Business Environment Analysis for Strategic Planning

The assignment involves analyzing the business environment to identify capabilities, weaknesses, opportunities, and threats. It requires using SWOT analysis as a tool for attaining strategic plans and managing issues effectively. The document provides references and resources for further study on business environment analysis and strategic planning.

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different kinds & purposes of organisations.........................................................................1
P2 Size and Scope of several types of companies.......................................................................3
TASK 2............................................................................................................................................4
P3 Relationship between various organisational functions and its link with objectives of
ventures.......................................................................................................................................4
TASK 3............................................................................................................................................5
P4 Positive and negative effect of macro environment on UK retail sector...............................5
TASK 4............................................................................................................................................6
P6 Interrelationship of strength and weakness with extraneous macro components..................8
CONCLUSION................................................................................................................................9
REFERENCES .............................................................................................................................10

INTRODUCTION
Business environment is nothing but a surrounding where each and every corporation
used to run their commercial activities. Such environs consist of different types of factors that is
known as macro as well as micro components. It is to be noted that these elements commonly
impact on overall performance and working of all ventures either in positive or negative modes.
It is important for firms to understand about such influences before making any kind of strategies
so as to operate in effective manner. This can be done by using an important tool named as Pestle
analysis. The present report is based on Marks and Spencer (Fernando, 2011). This is famous
venture that used to deal with clothing as well as retail sector. In this project, various types of
organisations, their size along with purposes is going is to be discussed. In addition to this, the
influences of macro environment on entire retailing segment of United Kingdom would also be
highlighted clearly.
TASK 1
P1 Different kinds & purposes of organisations
Organisation refers to an association which is designed for the purpose of earning profits
by providing basic facilities to civilians living in all over world. It has been noticed that company
commonly fall under various types of sectors according to their functionalities and way of
serving. There are mainly three spheres of business that are Profit, non- profit and Non –
governmental organisations i.e. NGO. Companies which fall under these sectors are of different
purposes. The comparison between such ventures could be better understand by following
discussed points:
Profit organisation: Mark and Spencer is a privately own retail enterprise which deals in
variety of products. Main aim of this enterprise is to earn higher profits. This simply defined as
an enterprise which is mainly set up for the intention of earning high sum of profitability by
delivering merchandises and services to their targeted customers. Herein, the profits which is
being generated is usually enjoyed by owner along with partners of ventures (Gebauer, Paiola
and Edvardsson, 2010). Corporations that come under this segment comprise of major aims and
objectives of creating a strong customer base and for doing the similar chore, they mainly focus
on seeking attention of numerous of clients. This will help them in increasing their rates of
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selling and as a fruitful outcome, high revenues may be earned by them. Companies would
basically operate in larger areas. But it is not important, as venture may be limited.
Non Profit organisations: On the other hand, such firms are not established for the
purpose of gaining benefits. But they wish to cater products and services to large number of
people at minimum or affordable prices such as NHS, so that each division of person either poor
or rich could easily access the similar. It has been found that turnover which is made at the
ending of year is not distributed among owners and business partners, but that would have
invested again for the enlargement of company in order to supply more and more facilities to
common public. Whereas, key objective of these forms of associations is to encourage science,
arts as well as commercial actions amongst civilians living in UK (Halbert and Ingulli, 2011).
The sphere of operations may be limited for these sectors of firms.
Non-Governmental Organisation: Oxfam is an NGO that works for helping the needy
people who are incapable of taking care of themselves. It is simply denoted as NGOs that is
having the key responsibilities of doing upliftment of social groups. Such forms of business are
fundamentally established by single person. It is to be noted that sometimes more number of
people used to contribute in setting system of non-governing bodies. On the contrary, its
objective is completely variant from all other ventures since they only wish to improve existing
conditions of society and attempting to provide assistance to needy people. This will also
contribute in upgrading entire nation since development of citizen is considered as success of a
country. It used to run their activities on large ground.
Apart from above, there are another three main businesses whose purpose and mode of
supplying merchandises are explained as follows:
Public sector: This is a segment of commerce whose overall frameworks are basically
formulated by governing bodies. Besides this, incomes which would create here- in are used to
distributed among those individuals who are performing in the enterprises. This has been
recognised that huge quantity of jobs or occupations is being generated by companies falling
under public sector in United Kingdom. NHS can be best example of public sector. They are
working for catering health related services to people living in United Kingdom (Agarwal, Grassl
and Pahl, 2012).
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Purpose: The primary intention of such forms of companies is to concentrate on growing
their businesses or economic situation so that they can serve more & more civilians by the
generated profits.
Private sector: In this kind of area, ventures are formed for the aim of acquiring high
sum of benefits by delivering products and services to expected users. Marks & Spencer could be
the best example of this which is working under private domain. It is dealing with retail industry
and having specialisation in the merchandising of fashionable clothes, domestic commodities and
many other luxurious food items.
Purpose: The key purpose of firms here in is to quench their customers so as to make
powerful customer base and earning huge profitability at last.
Voluntary sector: In this kind, individuals usually enter voluntarily for serving needy
citizens surviving in society. Oxfam is considered hereby since they are working for eliminating
the several forms of problems occurring in societal environs (Aterido, Hallward-Driemeier and
Pagés,2011).
Purpose: The key intent of these ventures is to enhance the economic circumstances of
nation along with doing welfare of citizenries in appropriate manner.
P2 Size and Scope of several types of companies
There are varieties of ventures which differs from each other because of their sizes and
scopes. This concept can be understood in between ways by below highlighted points:
Micro: This types of companies are very small in size in relation to other one. Hereby
around 15 to 20 employees used to work. They are established for the purpose of earning
livelihood. Market share as well as profit share of such form of ventures are very low as they are
not able to earn maximum benefits. That is why they are contributing in the development of
entire nation. It is to be noted that its growth rate is good since they attempt to explore itself in
effective manner. Whereas level of sustainability is somehow weaker as different fluctuations
in economic situation has been occurring on regular basis (Teece, 2010).
Small: On the other hand, it is somehow big than micro and may consist of approx. 50 –
55 manpower. Firms performing over here are wishing to enlarge their commercial actions at
greater extent so that they may convert themselves into larger one. Market & profit sharing in
this context is somehow good in comparison to micro organisations. At the similar time frame,
company’s effort to increase the degree of growth and sustainability.
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Medium: It is bigger in comparison to micro and small. Nearly 100 to 150 work forces
are basically existed in this case. Entrepreneurs aims to seek attention of huge customer base in
order to earn good profits as an outcome. It is better in terms of profitability, market sharing,
sustainability and evolution in relation to above one.
Large: A large enterprise is an enterprise that checks at least one of the following two
conditions: - has at least 5000 employees; - has an annual turnover greater than 1.5 billion euros
and a balance sheet total of more than 2 billion euros. Enterprises falling under such kind of
structure are having key intention to bring sustainability in their commerce’s so that they could
establish strong position even in this world which is full of competition. They offer great market
share and profitability shares because higher range of income has been made by them. They deal
in product type which demands high investment and brings options for the customers. It has high
scope and may deal in different parts of world.
TASK 2
P3 Relationship between various organisational functions and its link with objectives of ventures
Marks and Spencer is operating in private sector which comprises of flat organisational
framework as each & every chore are completed by their manpower who are existing at different
outlets. Via this unique structure, company are promoting or inspiring their team members to
give best efforts (Ullah and Lai, 2011). At the same time, all staffs are being invited to give
relevant ideas and thoughts while making final judgements. It has been recognised that M&S are
performing various functionalities which are liked with objectives and mission. Key one are
presented below:
Research and development: This division used to investigate about the needs and
demands of common public along with the conditions of current rivalries. As a result, company
try to design goods and services in accordance to the request of users. The objective of M&S is
also to bring feeling of contentment in expected civilians so as to draw and gain their attention.
Human resource management: The mission of referrer organisation is to make stronger
existence among rivalries present in marketplace. HRM are supporting them in hiring skilled and
talented personnel’s who are capable of manufacturing innovative products.
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Sales and accounting: The aim of mentioned venture is to attain extraordinary sales rate.
Thus, this department of accountability is being laid on the shoulder of sales & accounting areas
so that no confusion will remain regarding earned benefits in future (Wetherly and Otter, 2014).
Marketing: This helps in reaching to large number of audiences as promotional activities
are being accomplished by this department which assists in attaining objective of M&S since
they also wish to enlarge themselves to numerous of countries.
In can be affirm that each term in business has different meaning and concept that define
their interaction degree and scope with their external operations of their home nation. Here are
mentioned the major international, global and transnational companies difference in context of
Marks and Spencer:
International companies: these are exporters and importers who have few
investments externally of their home nation.
Multinational companies: These contain their investment in the other nation but
does not coordinate their service offering in every nation. These are more focused
over the adoption of services and products to each and every individual in the
domestic market such as Marks and Spencer.
Global Organisation: These entities have invested and are available in various
nations. They trade their services by the assistance and optimization of the same
brand and image coordinate in the trade.
Transnational Companies: These organizations are more complicated companies.
These invest in the operations of international market, contain a centre facility of
corporate but render decision making, marketing power and research & development
to each foreign market individual. In an organisation the structure is influenced by
the variety of departments. In large enterprise there are a number of departments
which shows that the structure of same is complex. Objectives for each section of
organisation is set and accordingly the levels in management is set which ensures
attainment of objectives on time.
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TASK 3
P4 Positive and negative effect of macro environment on UK retail sector
The aspects regarding macro environmental factors in context to retail sector of UK can
be understand by carrying out Pestle analysis. This is discussed below:
Political factor & legal factor: It consist of governmental rules and standards of retail
segment. For instance, high level of taxation rates is being incurred by legal bodies, due to that
higher amount of money of firms affiliated with retailing may go on paying such taxes only
(Wild and Han, 2014). Additionally, laws in India associated with Foreign Direct Investment
(FDI) is somehow strict which is giving adverse implications on whole it’s working. But some
policies such as prohibition of child labour, distribution of equal wages to each worker, etc. are
leading positively effects as through this ethical and disciplined works could be maintained in
retail companies.
Economic and social factor: The economic as well as social condition of entire
territories or states wherein enterprises used to run their commerce’s directly effect on its
operations in both optimistic or antagonistic manners. It has been seen that people are investing
more on purchasing domestic goods as without them, they cannot survive, thus, selling rate of
retail organisations would have predicted to be grow dynastically in upcoming days. Hence, such
elements are offering positive impacts but needs of civilians may vary on regular basis which is
acting as obstacles for ventures since it is tough to change whole business plans continuously.
Technological and environmental factors: Modern techniques are developing which
contributes companies in designing creative products and services in minimum period of time
(Auzair, 2011). Thus, considered to be optimistically impacted on overall working of retail
sectors in UK because degree of productivity has been enhancing in drastic style. But due to
these actions, the level of pollution is touching to the height of sky causing global warming and
several other issues for all flora and fauna. Whenever any change in the applications take place
in market it becomes important to implement same in business. It is due to the fact that if they
are not adopted then company may fail to achieve the competitive advantage.
TASK 4
P5 Internal & external analysis of Marks & Spencer
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In order to make proper schemes for future growth and development, referred
organisation should understand about its condition of interior and exterior
environment. The task of inside analysation could be accomplished by carrying out
SWOT analysis which is stated below:
Strength of M&S:
 They are having good and reputed image in- front of government as well as
their key customers.
 They comprise of completely unique merchandising points which is made by
supplying best quality goods & services to large number of people.
 Numerous of award or reward are being given to them for their outstanding
performances in sector of retail.
 They are employing around more than 80, 000 workers in all of their stores
which are existing internationally.
Weaknesses:
 Some of the issues are coming in their business environment since whole
management is being under pressure.
 This is founded from an investigation that Marks & Spencer has disclosed
their thoughts or planning of closing up to fourteen outlets. This would put
approximately five hundred jobs at risk ( Burns and Winter, 2011). The reason
for this is nothing but the pitiless approach taken by high street stalwart
which took away more to its struggling retail stores.
Threats:
 Level of competition is rising on continuous basis. Due to this, many new
firms has been established in huge quantity and are delivering similar goods
as well as services in discounted or minimum costings.
 The norms and regulations imposed by legal bodies are continuously altering
and are treated as threat for the Marks & Spencer.
Opportunities:
 They can do modifications in their current business policies through
developing impressive and attractive websites.
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 M&S could also present newer market segments which will help them in
generating high sum of profits.
 They are having good future chances to expand their commercial actions in
other places like China and India as well.
Apart about that, Porter five forces can be applied by given company for
determining about circumstances associated with their outsider surrounding. This
tool comprises of five factors which is stated as follows:
 Bargaining power of buyers (high): There are number of different brands
that are dealing in this sector and this way buyers have great choice to make
their choice of selection. It is important that high quality is maintained so
that long term connections with clients are made. Even with a slight change
in companies working can result in buyers switching to another brand.
 Bargaining power of suppliers (Low): A range suppliers are present in
market to provide their raw material to retailers. On same hand demand of
same is also high which shows that suppliers can make their choice on rate
and can negotiate with the retailers. As this industry is highly depended upon
the continuity of supply it increases the bargaining power of suppliers. (Chow
and et al, 2011).
 Threats of new entrants: There is high margin in the retail sector which
attracts more and more people to join this business. This limits the existing
firms like M&S to grow. When a new entry is taken they come with fresh
options which may be supported with better technology. This way they create
better satisfaction level for clients making it difficult for existing firms to
grow.
 Threat of substitutes: Generally, this has been observed that no substitutes
to products like foodstuff and clothes are present that in turn making the
threat of substitutes lower. But at the same time, companies such as Asda,
Tesco, are introducing inexpensive alternates and are offering dinner jackets
too. This is showing high threats of substitutes in this respect.
 Level of competition: This is quite high as numerous of enterprises such as
Sainsbury's, Tesco, Asda, etc. are giving identical goods and services at
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affordable prices to people existing in UK. This way the rivalry among them
further increases. Any change brought by one enterprise gives a major impact
on other too and it reacts to same.
P6 Interrelationship of strength and weakness with extraneous macro components
There is interrelationship among capabilities & weakness and external macro
factors. It can be understanding by following points:
 Government of UK and various other countries are imposing norms like
increment in taxation can treated as a factor which is making M&S weaker.
On the other hand, some of the restrictions like prohibition of child labour,
equivalent pay and many more helps in working in correct manner in context
to legal terms (Cronan and et al, 2011). It restricts the strength of organisation
to take full capacity utilisation of its resources. By giving employment to
small children few less important work can be carried out easily at low cost
but the laws made by legal authority has limited the profit margins.
 Technological aspects aids venture in enhancing production level which in
turn contributes in enlarging profitability. Hence, giving opportunity to M&S
for improving its abilities. On the other hand, improvement and development
of contemporary methods or technologies are also giving birth to competitive
marketplace as numerous of other firms are trying to deliver similar
merchandises (Commander and Svejnar, 2011). This is making referred company
weak in nature as its strong user’s base is segmenting and moving to their
potential rivals. Adoption of latest applications demands much investment
and in case of failure of the new technology threat of loss becomes vital.
 Environmental component is proved to be beneficial as most of the raw
constituents such as cotton, threads, food items, etc. could be easily available
to M&S via nature. But due to sudden changes in weather or climatic
condition (like heavy rain fall, earthquake, drought, etc.). Stocks or outlets of
this corporation come into danger zone. Thus, making it weak.
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CONCLUSION
From the above based report, it can be summarised that every firm that are working under
retail sector of UK need to take care of entire implications which are being made by macro
factors like government, economic condition of country , technology, political situations and so
on. As discussed above, such impacts could be negative or positive; therefore, companies have to
make good strategies so as to reduce antagonistic influences. For doing this, they have to know
about their own capabilities, weak sections, opportunities as well as threats. Marks and Spencer
may take use of Swot analysis for attaining the same. Afterwards, they could easily manage all
issues by designing proper plan of action.
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REFERENCES
Books and Journals
Fernando, A. C., 2011. Business environment. Pearson Education India.
Gebauer, H., Paiola, M. and Edvardsson, B., 2010. Service business development in small and
medium capital goods manufacturing companies. Managing Service Quality: An
International Journal. 20(2). pp.123-139.
Halbert, T. and Ingulli, E., 2011.Law and ethics in the business environment. Cengage Learning.'
Hamilton, L. and Webster, P., 2015.The international business environment. Oxford University
Press, USA.
Agarwal, R., Grassl, W. and Pahl, J., 2012. Meta-SWOT: introducing a new strategic planning
tool. Journal of Business Strategy. 33(2). pp.12-21.
Aterido, R., Hallward-Driemeier, M. and Pagés, C., 2011. Big constraints to small firms’
growth? Business environment and employment growth across firms. Economic
Development and Cultural Change. 59(3). pp.609-647.
Teece, D. J., 2010. Business models, business strategy and innovation. Long range planning.
43(2). pp.172-194.
Ullah, A. and Lai, R., 2011. Modeling business goal for business/IT alignment using
requirements engineering. Journal of Computer Information Systems. 51(3). pp.21-28.
Wetherly, P. and Otter, D. eds., 2014. The business environment: themes and issues in a
globalizing world. Oxford University Press.
Wild, J., Wild, K.L. and Han, J.C., 2014. International business. Pearson Education Limited.
Auzair, S., 2011. The effect of business strategy and external environment on management
control systems: a study of Malaysian hotels. International Journal of Business and
Social Science. 2(13).
Burns, C. and Winter, S., 2011. Introduction. Australian Farm Business Management Journal.
8(2). p.iv.
Chow, A. T. and et. al., 2011. Broadband network with enterprise wireless communication
system for residential and business environment. U.S. Patent 7.944,948.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp. 309-337.
Cronan, T. P. and et. al., 2011. Decision making in an integrated business process context:
Learning using an ERP simulation game. Decision Sciences Journal of Innovative
Education. 9(2). pp. 227-234.
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