencer, if its employees do not operate its new technologies and software carefully.
Positive impact – Modern IT helps in increasing productivity and lower costs and also
M&S has its online retail business that makes easy interaction with people. It has already
invested 100 million on new technologies to increase its efficiency (Widya Yudha, Taejon and
Kolios, 2018.)
Impact of legal factors
Negative factor-M&S was fined 1 million GBP for lung disease risk, because it failed to
protect its employees and also it forced its staff to work overtime, that has created negative
image of the company in the eyes of its customers.
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Positive factor- IF the company is legally abided by the rules made by government and
follow all the court orders then it can improve its image and make it positive.
Impact of environmental factors
Negative impact- If M&S is manufacturing such cloths that contains ingredients that is
harmful for environment and people then it will reduce its brand image
Positive impact – M&S is engaged in various sustainable practices like it charges 5p per
plastic bag from consumer and all the profit generated from selling plastic bag is invested in
project that improves parks, playing areas , and public gardens in and around UK, that helped
M&S to go green and achieve higher efficiency (Stefanova and Todorova, 2018)
LO4
P5 Internal analysis of organization in order to identify their strength and weakness
Internal analysis of Marks and Spencer includes identifying its strength, weakness,
opportunities and threats of an organization-
Strength
Marks and Spencer have many strengths that are as follows-
Good Brand value- M&S is known by everyone in the Market of UK, as it provides
quality products to its customers.
Availability of variety of products- There are wide variety of product available in
Marks and Spencer supermarket for example vegetables, fruits, clothing etc.
Multiple stores- Marks and Spencer has 900 stores all over the world with 600 in UK
and 300 in over 40 countries.
Multiple brands- Marks and spencer has multiple brands in its store such as Blue
Harbour, Collezione, Big and Tall etc.
Weaknesses
Like every business Marks and Spencer also has some loopholes that are as follows-
Old fashioned stock-. The major loophole of Marks & Spencer is that it has old
fashioned and non-trendy collection in its store like people says that it has major collection for
sixties and eighties people and not for new generation so M&S needs to develop new strategy to
overcome this weakness.
Increase in cost due to manual working- Another major drawback of Marks and
Spencer is that it does not use new technology and new methods of doing work that increases its
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manual work and reduces work efficiency that ultimately leads to increase in cost and
expenditure of a company.
Opportunities
Globalised- Along with the markets of UK it has now entered in various other countries
like Europe, Canada etc. and also it had a franchise deal with a company called planet sport, so
Marks and Spencer are growing gradually and showing its efforts to compete with other brands
(Phadermrod, Crowder and Wills,2019).
Niche marketing- Niche marketing refers to small segment of the market that consist of
group of people having similar level of interests, Marks and Spencer has concentrated on
splitting consumer in small segments by increasing its branches all over the world.
Threats
Competition-Marks & Spencer has threat of losing its business scope because of increase
in competition with other brands like Sainsbury, Tesco etc. M&S will lose its reputation among
customers if it continues with same trend and policies and on the other hand brands are offering
more quality products as compare to it. So, management have to adopt new policies and
procedures to compete with those brands (Find comprehensive SWOT & PESTLE research
reports across industries globally,2019).
P6 Strength and weakness interrelated with external factors
Strength of marks & spencer related to macro environment: -
Good brand values: -
Marks and Spencer are well-known brand in UK. They continue improve their quality,
value and customer experience through political factor. They make their decision making
according to government policies. Marks And spencer have very good political relations that
help in future prediction of their branding of the products. Because with the help of political
factor the marks and spencer identify about the political stability and changes and also protection
and discrimination laws that affects business internal operations and activities.
Variety of product: -
Marks and spencer have a list of products. This product is affected by social factors.
Products are made for customers. Customers buy their products according to their belief,
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lifestyle, personality and attitudes. Those all terms come in social factor. So, social factors are
related to marks & spencer's strength that is the company deals with variety of product
(Phadermrod, Crowder and Wills,2019).
Weakness of Mark & Spencer related to macro environment: -
Increasing cost due to manual working: -
Marks & spencer's biggest weakness is their manual working. It can cause of bending,
stretching and twisting of heavy machinery. There is lack use of technology increases their cost
of the product that ultimately affects the final price. It is also hazarding for employees who is
doing manual work. The final product price is increased that affects the sales of the product.
sales will reduce automatically profit will reduce. So, the technology factors affect organisation
overall performance.
CONCLUSION
From the above study it can be concluded that Business environment defines different types of
organisation and their scope in the business to achieve its predetermined targets of the company.
Present report has concluded that the Business environment of Marks & Spencer's company
helps in achieving success. Business environment includes organisation structure which describe
about tall or flat structure. Marks & spencer followed flat structure. It shows interrelation
between various functional areas of organisation. There are many macro factors that impact
organisations overall performance. Due to changes in social and political condition firm has to
make changes in its strategy and policies so that it can sustain in market for longer duration.
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