Business and the Business Environment

This report discusses the different types and purposes of organizations, the size and scope of various organizations, and the relationship between different organizational functions. It also explores the positive and negative impact of the macro environment on businesses and analyzes the internal and external factors of a specific organization. The report contextualizes M&S (Marks and Spencer), a British multinational retailer, to provide practical examples.

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Part 1................................................................................................................................................3
LO1..................................................................................................................................................3
P1 Different types and purposes of organisations.......................................................................3
P2 Size and scope of a range of different types of organisations................................................4
LO2..................................................................................................................................................6
P3 Relationship between different organisational functions.......................................................6
Part 2................................................................................................................................................6
LO3..................................................................................................................................................6
P4 Positive and Negative impact of macro environment.............................................................6
LO4..................................................................................................................................................8
P5 Internal and external analysis of specific organisation...........................................................8
P6 How strengths and weaknesses interrelate with external macro factors..............................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment refers to aggregation of all factors and events that surrounds and
influence business organisation and their functioning. However influence and impact of the
factors differentiate on the basis of type of organisation. This report will discuss about different
types of organisation and also about their key elements like their size, scope and vision, mission
and objectives. Followed by this, report will also discuss about different organisational functions
and their interrelationship. This will be followed by discussion about how they link with
organisational structure and objectives. In second part report will discuss about positive and
negative impact of the environment on business and followed by this report will discuss about
internal environment of the organisation. On the basis of this report will involve determination of
strengths and weaknesses of the organisation. For the purpose of this discussion report will
contextualise M&S (Marks and Spencer), British multinational retailer. It was founded in 1884
and is headquartered at London, UK.
MAIN BODY
Part 1
LO1
P1 Different types and purposes of organisations
Public Organisation
Public organisations are those that are owned and operated by government. These
organisations are operated with the purpose of providing elementary and other services to public
in general. Public organisations are funded by means of general taxation.
Legal structure of these organisations is based on the government that own and operate
these organisation and they are either completely owned by government or government has 51%

or more shares of the company (Demircioglu and Audretsch, 2017). NHS (National Health
Service) is an example of this type of organisation.
Private Organisation
Private organisations are those organisations that are owned and operated by private
people and purpose of these organisations is to generate profit and revenue by business activities.
Legal structure of such organisations is of several types, that are-
Sole proprietorship- In this legal structure, organisation owned business is owned and operated
by individual owner of the business. This business and its owner are considered as same, this
means that business does not have separate identity.
Partnership- Partnership is concerned with business organisation in which organisation are
owned and operated by two or more people.
Limited company- Limited company is a legal structure in which business is owned on the basis
of its shareholdings and operations of the company are managed by its directors and managers
(Leitner, Strauss and Stummer, 2016). Company has separate identity from its owners and in
addition to this company’s liability remains limited to company and shareholders are not liable
for that. M&S is an example of this type of organisation.
Voluntary organisation
Voluntary organisation also known as third sector organisations are those that are
operated with the purpose of making a social impact and enhancing standard of living of society.
These organisations also operate with the purpose of help and support society and members of
the society (Johnston, 2017). There are mainly three types of legal structure that voluntary
organisations use and these include unincorporated associations, a Trust and a company limited
by guarantee. Age UK is an example of voluntary sector organisation.
P2 Size and scope of a range of different types of organisations
Basis Micro Small Medium Large

Firm
Evolution Loans
Limited
Colortronic
(U.K.) Limited
Derbyshire
Aggregates
Limited
M&S
Business Business of the
firm is to
provide finance
Manufacturer
agents
connection of
plastic industry
and installation
and maintenance
of machinery
Supply of rocks,
stones and
aggregate to
construction
industry
Retail industry
and services
Product and
service offered
Products offered
by the firm is
finance.
Products and
service of the
company is
machinery, its
installation and
maintenance
(Tezel, Koskela
and Aziz,
2017).
Products of the
firm are requisites
for production
activities.
Products of the
company are
clothing and
general retail
products and
services are
retail online
and offline
services.
Size Size of the
organization is
very limited as
there are less
than 10
employees
working and
internet is also
limited.
Size of the
organisation is
bigger and as a
manufacturing
firm it also
includes
investment but it
is still limited
with its
operations and
activities.
Size of this
organization is
bigger compared to
other organisations
and employees
within organization
are high in number.
M&S is an
multinational
organisation
and this is why
it's size is
largest
compared to
all other
organisations.
Along with
this activities
of organisation

are also large
in terms of
their size and
numbers.
Scope Firm has limited
scope
Scope of the
firm mainly
depends on its
investment and
capacity
increase.
Scope of this firm
is bigger and they
can increase it by
adding investment.
M&S gave
significant
scope because
its activities
are high in
number and
operations of
the company
are also big.
Organisational
structure
No
organizational
structure is there
Organizational
structure is line
structure
Functional
organizational
structure
Flat
organisational
structure
Legal structure Sole ownership Partnership Limited company Limited
company
Stakeholders Employees,
owner and
customers
Partners,
suppliers,
customers,
dealers and
employees
Owners, managers,
directors,
employees,
suppliers,
customers and
regulatory
organisations
(Müller, 2019).
Shareholders,
employees,
board of
directors,
public and
customers
Objectives To earn
maximum profit
on investment
To increase
customers and
profit margin
To increase scope
and operations of
organisations
To provide
highest quality
and value to
customers

LO2
P3 Relationship between different organisational functions
Organisations undertake several functions and each of the function then organisation has
their own objectives and goals. But in order to organisational goals and objectives it is important
that they are effectively linked with each other to help and assist each other in contribute in
organisational goals and objectives (Maheshwari and et.al., 2017). Interrelationship between
different organisational functions is as follows-
Marketing and HR- In order to work effectively it is important that marketing organisations
have efficient manpower and HR department within organization can help in resourcing
marketing with right kind of employees in right number. Along with this HR department also
plays important role in training and development of employees in marketing and looking after
their compensation and benefits. In addition to this all manpower requirements of marketing
function are fulfilled by HR department.
Finance and Production- this is also important in relationship within organisation. Finance
Department is responsible to allocate budget to different functional areas with an organisation
and this is why finance related and monetary requirements of production are fulfilled by finance
department. Along with creating and allocating budget Finance Department also help production
in different activities concerned with financial management. This involves decision regarding
investment and return and linking Production department with organisational financial goals and
objectives.
Customer support and marketing- This relationship is and creating better relationship between
organisation and customers. This means that marketing department is responsible for market
research and identifying customer requirements (Mahlangu, 2017). In completing this task
customer support function can be a very important source of information as they directly deal
with customers on their different complaints and requirements about product and services of
M&S.
In order to realise objectives of organisation effective relationship between this functions is very
important. This is because overall objectives of organisation are divided into different functional
objectives. This is why realization of these objectives can contribute is realization of

organizational objectives. Interrelationship in these functions can facilitate achievement of
functional areas more effectively. This is why interrelationship in different functional department
is very important for organizational objectives.
As organizational objectives are linked with interrelationship of organizational functions.
Another element that had link with interrelationship is structure of the organization. This is
because structure of the organization differentiate nature of interrelationship in these functions.
Organizational structure that is followed by M&S is Flat organizational structure. This is a
structure in which there are less levels in organizational hierarchy (Miśkiewicz, 2017). This
means that in such kind of organizational structure levels of responsibility and accounting gets
reduced. Employees are accountable for their activities and supervision is also limited.
Figure 1 Organisational Structure of M&S

This structure involves and encourages employee participation within organizational decision
making. This motivates individuals at the same time provide benefit to organization through
intelligence of their employees.
Part 2
LO3
P4 Positive and Negative impact of macro environment
Macro environment has significant impact on organisation, macro environment refers to
environment in which organisation do not have any control. In order to analyse impact of
positive and negative impact of the environment Pestle Analysis can be utilised. Pestle analysis
of M&S is as follows-
Political – Political environment involves elements that are related to Political environment of
M&S includes those factors that are part of political conditions of the country in whichM&S
operates and because it is a multinational organization it gets influenced by different types of
political conditions (Perera, 2017). Political environment of Marks and Spencer includes several
elements like Brexit policies of countries for multinational organizations and foreign country
organizations. Business regulations of different countries and trade policies also affect M&S. In
this environment free trade policies and emerging Economics is an positive influence on M&S.
However as M&S operate in International political environment protectionist policies have
negative influence on M&S.
Economical- Economic environment of the organisation has significant influence on its
economic condition and financial well-being. In this environment increasing cost of operations
and reception has negative influence on organisation. However on the other hand effective
monetary and fiscal policies of UK have positive impact and influence on organisations.
However because of increasing cost discounting capabilities of organisation has affected and
because of this it has significant threat from discounting supermarkets. Because of recession

purchasing power and disposable income of customers have reduced and this is why ability of
customer to spend on luxury goods has reduced. This has a negative impact on organisation.
Social- Social environment of the organisation mainly includes its customers because of which
practices and operations of organisation get affected. Frequently changing consumer behaviour
has a negative impact on organisation (Rastogi and Trivedi, 2016). This is because it creates
difficulty for organisation to cope up with frequent changes. However as customers are
increasingly getting interested in online shopping it has a significant opportunity for M&S to
increase its customers and market share.
Technology- Technological factors become very important for the purpose of organisational
growth and it sustainability and competitive capabilities. Retail organisations are increasingly
focusing on enhancing customer experience in stores and are also working on increasing their
presence on online channel to increase customers. However this has created significant
opportunities for organisation and this is why it has positive impact on M&S. But as Technology
requires research and development by the organisation itincurs significant cost which negative
impact on financial condition of organisation.
Legal- Legal factor includes all regulations and laws that regulate and govern activities and
operations of business organisation. There are several elements in this environment that has
negative impact on M&S because it is an multinational organisation and becomes subject to
Laws and regulations of different countries. However these laws and regulations also help
organisation to operate in a certain way and because of this they can successfully operate.
Environmental- Environment it concerned with physical environment. Because of increasing
Awareness of public and several other organisations regarding environment it has become very
important for organisations to function in an environment friendly way (Vallati and Grassi,
2019). This has both positive as well as negative impact because organisations required
functioning differently from conventional practices. This creates difficulty and increased cost of
organisational functioning. However because of factors like sustainable practices it is also
positive impact on long-term operations and cost of organisation.

LO4
P5 Internal and external analysis of specific organisation
Internal environment refers to environment and factors that are part of organisation, in
other words those that exists within an organisation. In order to identify strengths and
weaknesses of the organisation there are certain frameworks can be utilised and these are as
follows-
VRIO Framework
This is a framework in which analyses resources and capabilities of the organisation on
the basis of their value, rarity, inimitability and organisation (Ariyani and Daryanto, 2018). A
resource or capability with all these elements is considered to have a long term competitive
environment for the organisation. VRIO analysis for M&S is as follows-
Resource/
Capability
Valuable Rare Inimitable Organised Competitive
advantage
Financial
resources Yes Yes Yes Yes
Sustainable
competitive
advantage
Local food
products Yes No No Yes Competitive
advantage
Employees/
Human
resources
Yes Yes No Yes
Long term
competitive
advantage
Patent and
intellectual
property
Yes Yes Yes No
Competitive
advantage
Supply chain
network Yes Yes Yes Yes
Sustainable
competitive
advantage
Brand
awareness
Yes Yes No Yes Sustainable
competitive

advantage
Customer
satisfaction Yes Yes Yes Yes
Sustainable
competitive
advantage
Positive market
reputation Yes Yes Yes Yes
Sustainable
competitive
advantage
McKinsey’s 7s Model
Figure 2 McKinsey's 7s Model
Strategy- This is the plan that is developed by M&S to achieve competitive advantage and
successfully compete in market. Strategy of M&S is differentiation excluding product and
expansion of a food outlet. In order to gain competitive advantage company also focused on
creating its brand image that Associates high quality.
Structure- Structure is an element that represents the way business divisions and different
functions are organised and it includes information about accountability of individuals and teams
within organisation (Razmi, Mehrvar and Hassani, 2020). Structure of M&S is flat

organizational structure in which there are Limited levels of Management and this structure helps
in increasing and promoting employees in decision making process.
Systems- This includes processes and procedures of company that outlines and suggests daily
business activities and process of decision making within organization. Process and practices of
organization includes practices for retain operations. In addition to this company concentrates on
international expansion of its food outlets for long-term success. Another focus of the company
is on discounting and pricing that don't trim down margins of organization.
Skills- This is concerned with abilities that employees of a firm requires in order to perform
well. As a large multinational organization M&S requires all type of skills through which it can
perform effectively in operations, finances, marketing, customer relations and innovation
practices of the firm. It also requires skills and competencies for designing clothes and products
that company offers to customers.
Staff- This Management is concerned with what type of and how many employees are required
in organisation and how they are recruited, motivated and rewarded (Razmi, Mehrvar and
Hassani, 2020). M&S employs 80000 employees to carry out organizational activities and realize
goals and objectives of organization. They are recruited through several practices and in addition
to this in order to motivate them organization use effective monetary and non-monetary
practices.
Style- This includes style of management and mangers that they use in order to administer and
manage organizational practices. Style of management within M&S is democratic and consulting
style of management. This means that employees are encouraged to share their opinion and
suggestions to enhance organizational practices and to utilize skills and knowledge effectively.
Shared values- This element is concerned with norms and standards on the basis of which
employees and organization’s activities and decisions are guided. Core values of M&S include
quality, value, service, innovation and trust (Gechkova and Kaleeva, 2020). These elements
guide employees' and organizations’ activities.
P6 How strengths and weaknesses interrelate with external macro factors
SWOT Analysis of M&S

Strengths
 Strong brand image and positive brand
reputation
 Strong financial position of the
company
 Strong infrastructure and technology
for E-commerce
 Customer satisfaction
 Strong market presence
 Market experience of M&S
Weaknesses
 Decline in sales
 Negative and unfavorable public
perception
 High reliance and dependence on UK
market (Elavarasan and et.al., 2020).
 Frequent product recalls can lead to
customer dissatisfaction and affects
confidence of customers
Opportunities
 Increasing online customers is an
opportunity to increase customers and
market share
 Emerging economies and expansion in
developing nations
 Working on consumer experience
Threats
 Recession and economic conditions
 Intense competition in retail market
and also competition with discounting
retailers and supermarkets
 Frequently changing consumer buying
behavior
This matrix outlines strengths and weaknesses of M&S and in addition to this it also outlines
positive and negative impact of external environment and what they offer to the organisation
(Dandage, Mantha and Rane, 2019). In order to connect its internal and external environmental
factors TOWS matrix can be utilised by the organisation. Application of TOWS matrix is as
follows-
Internal Factors
E
x Strengths Weaknesses

ternal Factors
Opportunities
Strong brand image and effective
infrastructure of e-commerce enables
company to utilise opportunity of e-
commerce effectively.
Market experience of the company can
help organisation in using opportunity
and for market expansion
With its strong market presence and
decline in sales company can enhance
its condition that got affected because
of decline in sales.
With its opportunity of market
expansion company can utilise reduce
its reliance and dependence on UK
market.
Threats
Company has strong brand image and
customer satisfaction and because of this
it can deal with competition and reduce
threat of competition.
With its strength of customer satisfaction
company can effectively deal with threat
that is frequently changing consumer
behaviour.
In times of recession and negative
economic conditions additional
decline in sales can worsen condition
and impact on M&S (Mugo and et.al.,
2017).
Negative public perception towards
M&S can enhance effect of threat that
is related to competition. This means
that it can be additional favourable
factor for competitors that M&S is
being negatively affected by public
perception.
CONCLUSION
On the basis of above discussion it can be concluded that business environment that is
highly important for survival and growth of organisation involves several factors. However their
impact depends on the situation of organisation. Report discussed about different routes if
organisation and analysed their different characteristics. Report also discussed some of functions
within organisation and their link with organisational objectives and structure. This suggests that
interrelationship between organisational functions is very important for its overall success.

On the basis this discussion it can be concluded that M&S operates in a highly complicated
external environment. However internal environment of organisation is favorable to deal with its
external environment. Report included drone of the frameworks to analyze different factors of
the organisation. Discussion suggests that internal external factors are significantly linked with
each other.

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