Organizational Factors & Impact Analysis

This assignment delves into the critical role of internal and external factors in shaping an organization's performance. It emphasizes a SWOT analysis framework to evaluate an organization's strengths, weaknesses, opportunities, and threats. The document explores various influencing factors like technology, market trends, competition, and internal capabilities, highlighting their impact on organizational effectiveness.

BUSINESS AND THE
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
Part 1................................................................................................................................................1
P1 Different Types And Purpose Of Organization: Public, Private, Voluntary Sectors And
Their ......................................................................................................................................1
P2 Size And Scope Of Range Of Different Types Of Organizations( Public Sector, Private
Sector And Voluntary Sector Organization ).........................................................................2
...............................................................................................................................................3
P3 Relationship Between Different Organizational Functions And Their Link To
Organizational Objectives And Structure...............................................................................4
PART 2............................................................................................................................................6
P4 Discuss Positive And Negative Impact Of Macro Environment Has Upon Business
Operations Supported By Specific Example of Marks and Spencer through PESTLE analysis
model......................................................................................................................................6
P5 Internal And External Analysis Of Marks And Spencer In Order To Identify Strength And
Weakness................................................................................................................................8
P6 Interrelation Of Strength And Weakness With External Macro Factors..........................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
All the external and internal factors which affects the organizations functions and
operations are exist in business environment. There are many factors which affects the business
environment. Marks and Spencer is UK based retail organization with world wide presence
which has more than 800 stores worldwide. This report will lay emphasis on different types of
organizations and their purposes and legal structures, size and scope of different types of
organizations, relationship between different organizational functions and how they are linked to
their organizational structure and objective, positive and negative impacts of macro environment
has upon business, internal and external analysis of Marks and Spencer to identify their strength
and weakness and at last how strength and weakness interrelates with external macro factors. All
these factors will be explained with the help of Marks and Spencer company.
Part 1
Brake Bros Ltd: It is basically a food and distribution company which provides food, drinks and
many other products to customers and mainly to catering industry.
Sports direct: It is basically a retail group in europe which sales sports goods and products.
They are one of the largest brand which provides large variety of sports products under name of
sportsdirect.com brand.
NHS: It is an organization which provide health care services all over UK. They basically
provide all kinds of social and health care services to patients who require it and they also
provide ambulance service in case of emergency.
P1 Different Types And Purpose Of Organization: Public, Private, Voluntary Sectors And Their
Public Sector: Organizations which are accountable to local government or central government
comes under public sector organizations. Purpose of these companies is to provide services to
public rather than producing products to gain profits. Legal Structure: These companies are
directly run by the government. But all the public sector companies are not completely run by the
government some are of joint stock and some are purely made of parliament acts passed. Some
are joint stock companies in which major share is owned by government known as public limited
company. This company is run by Board of directors on behalf of shareholders. Any decision
taken is passed by board of directors without approval of board of directors no decision can be
taken These type of companies can sell their shares on stock market to raise their finance
more(Subramanian and et.al., 2016).Example: Sports Direct. All the companies have different
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percentage of share holders and can have any number of share holders. These type of companies
are strictly ordered to list all of their financial growth so that all of their shareholders are known
to the true value of their shares.
Private Sector: When a part of countries economy is run by individuals or companies not by the
government then that comes under private sector organizations. When a company has different
owners with separate different identities then that also comes under public sector organization.
Legal Structure: In this type of companies it is important that each shareholder of the company
are part of their business and under no condition those shares can be sold to public. This type of
company is also run by board of directors elected by share holders and headed by chairman. All
the shareholders can lose their part of share as they have liability for the companies debts.
Purpose of these type of companies is to make profit by selling their products or services to
public. For private companies it is difficult to sell their shares as the buyer should be within the
companies' framework. These type of companies can have any number of shareholders weather
more or less. One of the example of private sector company is Brake Bro's Ltd. which is a
conglomerate sector organization.
Voluntary Sector: Organization who serve, benefit and enrich society without making any profit
is called voluntary sector organizations. The main purpose of voluntary sector organization is to
serve people without thinking and making any amount of profit. Legal Structure: These
societies think only of community and serve them. In this all the charitable organizations, non
profit organizations and NGO's comes under this category(Haigh and et.al., 2015). These type of
organization do not have any board of directors and if they have they can be of any number.
Some voluntary sector organizations are tightly integrated with government so that they can get
their support to serve the society. Many organization under this category have both paid and
voluntary staff. Example NHS. There are many legal structures of voluntary sector organizations
like community benefit organizations, unincorporated associations, trust, charitable incorporated
organizations or community benefit organization. NHS is a non profit organization with legal
structure as community benefit organizations.
P2 Size And Scope Of Range Of Different Types Of Organizations( Public Sector, Private Sector
And Voluntary Sector Organization ).
Size of different types of organization (public sector, private sector, voluntary sector
organization)
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Private sector Public sector Voluntary sector
Organization name Brake Bro's Ltd. Sports direct NHS
Number of employees More than 84,000 More than 17000 More than 14,00,000
Turnover Approx 10,600 billion
pounds
Approx 3200 million
pounds
Approx 790 billion
pounds
Value of assests Approximately 7,500
million pounds
Approximately 1200
million pounds
Approximately 23
billion pounds
Opinion Company is being
doing excellent and
giving a tough
competition to its
competitors(Bosco and
et.al., 2015).
Performance in terms
of turnover and assets
value is not same as
compare to its
performance it's
simply average. They
are organization of
medium level.
Here company needs
to improve themselves
by avoiding employee
division so they can
work more efficiently
and effectively to
achieve organization
objectives. They are
organization of micro
level.
This company is
performing excellent if
its turnover and assest
valuation is compared.
This Organization is of
middle level.
Scope of different types of organization ( Public sector, private sector and voluntary sector
organization)
Private Sector Public Sector Voluntary Sector
Organization name Brake Bros Ltd. Sports Direct NHS
Number of branches-
outlets
Approx. 500 stores Approx 450 stores in
UK
207 clinical groups,17
specialist trust, 35
community providers,
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54 mental health trust
and above 850 profit
and non profit sector
organizations
Operational area Manufacturing of
baverages and food
products, catering,
hotels(Schilke., 2014).
Manufacture sports
items which includes
baseball equipments,
football equipments,
tennis equipments,
cricket equipments etc.
Main area is to provide
health care services
like clinical services,
health services,
hospital services etc.
No.of services/
product
Products like: pastries,
cake, burgers, pizza
etc.
Products like: bats,
balls, racket, tennis
etc.
Ambulance service,
Care trust service,
mental health services,
hospital treatment
services etc.
Opinion about
organization
By providing good
quality of products,
services which are
desired or needed by
the customers,
company is doing very
good to satisfy their
customers.
This is the narrow
organization which
provide all the sports
items in UK. This
company is also doing
good in their business.
This organization is
really good in their
field and provide
excellent services to
their customers or
patients.
Employment in different types of organization
Name of
organization
Employees
Micro Organization Sports Direcrt More than 1700
Medium Organisation Brakes Bros
Ltd.
More than 84,000
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Large Organisation Sainsbury More than 180,000
P3 Relationship Between Different Organizational Functions And Their Link To Organizational
Objectives And Structure
Here relationship between different organizational functions is shown and their like to the
objective of the company.
Production and purchasing department: Both the departments have a relationship
between them i.e. if purchasing is done of any product or service only then production
department will do any products' production. For example in Marks ans Spencer if customers
will not buy any products then revenue will not get generated and production department will not
be able to do any production
Human resource and production department: Only if human resource department will
heir employees only then production department will be able to do production of products and
achieve their targets(Axaopoulos and Gelegenis., 2014).
Marketing and finance department: All the wedges, expenses etc. are seen by finance
department so only if marketing department will provide all the expenses details only them
finance department will be able to finance them. For example if Marks and Spencer wants to do
any marketing of their products then they need to provide details of all the expenses to the
finance department So that they can approve and finance them.
Marketing and IT department: Both of these departments are interconnected to each
other. If IT department will not provide all the required facilities to the marketing department
then they will not be able to do marketing of their services and products.
Finance and R&D department: For doing all the research and development allowance
and permit from finance department is important. Without it they won't have any finance for
their research and development.
Sales and finance department: Sales and finance department functions are
interdependent as if sales are good then revenue generation will increase. Like if Marks and
Spencer sales are good then only revenue will be generated and profit will increase and if sales
are not good then revenue generated will be very low and they will suffer loss.
IT and Operations department: If all the proper facilities are provided by IT
department to operation department only then they will be able to do all their operations and
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meet the requirement. IT department need to provide facilities to the top management as
well(Christ and et.al., 2017). For example for generating report or do any market research
permission from IT department is necessary for internet usage only then employees will be able
to use internet.
Distribution and Finance department: For distribution or products in different cities or
countries, finance from finance department is important without which distribution of products
and services will be quite difficult.
Sales and Distribution department: If distribution of products and services is done
properly only then sales will be done and revenue will be generated. If distribution is not done
properly then it will affect the sales of the country.
Sales & marketing and customer service department: If distribution of products and
services is done properly only then sales will be done and revenue will be generated. If
distribution is not done properly then it will affect the sales of the country.
PART 2
Here positive and negative impact of macro environment has upon business operations
supported by specific example of marks and spencer through pestle analysis model will be
explained. Marks and Spencer is one of the UK's biggest retailer store which has more than 800
stores worldwide. Here PESTLE analysis of Marks and Spencer will be done. PESTLE analysis
gives a brief about all the macro environmental factors both in positive and negative way.
Political: All the political factors are those factors which are changes, made and run by the
government and all the organizations has to follow all those factors. Governments acts, policies
where government's anticipation is important is labour law, trade policies,restrictions in trade,
tariff, stability in politics. Government has their own set of regulations and rules which every
organization has to follow such as health hazards, health and safety planning, risk control and
management etc. Marks and Spencer has always been in trouble whenever it has came to
political factor(Zalengera and et.al., 2014). They were once charged for not following safety
rules when it concerned with employees as one employee got injured because of their negligence
of safety regulations. But after this indecent they have become an organization to get full
government support as they were following all the trade practices fairly. But every tine Marks
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and Spencer get affected by VAT set by government i.e. value added tax which is set by
government and paid by companies, whenever VAT is increased by government marks and
Spencer need to increase their prices also otherwise it will affect companies profit and
revenue(Utami and Lantu., 2014). And because of this reason they are facing many financial
losses and because of which they need to close 14 shops and risk approximately 500 jobs.
Economical: Economic factors like interest rate, inflation rate,foreign exchange rates, economic
growth factor etc. directly affects retail sector companies economic condition and have a long
term effect. Like if inflation rates are increased then it will affect the price of companies services
and products. Marks and Spencer need to consider rate of economy for all of their long and short
term plan. They need to consider all the economic factors to have a hold in their long term plan
So that all the issues related to these factors can be resolved easily. Marks and Spencer is a brand
which is preferred by old age group and is least preferred by youngsters. So they need to focus
on their fashion area as today's young generation spend more on shopping as compared to old
generations. This factor has affects them heavily and they need to close few stores in UK to
sustain in the market.
Social: Social factors are some factors which cannot be controlled by the company directly but
they can directly affected many retailer organizations or companys and can affect marketing
strategy and business. To deal with the social environment, company need to think of the
customers in that country or region because the changing social trend affects the demand of
product and service provided by the company. Marks and Spencer should try to change their
products according to their customers but still marks and Spencer's most of the customers are of
age above 40 which has affected the company as youngsters spend more than old aged group
people. So, to convince its customers Marks and Spencer has lowered their price, offered
discounts to attract their customers. Since credit card came into picture initially Marks and
Spencer suffered major loss so they started use of credit card to increase their sales in payment
by the customers.
Technological: Constantly evolving technology has changed the business of different companies
in different ways to increase their sales, profit and revenue. Use of internet for online purchasing
has increased a lot, so like any other to retailers they also started online shopping and home
delivery option to increase their business. They are investing heavily on technology to increase
efficiency. They had also equipped Wi-Fi in all of their stores to attract customers and increase
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sales. But because of this technology they had to suffer major loss due as their website crashed
and out of stock option on online shopping. They suffered major loss.
Legal: Many retail sector firms had faced many legal issues and had dealt with them. Marks
and Spencer had faced approximately 1 million dollar fine in as they failed to protect their staff
and customers from asbestos risk which comes under health and safety act. This scandal was all
over the news and had affected their customer base drastically.
Environmental: Marks and Spencer is one of the most sustainable brand in the works. They
were the first one to produce fresh milk from RSPCA assured dairy farms. They always produce
environment friendly products.
SWOT- After PESTLE analysis here analysis of all the internal and external factors of Marks
and Spencer for identification of strength and weakness through SWOT analysis. SWOT analysis
compares all the internal factors i.e. strength and weakness of a company and its external factors
like opportunities and threats of a company.
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Figure 1: PESTLE Analysis
(Source: PESTLE Analysis.2018)

Strength(internal factor):They offer latest trending things weather in clothing section or in food
section. Like they launched wow a healthy food product among customers. They also have
strong e-commerce infrastructure as they are trying to reach their customers through mobile
devices, e-commerce websites etc. They are highly responsible in effective corporate social
responsibility(Bull and et.al., 2016). Also, focusing on enhancing customer base by targeting
youngsters.
Weakness(internal factor): One of the biggest weakness of marks and Spencer is their too
much relatability on UK market which makes them most vulnerable to local market's condition.
Online market of M&S has resulted in frequent product recall because of which customer trust in
company has declined.
Opportunities(External Factor): They can try to invest in developing countries to increase their
market share. They can also grow their online presence through fashion applications like myntra,
amazon etc. this can help then to enter new market. Reshaping their section in cloths according
to youth is also big opportunity for them.
Threats(External factor): Changing trend in clothing section is one of the biggest threat for
them. Also, recession has affected many companies revenue, growth and profit rate so they need
to remain up to date in the competition(Bohari, Hin and Fuad., 2017). Increasing competition in
clothing market is one of the biggest threat for the brand they have dropped from number one
position to third position. Unstable political situation in many countries is also one of the biggest
threat to the company as it will affect the trading laws in all those countries.
Porter's five force- analysis will also be done to explain all the factors which influence the
decision of supermarket through Marks and Spencer example.
Bargaining power of Supplier: Marks and Spencer have mostly positive effects of this. Positive
as there is high level of competition among suppliers which forces them to reduce their price and
give more option to Marks and Spencer. Marks and Spencer gives their supplier high volume
demand because of which supplier cannot bargain as they will get threatened to cut down
volume.
Bargaining power of Customers: This factors has both positive and negative effect on Marks
and Spencer. Quality of product is good provided by then which is cherished by many customers
so they end up paying extra for that product which is an advantage for Marks and Spencer. They
are trying to customize their products according to customers specially aged customers which
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increases their customer base. High amount of substitutes are available in the market which will
affect Marks and Spencer and influence their decision.
Intensity of existing rivalry: As the size if retail industry is large which allows many industries
to business without steeling their market share gives an opportunity to Marks and Spencer and
can influence their decision but on the other side there are many companies which gives a tough
competition to Marks and Spencer and are steeling their customers away and this is a major
factor which will influence their decision in the future.
Threat of Substitute: Threat of substitute is high but the quality of substitutes available in the
market which can be compared to quality of Marks and Spencer is less which is a positive sign
for them as well. But switching cost of substitute for customers is less which is a threat for
Marks and Spencer.
Threat of new Competitors: It is a weak force which will not influence Marks and Spencer
decisions much as for starting and competing with a brand like Marks and Spencer requires
strong distribution network, large amount of investment, strong brand name which is difficult for
a new entry.
At last interrelation of strength and weakness with external macro factors will be
explained.
Interrelation of its infrastructure as a strength with Technological Factor: Strong e-
commerce infrastructure is Marks and Spencer's strength and because of which technological
factor grows strong. As use of internet and reaching customers through mobile application and e-
commerce websites is strengthening their technological factor as usage of technology has been
increasing(Ervural and et.al., 2018).
Interrelation of their effective social responsibility with social factor: Marks and Spencer
have a highly effective social responsibility as they are building strong partnership with charities,
NGO's etc. which is strengthening their social factor as people nowadays are becoming more
and more responsible towards their social environment which will help them to increase their
customer base.
Interrelation of their vulnerable market condition with economic factor: Marks and
Spencer's too much reliance on UK's market is their biggest weakness which makes them
vulnerable to market condition. Which weakens their economic factors because if the inflation
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rate increases in UK then it will affect companies price of products and services and also affect
the purchasing power of customers.
Interrelation of their infrastructure maintenance weakness with political Factor: Financial
performance of Marks and Spencer is poor because of which they do not focuses on their
infrastructure and maintenance of their infrastructure which will affect their political factor as
well as legal factor as if any accident happens with any employee because of poor infrastructure
maintenance then it will be violation of health and hazard act and which will result in some strict
legal actions to be taken which will also affect their customer base, and brand reputation(Leibers,
Stensaker and Harvey., 2018).
CONCLUSION
From the above study it has been summarized that there are three different types of
organization with different purpose, legal structure, goal and objective. All these types of
organizations differ in their size and scope. Each organization has different organizational
functions and each function has different work and each function is interrelated with each other
and with organizations structure and objective. There are different macro factors which has a
huge impact on organization in both positive and negative way. There are also many factors both
internal and external factors which strengthen and weaken the organization.
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REFERENCES
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Zalengera and et.al., 2014. Overview of the Malawi energy situation and A PESTLE analysis for
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Online
PESTLE Analysis.2018.[Online].Available through:
<https://www.professionalacademy.com/blogs-and-advice/marketing-theories---pestel-
analysis>
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