Business and the Business Environment

This document provides an overview of the types and purposes of organisations, the relationship between organisational functions and objectives, and the positive and negative impacts of the macro environment on business operations. It also includes a PESTEL analysis of Marks and Spencer. Study material available at Desklib.

Business and the
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
LO 1.................................................................................................................................................3
P1 Different types and purposes of organisations.......................................................................3
P2 Size and scope of different types of organisations.................................................................5
LO 2.................................................................................................................................................7
P3 Relationship between different organisational functions and the way they link themselves
to organisational objectives and structure...................................................................................7
LO 3.................................................................................................................................................9
P4 Positive and negative impacts of the macro environment on business operations with
examples......................................................................................................................................9
LO 4...............................................................................................................................................10
P5 Internal and external analysis of the specific organisation..................................................10
P6 Interrelation of strengths and weaknesses with external macro factors...............................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment can be defined as the collection of all the factors, both internal as
well as external impact a business (Cepel and et. al., 2018). The factors can have an impact on
each other as well as on the business. The factors can range from technological advances,
implementation of government policies, market conditions etc. An organisation has to keep all
these factors in mind before developing and formulating any new strategies. Marks and Spencer
is an international brand, headquartered in Westminster which was founded in 1884 by Michael
Marks and Thomas Spencer. The brand is recognized globally offering clothing, food and home
products of high quality. The report covers an explanation of various types of organisations, their
purpose, size and scope. It also describes the various functions within an organisation that link
themselves to the objectives and structure of the organisation and work in coordination and the
positive and negative impacts of the macro environment on different operations of business. An
internal and external analysis of the company and the interrelation of strengths and weaknesses
with the various external macro factors is also explained.
MAIN BODY
LO 1
P1 Different types and purposes of organisations
There are different types of organisations that have their own goals and objectives such as
private, public and voluntary organisations. All organisations vary in their sizes, scope and
structures. A company from each sector and its organisational as well as legal structu5re is
described below - Public sector organisations – Public sector organisations are the ones that are owned by
the government of a country and are primarily focussed at providing services to the local
citizens in order to fulfil their needs and meet expectations (Clarke, Li and Xu, 2016).
NHS or National Health Service is a public organisation that provides health services to
the people and is owned by the UK government.

◦ Purpose : The primary purpose of this company is to give health services to the
people who can't afford to avail heath services because of their low levels of
disposable incomes. Therefore, the services that NHS provide are affordable and
cheap. Public sector organisations are funded by the government and hence their main
mission is not to make profits but provide affordable services to the citizens.
◦ Objective : The main objective of the company is to create an environment that is
helpful for the patients by providing them health benefits and a courteous staff.
◦ Legal Structure : The company was formed through the implementation of various
acts by the Parliament and also receives funds for the government.
◦ Stakeholders : Competitors, customers etc. are the stakeholders of the company. Voluntary Organisations – Voluntary organisations are non-profit in nature and include
various companies that provide services relating to education, healthcare etc. Oxfam is a
voluntary organisation in the UK that is mainly focussed on providing services to the
poor people for their overall development (Davies, 2016).
◦ Purpose : The major purpose of the company is to provide services to people below
poverty line who cannot afford even the most basic necessities. Oxfam work towards
developing solutions in order to remove poverty.
◦ Objective : The organisation aims for the development of the people who have no
source of finance and thus focuses on their overall development and advancement.
◦ Legal Structure : Voluntary organisations can either have a corporate or an
incorporate legal structure wherein the rules are executed through various parties
who donate funds. Oxfam has an incorporate legal structure as the company is not
developed according to a stable framework.
◦ Stakeholders : Voluntary organisations have both internal as well as external
stakeholders. The respective company has donation parties, general public as its
stakeholders. Private sector Organisations – These organisations are run and controlled by sole
proprietors like Marks and Spencer which is an internationally known brand (Erasmus,
Strydom and Rudansky-Kloppers, eds., 2016).
◦ Purpose : Marks and Spencer aims to provide services to people in middle and upper
class segments by offering products of high quality.

◦ Objective : The company's main objective is to build itself as a brand that profitable
besides being sustainable through constant and continuous efforts.
◦ Legal structure : Private sector firms can be formed either through partnership or
there may be a sole proprietor. Marks and Spencer, although is a joint venture.
◦ Stakeholders : The company has both external stakeholders like suppliers, clients etc.
and internal stakeholders like the staff, managers and board of directors.
P2 Size and scope of different types of organisations
The size and scope of the different types of organisations are described below -
Types of Organisations Scope Size
Public Organisations
National Health Service is a
public organisation that
primarily aims at bringing
transformation which will not
only help it overcome
challenges but also identify
new opportunities that come
up in the medical sector
(Gavurova and et. al., 2017).
The organisation provides
services to the people of the
United Kingdom without being
asked to pay the service cost
which includes services like
visiting a doctor for a surgery,
getting a treatment done if you
are unwell or injured, getting
an urgent help at the time of an
emergency etc.
The company has its own
hospitals, fundamental care
units and a community and all
of these have approximately
320,000 midwives and
150,000 doctors that attend the
patients and provide them
services. The company
appointed a total of 106,430
doctors, 285,893 nurses,
21,597 midwives, 19,772
ambulance staff, 21,139
managers and 9,974 senior
managers at different locations
(NHS statistics, facts and
figures, 2019).
Being a voluntary
organisation, Oxfam can
People of the United Kingdom
can avail the services provided

Voluntary Organisation exercise its services in
different parts of the world and
this can be done by partnering
up with a company where free
services are provided to people
who do not have a strong
financial background. Also,
the company has a
determination of changing the
conditions of these people who
suffer from poverty. The
company's scope is help
people claim for a better life,
save lives today as well as in
the future and increase money
for basic development services
like health, education to more
people so that they participate
at their fullest in the economy
of the country (Hamilton and
Webster, 2018).
by the respective company to
overcome their existing
conditions. Oxfam also has
approximately 20 charitable
companies that are
independent and perform
various activities for
improving the conditions of
the society. The company has
operations in more than 90
countries and is also known for
carrying out various charitable
practices (About us, 2019).
The company runs projects
that are driven by the
community. The company has
thousands of partners and
communities that are available
for help in times of
emergencies to help people
rebuild their lives during those
situations.
Private Organisation
Marks and Spencer majorly
focuses on growing and
expanding itself across the
globe and to be able to sustain
in highly competitive markets.
Since the company has major
operations in fashion, the
company has plans of
exploring new markets world
Marks and Spencer operates in
a variety of regions across the
world and has got a powerful
system of distribution. The
company is recognised by
people as a high quality brand
globally. The company
currently is present in
approximately 1463 locations

wide so as to reach a broader
customer base and attract new
potential customers thereby
gaining a competitive
advantage against its
competitors which will help
the company in increasing its
overall sales and profitability
as well.
with a net income of nearly
£37.3 million every year.
LO 2
P3 Relationship between different organisational functions and the way they link themselves to
organisational objectives and structure
Organisational structure refers to an organisation assigns and supervises various roles,
responsibilities as well as tasks in order to achieve its goals and objectives (Hillary, 2017).
Different organisations have different structures like pre-bureaucratic, bureaucratic, post-
bureaucratic structures. An organisation function can be defined as a set of activities that is
carried out within a department of the company like operations, finance, human resources etc.
Different organisations have different departments that work collectively towards achieving
goals and objectives. The activities carried out by some departments in a company are explained
below -
 Finance Department – The Finance Department within an organisation is primarily
focussed on managing and controlling the cash flows within the organisation. The finance
department at Marks and Spencer has the responsibility of analysing the data and
reporting it. The department also carries out the process of capital budgeting and financial
forecasting in order to make the company being able to make sound decisions when a
challenge comes up (Ibrahim, Abdullah and Ismail, 2016).
 Operations Department – The operations department in an organisation makes sure that
the products that are manufactured by it pass through the correct processes and is
delivered at the right time. The department performs quality assurance and audits which
are evaluations of an independent process and helps in ensuring that the process is

functioning properly. Whereas quality assurance is done in order to inspect the products
and services regarding any defects. Process improvement is one of the major functions of
the operations department in Marks and Spencer. The process involves examining the
current work flow and redesign it for creating a more efficient system. The operations
specialists in the respective company are responsible for carrying out various activities
that focus on the development of a project like improving internal business processes and
improving the workflow.
 Marketing Department - Marks and Spencer has a special team that works on various
marketing activities like promoting, advertising, analysing the market conditions for the
company's products (Kolk, 2016). The department analyses the activity of the
competitors as well as the conditions of the market in order to formulate the best
strategies for promoting the company's products in the market and to reach a broader
customer base worldwide.
 HR Department – The HR department in the respective company is basically
responsible for carrying out the process of hiring the right people for the right positions in
the company (May, 2019). It is also responsible for promoting a healthy environment
where the employer and employees share a healthy relation with each other which in turn
helps in improving their overall productivity and avoiding conflicts.
The interrelationship of these departments is explained below -
 Finance and Operations Departments – Both finance and operations departments work
in coordination with each other in order to improve the overall business operations. The
finance department in Marks and Spencer advices all the other departments including the
operations department on how to make use of the funds that are available in the company.
Similarly, the operations department asks for funds when the need arises like
implementation of new machinery or technology etc. If this is not done, it will result in
poor performance of the company.
 Marketing and HR Departments – The HR department hires the right people for the
positions that are vacant in the company and those who are qualified and have skills that
match the job description. Whereas, the marketing department of the company makes use
of the skills of the hired candidates to the fullest in order to generate more effective and
efficient outputs that are beneficial for the company in the long run. If both these

departments don't work in coordination, other departments in the company will be
affected negatively.
LO 3
P4 Positive and negative impacts of the macro environment on business operations with
examples
Macro environmental factors are those factors which are uncontrollable and externally
impact on the business operation as well as management decision making (Oriesek and Schwarz,
2016). This will include numbers of factors such as political, technological, social, economical,
environmental and so on. It has both positive as well as negative impact which impact on the
business operations and functions. Below PESTEL analysis of Marks and Spencer is given
below:-
Political factors - In this M&S need to consider several elements like government policy,
foreign trade, tax policy, labour law and so on. Positive impact - Political condition of UK is stable which help respective company in
gaining various opportunities to grow their business.
 Negative impact - After Brexit implementation, respective firm go through issues due to
they need to close some store because they are not able to do proper shipping due to hard
placed tax.
Economic factors - In this factors this firm need to consider economic growth, exchange rates,
interest rates, inflation rate and several other factors of country at which they are operating
(Prajogo, 2016). Positive impact - Economic condition of UK is strong which is beneficial for respective
firm because it provide numbers of opportunities to expand business.
 Negative impact - At UK there are numbers of local clothing store which provide quality
and wide range of clothing products in budget of customers which impact on M&S
business.
Social factors - According to respective retail company they need to consider several factors like
population growth rate, career attitudes, safe emphasis, cultural barriers and so on. Positive impact :M&S is operation their business from many years at UK due to which
they have strong goodwill and brand value.

 Negative impact : Now respective company is not consider as company for youth due to
which their business get fall and they are losing their majority of customers.
Technological factors - According to this factor M&S need to consider elements like level of
innovation, Research and Development activities, technological awareness, technological
incentives and many more (Sharafizad and Coetzer, 2016). Positive impact : Respect company adopt new technology which help in attract more and
more customers at United Kingdom market.
 Negative impact : There are numbers of store at UK who also adopt new technology and
innovation who are attract more youth customers of Marks and Spencer.
Environmental factors - This factor will include several other factors like climate, weather,
environmental laws, climate change, pressures from NGOs and many more. Positive impact : Marks and Spencer advertises itself as a luxury brand and according to
that it can create concern about environment because that this may impact its brand
image.
 Negative impact : There are several environmental rules and regulations in United
Kingdom according to which respective company need to operate which impact on
decision making.
Legal factors - In respect of these factors M&S need to include factors like discrimination law,
employment law, customer protection law, copyright and patent law, health and safety law and
many more. Positive impact : Respective company can develop its strategies, plans and policies
according to legislation developed by United Kingdom government which can help it in
conducting work effectively.
 Negative impact : In last few year M&S involved in numbers of legal disputes which
impacted its overall brand image and name (PESTLE Analysis Of Marks And Spencer,
2019).
LO 4
P5 Internal and external analysis of the specific organisation
SWOT stands for strengths, weaknesses, opportunities and threats where strengths and
weaknesses are considered internal to the organisation and opportunities and threats are

considered to be external to it. A SWOT analysis can be conducted for an individual, groups and
even organisations in order to analyse the current situation of the market, understand their
strengths and weaknesses and act in an effective manner when an opportunity shows up or when
there is a threat posed to them. The SWOT analysis of Marks and Spencer is described below -
 Strengths – Marks and Spencer is a brand with high recognition that is a UK giant
having headquarters in Westminster. The brand value of the company is high as people
who prefer shopping high quality products can visit the company's stores in order to fulfil
their needs and expectations as the brand target people in the premium segment (Somers,
2019). Although the company is nearly 135 years old, it has still managed to remain in
the race majorly because of keeping in line with the market trends and constantly
innovating its products.
 Weaknesses – Besides being a successful brand, Marks and Spencer has not been able to
penetrate successfully in foreign markets like Europe and the US. There have been cases
where the customers were not found to be satisfied with the company's products and there
were several issues with respect to the returns of the products as well as the in store
experience of the customers. As a result, there was a decline in the customers' loyalty as
they switched to other brands.
 Opportunities – Since the brand majorly deals in fashion, there is an opportunity for the
company to expand itself in new segments as fashion is a constantly evolving business
where new segments keep coming on a regular basis (Stott, Stone and Fae, 2016).
Constantly upgrading itself online will help the company to increase its revenues as the
concept of online shopping is constantly rising. For its food products, Marks and Spencer
an focus on promoting healthy products as customers today have become more health
conscious.
 Threats - Marks and Spencer has been facing threats not only from various market
leaders like Zara, Tommy Hilfiger, Gap and United Colors of Benetton in terms of
innovations and uniqueness in the products but new entrants as well. Also, increasing the
prices of its products will lead to people spending less on the brand and opting for other
brands instead. The company's inability to meet the needs of the customers previously
can also post threat to it in some way or the other.

P6 Interrelation of strengths and weaknesses with external macro factors
Different changes in the macro factors can impact the functioning of an organisation.
Thus, analysis of various macro environmental factors can provide an insight about the
challenges may come up in the future and how can the organisation react towards them in an
significant manner. The interrelation of strengths and weaknesses with various external macro
factors like Political, Economic, Social, Technological, Environmental and Legal factors is
explained below -
Political Factors - Strengths : The decision of the European government to permit free flow trade between
themselves and other countries makes it easier for the company to import products in
time making it an easier process than before which can act as a strength (Yashkova and
et. al., 2016).
 Weaknesses : But the competitors of the company took advantage of the same which
resulted in a decline in its market share.
Economic Factors – Strengths : Marks and Spencer is a brand that understands the needs of its customers very
significantly which acts as a strength in satisfying their customers.
 Weaknesses : Price is considered as an important factor as far as the retail industry is
concerned. But the number of budget retailers entering the market has increased as they
supply products similar to big brands like Marks and Spencer at a much cheaper rate.
Social Factors – Strengths : Being among the oldest brands in the UK, Marks and Spencer is widely
known by people. Therefore, a strong brand name has acted as a strength for the company
in reaching out to a large number of customer segments and attracting potential buyers
over time (Davies, 2016).
 Weaknesses : However, this has also acted as a weakness as the customers have now
started associating the company with the past.
Technological Factors – Strengths : By implementing latest technologies like self-checkout which is among the
biggest trends of the retail industry, Marks and Spencer has gained a competitive

advantage over its competitors. This has also helped the company in saving money that
would have been otherwise spent on appointing cashiers for their stores.
 Weaknesses : Another big trend in the market is online shopping which has acted as a
weakness for the brand as it does not deliver food items online as compared to other big
food stores.
Environmental Factors – Strengths : The company's move in order to become more sustainable can act as a
strength and help it gain a competitive advantage (May, 2019).
 Weaknesses : Most companies today, including Marks and Spencer produce products that
are environment friendly that are manufactured using renewable resources. This has
posed a big challenge for many brands in order to maintain their share in the market.
Legal Factors – Strengths : Marks and Spencer follows various legal rules and regulations in order to
remain sustainable and offer high standard products to its customers as the UK retail
industry closely monitors the organisations (Evans and et. al., 2017).
 Weaknesses : Different countries have their own legal structures which they keep on
updating. As a result, the company has to update its own legal rules and regulations
which affect its operations.
CONCLUSION
From the above report, it can be concluded that business environment forms an important
aspect for an organisation in order to carry out its business operations in an effective and
efficient manner. Also, there are various kinds of organisations depending on their scope, size
and stakeholders and structures like pre-bureaucratic, bureaucratic structures etc. and have
various departments like finance, human resources, marketing departments that function in
coordination with each other towards achieving the goals and objectives of the organisation on a
whole. All the departments in a company are interlinked with each other and non-efficiency of
even one department can cause a dis balance in the overall performance of the organisation.

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<https://www.marketingtutor.net/pestle-analysis-of-marks-and-spencer/>.