Business Environment and Corporate Governance

The assignment requires students to analyze the business environment using PESTEL analysis and identify key factors that impact corporate governance. It also involves studying the impact of the business environment on the creation process of new businesses and companies. Additionally, it includes a review of culture as a successor of quality initiatives, private company accounting, SWOT analysis, and marketing plans. The assignment aims to provide students with a comprehensive understanding of the business environment and corporate governance.

Business and
Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different type and purpose of organisations with their legal structure..................................1
P2 Scope and size of different type of enterprises......................................................................4
TASK 2............................................................................................................................................4
P3 Relationship between various organisation functions and its link with structure and
objectives of firm........................................................................................................................4
TASK 3............................................................................................................................................6
P4 Positive and negative impact of macro environment on business.........................................6
TASK 4............................................................................................................................................8
P5 Internal and external analysis of organisation.......................................................................8
P6 Interrelationship of strength and weakness with macro factors.............................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Environment in which an organisation execute its operation with the aim of earning profit
is known as business environment. Number of elements exist in this which affect the activities of
firm that's why it become more important for organisation to identify these factors and its impact
on commercial activities (Chavis, Klapper and Love, 2011). This evaluation help business
managers in plan their activities and also assist them in formulate an effective business plan.
Analysis of strategies adopted by rival of firm is also come under the study of business
environment. External factors of business environment create opportunities and threats for firm
while internal factors help in define strengths and weakness of company. Basically business
environment is a mix of various complex components and elements and study of these help
managers in achieve effectiveness in commercial activities. Marks & Spencer (M&S) a big
retailer of food and home products is taken under this report for study. Presently firm is
delivering its services with more than 1433 stores. Various type of enterprises and their legal
structure is detailed under this report. Further different macro factors and its impact on business
and its activities is all cover in this report.
TASK 1
P1 Different type and purpose of organisations with their legal structure
One of the main objective of every business organisation is to generate more amount of
profit by offer effective products and services to its customers. Number of department work in an
enterprise and perform various kind of activities. Quality and size of activity largely affect by the
size of a company. Large business firms execute their operation on a big level whether small
organisation execute same operations on a small level. Activities of a big enterprise are more
complex and lengthy as compared with operations of small firm. Type of business enterprises
can be better understood by the following points: Public limited company: A company which regulated by government or whose
ownership remains s in the hand of government is knows as public limited company.
These type of organisations focus to deliver effective products to its clients in order to
satisfy their needs (Rankin, Windsor and Wahyuni, 2011). Shares are issued by these
firms to raise funds for execute commercial activities. These type of companies invite
individuals to buy shares. PLC is a word which these companies keep behind name of
the firm. These type of organisation take suggestions or approval of their shareholders
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regarding any big decision about the company. TESCO is a public limited firm and legal
structure of a public limited firm can be understand by the points stated below:
General government: this is further divided into following parts:
 Central government: This government is also knows as apex body of government who
control every issue of a nation. Collect taxes from business organisations and print money
comes under the main duty of central government. State government: Activities of a particular state are regulated by this government.
Various programmes and policies are formulate by this government to encourage higher
education of children. Local government: As the name suggest this government control and regulate the
activities of a small area and town (Commander and Svejnar, 2011). Small authority is
given to this government to solve the local issues of a small town.
Private company: Organisations which controlled by the private hands of individuals or groups
is knows a private organisation. Innovative and featured products is one of the main speciality of
these companies which attract large number of customers towards their product. M&S is an
example of a private organisation who make and offer products as per the needs of its customers.
Private firms are further divided into following parts:
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 Sole trader: This is one of the popular form of private business. Under this whole
business and its activities are carry out by a single person. He only bear all losses and
gains of firm. Partnership: When two or more than two individual come together to start a business is
knows as partnership. Increases resources and amount of profit is one of the main
advantage of this type of business (Myers and Korsmo, 2014). A written document
called partnership deed is signed by every partner to avoid conflicts. Deed contain
relevant information like share of profit of every partner, permanent address, age, name
and various other things. Franchising: Due to complex business situations this is one of the most popular business
form (Eckardt, 2012). Under this an individual called franchisee take permission from the
owner of well and popular brand name called franchisor in order to sale products under
that name. Franchisor give permission to franchisee in exchange of some consideration
called royalty fees. Due to popularity and positive image of brand this provide
opportunity to franchisee to capture a larger market share easily.
Voluntary sector: Firms which are formed with the aim of doing social development of
individuals is knows as voluntary sector. These type of organisation focus to fulfil basic needs of
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individuals so they can live a better life. OXFAM is an example of voluntary sector who do
efforts to remover poverty from the world.
P2 Scope and size of different type of enterprises Public sector enterprise: TESCO is a public limited firm work in grocery sector based in
UK. Due to its big size firm generate large amount of profits every year. Presently firm is
offering its services with more than 6553 stores worldwide which generate more than 50
millions of profit every year (Eisenber and Miller,2012). Currently more than 454600
workers are working in firm which help in effective execute all activities of company.
Vision of TESCO is to make and offer quality grocery products to its clients in order to
get their loyalty and to capture a larger market share. Private sector enterprise: M&S is private company which make and offer variety of
products to its customers. Mainly firm deals in various home and luxury products for its
customers. In UK M&S has more then 959 stores that sell food products only. Operating
income of company is £ is 690 million and profit of firm is £ 115.7 per year. More than
80000 employees are working in its outlets. Size of company's operation is very large
that's why today firm has a string and positive brand mage.
 Voluntary enterprise: OXFAM is a type of voluntary enterprise who work for the social
development of society and to remove poverty from the world. Different programmes are
conduct by this organisation to address the problems such as poverty and injustice
(Welford, 2013). Company provide help to those individuals who can't fulfil their own
basic need of routine life.
TASK 2
P3 Relationship between various organisation functions and its link with structure and objectives
of firm
Number of functions are carry out by different organisations to achieve their set
objectives and targets. Effective implementation of those activities is very necessary. In order to
capture a larger market share and to achieve efficiency in its business operations it is very
essential for the mangers of M&S to effective execute its commercial activities. Basically
function of an enterprise largely depend on structure and objective of a company. Simple and
effective structure of company increase effectiveness of business activities while complex
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structure increase both cost and complexity of business functions. Further main function of M&S
and its link with organisation structure and objective can be understood by following points: Production and design: Product is the final offering of a firm to its customer and its is
very necessary that product of M&S should be as per the requirement of its clients. One
of the main speciality of this company is that it offer innovative products to its customers
to satisfy their needs and wants (Hamilton and Webster, 2015). Capital, labour and
equipments are the main elements of a production process so all these should be well
manage by firm to achieve efficiency and to offer good quality products to its customers. Human resource function: Management of employees and activities related with them is
one of the essential elements behind success of every enterprise. It is very essential that a
firm should have skilled and capable workers because these are the one who make final
products and services to large number of customers. Further capable human resources
help the firm to get competitive advantage. Activities of employees working in enterprise
get affected by the structure follow by company. Effective communication channel must
be build at workplace of M&S so confusion can be removed form mind of employees
and they can perform their duties effectively. Finance: Sufficient amount of funds are require by every enterprise to execute their
business activities and to achieve set objectives. Lack of money create unnecessary
delays and obstacles in business activity. In this case it comes under the responsibility of
finance manager of M&S to identify and assess financial needs of every department and
than allot them funds so company can achieve its set targets. Finance require by company
depend on size of its operations larger the size will be of business activity more finance it
will require to complete the same. Marketing and sales: Marketing comes under one of the main function of every
enterprise because this provide platform to company to communicate with its customers
and make them inform about its products and features (Jayeoba, 2012). Effectiveness of
marketing department increase sales of company's offering that's why it is very essential
that this function should be well perform by the managers of M&S.
 Administrative function: All supporting activities of company like handle the complaints
of customer send them mails and letter all comes under the activity of administrative
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function. It is very essential that function of this department should be effectively done
by the managers of M&S so firm can execute its operations smoothly.
One of the main quality of structure adopt by organisation is that it indicate the flow of
responsibilities. Presently M&S follow a divisional structure to operate its business activities.
Under this firm give perform all its activities as per the geographical areas. Main trait of this
structure is that it has global hierarchy and further groups are made as per the function which
increase effectiveness of company's activities.
Illustration 1: Organisational structure of M&S
TASK 3
P4 Positive and negative impact of macro environment on business
Business environment is aggregate of various internal and external factors which largely
affect the activities of a business. Internal elements are those which remain inside the
organisation while external factors are those which exist outside environment of a firm. External
factors are also known macro elements which remain out of control of a company but largely
affect its operations (Klapper, Lewin and Delgado, 2011). That's why identification of these
factors and its impact on business activities is done by every organisation. PESTLE tool can be
use by M&S for identify the impact of external factors on business environment.
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Illustration 2: PESTLE Political: This is one of the most influencing factor from external environment which
must be consider by managers of M&S. Government of every country made some rules
and regulation regarding the functioning of other firms in order to maintain the economy
of country. For example in 2010 government of UK made various regulation which give
rise to financial crisis there. Further, when government give subsidy to business
enterprises than this encourage business activities and contribute in economic growth of
nation. Negative impact is that sometimes to many regulations of government crate
unnecessary delays in business activities. Economic factor: This is another element which also affect the business activities of a
firm in both positive and negative way (Klapper, Lewin and Delgado, 2011). Rate of
loan, inflation, deflation, interest and fiscal policy are the main factors of which covered
under this. All these should be evaluate by managers of Marks & Spencer before expand
its activities in different areas. Positive impact of this is that decrease rate of interest and
loan provide opportunities to business to expand its activities new areas while on the
other hand increase rate blocks the way of company's expansion. Social factors: Needs, habits, lifestyle and taste of people comes under the social factor.
In order to capture a larger market share and to better satisfy the needs of clients it
became essential for the firm to study these factors. With the help of this M&S can
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generate more number of profits. Positive impact of this is that it give an opportunity to
firm to understand the needs of customers and satisfy the same. While on the other hand
when requirements of customers change at a fast speed than it becomes difficult for firm
to execute its operations. Technological factors: Today needs of customers are changing at a fast speed and every
customer want updated products to fulfil their requirements. Every small change take
place in technology affect activities of a firm. Fast adoption of technology help company
to attract more number of customers towards its product. Same can be done by the
managers of M&S in order to make updated products and to better satisfy the needs of its
customers. Adoption of technology at early stages give an opportunity to firm to capture
a larger market hare but at the same time it increase the cost of firm in conduct training
programs for employees. Legal factors: Government of every country made some rules and standards for
enterprises to make and offer quality products to people (Krishnan, 2013). Sometimes
these rules help firm to make and offer quality products to its clients which attract large
number of customers. But sometimes these rules create unnecessary obstacles in smooth
functioning of firm. For example increase regulation of government of UK influence
M&S to use standard and ethical process for make final products for customers. Negative
impact of this is that it create delays in business activities.
 Environmental factors: Due to increase awareness in customers about security of
environment it become essential for every firm to use good quality raw materials and
methods to make final products for its customers. For example increase consideration of
customers about environment influence firms to use good and quality raw material for
make products. Negative impact of this is that it limit the firm to use natural resources.
All the are the main external factors of business environment which affect the activities
of a business. It is very necessary that all should be well examine by the manager of M&S so
firm can plan its future activities accordingly.
TASK 4
P5 Internal and external analysis of organisation
It is very necessary that manager of a firm should have detail information about strengths
and weakness of firm as this guide and support him during the formulation of business plans and
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strategies. With effective utilising its strengths M&S can get various advantages over its rivals.
Identification of opportunities and threats is also essential for managers of company as this guide
in plan future activities of company (Love, 2011). For this a tool called SWOT can be used by
the managers of M&S. Strengths, weakness, opportunities and threats of M&S can be understood
by following points:
Strengths: Different traits of an organisation which make it unique and different form its rivals is
knows as strengths of a firm. Main strengths of M&S can be understood by following points:
 Firm is operating with more than 1382 stores worldwide. Geographical diversification of
company reduce its risk and provide more stability of company's operations.
 Company is trading since 1884 that's why today brand of company has a strong positive
value and is consider under top ten brands of UK. Expenditure of company in brand
building adverting provide number of advantages to firm. Shift of company from focus on products to focus on customers increase market share of
firm.
Weakness:
 Company loose its key rivals, workers and technology developers. This increase cost of
firm as firm has to invest more in process of recruitment, selection and training of new
workers.
 With the implementation of digital transformation strategy company face a number of
technical obstacles while introduce club and card schemes to its customers.
 Initiatives of firm like introduction of various brands attract customers of firm's rivals but
at the same time decline market share of company's most profitable business. Company follow old techniques of complete work rather than adopt new tools which
increase both time and cost of firm.
Opportunities: Market segmentation is a process of making a group of customers which share similar
needs and interests. M&S has opportunity to effectively use this technique by increase the
number of its branches in various areas. Basically firm has mega stores and company did
not focus on splitting its clients as per their similar interests. In this way M&S can
establish small shops which will reduce maintenance cost of company and will increase
profit of firm.
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Threats:
 Due to increase competition M&S has a threat to loose its current market share. Increase
competition in retail sector is huge threat for firm further M&S has number of
competitors include Asda, sainsbury and TESCO. All these rivals of firms are expanding
its activities in various areas while M&S is still relay on mega stores that's why firm is
losing its reputation. So it is recommend to management to develop a scenario of risk
management to increase amount of its profits. There is a need for M&S to use a effective
strategy to overcome over all the obstacles.
With identification of these strengths, weakness, opportunities and threats of firm
managers can formulate better and effective plans for business and at the same time can capture a
large market share than its rivals.
P6 Interrelationship of strength and weakness with macro factors
External factors of business environment are directly linked or relate with strengths and
weakness of a company and this can be better understood by the points stated below: Political factor: Stability of government in a country, various rules and regulation form
by them to manage the activities of an enterprise all come under the political factors of
business environment (Macdonald, 2012). All these elements directly affect business
activities and strengths and weakness of firm. For example if government of UK
introduce a new technology for making products than M&S has to do changes
accordingly and this is possible than this will increase the cost of its operations. Economic factors: Achievement of business objectives is possible if firm make strategy
as per the economic conditions prevail in a country. Various rates such as inflation,
deflation and rate of interest affect activities of a company (Madsen, 2016). For example
if rate of loan will be high than M&S will fail to expand its activities in new areas and on
the the hand in case of recession M&S can not make products as per the needs of its
customers and can not utilise its resources effectively. Social factors: Consumers are the final target of every company that's why it is essential
for every firm to make and offer products to them as per their needs, habits and attitudes.
Production of innovative products is very essential for an enterprise to maintain their
market share.
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 Technological factors: Use of new technology is very essential for very business to
survive in competitive business environment. Any change in technology affect its
production process and number of its customers. Legal factors: It comes under the responsibility of every business organisation to comply
with all rules and regulation set by government of a country to run its business operations
smoothly (McDonald and Wilson, 2011). Otherwise it create unnecessary obstacles in
functioning of firm.
 Environmental factors: Due to increase awareness among customers and various rules
set by government it become necessary for every business organisation to use quality raw
materials for making final products for customers.
From the above point it can be clear that there is a direct link among various external
factors of business environment and strengths and weakness of a firm (Mojaveri and
Fazlollahtabar, 2012). So in this case all these factors should be well identify and study by the
managers of M&S to use its strength in an effective way to minimise the negative impact of its
weakness.
CONCLUSION
From the above information it can be concluded that study of business environment and
various elements exist in that is very essential for a firm like M&S. Main advantage of doing this
is that it provide useful information to managers about what is going on environment and support
them during the process of policy formulation. Basically there are number of organisations which
execute commercial activities to fulfil their own purpose. Function of a company largely affected
by its nature, scope and size. All functions perform by different department of an organisation
are directly linked with each so it is very necessary all should be well perform by M&S so firm
can attain its set objectives. Further managers of firm can use PESTLE tool to identify the factors
exist in business environment and its impact on business activities. Company can go for internal
and external analysis in order to identify its strengths and weakness.
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REFERENCES
Books and journals
Chavis, L.W., Klapper, L.F. and Love, I., 2011. The impact of the business environment on
young firm financing. The world bank economic review. 25(3). pp.486-507.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Eckardt, M., 2012. The European Private Company: Do we need another 28th private company
law form in the EU? On regulatory competition of corporate law.
Eisenberg, T. and Miller, G.P., 2012. The English versus the American rule on attorney fees: an
empirical study of public company contracts. Cornell L. Rev.. 98. p.327.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Jayeoba, F.I., 2012. NEED-GOAL INTEGRATION AND ORGANISATIONAL TYPES;
IMPLICATION FOR INDUSTRIAL RELATIONS. European Scientific Journal. 8(19).
Klapper, L., Lewin, A. and Delgado, J.M.Q., 2011. The impact of the business environment on
the business creation process. In Entrepreneurship and Economic Development (pp.
108-123). Palgrave Macmillan UK.
Klapper, L., Lewin, A. and Delgado, J.M.Q., 2011. The impact of the business environment on
the business creation process. In Entrepreneurship and Economic Development (pp.
108-123). Palgrave Macmillan UK.
Krishnan, A., 2013. Culture As a Successor of Quality Initiatives: A Review. International
Journal of Social Science. 2(1). p.53.
Love, V.J., 2011. Private company accounting: A concept whose time has come. The CPA
Journal. 81(2). p.16.
Macdonald, R., 2012. Unilever. A Strategic Analysis.
Madsen, D.Ø., 2016. SWOT Analysis: A Management Fashion Perspective.
McDonald, M. and Wilson, H., 2011. Marketing plans: How to prepare them, how to use them.
John Wiley & Sons.
Mojaveri, H.S. and Fazlollahtabar, H., 2012. Designing an integrated AHP based fuzzy expert
system and SWOT Analysis to prioritize development strategies of Iran agriculture.
Revista de Management Comparat International. 13(1). p.117.
Myers, M. and Korsmo, C., 2014. Appraisal Arbitrage and the Future of Public Company M&A.
Rankin, M., Windsor, C. and Wahyuni, D., 2011. An investigation of voluntary corporate
greenhouse gas emissions reporting in a market governance system: Australian
evidence. Accounting, Auditing & Accountability Journal. 24(8). pp.1037-1070.
Welford, R., 2013. Hijacking environmentalism: Corporate responses to sustainable
development. Routledge.
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