Business and Business Environment

This report explores the business environment of Marks & Spencer, a British multinational retailer, including the types and purposes of organizations, size and scope of different organizations, interrelationship among various organizational functions, and a PESTEL analysis of Marks & Spencer.

BUSINESS AND BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BOODY...............................................................................................................................3
LO1..................................................................................................................................................3
P1: Types and purposes off organizations...................................................................................3
P2: Size and scope of different organizations..............................................................................4
LO2..................................................................................................................................................5
P3: Relationship between organizational functions.....................................................................5
LO 3.................................................................................................................................................7
P4: PESTEL analysis of Marks & Spencer.................................................................................7
LO4................................................................................................................................................10
P5: Internal analysis of Marks & Spencer.................................................................................10
P6: Interrelationship between strength and weakness and external macro factor and the impact
they have upon business objective.............................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment refers to all the internal and external factors which tend to impact
the functions and operations of a company such as customers, employees, investors, business
core operations, decisions of the management, demand and supply etc. This report will aim at
studying the business environment of the organisation Marks & Spencer which is a British
multination retailer headquartered in London, UK which deals in clothing, fashion apparels and
food products. The report will highlight the type of organisations, their size and scope,
interrelationship among various organisational functions, organisational structure, critical
analysis of macro environmental factors through Pestle and SWOT analysis.
MAIN BOODY
LO1
P1: Types and purposes off organizations
Public-
Public sector is the type of organization which is governed by the government, this is
done in particular because it allows legislatives of the state to provide organizational services to
a wide range of customer by not limiting to a particular segment of the society. This sectors is
mainly used for providing services to citizens irrespective of revenues to be earned, this can be
seen in various cases like hospitals, etc. The main purpose of this type of organization is to
provide high level of services to customer at a unified price range (Akhmetshin and et.al, 2017).
These are government run organizations, therefore it uses taxes and small revenues from
customer to provide its services due to which less and unified pricing is taken from customers.
Private-
This sector is run by individuals due to which it highly rely on earning money to fulfil its
expenditures, thus it uses various creative marketing strategies for attracting wide range of
customers such that high revenues can be earned. Since organization try to increase its customer
count thus it implement various creative marketing strategies such that customer can be attracted
towards the organization. Various organizational changes can be seen in this part in which
company implements various changes like changing its pricing strategies so customers can be
attracted, improving product or services as per changing market trend and many other ways
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through which organizational sales can be increased (Čepel and et.al, 2018). Since it is controlled
by individuals therefore, its working is changed as per the requirements of the organization such
that customer can be attracted in order to sustain in the market full of competition.
Voluntary-
Voluntary sector is also called as non profit organization in which social groups and
individuals whose primary goals are to improve the life of citizens and for which it provide its
services for free. This sector is completely independent for governmental activities and corporate
profit earning organizations due to which it is completely independent. This type of
organizations are run in such a way that by providing its services for free customer’s lifestyle can
be improved, therefore this can be seen various scenarios like flood relieve, serving home less,
etc. Thus the main purpose of voluntary organization is to improve the life style of its customers
in which high level of services are provided for free and initial cost of working is taking from the
means of donation and on that basis organizational services are provided.
P2: Size and scope of different organizations
Public Sector-
Public sector is mainly run by the government due to which its branches can be spread all across
the country. With that it get initial investments from the taxes and running capital is earned from
collecting charges from customer for utilizing organizational services. Due to which there are
high chances that its performance can be improved with times (Gaganis, Pasiouras and Voulgari,
2019). However in this type of organizational structure working procedure and pricing structure
are not improvised as per customer request or as per changing market trend due to which no
advertisement or commercialization is done in public sector. The size of organization can be
increased till within the boundaries of the country and in which it working range can be divided
into segments like, national level and state level. With this segmentation, public sector’s
efficiency can be increased because it is having high in depth operations like in various
geographical conditions due to which company can perform well on ground level.
Private Sector-
Private sector is run by individuals due to which its working procedure can be changed as
per changing market condition, this improvisation enable organization to increase its reach to
various geographical conditions. Unlike public sector this sector can increase its geographical
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reach to other countries in order to achieve high organizational profits, through which it tend to
increase its brand awareness. However private sector may increase its geographical reach to
other countries but still it has to follow the rules and regulations of host location otherwise it may
has to face penalties which would make a negative impact on company’s economical growth
(Gavurova and et.al, 2017). Through increasing its size private sector can increase its
geographical reach over market which allow it to get better grip on market, such that it can
maintain its existing customer count and at the same time also attract new customer towards the
organization. By doing so it can achieve high level of brand awareness and high profits can be
earned for making future organizational changes.
Voluntary Sector-
Voluntary sectors provide its services for free to a wide range of customers in order to
improve their lifestyles. In this the services are provided for free thus initial capitals are earned
through the means of donation due to which geographical reach is not as effective as other two
sectors. However it is having organizational workers which are social workers because of which
salary structure is not available, this empower organization to improve the effectiveness such that
it is able to increase its geographic reach.
LO2
P3: Relationship between organizational functions
Organization is the group of individuals gathered together for achieving a common task, in
organization each individual is having its personal capabilities and unique skill sets, due to which
several organizational departments are made. By implementing these organizational departments
Marks & Spencer can enhance the working capabilities which will increase the probability of
goals achievement. Following is interrelation of several organizational functional (Ključnikov
and et.al, 2016).
Marketing with R&D-
Marks and Spencer is multinational retailer which provide wide range of products to its
customers, due to which it becomes very important for it to provide new items to its customers
such that their engagement with organization can be increased. Thus in order to showcase new
and attractive products the marketing department and R&D department has to work in proper
coordination with each other. This is important because marketing department is in direct contact
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with the customers due to which it is well aware of their requirement, thus through proper
communication it can show case the requirement to R&D. Through this R&D can develop
products as per customer requirements which empower Marks and Spencer to showcase new and
rare products which are able to fulfil customer requirements (Veselovsky and et.al, 2017).
Through this organizational activity company is able to maintain customer’s engagement with
the organization, resulting increment in loyalty towards the organization. Thus in order to
provide new and rare products Marks and Spencer’s marketing and R&D department has to work
in proper coordination with each other such that products can be made available as per customer
requirements.
Finance and Marketing-
The finance department and marketing department are having several similarities in their
organizational working. The marketing department is responsible for developing a effective
communication with organizational customers and advertising organization for attracting new
customer towards the organization. But on the other hand finance department is responsible for
maintaining a strong economic condition for the organization and thus marketing and finance
department has to work in proper coordination. The main objective of this organizational activity
is that Mark & Spence can make creative advertisement for attracting wide range of customer
and at the same time having strong economical background for the organization (Virglerova,
Dobeš and Vojtovič, 2016). Thus marketing department wants to get more budgets for
effectively showcasing the new product or service, at the same time finance department wants to
make sure that company is having a strong financial background. Through this efficient
communication Mark and Spencer will get increment in brand awareness resulting high
organizational sales within minimum expenditures thus effective interrelationship among
organizational functions is necessary.
Marketing and Production-
Effective communication between marketing and production department are also very
important for Marks and Spencer because marketing department is responsible for showcasing
the new products to customers. Whereas production functional is responsible for producing
product in large quantity, thus marketing department wants a clear deadline from the production
such that it can develop its marketing strategies on that deadline. But on the other hand
production department at Mark and Spencer has to make sure that developed product is able to
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pass every required criterion. This is important because if proper testing is not done on products
then in that case the final developed product may not be as per expectations, due to which
malfunctioning may arise. This malfunctioning of product will generate a negative organizational
image to its end customers, therefore production department wants to get more testing and
developing time whereas marketing department wants short time. Thus through proper
coordination and times management, company will be able to provide high quality of products
within specific time frame.
LO 3
P4: PESTEL analysis of Marks & Spencer
Marks & Spencer (M&S) being the renowned British retailer which deals in the clothing,
food and various products of home does not face rapid success all the times. Recently, the
company has announced various plans in order to close its about 100 stores which raised many
questions about the future of the company (Farooq, 2019). Therefore, PESTEL analysis helps in
examining the factors of macro environment including Political, Economic, Social,
Technological, Environmental and Legal. The impacts of these PESTEL factors on the business
operations of M&S are as follows:
Political
Political factors play a major role in deciding the profitability of a company in certain
countries and market. M&S is exposed to different kinds of political environment and risks of
political system. In order to achieve success in such a dynamic retail industry, the company
needs to focus on minimizing all the political risks and maximizing the benefits from them.
Political factors identified by M&S includes the level of corruption, trade regulations, taxation,
pricing regulations, product labelling and many more (Choudhary and Piparo, 2020). These
restricts the various operations of the company to be performed.
Positive: M&S is facing the benefits of the political factor such as free trade as the company is
operating in UK also has many locations abroad. This allows the company to import the products
from foreign to sell in the stores at much lower prices along with maintaining a high profit
margin.
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Negative: The decision of UK to leave the European Union is the major factor which impacts the
operations of M&S. It was unpredictable that where UK will stand after the Brexit in terms of
tariffs and trade regulations. If UK left European Union in hard Brexit then it could result in the
free trade policies’ loss with the suppliers of Europe, which can result in the higher cost of
product for the target consumers.
Economic
These factors decide the economic stability of the company such as efficiency of
financial markets, infrastructure quality, labour costs and productivity in economy, economic
growth rate, inflation rate, interest rates etc. These decide the aggregate demand and the
investment in the economy.
Positive: M&S can use these factors for forecasting the growth trajectory of not only the retail
industry but also that of the company. The income of the people of UK is good in order to afford
the products of M&S. This gave the opportunity to the company to increase the customer base.
Negative: The competition in the budget clothing to budget supermarkets is increasing day by
day, which forces the new entrants to steal the market share from brands like M&S, which sells
the products at lower prices. But, M&S makes use of this and switched to make use of the
foreign suppliers which was fuelled only by the discount competitors.
Social
These factors impact the organisational culture in numerous ways. These factors include
demographics, culture, attitudes, leisure interests, education level etc. The retail chain has
become the household name for the among the people of all ages.
Negative: This impacts the company negatively as M&S is the company which is progressing
from last many years but this made the consumers to associate the company with the past. This
also made the reputation of the company less trendy for the customers especially the young ones
(D'Agostino, 2018).
Positive: The food technology is increasing day by day which made the society preferring the
ready meals more as they are more palatable. This has given various opportunities to food stores
like Marks & Spencer because it is already famous as UK’s top ten distributors of ready meal.
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Technological
The companies not only analyse the technology prevalent that time but also must
examine the speed at which the industry is disrupted by the technology. If the speed is fast, then
the company does not get time to manage but if it is low then company gets time to cope up with
the change in technology and can become profitable.
Negative: Though, Online method of shopping is beneficial for the customers’ experience but
Marks & Spencer being the older company have not started its food delivery to home and does
not take order on the online platforms. In this aspect, M&S lags behind the competitors who
delivers the food products to the doorsteps of the consumers (Marks and Spencer SWOT &
PESTLE Analysis, 2020).
Positive: Strong e-commerce presence was established by M&S in order to deliver the clothing
items to the consumer’s preferable places. It also takes the traditional approach to the online
shopping which increased the effectiveness of its operations and also its customer base. It also
impacted on the value chain structure among the Consumer Service sector. The company used
the benefits of the advanced technology by developing in terms of technology in competing with
the competitors.
Environmental
Every market has its own standards of environment which affects the operations and
profitability of the organizations in those markets. Even if the company operates in single
country, then also it must follow different environmental laws. These factors include the climate
and weather change, laws regarding environment pollution, recycling, waste management etc.
(Kuusela, 2019).
Positive: The biggest impact which positively affected the company is fair trade which was
considered as an initiative in compensating the foreign producers. M&S started selling fair trade
products in order to compete with the smaller producers.
Negative: Though M&S, in order to maintain the image as a luxury brand, has pledged for
becoming the most sustainable retailer in UK, but this also consists of various factors like in
acquisition of food, home products and clothing etc. Marks and Spencer strived hard to become a
sustainable retailer by using environmental friendly things in all its processes, but it became easy
for the other companies to copy so it doesn’t allow the M&S to gain competitive advantage.
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Legal
The companies must have robust legal framework so that they can protect the intellectual
property rights. The various factors or the laws which must be focussed by M&S in order to
improve the performance of its operations such as consumer protection and e-commerce, health
and safety law, data protection, employment law etc. (Virtala-Raskila, 2018)
Negative: The company was involved in various legal disputes which made very difficult for the
company to maintain the image of the brand. The recent example can be of the legal dispute with
the Frascati landlord.
Positive: The company takes the benefit by following various laws such as discrimination law
and employment law which motivates the employees to perform operations effectively. It also
follows the health and safety law under which the quality of the products is such that which can
never harm the health of the customers.
LO4
P5: Internal analysis of Marks & Spencer
Internal analysis is looking within the business organization to identify their strengths and
weakness. It is the thorough examination of company’s internal components and also helps in
making decision effectively. M&S conducts Swot to identify strengths and weakness of their
organization.
Strengths of M&S
Strengths are those characteristics that give M&S a competitive edge over other rivals. The
following are the strengths of M&S :
M&S has immense experience of the market as it is operating from many years and it has also
worked with many other big players.
It has a very good reputation as it provides fine quality of products and comes in the list of 2nd
best supermarkets in UK. And they also look for innovations and creativity this free spirit of
innovation is one of their biggest strengths.
M&S has a great international presence as it has created both physical and online presence in
various countries and on various sites. It also has its own clothing and homeware brand. It can be
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said that it has a strong e-commerce infrastructure. Apart from selling premium brands they also
have some of their own private labels under their name (Sarsby, 2016).
The company focuses on enhancing their customer experience by giving them an option of
feedback. They also make the interaction very warm and friendly with the customers.
Weakness of M&S
M&S has the following weakness:
M&S has a drawback in the market that the fashion is not trendy even though it has wide range
of products but many people observed that the clothing is old-fashioned is not according to the
trends what the youngsters prefer.
The company’s manual working adds up cost as now-a-days there is technological
advancement and automated machines for money collection and billing etc. but the company is
not efficiently utilizing the new techniques (Phadermrod, Crowder. and Wills, 2019).
Too much reliance of the UK market is also a drawback of M&S and this make it vulnerable to
markets.
Customer lose confidence on the company due to frequent product recalls.
P6: Interrelationship between strength and weakness and external macro factor and the impact
they have upon business objective
Political factor – Political factors like free trade enhances the strength as M&S can also open
their stores in other countries as UK has good relations with them and it can also import the good
at cheaper prices. This gives the company larger market share and great international presence.
But Brexit is seen as a weakness for the organization. The company can take the decision to
expand in more countries and also make strategies to cope up with Brexit. In this way their
business objective of increased sales will be achieved.
Economic factors – Economic factor like discounts given by competitors’ acts as a weakness for
M&S as they are stealing the market by giving the similar products at lower prices. The company
can take the decision to diversify into different segments and also offer customers unique
products. In this way their business objective of survival in the market will be achieved.
Social factor – Social factors like latest trends being introduced in the market is a weakness as
the company has to change the stock every now and then to meet the needs of customers. In this
case the company can take the decision to offer discounts on the old stock and provide offer on
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the new ones. By undertaking this step the company can fulfil the business objective of having a
competitive advantage over rivals (Shtal. and et.al., 2018).
Technological factor – Technological factor like advancement in technology used by the
company such as online shopping. This technological advancement is strength in way that the
company has no geographical boundaries and can sell in any part of the world it can become a
weakness if the company is not accepting that technology and is not able to keep up with the
competitors. The company can take the decision to adopt all the latest technology. In this way the
company can achieve their business objective of customer satisfaction and better customer
service.
Legal factor – Legal factors like following fair trade practices is a strength of the company as
following this practices will not dump them into paying penalties and will not add up to their
cost and not following these practices can become a weakness. The company can take the
decision to indulge in lawful practices and also adopt to legal laws. In this way company can
achieve business objective of earning profits (Perera, 2017).
Environmental factor – Environmental factors like producing sustainable products is a strength
of the company as it helps in building brand image and contributes to corporate social
responsibility and if these things are not considered then it can become a weakness as increase in
carbon emission adds cost to the company. In this way company can achieve business objective
of building brand image in minds of customers and society.
CONCLUSION
It can be concluded from the above report that Marks & Spencer belongs to the private
sector and is a public limited company. Other organisational structures like public, private and
voluntary sectors were elaborated. The relationship between various organisational functions like
marketing, finance, operations and human resources were elaborated along with hierarchical
structure of Marks & Spencer. Macro environmental like impact of Brexit, income level, interest
rates, lifestyle choices of customers, technological factors, legalities in retail business etc. were
critically analysed on how they affect the operations and decisions of Marks & Spencer. Apart
from that, the strengths and weaknesses of the company were evaluated through SWOT analysis
and its influence on decision-making and macro factors was established.
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REFERENCES
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Online
Farooq, U., 2019. PESTLE Analysis of Marks and Spencer. [ONLINE]. Available through :<
https://www.marketingtutor.net/pestle-analysis-of-marks-and-spencer/>
Marks and Spencer SWOT & PESTLE Analysis, 2020. [ONLINE]. Available through :<
https://www.swotandpestle.com/marks-and-spencer/>
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