Importance of Business Environment: PEST Analysis and Porter's Five Forces Model

This presentation discusses the importance of business environment and how external factors can influence an organisation. It includes a case study of Marks and Spencer and explains the use of PEST analysis and Porter's Five Forces Model.

Business
Environment

INTRODUCTION
The business is defined as the activity which is conducted
by an individual or group of individuals in order to serve
value to the society and earn profits. It is very important for
the organisation to take care of the business environment.
The business environment is defined as the various external
factors which have an influence over the business
operations. The business environment is the activities of the
surroundings which have a direct impact. It is very essential
for the organisation to have a concern for the business
environment so that they are able to function the various
activities in an effective and efficient manner. The company
which is chosen for the report is Marks and Spencer which
is the multinational retailer company. This presentation will
include the PEST analysis and porters five forces model.

Porters five forces model
This is the model which is used by the various business organisations in order to identify its competition in the market.
Also, the five forces help in analysing the which one has the high force over the business enterprise. The various forces
of this model are explained below:
 Bargaining power of buyers - By and large, Bargaining force of purchasers is high. Buyers were either looking for
traditional attire became value delicate or looking for high picture became design touchy
 Bargaining power of suppliers- More than 90% of Marks and Spencer providers were British. M&S purchased
straightforwardly from a couple of UK providers generally their stock that they fabricate which caused a circumstance
where the provider was dependent on M&S as well as the other way around
 Threat of substitute- The substitution of the product or service would diminish clients' interest for a specific 'class'
of items since clients ready to change to the other options
 Competitive rivalry- It is possible high since there is the danger of substitute items, and providers and purchasers in
the market endeavour to control
 Threat of new entrants- It is hard for Marks and Spencer to have another contestant in its area since significant
expense of section and upkeep are required in entering the dress market

PEST ANALYSIS
This is the framework which is used to analyse the external factors which
can influence the business organisation. The various factors are explained
below:
 Political- This is the factor which is related to the extent to which the
government policies may interfere the business organisation
 Economical- This is the factor which is related to the performance of
the economy which has a direct impact on the business organisation
 Social- This is the factor which is related to the current trend in the
market can impact the business organisation
 Technological- This is the factor which is related to the innovation and
development around the world which can influence the business
organisation

Conclusion
From the above report it is conclude that business environment is the important and
concern of matter for the business organisation. From the use of the model, it is
identified that there is impact of the external factors over the business organisation
which need to be taken into consideration.

REFERENCES
 Halbert, T. and Ingulli, E., 2020. Law and ethics in the business environment.
Cengage Learning.
 Dana, L.P., 2018. African EntrepreneurshipChallenges and Opportunities for
Doing Business. Palgrave Macmillan.
 Cravo, T.A. and Piza, C., 2019. The impact of business-support services on firm
performance: a meta-analysis. Small Business Economics, 53(3), pp.753-770.