Business Environment Analysis of Mark and Spencer

This report analyses the business environment of Mark and Spencer using various models such as SWOT, PESTEL, VRIO, and Porter's five forces. It also identifies various business risks and provides an action plan to manage them.

Business Environment
Analysis

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Internal environment analysis of the chosen company with using conceptual model................3
External environment analysis of the chosen company with using conceptual model...............5
Undertake assessment of your chosen company, identify business risks and prepare an action
plan showing how could these risks be managed........................................................................8
CONCLUTION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business element basically related to those elements which effects the operational
activities, services and performance of the organization in both internal and external way. It
includes suppliers, government norms, competitors, consumers and so on. The company which is
finally selected for analysing the business environment and their risk are Mark and Spencer.
Mark and Spencer is a biggest retail based organization and is headquartered in UK (Ali, and
Anwar, 2021). The company was founded in 1884 and the management of Mark and Spencer are
dealing in some specific product line which includes clothing and food products. But the main
purpose of organization is to facilitate good quality products to consumers at wide range. Due to
this the revenue of this organization are increased at higher rate in long run. This report will be
prepared with help of using various methods which includes PESTEL, SWOT and VRIO model.
This report will also explained the specific action plan which is initiated by the management for
reducing the various types of problems which was facing in their operational activities.
TASK
Internal environment analysis of the chosen company with using conceptual model
SWOT Analysis -
It basically refers to the planning method which is utilized by firm for analysing the
different types of scenario which was developed by employees. Therefore the management of
Mark and Spencer used this tool for identifying their strength, weakness, threat and opportunities
which are described below -
Strength includes -
 Brand image – It means that Mark and Spencer always provides good quality product to
old and new customer's in type of situation (Amankwah-Amoah, and Wang, 2019). Due
to their wide range of products and services communications are effectively maintained
with all categories of customers smoothly.
 International company – Mark and Spencer is one of those company who deliver their
products and services to customers at international level. Due to this management
expanded their services in both online and offline modes in large number. It includes
Europe, Middle East and Asia.
Weakness includes -

 Declining of sale – It means that Mark and Spencer did not effective distribution channel
which creates negative impact on the sale of their product and performance. Because due
to ineffective distribution channel customers are not received their ordered product in
right time at right location.
 Increasing cost – The biggest disadvantage of Mark and Spencer is that focusing on
upper and middle class customer's because in their product prices are very high
(Bhatnagar and Sinha, 2018). Due to using this strategy their customers are limited in
number for buying the product.
Opportunities includes -
 Expansion of company – It means that due to their world wide activities Mark and
Spencer launched their new shops in other locations for increasing their popularity. It
includes Poland, India, Russia and Brazil and in this way their market are increased at
large level.
 Efficient use of technology – It means that Mark and Spencer is one of those company
who used different types of e commerce platforms for increasing the sale of their product.
With help of this facility company easily position their image in market for long time.
Threat includes -
 Increase in competition – It means that in today's time competition are very high in
retail sector due to other competitors. Competitor includes TESCO, ASDA, Sainsbury
etc. Because these type of competitors are also facilitating the same product to all
customer segment. This create threat to company company's growth in long run.
 Deep effect of COVID 19 – It means in COVID situation Mark and Spencer faced
various types of problems for providing effective service to users (Božič, and Dimovski,
2019). Because at that time government initiated lock down for increasing the safety of
public. But in this strategy the supply chain of the organization are totally disturbed
which creates negative impact in the minds of customers for their services.
VRIO Analysis -
It is a technique which is followed by the organization for evaluating their resources and
competitive advantage effectively. VRIO stands for valuable, rare, imitable and organized and
with help of all these elements portfolio of organization are easily increased in time

Ability and
Resources
Valuable Rare Imitable Organised
Employees Yes Yes Yes Yes
Financial
Resource
Yes Yes No Yes
Worldwide
presence
Yes Yes Yes
No
Patents Yes No No Yes
 Valuable – It means that organization mostly focused on those factors which is highly
valuable for increasing their profit in smooth manner (Dabo, and Ndan, 2018). It includes
worldwide presence, patents and financial resources.
 Rare – It is related to those factors which are used rarely by the Mark and Spencer for
achieving competitive advantage easily. It includes financial resources, employees and
worldwide presence.
 Imitable – It refers to those factors which is used by organization for engaging various
types of functions systematically. It includes employees and worldwide presence.
 Organized – It means that managing the whole activities of organization in systematic
manner (Helfaya, Kotb and Hanafi, 2018). The factors which are considered for
managing whole organization effectively are patents and employees.
External environment analysis of the chosen company with using conceptual model
PESTEL Analysis -
It refers to those factors which is used by Mark and Spencer for evaluating the outside
factors which are responsible for effecting their performance in long run. But the fact is that this
type of factors are definitely not controllable for the organization and are explained below -
 Political – It refers to those elements which impact the organization in political manner
which includes effective policies, taxation system and regulations and rules. In context
Mark and Spencer, it is necessary for management that they sincerely follow rules and

policies of UK government. Because with help of applying these policies quality service
are easily provided to users effectively. It also helps to build good relationship between
producer and customer are maintained in long run.
 Economical – It is related to those components which effects the company's performance
economically (Higgins-Desbiolles and Monga, 2021). It includes salaries of employees,
interest rates, government activities and so on. In context Mark and Spencer,
management established effective infrastructure through digital platforms or in their
store. In this strategy convenience are easily enhanced for build effective coordination
between customer and employee in long run.
 Social – It is a set of activities which influence the changes in people behaviour, desire
and their attitude. It includes culture and subculture, families, social class groups etc. In
context Mark and Spencer, management analysed the current trend and culture of person
and location effectively. Then after the effective analysis management distribute their
products and services into various segments. Due to using this method services are
purchased by the customers in large number.
 Technological – It means the utilization of different types of equipments within the
organization for increasing the employee productivity (Kohli and Melville, 2019). Due to
effective utilization equipments products and services are delivered to users in time. In
context Mark and Spencer, management used various types of E commerce platforms
such as official portals or the apps for displaying their product easily. The biggest benefit
of this method is consumers are easily attracted for buying the product at low time.
 Environmental – It refers to that type of factors which effects the company in natural
manner. It includes shortage of finished and unfinished goods, temperature, food and so
on. In context Mark and Spencer, used the green policy for producing and selling the
product. In this policy company used the recyclable and reusable material for packing
their product. In their packing various various colour and stylish packaging are used for
maintaining the unique identity of organization in their product. This type of identity are
also essential for increasing their popularity in minds of customers.
 Legal – It refers to rules and norms of government which impact the performance and
activities of Mark and Spencer in legal way. Due to the use of legal norms misconduct
activities from the employees are easily decreased at high rate. In context Mark and

Spencer, it is necessary for management that they must follow safety standards and rules
of government which was initiated for employees. Because when the safety standards are
effectively organized then only employees are able do their work with full potentiality. It
leads to enhance the productivity of company at high rate.
Porter's five forces model with respect to Marks and Spencer
This model tries to study the structure of the organization in order to understand and
analyse the company's position in the competitive market by also understanding its position in
the industrial sector. It helps in evaluating and identifying the effect that the five forces have and
those are the rivalry among the competitions, the power of supplier, buyer power, threat that the
substitutes pose and the threat of new entries. The following have been explained below:
 Bargaining power of supplier- A supplier is very essential for a business because it is
the one who supplies basic raw materials to the company so that they can manufacture
and develop final products which can be sold in the market. It basically explains the force
or pressure that suppliers can put on the buyers emphasizing the power of supplier
(Kwon, Lee and Hong, 2019). With respect to M&S, Suppliers don't have this power
because the company cannot be forced to increase its rates unless there is a discussion
among them. This is due to the fact that the company has a range of suppliers to provide
them with raw materials.
 Bargaining power of Buyer- Buyers enjoy the products of the company by purchasing
them and using them. This force specifically examines the power of buyers and their
effect on the quality and price of products. In context of M&S, the buyers have the power
to choose products from different company and brand in relation to fashion if they are not
satisfied with the product of this brand. To overcome this, they should create products
and provide service which can give the buyer the bargaining power so that they do no
lose on their competition.
 Competition Rivalry- This force helps to analyse the competitions and rivalry that are
present in the industry because tough competitions can create downfall in profit margins
of the company. With respect to M&S company, it works in competitive fashion products
which is not beneficial in ensuring long term profits. This can be overcome by
collaborations with the market competitors so that cheaper products can be made which
can also increase the market size.

 Threat of new entries- A long established company can face threat by a new company
which is selling similar products and giving offers on it. This force analyses the threat
that these new entrants pose to a current company. In case of M&S, new entrants selling
fashionable products with discounts can be threat as consumers switch brands. Thus, it
should focus on selling its products with offers so that customers remain loyal.
 Threat of Substitutes- Companies face threat when they have chances of getting
replaced by the substitute and alternate products that are present in the market. In case of
M&S, there are a lot of brands in the market which operate selling similar fashion
products (Ponsignon, Kleinhans and Bressolles, 2019). To overcome this, the company
should provide products with good quality and should focus on customer demand so that
they get satisfied with their products.
Thus this model helps to get an insight of the business environment and the competitions present
in the market.
Undertake assessment of your chosen company, identify business risks and prepare an action
plan showing how could these risks be managed
The risks of the business and how they managed
There lies the various number of risks with respect to the company, which here is Mark's and
Spencer. Some of the major risks are as follows-
Security and fraud risk, where there lies the concern of hacking of the information of
business with the more and more use of online platform by its customers. This can further also
make an impact on the brand value of the company (Salamanca and Alcaraz, 2019)Vx. So for the
M &S can take the measures such as application of fraud detection tools, by paying more focus
on security solution and also while guiding the customers and employees for the manner in
which the detection of potentials issues can be done.
Compliance risk, every company is bound to comply with the number of legislations as
the non compliance of the same can result in major penalties and fines on the part of it.
Therefore, the company, M&S by being vigilant and conscious can track the existing
compliances. Also the company can manage this risk with the regular assessing of the
government policies while seeking the assistance from specialized consultants.
Economic risk, where with the continuous fluctuation in the markets economy of the
country tends to change. It can face both the negative which is sales can be reduced and positive

as booming in purchasing environment. So in order to identify the economic downturn one needs
to identify the changing trends. The said by the M&S can be very well managed by saving the
maximum possible amount of cash flows and by operating with a lean budget as a part of
business plan.
Financial risk, where the interest rate fluctuation and the high number of credit rate to
customers can increase the burden on company (aradarajan, 2020). This particular risk can be
minimized by the M&S company by making certain required adjustments in the business plan of
the company which can avoid the situation of unexpected losses.
Competition risk, every business faces the risk of competitors as there lies the number
of substitute goods in the the market. So the said company which is Marks and Spencer's, can
avoid the same while availing the more quality products to the customers and also while giving
great offers to them. This action can help in retaining the customers to the company rather than
switching to the others.

CONCLUTION
From the above report it can be concluded that one of the major aspect which is essential for any
business is the analysis of its organizational environment. With respect to Marks and Spencer
company, proper understanding of SWOT and PESTLE model will prove to be helpful in
understanding what factors influence its internal and external environment so that employees
work towards making the organization successful by building positive relations. They can also
improve work efficiency. A company also faces business risk which can be understood with the
help of porters five forces model. This can help in improving and overcoming these risks and
managing them efficiently.

REFERENCES
Books and Journals
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