The Business Environment of Marks and Spencer

Business and the
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
P1 Different types and purpose of organisation and legal structure.......................................3
P2 The size and scope of a range of different types of organisations....................................6
P3) Relationship Between Different Organisational Situations and Link Between
Organisational and Objectives and Structure.........................................................................7
P4 Identification of positive and negative impact that micro environment has on the business
operations...............................................................................................................................9
P5 Internal and External analysis of Marks and Spencer in order to identify the strength and
weaknesses...........................................................................................................................11
P6) Interrelation of weakness and strengths with macro environmental factors..................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Business environment refer as all the factor which are related to business and have some
impact on business (What Is Business Environment? - Definition & Factors, 2019). It is the
combination of internal and external factors that influence company's working and operating
situation. It includes individuals such as clients, suppliers, competitors, owner; improvement in
technology; government; law; social and economic trends; market; that affect business
performance; survival and growth. This report is based on Marks and Spencer company, which is
UK based Multinational company and headquarter is in Westminster, London. This company is
founded in 1884 by Michael Marks and Thomas Spencer. This report contains study about
business environment. It includes different types and purpose of organisation with their legal
structure, understanding about size and scopes of different organisation, organisational functions
and link with organisation objectives. Positive and negative impact of macro environment upon
business and its strengths and weaknesses international.
P1 Different types and purpose of organisation and legal structure
Public sector company
These are those organisations which are owned and operated by government. Public
sector company exist to provides its services for its citizens only (Bocken, Rana and Short,
2015). These organisations are controlled by governmental body and public sector organisation
do not work to generate profits. This sector company usually get funding from taxes, fees, and
through financial transfers from other levels of government. For example, NHS is a public sector
organisation. Public enterprises has various advantages such as they get enough facilities from
government, efficient capital available for research and development, proper administrative
planning and so on. Coming to disadvantages, there are certain disadvantages of public sector
such as wrong usage of power, corruption, political issues, ignoring consumer preferences and so
on.
Purpose
NHS purpose is to provide comprehensive clinical services to all irrespective of gender,
race, disability, age, religion and sex discrimination. NHS services are free of charge.
 Objective – NHS objective is to provide world best hospital services with best patient
care and staff experience.

Types of public sector organisation Central government: This type of government holds an absolute control over a unitary
state (Brown, 2018). They are responsible for entire nation policies and procedures which
have direct control towards sustainable economic development.
 State government: A state government is responsible for the rules and regulation for a
particular state. It is working for administrating local needs and problems of a particular
state or region.
Legal structural
NHS are following a legal structure of central government in order to work towards the
benefit of local and needy people. Some advantages which NHS get by following this structure
are decisions are taken quickly, employment generation, solving complex issues and so on.
Limitation of this structure to NHS are less transparency, taking wrong decisions regarding the
methodologies, problem faced while selecting indicators etc.
Private sector company
Companies in private sectors are run by individuals or group of people. Private sector
company work to earn profit and they are not owned and control by any government party.
Example of private sector company is Marks and Spencer. Advantages of private sector
companies are that is has strong management, flexible business, less formalities, long term
existence and so on. limitation of private companies are non transferable shares, cost of
registration process, cannot raise funds from public, requires minimum two directors,
shareholders and so on.
Purpose
Marks and Spencer purpose is to provide quality clothing, food and home decor products
to middle and lower-upper class customers.
 Objective – its objectives is to gain leadership in marketing by highly goal orientated
employees to achieve improvement in sales.
Type of Private sector organisation:
 Sole proprietorship – This is the simplest structure of business. In this company is owned,
controlled and operated by just one individual (Charter, 2017). Sole proprietorship is also
referred as a sole trader. Sole proprietorship is very popular among individual self
contractors, consultants or small business owner.

 Partnership – Partnership businesses are owned and operated by several individuals. In
this controlling power is divided between partners and owners of organisation. There are
two varieties in partnership that is general partnership and limited partnership.
 Large corporation and multinational – Large corporation and multinational has more
complex and expensive structure. It is an independent legal entity which is separated
from its owners. This have businesses or stores in many nations or countries.
Legal structure
Marks and Spencer follow the legal structure as public limited company in order to
manage their business activities in effective manner. Marks and Spencer has many advantages by
following this type of structure such as there is no political interference, proper management
system, long term existence, easy to borrow money and raise capital. This structure even has
disadvantages like needs to do annual meetings and pay annual fees, limited shares and so on.
Voluntary sector company
Voluntary sector organisation refers as organisation who work with aim to provide
benefit and enrich society. This organisation often has motive to work without profit. They work
for charities, foundation and social welfare organisation. There are various advantages of
volunteer organisation such as they do not have to pay tax, get help from public and private
companies, an individual who run non profit organisation is not liable to pay any business related
debt. Disadvantages of voluntary sector companies are it has to be maintained continuously and
needs a lot of money and time to make a start, no profits can be generated from this types of
organisation.
Purpose
It is a part of global movement for change and purpose of Oxfam is to provide solutions
to injustice of poverty.
Objective: Its objective is to provide facilities to child that is beneficial for building their
future without any difficulties.
Types of Voluntary organisation: Trustee: It refers to an individual person or members who have given full power or
authority to control administration of a particular sector.
 Charity: Charity is refer to an organisation which raise money in order to help general
and local people. It consist of food, cloth and other necessary requirement.

Legal structure
Oxfam is following charity legal structure as they work with motive to helping poor and
needy ones. Advantages of following charity level structure to Oxfam are no corruption, gets
money from public donations, directly involved in the community and so on. Disadvantages of
this structure are it doest successfully run for long time, misuse of help, sometimes there is fund
raising problems too.
P2 The size and scope of a range of different types of organisations.
All the firm has its various offerings, scope, size and many more. Description of these are
mentioned in context of various company:
Private Limited: Firms that lies under private sector having the purpose of profit
enhancement through accomplishing the requirements of the consumers. They are restricted to
trade its share publicly as well as owners are liable for company profit or loss (Brown, 2018).
Marks and Spencer is the private firm.
Size: Marks and Spencer has approx 1,463 stores in all over the world as well as its revenue is
about £ 10,337 million.
Scope: Its geographical scope ranges from UK to various global markets with more than 35, 000
product lines.
Mission - Marks and Spencer mission is to produce inspirational quality accessible to all.
Vision – Vision is to gain leadership by meeting needs and wants of customers and improving
competitiveness.
Public limited company: These firms are operating through the government of
respective nation for facilitating effective services to individuals as well as raise its standards of
living. For example: NHS.
 Scope: The following organisation is covering almost every part of the England and
providing wide variety and range of services to the people of UK such as dental care, eye
tests, health care services and some more.
 Size: The company is operating all over the England and provide medical services to their
customers and the number of employees in this company are 1.5 million across UK.
 Products and services: The company is providing a wide variety of services to their
customers such as dental care, eye tests, prescriptions and aspects of long-term care.

 Vision: To deliver better health, better care and better services to the customers.
 Mission: To provide good and enhanced quality of services to the customers in order to
make them healthier.
 Business Objectives: To provide highest quality and maintain clinical excellence in the
services.
 To hire, develop and retain skilled employees for longer period of time.
 Stakeholders: Stakeholders for this company can be government, employees,
organisation’s management and some more.
Voluntary sector: These companies perform for the society welfare with no aim of profit
enhancement. For example: Oxfam
 Size and Scope: There are 20 independent charitable firms performing together with
Oxfam to reduce poverty as well as facilitates welfare services in drought and famine
prone location.
 Products and services: Providing basic needs to help the needful people such as food,
water, shelter and clothes.
 Mission: To make positive changes in the lives of people living in poverty.
 Vision: To make able to influence their decisions impacting upon their lives, enjoying
their rights and assuming their responsibilities.
 Business Objectives: To maintain the satisfaction level of employees.
 To provide the best possible services to the needful people.
 Stakeholders: Stakeholders of this organisation are government, management, people and
society (Kolk, 2016).
P3) Relationship Between Different Organisational Situations and Link Between Organisational
and Objectives and Structure
All the department of an organisation are interlinked and dependent on each other in
some or the other way. M&S follow flat organisational structure and in this type of structure
employees can be a part of decision making process of organisation. The main reason behind
following this structure is to motivate their employees to participate actively and increase the
productivity. It even helps upper managers of M&S to communicate easily with employees.

The functioning of different departments depends on one another and the following is
described with the help of below presented discussion:
Marketing and Finance: In between these two departments of M&S, the relation is very
important to understand. It plays an important role in the growth and success of the organisation.
It is so because marketing department needs funds in order to carry out various activities such as
promotion, advertising and many more which required funds (Charter, 2017). So these
requirement is then fulfilled by this department and hence have an important interconnection.
Marketing department of M&S identifies what types of clothing and food items are to be sold
and how to promote it in the market, the cost of promotion and advertisement is shown to finance
department of M&S. Finance department then makes a budget plan for marketing activities and
then invest accordingly. This is how marketing department and finance department of M&S is
related to each other.
Marketing and Production: These two department of M&S are also interrelated with
each other as the marketing is the department which is directly in contact with the customers
need and demand for the product in the market so this department of M&S provides guidance
and estimation about the demand of the product in the market and on the very basis the
production is carried out in the business. Marketing department of M&S makes a quick research
Illustration 1: Flat Organisational Structure
Source: Flat Hierarchy, 2019

about the fashion trends and food taste of UK people and then suggest the production department
of M&S to produce it. M&S market department set a deadline for producing these products and
production department has to finish goods within estimated time. This is how marketing
department and production department of M&S work together.
Production and Sales Department: These two department of M&S are also interrelated
with each other as the work of the production department is to make the production and the sales
department is concerned with the sales of the products produced by the company (Ji-fan Ren and
et. al., 2017). In case the production is not carried out appropriately than it will become difficult
for the sales department M&S to make the sales of the product. M&S production department is
responsible for producing goods in an effective manner and then sales department plays a role of
selling those in the UK market. Many times sales department of M&S finds a default product or
customer returns product due to inconvenience and those are handed over to production
department to Re-do it again. In these kinds of situations production department and sales
department of M&S comes into same picture.
Sales Department and Finance Department: The relationship in between in these two
departments of M&S is also important and plays very important role in the success of the
organisation. These two departments are interlinked as the sales department by making the sales
of the products produced by the company helps in generating funds for the company and
provides to the finance department. The finance department of M&S than makes the proper
distribution of financial resources of the company in different departments in order to make the
effective running of all the departments. In this way these two departments are also interrelated
with each other. Sales department of M&S identifies different ways to sell product such as new
outlets and online marketing. For implementing sales strategies into action they need finance and
this is where they comes in connection with finance department of M&S. Finance department of
M&S provides finance to sales department for increasing sales and profitability of firm.
Production and Finance Department: The following two departments of M&S are
interlinked with each other. It is so because in order to complete the working of the production
department effectively, they will require various things such as raw materials, equipments and
many more and for this, production department will need finance (Deasy and et. al., 2016). So
this need of finance will be fulfilled by the Finance Department of M&S which helps the

production department to carry out their processes smoothly. In this way the dependency and
interrelation in between these two departments can be defined.
In this way the different departments in the organisation are interconnected with each
other and plays an important role in the success of organisation. It also helps in achieving the
business objectives of the company as the proper working and coordination in the different
departments of the company will ensure the proper and smooth working of the company. Hence,
the proper working will reduce the errors and omissions in work and it will become possible for
the company to achieve their objectives.
P4 Identification of positive and negative impact that micro environment has on the business
operations.
For analysing the macro environmental factor, Marks and Spencer conduct PESTEL
analysis in order to know the impact of external factors. PESTEL analysis showing the positive
and negative impact is as follows:
 Political factors: It refers to those factors which involve interference of the government
like foreign trade policy, tax policy, government policy etc. if any new legislation and
policies are formed by the government it will have a impact on the operation of the
business (Hillary, 2017).
Impact on M&S: M&S enjoys a positive impact of European commissions free trade as it made
its product export easier. As government regulations are keep changing so it is not so easy for the
organisation to amend changes on regular basis so have a negative impact on the organisation.
Impact of NHS: The company is following all the rules and regulations clearly thus the policies
of government has positive impact on the company. On the other hand sometimes it is not always
possible to make changes according to regulation and in that case company is facing high issues
from the government.
 Economic factors: These are the factors which include inflation rate, interest rates,
exchange rates etc. Government has faced recession in the year 2008 which has put the
economy in the trouble. Although several steps are taken by UK government in reducing
the impact.
Impact on M&S: Economy of UK is stable which enhances the purchasing capacity of the
buyers and has a positive impact on the operations of Marks and Spencer. Lot of money is spent

in providing the free public service which has a negative impact on the operation of Marks and
Spencer.
 Impact on NHS: The impact of Brexit has been seen over NHS as at that time as
company suffered from huge loss which result in decreasing the growth of the company
and hence has a negative impact. If interest rate are decline this tends to have positive
impact on NHS as they able to provide services of high quality more easily
 Social factors: These are the factors which include shared belief of the population. It is
very essential for M&S to provide such type of products and services which satisfy the
customers for the long run (Evans and et. al., 2017). It will result in a positive impact as
by this market trend can be known and a product can be developed according to the
customers need. As buyers got educated so there preference is changing at a fast pace and
it is not always possible for the company to fulfil the desire every time so thus it has a
negative impact on the organisation.
Impact on NHS: The company is able to understand about the needs of society which
results in positive impact for the company. Sometimes the company fails to understand about the
technology change which results in failure of understanding the people that tends to have
negative impact on NHS.
 Technological factors: These are the factors which involves innovation. In UK various
organisation is making the use of latest technology in order to increase the profitability.
Impact on M&S: As M&S has followed the latest trend in the term of design thus it has a
positive impact on sales of the company. Changing the technology incurs lot of expenses
thus it also has a negative impact on the organisation.
Impact on NHS: By the fast technology innovation, company is able to provide deficient services
to the customers. It is not always possible for the company to move along with the technology
thus has a negative impact on the operations of the company.
 Environmental factors: These are the factors relating to the environment and has an
influence on the business operations . Government and local council have taken several
measures in order to create environmental awareness which reduces the negative impact
on the environment.

Impact on M&S: As company is dealing in eco friendly product thus has a positive impact on
the organisation. If M&S are not following the environmental regulation properly it will have a
negative impact on the brand image of an organisation.
Impact on NHS: The company is making the use of proper renewable energy thus has a positive
impact on the working of an organisation. Sometimes the environment creates pressure on the
working of NHS thus has a negative impact on the working of an organisation.
 Legal Factors: In order to run business properly, company need to follow some of the
regulations.
Impact on M&S: Managers of M&S are following all the legal frameworks which build the
image in the minds of the customers thus it has a positive impact on the organisation. If
regulations are not followed properly, company need to pay fines which has a negative impact on
the overall operation of M&S.
Impact on NHS: Before doing any operation it is required by the company to follow all rules
and regulation and NHS is following the same thus has a positive impact on the NHS. As per the
legal regulation of NHS, company has to contribute to the employees pension which has negative
impact on the organisation.
P5 Internal and External analysis of Marks and Spencer in order to identify the strength and
weaknesses
In order to identify the internal and external factors , Swot analysis can be conducted by M&S
which will help the manager in distinguishing about the strength, weakness as well as threat and
opportunities in an appropriate manner. Below is the SWOT analysis of Marks and Spencer:
Strength
 The image of M&S is very good in the
market which enables the company to
create the large customer base.
(Schaltegger, Hansen and Lüdeke-
Freund, 2016).
 Company is dealing in wide range of
products like clothing, home
accessories, food product etc.
Weaknesses
 M&S major operation is in Europe ,
UK. Though the company has opened
its operation in Asia but was not that
successful.
 The company lacks in the term of
technology and because of this issue the
clothes in which it is dealing are old
fashioned.

 The company is having large number of
outlet throughout the world ranging
from 600 stores in UK and 300 stores in
40 countries across the world.
 The company is not able to supply
trendy clothes to the people which
results in bad publicity of the company.
Opportunities
 Marks and Spencer has the opportunity
to expand its operation in other
countries in which it is not working at
present.
 The company can diversify the product
in different sector like tradition and
ethnic wear.
 The company must work toward
reshaping the website which makes it
more attractive toward the customers.
Threat
 High competition in the market as there
are so many company which are dealing
in same type of products.
 Changing in the taste and preference of
the customers being the biggest threat
for the company.
 Due to the impact of Brexit, the sales of
the company have suffered a lot.
SWOT Analysis of NHS
Strength
 Good brand image in society which
result in providing efficient services to
the customers.
 It provide different type of health
services all over the world.
Weaknesses
 The perception of people changes from
time to time related to the use of
services of hospital so this could impact
upon the services of the organisation.
 Services offered by NHS are not always
available on time which create
dissatisfaction among customers.
Opportunities
 The company tries to improve the
health, well being and working lives of
people all over the world.
Threat
 The services provided by the company
should met with the standard of
government.

 With the help of technology
advancement the company can able to
provide more medicated facility to the
people.
 There are so many major players in the
industry namely
P6) Interrelation of weakness and strengths with macro environmental factors
Strength and weaknesses of Marks and Spencer has a relationship with macro
environmental factors which are discussed below:
Political Factors: These are those factors which impacts upon the working of an organisation in
accordance with the rules and regulations and policies formed by the government of a country
(Georgescu and Popescul, 2015).
 Strength: The economic stability of UK is the greatest strength of the company which
helps the companies in formulating long term policies and strategies for the organisation's
success.
 Weakness: Likewise, it has also become the problem and weakness for the companies
because in case the tax rates are revised than it will impact negatively on the working of
the company as customer base of the companies will be negatively impacted.
Economic Factors: There are those factors which impacts upon the working of an organisation
due to changes in the interest rates, disposable income of buyers, import rates, export duties,
fluctuations in currency rates and many more.
 Strength: The large number of portfolio of the products of M&S has provided the
customers with a large number of products which has increased the offering in the
products provided to the customers.
 Weakness: In the weakness, the import and custom duties are included. It is so because
this has impacted negatively on the working on the company as these duties increased so
the prices of the goods and services for the customers has also increased. This will lead to
decrease in the customer base and sales of the company.
Technological Factor: UK is technological advanced nation which draws large number of
companies towards the country (Hair Jr and et. al., 2015).

 Strength: With the advancement is technology, M&S is following the latest trend in the
technology which helps in maintaining the brand image. Moreover in this context, M&S
is giving effective training session to the existing employees which will enhance the
growth of the company.
 Weaknesses: This will build the production cost of Marks and Spencer which influences
the and effects their sales and profitability. Not only this nut the increase in cost will also
impact upon the customer base of the company as a reduction.
Social factors: These factors include the shared belief of the population. With the help of this
factor, company encourages to use a specific product of a firm.
 Strength: Department of research and development plays vast role in analysing the needs
and wants of people at market place as to satisfying them through producing more
effective goods and services.
 Weaknesses: Being a large organisation, there are people from different culture which
creates conflicts in the minds of the customers. It is also important for the company to
consider this point in order to make the company safe from unknown loss.
Environmental factors: It refers to the factors which are associated with the
environment that results in putting negative impact on the working of the company.
 Strength: The company has formed some of the regulation where the trying to reduce the
use of plastic packets which results in strength for the copmany.
 Weaknesses: Though in manufacturing of some of the product, harmful gases are being
emitted which in turn is a weakness for the company.
Legal Factors: It refers to the laws and regulation developed by the government. For proper
functioning it is required by the company to follow it properly.
 Strength: M&S is following every laws and regulation of government properly which act
as a strength as due to this only they promote the brand image of the company.
 Weaknesses: Earlier the company was trap in scandals which are associated with
providing the fair wages which has become one of the weakness of the company.
Marks and Spencer is using high quality raw materials in making the products of the
company. This will help the company in attracting large number of customers towards the
products and services of the company. In addition to this, it will also help the company in

changing the potential customers of the company into the real customers (Hamilton and Webster,
2018).
So it can be said that the internal and external environmental factors are interconnected
with each other and these factors also provide an effective impact on the business operations of
the company.
CONCLUSION
From the above assignment, it has been concluded that there is a lot of difference in
between the different organisations, their objectives and their organisational structure. These are
made in accordance with the suitability and purpose for which the company is formed. In
addition to this, in order to achieve the goals and objectives of the company, it is important to
have coordination among the different departments of the company so as to perform their own
tasks effectively and ensure smooth running of the company. Further, it is also concluded that
internal and external factors also impact upon the working of the organisation and properly
analysing these factors will help the company in earning more profit and reducing the loss to the
possible extent. Lastly, it is also concluded that these factors provide the managers with different
experiences which increases their efficiencies and skills and also makes them to make changes in
their strategies and policies of organisation in order to deal effectively with the situation
confronted by the company.

Flat Hierarchy. 2019. [Online]. Available through:<https://www.researchgate.net/figure/Flat-
hierarchical-structure_fig2_321488367>.