Business Performance Analysis: Marks & Spencer

This assignment involves a comprehensive analysis of Marks & Spencer's (M&S) business performance. You are required to examine M&S's financial trends, evaluate their macro environmental factors using the PESTEL framework, and apply strategic management theories and business process management concepts to assess their competitiveness and sustainability. Additionally, you will explore the impact of institutional environments on M&S's operations.

Business and Business
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
P1 Purpose of private, public and Voluntary organization.....................................................1
P2 Size, scope of organizations..............................................................................................2
P3 Relationship between function of organization and their mission....................................5
PART 2............................................................................................................................................7
P4 Positive and negative influence of macro environment factors........................................7
P5 Internal and External analysis of organization..................................................................9
P6 Strength and weakness of business and their interrelationship with external factors....10
CONCLUSION..............................................................................................................................11
REFERENCES .............................................................................................................................12

INTRODUCTION
Performance of business unit affects by various internal and external factors. It not only
impact on its growth but also affect its sustainability as well (Othman and Rahman, 2014). Each
firm operates in such environment where it has to handle these micro and macro environment in
order to survive in the market for longer duration. Current assignment is based on Marks and
Spencer which is leading retailer which provides innovative, quality products and services to its
customers. It exports cloths and home items across the world.
Present report will discuss purpose of private, public and voluntary organization and their
legal system. Furthermore, study will focus on relationship between various function of entity
and its objectives.
PART 1
P1 Purpose of private, public and Voluntary organization
Each business unit has their own objectives and purposes. They make such structure so
that their objectives can be achieved. Purposes of different organizations are as following:
NHS
National health services (NHS) is public limited firm which operates under the
supervision of government (Othman and Rahman, 2014). It gets funds through taxation system.
Its main agenda is to provide quality care services to patients and improve their well being
(Rong, Shi and Yu, 2013). It organizes emergency services for critical cases, vaccination
services so that death rate in the nation can be reduced. NHS supervise all care homes and
hospitals and make arrangement of facilities for them so that they can provide quality care
services to patients.
Purpose of this organization is to deliver good health care services to population and
improve their well being (Drucker, 2017). Their main agenda is to improve services rather than
earn profit. Such kind of entities work to enhance satisfaction level of users by offering them
beneficiary products as per their requirements (Al-Debei and Avison, 2013).
In the NHS there are many shareholders and they can share their shares in public easily.
Dividend is necessary to pay to all share holder at the end of financial year. Government has total
control over this body and they make decision for the company.
Marks & Spencer (M&S)
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It is private multinational retailer which provides services to customers across the world.
It provides cloths, home items and other retail items to its clients at affordable rates (Al-Saleh
and Mahroum, 2015). It has many retail stores and other outlets which provides products and
services to consumers as per their needs. It main purpose is to earn more profit by providing
satisfactory products to them. It concentrates on needs of consumers and accordingly offer them
services (Carrió-Pastor and Calderón, 2015). It helps in making people loyal and attracting new
clients towards the brand. It pays attention on improving quality of its goods so that it can meet
with the needs of consumers. It supports the M&S in meeting with the specific needs of
customers. Apart from this increase market share and sustain in the market for longer duration
are other objectives of cited firm. It has made its structure in such manner so that it can
accomplish its objective within stipulated period of time
Legal structure of M&S is as similar to limited firms, shareholder selects directors those
who make necessary decision for the welfare of companies. Director further select MD,
Secretary and rest important persons. It needs to conduct its business as per the regulation of
companies act. Its transfer share is restricted (Al-Debei and Avison, 2013).
Voluntary organization
There are many entities which are working freely and there is no intervention of
government. Though, these firms operate separately but sometimes government interfere to
improve its services. American Red Cross, World Wildlife etc. are some popular voluntary firms.
Its main purpose is to improve wealth of society and provide them quality life (Dima, Grabara
and Modrak, 2014). British Red cross is working as voluntary organization in UK, which has
humanitarian network through which it provides help to such people those who are in crisis
situation. It supports to needed people without any discrimination, political belief. Its main
purpose is to improve well being of society members and improve their life style.
Legal structure of voluntary forms are differed from private and public firms.
Constitution set rules for these entities and they have to follow these norms. It is governed by
trust and governed by constitution.
P2 Size, scope of organizations
Size, scope of all these firms are different from each others.
National Health service (NHS) (Public firm)
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It is the public firm which has employed 1.5 million people in its workplace. All these
persons have necessary skills and are devoted to provide quality care services to patients so that
their well-being can be improved (Chang, 2016). This entity has contributed £101,708 million in
the year 2016 to the economy. Cited firm provides its services major in Scotland, Ireland and
England. Government makes decision for smooth functioning of this unit and improving services
of NHS. Its main agenda is to provide free health care services to such patients those who are
unable to pay fees. Patients can get treatment at minimum cost.
British Red cross (Voluntary organization)
It is working well and having strong network worldwide. Currently there are 32500
volunteers those who are working day and night to provide quality services to needed people. It
has hired 3500 staff members for conducting operations well. It earns profit but utilize money for
charitable activities. It is incorporated by Royal Charter. It adopts matrix structure where higher
authorities try to enhance communication with needed people. It provides them necessary help
on time so that their objectives can be achieved.
Marks & Spencer (Private firm)
M&S is the private organization which provides its services to consumers across the
world. Its main agenda is to enhance its sales and increase its profitability to great extent. It
continuously improves its services so that it can meet with specific needs of target audience. This
strategy of M&S has made it the leading brand of this industry (Xavier, Bandeira-de-Mello and
Marcon, 2014). It works on customer centric approach which means it provides products and
services as per the needs of clients. That is why people are loyal towards the brand and it is able
to attract new consumers towards the entity (Wheelen and Hunger, 2017).
Its sales revenues are increasing continuously, its number of stores have been increased
since last year and overall profit of the entity has also raised. Statistical records show that last
year it has earned £603m net profit (Schaltegger and Wagner, 2017). In the year 2017 sales of
the cited firm has tumbled by 5.9%. But after that entity has improved its services and has
improved its products quality which has increased its sales revenues to great extent.
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Illustration 1: Financial performance of M&S
Source: (Marks and Spencer reports first profits rise in four years, 2017)
Food sales of the entity were approx 0.6%. Its focus is on providing better ranges, better
availability. It provides range of products to consumers at affordable rate. It has made them loyal
and has attracted new clients towards the brand. Total sales volume of cloths products have been
grown by 3.1 as compare to last year. It is planning to open 30 more stores at new location and
expand business across the world (Business Environment: Nature and Significances of Business
Environment, 2016). With the help of customer centric approach M&S has developed a unique
brand image of its company and has gained attention of mass audience.
It conducts its business separately, there is not intervention of government. This helps the
organization in gaining competitive advantage and improving its services as well. Currently
M&S is continuously trying to enhance economy position of nation by increasing its import
export business (Wheelen and Hunger, 2017). In the year 2017 it has earned profit of
£10,622.0 million. Operating income of the firm was £9690.6 million in the year 2017. It has
employed approx 82304 employees across the world. It has many retail stores, physical outlets
where skilled candidates are working those who are providing quality care services to clients.
M&S follow flat structure in the workplace. It gives power of decision making to its
employees. This has supported the cited firm in retaining its staff members in the organization
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for longer duration. Workers have power to communicate directly with higher authorities and
they can share their views with them (Al-Saleh and Mahroum, 2015). That is why people are
loyal towards the brand and they like to contribute well in the success of business unit.
The main agenda of NHS is to provide quality health care services to consumers. It treats
its employees well so that they feel motivated and put their hard efforts to meet with the health
needs of patients. It is continuously trying to provide high quality treatment at affordable cost to
users. It offers enhanced treatment facilities to patients which helps in accomplishing objective
of entity (Drucker, 2017).
On other hand M&S work to enhance its profitability. It motivates its staff members so
that they retain in workplace for longer duration. It utilizes skills of employees well so that it can
offer quality products and services to consumers. NHS follow tall organizational structure
whereas Marks and Spencer follows flat organizational structure in its workplace.
P3 Relationship between function of organization and their mission
Structure, objective and function of any firm are interrelated, this relationship of all these
three aspects support in accomplishing goal of the firm. M&S has different departments such as
marketing, HR, finance etc. and all these departments work together in order to achieve common
goal of entity. Objective of National health service is to provide quality health care services to
patients and improve their well-being (Carrió-Pastor and Calderón, 2015). Cited firm make
effective coordination between its all departments that helps in meting with its objectives soon.
Before making any decision NHS involve its all managers of all departments and make
conversation regarding the topic. By this way it gets innovative ideas to improve its services.
HR, finance and marketing department continuous work so that it can run its operations in
smooth manner. NHS follows divisional structure whee all departments equally work and
perform their duties ell to meet with the organizational goal (Xavier, Bandeira-de-Mello and
Marcon, 2014).
Objective of M&S is to increase its profitability by providing quality products and
services at affordable rates to its valuable consumers. HR department of cited firm support the
firm by hiring skilled employees those who contribute well to attract more consumers towards
the brand. Customer service department of entity work to resolve quarries of clients so that their
satisfaction level can be enhanced (Al-Saleh and Mahroum, 2015). For maximizing sales volume
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marketing and Human resource team work together. Development team give training to staff
members so that they can coordinate well with consumers and can provide them products as per
the needs of clients.
Marks and Spencer follow flat structure, it gives power to all employees to make
profitable decision for the welfare of corporation (Drucker, 2017).
Functions and interrelation of each department are as following:
Human resource function
The main objective of cited firm is to provide quality services to consumers and resolve
their complains soon so that they become loyal towards the brand. For that HR department of
M&S always hires skilled employees those who have relevant experience and skills about the
field. These persons can work effectively in the workplace and can contribute well in achieving
common goal of the firm. Human resource department of the entity motivates its workforce by
providing necessary rewards and recognition to them. It helps in retaining them in the
organization for longer duration. Entity has flexible HR policies and has strong relationship with
its staff members. People can share their feeling with their supervisors easily that creates healthy
workplace environment. This functioning of HR departments supports M&S in accomplishing its
goal (Rong, Shi and Yu, 2013).
Finance department
It is another department of cited firm, which looks at the market condition and
accordingly allocate resources to each departments. It concentrates on activity of cash inflow and
outflow which helps in effective utilization of funds and increasing its profitability to great
extent.
Customer service function
It is one of the important department of Marks and Spencer. The main agenda of cited
firm is to satisfy needs of consumers and resolve their quarries soon. For that this department
works. It understands the needs of clients and accordingly provide them products and services. If
any customer raise any issue then managers immediately take action to resolve their complains.
It supports in satisfying consumers and retaining them in the workplace for longer duration
(Chang, 2016).
Conclusion
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From the above report it can be concluded that different firms have different purpose and
in order to achieve heir goal all departments work together. Equal contribution of each
department helps in meting with the objective of entity (Wheelen and Hunger, 2017).
PART 2
Introduction
This report will explain positive and negative influence of macro environmental factors
on corporation. Strength and weakness of these macro elements will be described in this study.
P4 Positive and negative influence of macro environment factors
Macro environment factors are those elements which are related with outside
environment of business but impact on entire industry to great extent. Company has to conduct
its operations by looking upon situation of these external elements (Business Environment:
Nature and Significances of Business Environment, 2016). PESTLE analysis is the tool which is
used by entity to identify situation of external market. Impact of these components are described
as below:
Illustration 2: Macro environmental factors
Source: (Marketing theories – Pestel
analysis, 2017)
Political factor
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Political condition, stability impact on the working of organization to great extent.
Political changes, changing policies impact on business environment to great extent. If
government increases tax rates and others then company will have to pay more tax. In such
condition cited firm have to modify its operations that can increase its cost. Changing legislation
of government impact on business unit, if it is favourable them company can run its business
smooth manner but for example if government increases working hours then employees may not
accept it. In such condition cited firm will have to face consequences (Marketing theories –
Pestel analysis, 2017).
Economic factor
Changes in exchange rates, inflation, growth rates impact positive or negative on the
working of retail industry. It indirectly impacts on Marks and Spencer as well. For example if
inflation is high then purchasing power of consumers will be decreased. In such condition people
will not be able to spend much amount in purchasing (Schaltegger and Wagner, 2017). By this
way sales volume of the cited firm can get decreased which impacts negatively on the
profitability of M&S. Growth rate of the nation impact on the economic condition to great
extent. This can affect employment opportunities as well. If country is growing well then their
will be large employment opportunities, By this way people will get income sources that will
enhance their spending power. This will positive impact on the cited firm because people will
like to buy products of the corporation (Dima, Grabara and Modrak, 2014).
Social factor
Social factors are also create major impact on the business results. In this aspect, M&S
need to assess customer demand and their requirement from the organisation. After than making
the products and services. Therefore, they can deal effectively within the business enterprise. In
addition to this, customer perception also change day by day so that it will impact on the
functions and outcomes of the chosen industry to operate their operations in systematic aspects.
Technological factor
Technology is the main component that impact on business operations. Continuous
changing technologies helps in improving quality of products. These advance technology
supports M&S in raising quality of products and providing beneficial products at affordable to
them. Use of electronic point of sale (EpoS), electronic fund transfer machines help in improving
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distribution, production activities of cited firm. By this way it can reduce cost and can minimize
its wastage. It supports in increasing profitability of organization to great extent and entity can
gain competitive advantage as well.
On other hand installation of new technologies increases cost of business unit and
enhance its expenditures. It has to give training to staff so that they can handle these upgraded
equipments well. These all enhance cost of the firm which impact on revenues of business unit.
Legal factor
It is another main important part of macro environment, if government make amendments
in legislation and make changes employment law, tax regulation then it may positively or
negatively impact on cited firm (Drucker, 2017).
Environmental factor
Government always to try to keep environment fresh and safe. By focusing on eco-
friendly product's entity can attract more consumers towards the brand. It can support in raising
brand image of corporation. On other hand if entity spend money in fulling its corporate social
responsibility then it has to invest huge amount which may increase financial burden of the cited
firm.
P5 Internal and External analysis of organization
SWOT analysis of Marks and Spencer (Internal analysis)
Strength
 It is the leading multinational retailer
and has strong brand image.
 High quality products
 Strong financial background
 Quality customer services
Weakness
 Weak capital investment strategies
 Stock management
Opportunities
 Online shopping trends
 Technological up-gradation
Threats
 High competition
 Economic condition of nation
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External analysis
Porter's five forces are great tool for analysing the external environment of business unit.
 Threats of new entrants: Retailing market is highly competitive and high entry barriers
are presence in this industry.
 Threats of substitute: Tesco, Sainsbury are providing similar products to consumers. This
Thus, power of substitute products are high and they can influence operations and
profitability of M&S.
 Bargaining power of buyers: Customers are life blood of firm if they are positive towards
the brand then entity can meet with its objective. They have high power and can influence
operations of cited firm.
 Suppliers power: Cited firm can get raw material from many suppliers, it looks upon cost
and accordingly order the material from specific suppliers. SO suppliers has low power in
the organization because company can move to other suppliers if they provide quality
products at lower cost.
 Competitive rivalry: Power of competitors is high because if Tesco change its provides
then M&S will also have to make changes in its price range.
P6 Strength and weakness of business and their interrelationship with external factors
Internal strength and weakness of the company can be identified through SWOT analysis.
It is the great tool which helps in meaning strong point, weak point, opportunities and threats of
business unit. It has strong relationship with the external factors (Marketing theories – Pestel
analysis, 2017).
Internal and external both elements impact on the working of cited firm to great extent.
The main strong point of M&S is having strong brand image, it is operating in many countries so
if government makes changes in legislation, tax rates then entity may get affected to great extent.
In such condition it will have to follow regulation of each nation and has to modify its operation
accordingly. Apart from this M&S has strong financial capabilities. It has sufficient economic
resources for conducting the operation in smooth manner (Business Environment: Nature and
Significances of Business Environment, 2016). But if technology gets changed then in such
condition cited firm will have to upgrade its system which will increase financial burden on the
corporation. In such condition its financial strength will get affected to great extent (Xavier,
Bandeira-de-Mello and Marcon, 2014).
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M&S is effectively running its online business, this facility attracts more consumers and
people buy its products online. But due to changes in social condition sales volume of the entity
may get affected which can affect its sales, profit. Before expanding business to any location it is
essential to identify needs of population of that market. In the absence of this, company can not
be able to meet with the specific needs of clients (Chang, 2016). In such condition profitability
and sustainability of entity may get affected. Changes in employment law affect the profitability
of the firm by this way its strong brand image may get affected. If government increase working
hours then it may make the employees negative, in such condition people will not accept this
think and they will not perform their duties well. That is the situation in which overall
profitability and brand image of the cited firm may get affected to great extent. If regulations of
authorities are in favour then it may increase its performance and company may gain competitive
advantage (Drucker, 2017).
Thus, it can be said that micro factors are interrelated with external components. Changes
in one element impact on others as well. It is essential for the M&S that to look up[on these
factors and conduct business accordingly.
CONCLUSION
From the above report it can be concluded that micro and macro both are essential actor
and impact on the business environment to great extent. For smooth running of business it is
essential to monitor market condition and accordingly make changes in the system. This can help
in sustaining in the market for longer duration.
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REFERENCES
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instruments and business models: greening the built environment a case in point. Journal
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Carrió-Pastor, M. L. and Calderón, R. M., 2015. A contrastive analysis of metadiscourse features
in business e-mails written by non-native speakers of English. Procedia-Social and
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Chang, J. F., 2016. Business process management systems: strategy and implementation. CRC
Press.
Dima, I. C., Grabara, J. and Modrak, V., 2014. Sustainable logistics and business
competitiveness. International Letters of Social and Humanistic Sciences. 15 (2). pp.148-
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Drucker, P. F., 2017. The Theory of the Business (Harvard Business Review Classics). Harvard
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Othman, Z. and Rahman, R. A., 2014. Attributes of ethical leadership in leading good
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Rong, K., Shi, Y. and Yu, J., 2013. Nurturing business ecosystems to deal with industry
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Wheelen, T. L. and Hunger, J. D., 2017. Strategic management and business policy. Pearson.
Xavier, W. G., Bandeira-de-Mello, R. and Marcon, R., 2014. Institutional environment and
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Online
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Business Environment: Nature and Significances of Business Environment, 2016. [Online]
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analysis>. [Accessed on 30th October 2017].
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<https://www.ft.com/content/e02f03c2-feb8-11e4-84b2-00144feabdc0>. [Accessed on 30th
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