Impact of Economic and Non-Economic Environment on Organizational Behavior

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This article discusses the impact of economic and non-economic environment on organizational behavior, with a focus on the case of Marks & Spencer. It covers topics such as economic policies, economic conditions, demographics, natural factors, and cultural factors. The article also includes a SWOT analysis and a PESTEL analysis of Marks & Spencer.

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Contents
Contents
1. INTRODUCTION.......................................................................................................................3
1.1 Company overview................................................................................................................3
2. LITERATURE REVIEW............................................................................................................4
2.1 Impact of economic environment on the organizational behavior........................................4
2.1.2 Economic Polices................................................................................................................4
2.1.3 Economic Conditions..........................................................................................................5
2.2 Non – economic environment and their impact on behavior.................................................5
2.2.1 Demographics.....................................................................................................................5
2.2.2 Natural................................................................................................................................6
2.2.3 Cultural...............................................................................................................................6
3.) DISCUSSION AND ANALYSIS..............................................................................................7
3.1 SWOT Analysis.....................................................................................................................7
3.2 PESTEL Analysis..................................................................................................................8
4 CONCLUSION.............................................................................................................................9
REFERENCES..............................................................................................................................10
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1. INTRODUCTION
Economic environment is the sum or the collection of the external and internal factors
which affect on the companies business and their profitability. Some of the internal are
employees, costumers, leaders, stakeholders, owner needs and their expectations. External
factors are political factors, social factors. Top environmental factors that
will affect business include storms, loss of resources, inflation, and scarcity of food and water.
These economic concerns are likely to be secondary to the risks to human health so it is
important for the company’s leaders and managers to be aware about those factors.
1.1 Company overview
Marks & Spencer is top multinational retailer company who have headquarter is in London.
This company is selling products such as home appliances, quality clothing and . food products.
This company was founded by the two partners Polish and Michael marks they both started this
company together in 1884 (Hamilton and Webster., 2018). In the period of 1900 to 1920 this
company brought up with the numbers of competitors in the market and they become the public
company , the original founders of the Marks & Spencer died and the companies control come
up on the Simon Marks. From the period of 1920-40 converted into the wars and the British
moved into the great depression. In that time there was too much shortage of the good ,
unemployment was nearly 3 million and money comes stoup their business . Marks & Spencer
company was now facing the competition from the affordable variety stores. Adapting to keep
ahead of the game it changed the pricing system, now selling good up to 5 shillings. Marks &
Spencer also decrease their prices will lead this company toward the success. In the year of 1940
to 50 the war outbreak bring with the rationing as well as the enemy bombing which hit over
100 Marks & Spencer stores and 16 out of them destroyed. At the beginning of the war 70% of
Britain's food was imported from across the sea. U-boat attacks quickly cut off this supply and
by 1940 rationing was introduced for lots of food, beginning with bacon, butter and sugar. In
1998 this company become first British retailer to make profit tax profit around one million.
Curtly this company has more than 1450 shops in all around the world and more than 80000
employees are working for this company and they are top leading company in UK.
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2. LITERATURE REVIEW
2.1 Impact of economic environment on the organizational behavior.
According to the (Deasy and et.al., VMware Inc, 2016) Economic change has huge
impact on the Marks & Spencer because when any change our in the economy then it directly
affect on the company’s profitability and their position in the market. Company has no control
on the economic its not only affect on the Marks & Spencer but change in impact on the
economic impact each and every country. Marks & Spencer company mostly affect from the
demand and supply of their products in the economy. When people spend more money on the
economy then it creates opportunity for this company to gain competitive advantages but when
they demand of the product decries on the economy than they also have to decrease their product
prices so they can stay in the compaction and the margin profit they earn is very low. The
another impact from the economy have on the Marks & Spencer is from the political factors.
Polices change with the time and government increase and decrease the Taxes on the commodity
which affect on the prices of the products. Products price of the Marks & Spencer also incases
and they re not able to provide their products to the customers on the affordable prices. This
can also have some positive impact if companies leaders and their managers analysis those
factors properly a than they can gain competitive advantages in the future. They can gain
competitive advantages through the new technology trends. Company have to find the new
trends in the market where they are operating so they can increase their products and they can
take competitive advantages. This is one of the best way for the Marks & Spencer company to
take competitive advantages and show their presence in the market.
2.1.2 Economic Polices
As per the view of (Eling and Schaper., 2017) Economic policies are made by the government
of the country where Marks & Spencer is operating their business. It is important t for the
company to follow the rules and regulation of the country otherwise they have issues from the
g0verment and they can also shot down their business. Government has made some rights for
the customers which Marks & Spencer have to provide to their customers. They have to
provide good quality products to the customers and company is selling food products so they
have to care about the cleaning of the place where they are making food. They also have to
listen to the customers and they cannot misbehave with the customers. Marks & Spencer have to
provide shifty to their customers at their workplace so they can feel safe when they enter in their
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store. Government has also make the polices related to the prices and they have decide the
highest prices of the products so Marks & Spencer cannot sell their products more higher than
the price given by the government. They have to fallow their rules and their regulations.
2.1.3 Economic Conditions
According to the (Almalki, Al-fleit and Zafar., 2017) Economic condition affect the Marks &
Spencer strongly because of the Barxit company is suffer from the losses most of the raw
material of the Marks & Spencer was coming from the European countries and they it was
cheaper as compare to the other countries. After the Braxit , European countries stop supply of
the raw material which affect on their profitability and now they are exporting their row material
from the other countries. Recently all the economy in the world is affecting from the virus
(Corona virus ) which is affecting the world economy and many of the business get shut down
because countries has lockdown their country. Uk also have taken this step and they lockdown
their country which, means every retailers and shop keepers also have to shun down their
business and they have to stay at home. This is affecting on the Marks & Spencer because they
have to lock down their business because they have legal notice from the government.
2.2 Non – economic environment and their impact on behavior
According to the (Komljenovic, Loiselle and Kumral., 2017)The non- economic
environment has huge and strong influence on the business of the Marks & Spencer Company.
Generally the Non- economical factors are the key factors of the business activities on the
countries. Non-economic environment is as important as economic environment for influencing
the business activity of the country. All non-economic issues related to business are included in
non-economic environment of a country. The non-economic environment of business can be
classified broadly as— politico-legal, demographic, socio-cultural, technological and natural.
For examples – conflict situation in the Marks & Spencer company impact on the working
environment of the company it is important for the company to overcome from the conflict
satiation other wise this small conflicts and convert into the physical fights which will lead this
company to decrease in their growth and company will not able to achieve their goals and their
objective.
2.2.1 Demographics
Demographic factors such as Gender , age , language etc has huge impact on the Marks &
Spencer company. When they launch any product or sell any product on the market then they
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have to study the market and decide the age group which can but their products. Their clothes
design and their size are according to the gender of the person. They have separate products
for the ladies such as ladies bags, ladies cloths etc. when company expand their business then
the common problem they always face s the language. The different language in the particular
place can be a barrier for the Marks & Spencer company because they every country have their
own language. It is important for the company to recruit employees from the country where they
are expanding thei9r business because they will able to communicate and deal with the
customers of the their own country otherwise it become hard for the Marks & Spencer to expand
their business and get success. Income of the people also affect on Marks & Spencer company
because if they are having their store in the area where people are earning every low income
which means they will spent very less to purchase the products so company can suffer from the
loses (Saleh and Watson., 2017). It’s also depend on the economic condition of the country
because of b people will have jobs and they are earning good, then they will expand their
business more so this factors always affect on the profitability of the Marks & Spencer company.
Education level- employees who are working in the Marks & Spencer should have some
experience and they ,just be educated so this factors also affect because without having
experience and education in the retail indist5ry employees cannot performed their task properly.
2.2.2 Natural
It is important for the company to have necessary resources to make final products which they
can offer to the customers. Marks & Spencer have to but the resources which have good quality
and lower prices so they add some value for the customers and they can buy quality product in
the lower prices. Other natural and economic conditional such bas climatic condition also
affect on the Marks & Spencer company. On the seasonal time company get row material in the
low prices’ but when there is no season then raw material become more expensive. Whether
conditions also affect on t5yhe company because they are selling the food products and when
whether is not good then their food cannot maintain the temperature which damage their
products.
2.2.3 Cultural
This company is operating their business in all around the world so the employees are
working in their stores are from the different different culture which can create conflict situation
at the companies workplace. It is important for the Marks & Spencer company to overcome
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from this problems so superiors of the company used to run group- activities at their workplace
so every employees can work together and they can 8understand each other’s culture.
Government also has make polices which are related to the employees harassment,
discrimination etc which provide employees rights. If employees at the workplace of the Marks
& Spencer company are facing any discrimination at the workplace then they can complain to
their superiors and they will take strict action against them. This polices create good cultural
environment at the workplace and every employees can work together and they to achieve their
goals and their objectives.
3.) DISCUSSION AND ANALYSIS
3.1 SWOT Analysis
Strength
Marks & Spencer company has strong market hold in the United kingdom and India both
countries .
This company has huge reputation in the whole retail, industry and their business growth is
increasing day by day (Mawejje and Okumu., 2016).
Top leading company and they are having strong skillful workforce which helps them to
gain competitive advantages.
Weakness
One of the biggest weaknesses that Marks & Spencer’s has is poor scalability of the
supply chain. Though the company has been trying to offer global access to their
merchandise through their online store they have been unable to scale up their supply
chain to deliver to all locations globally. Though they have tried to reach out to Asia
because of inventory situations and unsold stock they have to resort to end of season sales
to sell off their merchandise.
Opportunities
M&S should innovate their online website which can lead them toward the success
because people now a days purchasing their products on the online sides.
There are some markets like china and Indian ] where they can expand their business
more and gain competitive advantages and strong hold in those countries.
Threat
Competitors in the retail industry are the biggest threat for the Marks & Spencer
company. Competitors are selling their products in the lower prices which is affecting
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the company and they also have it fall down their product prices to stay in the
competition.
Old technology is creating threat for the company because Marks & Spencer company
have technology which very old and other companies can overtake this company by
implementing new technology so they should also follow new technology trends.
3.2 PESTEL Analysis
Political
Economic condition affect the Marks & Spencer strongly because of the Barxit company
is suffer from the losses most of the raw material of the Marks & Spencer was coming from the
European countries and they it was cheaper as compare to the other countries. After the Braxit ,
European countries stop supply of the raw material which affect on their profi6tability and now
they are exporting their row material from the other countries
Economical
Economical factors has huge impact on the Marks & Spencer, when Unemployment rate
of the country decrease then company get advantages from it because people of that country
ready to work for the company in lower salaries (Virglerová and et.al., 2017). Company can save
money and use it for the training and development of their employees.
Social
Marks & Spencer also try to add value for society by provide useful products . they are
selling ready meal products which are us full for the people who do not have time to make food
for themselves. b Marks & Spencer provide ready means which can be prepare by just adding
boil water and user do not have to add any extra ingredients (Fabus., 2018). This saves their
time and they can eat their prople meals
Technological
Technology always helps this company to take competitive advantages. Company have huge
customers on their online shopping website and they are also provide many technological
facilities to their customers.
Environmental
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Fair trade, which is an initiative created to better compensate foreign producers, also has
an impact on the environment. This is because smaller producers, who receive the most benefits
from fair trade, generally follow more sustainable business practices than larger competitors. As
a result, Marks and Spencer’s decision to sell fair trade products also has an Environmental
benefit.
Legal
Marks & Spencer Company is following all the legal rules of the government. They are
working in the internal market and the y cooperate with the legal rules of the government.
4 CONCLUSION
This report has been cover the case study of the Marks & Spencer company and it6 has
been provided information about the business environment of the company. This report has been
provided brief information about the companies culture and the factors which affect their
pro9fitability. It has been covered literature review of the economical and non economical
factors impact of the business of the Marks & Spencer company. In the other section this report
has been provide SWOT and PESTEL of the Marks & Spencer company.
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REFERENCES
Books and journal
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International journal of production Economic. 171. pp.241-
249.
Deasy, S. and et.al., VMware Inc, 2016. Controlling use of a business environment on a mobile
device. U.S. Patent 9,247,042.
Cepel, M., Stasiukynas, A., Kotaskova, A. and Dvorsky, J., 2018. Business environment quality
index in the SME segment. Journal of Competitiveness. 10(2). p.21.
Kozubikova, L., Homolka, L. and Kristalas, D., 2017. The effect of business environment and
entrepreneurs’ gender on perception of financial risk in the smes sector. Journal of
Competitiveness. 9(1).
Eling, M. and Schaper, P., 2017. Under pressure: how the business environment affects
productivity and efficiency of European life insurance companies. European Journal of
Operational Research. 258(3). pp.1082-1094.
Gaganis, C., Pasiouras, F. and Voulgari, F., 2019. Culture, business environment and SMEs'
profitability: Evidence from European Countries. Economic Modelling. 78. pp.275-292.
Almalki, M., Al-fleit, S. and Zafar, A., 2017. Challenges in Implementation of Information
System Strategies in Saudi Business Environment: A Case Study of a Bank. International
Journal of Computer Trends and Technology. 43(1). p.60.
Calabrese, M., Iandolo, F., Caputo, F. and Sarno, D., 2018. From mechanical to cognitive view:
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Perspective (pp. 223-240). Springer, Cham.
Komljenovic, D., Loiselle, G. and Kumral, M., 2017. Organization: A new focus on mine safety
improvement in a complex operational and business environment. International Journal of
Mining Science and Technology. 27(4). pp.617-625.
Lee, I. ed., 2017. The Internet of Things in the Modern Business Environment. IGI Global.
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Hansen, M. W. and et.al., 2018. Coping with the African business environment: Enterprise
strategy in response to institutional uncertainty in Tanzania. Journal of African Business. 19(1).
pp.1-26.
Saleh, A. and Watson, R., 2017. Business excellence in a volatile, uncertain, complex and
ambiguous environment (BEVUCA). The TQM Journal.
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Müller, D. K. and Hoppstadius, F., 2017. Sami tourism at the crossroads: Globalization as a
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Mawejje, J. and Okumu, I. M., 2016. Tax evasion and the business environment in
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Rialp-Criado, A. and Komochkova, K., 2017. Innovation strategy and export intensity of Chinese
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Virglerová, Z. and et.al., 2017. Key determinants of the quality of business environment of
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Fabus, M., 2018. BUSINESS ENVIRONMENT ANALYSIS BASED ON THE GLOBAL
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