Business Environment Report

This report analyzes the business environment of Marks and Spencer, a leading UK retailer. It explores different types of organizations, their size and scope, and various organizational structures. The report also discusses the complexities of transnational, international, and global organization structures and how different functions within Marks and Spencer relate to the company's overall mission and objectives.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Different types of organization...............................................................................................1
2. Size and Scope of an organization..........................................................................................2
3. Organization Structure and Functions.....................................................................................4
Different types of organization structure....................................................................................4
Complexities of transnational, international and global organization structure.........................5
How functions relate to overall organisation mission and objectives.........................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment is the sum up of all micro and macro factors that affect the
business in positive and negative way. The chosen firm for this report is Marks and Spencer
which is one of the top and leading retail firm in UK that provides clothes and groceries to their
customer at reasonable rates. Further, report will describe the difference between profit, non-
profit and non governmental firm with their business purpose, size and scope. Then it also
describe different organization structure and functions and how it related to overall organization's
mission and objectives.
1. Different types of organization
Differences between profit, not for profit and non-governmental organisations (NGOs) :
There are three main types of organization which are as mentioned below:
Profit organization: This is also known as private company in which the entire
ownership is in the hands of single person or an enterprise. As there is no or little involvement of
the government regarding working of private company and it is sometimes also called citizen
sector.
Purpose: The main aim of this sector is to earn profit and expand their business at further
level of success.
Example: Unilever is the private retail company in UK who offer different variety of
clothes, groceries and furniture to their customers.
Supply of goods and Services: These type of private company provides goods such as
Sole proprietor and plumbing etc.
Not for Profit organization: It is also known as public sector that is the part of an
economy which composed both public services as well as public enterprise. It is also analysed
that public enterprise are those self financing commercial enterprise which also provide different
private goods and services for a sale but it is operate on a commercial basis (Chang, 2016).
Therefore, it is not a part of private and voluntary sector and this mainly provide the services for
the welfare of public. Moreover, they are also legally distinct entities with their own assets and
liabilities.
Purpose: It main aim is to serve for the public only without earning profit and as a result,
this directly helps public.
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Example: NHS is a public limited company in UK that provides health care facilities to
their patients.
Supply of goods and Services: These includes the services such as Military and law
enforcement, roads making etc.
Non- governmental organization: It is also known as Voluntary sector or civic sector in
which is completely different from profit and non profit firms. Therefore, this organization
mainly work to create a social impact upon society and also independent from local and national
government and even it is also distinct from a profit firms as well. It has been analysed that with
a growing number of non profit firms, that mainly focused on social services and indicates for a
healthy economy of United Kingdom as well (Saleem, 2015).
Purpose: The main purpose of Non- governmental organization is to creates a social
impact rather than profit and
Example: British Red Cross Society is a non- governmental organization in UK that
helps people in crisis also provide a health and social care services as well to them.
Supply of goods and Services: These service includes the Ambulance services and
probation services.
2. Size and Scope of an organization
Micro enterprise: These are the business which operate in a very small scale. Thus, they
only grow their business when something in their lives is changed.
For example, the grocery store who sell groceries, dairy products etc.
Market share: The market share of micro enterprise is so small as compared to other
sector because UK has a stable economy which helps to provide different employment
opportunities to the people.
Profit share: As the market share of the micro enterprise is so small such that the annual
turnover cannot be exceed from 1 million Euros (Chang, 2016).
Growth and sustainability: The growth of micro business in so small and they did not
support for the sustainability as well.
Small enterprise: This is the business in which there is limited number of employees and
the flow of finance and material is also quite small. This is also supported by the government
and it is also preferential for the tax as well .
For example, small retail shops that provide clothes at low rates.
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Market share: It occupy large market share as compared to micro enterprise because in
order to start a business, owners start with small business and then develop strategy to grow its
business and succeed to further level of success.
Profit share: The market share of the small business is quite strong as compared to
micro than it also earn high profit share as compared to other such that its annual turn over rate
is up to 6 millions.
Growth and sustainability: The growth of small business is faster as compared to micro
factors because in UK generally people established small business and this also help in the
sustainability as well.
Medium size enterprise: This is an enterprise where more than 250 employees are work
and the annual turnover is not exceeding with 50 million Euros (Saleem, 2015). This company
share the great amount of profit for the growth of an economy as well.
For example, some manufacturing enterprise, service enterprise etc.
Market share: The market share of medium size enterprise in UK is quite large such that
as per statistics, there are large number of medium size business that grew every year. Thus, it
shows that market share is high.
Profit share: The market share of the medium size enterprise is quite strong and it also
share the highest part for the growth of a economy such that its annual turnover rate is more than
40 million euro.
Growth and sustainability: The growth of medium business is so fast among all and
also help in the sustainability such that, this business are follow sustainability act.
Large enterprise: This type of enterprise have more than thousands of employees and
main aim is to earn profit by analysing the needs of the customers and produce the same as well.
It also generate the highest turnover which further help in expansion of a business.
For example, TESCO and Marks & Spence.
Market share: The large enterprise share one of the highest market share in UK such
that almost all the companies are mainly establish on larger basis an due to stable economy, the
purchasing power of the customers is also high that helps to grow the large business and expand
it as well (Teece, 2018).
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Profit share: As the market share of the large enterprise is high which means that the
profit sharing is also good as compared to other sector. Such that the annual turnover of the
large enterprise is greater than 1.5 billion euros and it can be exceed up to 2 billion as well.
Growth and sustainability: The growth of large business is not so fast because it
requires lots of investment, but on the other side, it follows sustainability act that helps to
promote the environment as well.
Such that Marks and Spencer is large firm and profit organization. Its market share and
profit share is high i.e. £10.7 billion as compared to others and even it helps in the sustainability
of an environment as well.
NHS is the not for profit fir and its market share is high, even its profit share is £5.8
billion and also helps in the growth and sustainability of a business as well.
Red Cross society is work in voluntary sector and its market share is not high and the
profit share is around around 17 million.
3. Organization Structure and Functions
Different types of organization structure
Divisional Organization Structure: This structure is mainly found in large companies
which operate at wider geographic area. Using this structure, the firm can easily meet the defined
goals in more specifically manner (Different types of organizational structure, 2018). Further,
within the divisional structure, each function of the firm has its own divisions which act to
products and each division also contain necessary resources that help or support the product line.
Flat structure: This type of structure is mostly adopted by small companies and in this,
there are many levels of middle management which are eliminated. This type of structure mainly
enable the employees to make a decision quickly and independently such that it requires well
training for the employees to get involve in the decision making process. It has been analysed
that, this structure is followed by the firm of small companies because employees do not have
superiors and people who can report (Schaltegger, Hansen and Lüdeke-Freund, 2016).
Matrix Structure: In this type of structure, the organizational management have the
similar skills of people for the defined work assignment and as a result, there are more than one
manager to report. It is also known as functional structure and mainly used in Multinational
companies. Though it is considered one of the complex structure but it helps in achieving the
ultimate goals of a firm.
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Hierarchical structure:It is one of the most popular organization structure in which the
employees have cleared supervision and it is another way to structure an organization by using
different levels of authority. If the firm uses this structure then it helps to provide different
opportunities of promotion which motivate the employees and raise their production level as
well.
Among all, Marks and Spencer uses divisional organization structure in which every
functions of a firm have their own roles and responsibilities. Even managers also delegate the
task to their employees so that easily attain the firms objectives.
Complexities of transnational, international and global organization structure
Complexities of transnational: The transnational company are much complex
organization such that they have invested in foreign operations. Even the transnational strategy
also differ from others and faces some complexities such as tax competition, which is one the
biggest problem and to compete it, the company should improved the infrastructure, so that it
will be helpful to be more attractive to foreign investment. Apart from this, political instability is
another major issue that affect the business when follow the transnational strategy (Jaakkola and
et.al., 2016) . It is so because it directly increases the rate of products and also increases the risk
of doing business in other country.
Complexities of International: The company have no foreign investment such that they
are basically importer and exporters. Further, international business also customize the products
and service for their local market at limited cost and the customization is generally not a priority.
This strategy is generally followed by the small manufacturer who exports to their neighbouring
countries. These company follow some issues such as compliance with foreign laws and
regulation, currency rates and world wide environmental issues as well (Laudon and Traver,
2016) . As a result, the prices of the products is increases and the purchasing power of the
customers is decline.
Complexities of global organization: A firm that use the global business strategy
operate globally as one huge domestic market. Such that Marks and Spencer also uses this
strategy where it makes a direct investment in their host countries. Even in this type of
companies, management makes all the investment decisions that are mainly achieve the
economies of scale and also responded to local market preference as well. Moreover, there are
some complexities which the global business faces such that unfamiliar culture, which is the
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biggest issue, lack of communication such that the way which a team members handling the
globalization efforts through their communication affect the business. Further, choosing a right
country is another global issue which a firm is also faces (Teece, 2018).
How functions relate to overall organisation mission and objectives
Mission: To provide the best and good quality of products to their customers at
reasonable and affordable rates.
Objectives: To raise the profit up to 5% in next 6 months
There are different functions of Marks and Spencer which are as mentioned below:
Human Resource department: This department is directly concern with employees well
being and the HR department of the firm mainly work in to recruit the best candidate for the
business who help to achieve the company's objectives and mission as well. Even the HR
department of the firm also develop or make strategies that help for a smooth functioning of a
business and also provide rewards and recognition to their employees for performing outstanding
performance. Apart from this, they also provide training sessions to their employees in order to
raise their working efficiencies and they also work for attaining the defined goals of a business.
Production Department: The production department is the main functional area which
is responsible for converting the inputs into output (Prajogo, 2016). Therefore, it also describe
the ways that helps to minimize the production cost, further it also improve the existing products
and also make sure that the quality of products is meet with the demand of the customers. As
company's mission is to provide the good quality of products to their customers therefore
production department mainly concern with quality of the products and even it also uses the
advance technology such as lean production in order to eliminate the waste and help in the
process of standardization to make sure about the quality of products.
Research and development Department: This department is mainly concern to
introducing new products and improve the existing products as well. Even in Marks and Spencer,
the R&D department continually develop new initiatives and set policy that helps to improve the
quality of manufacturing products and also determine proper and timely implementation as well.
Further, the department is also closely connected to other department of the firm so that it
monitor whether the quality of the products is actually meet with a deadlines and the company is
meet out the defined goals and objectives in well manner (Quinlan and et. al., 2019).
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Operational department: One of the most important function of Marks and Spencer that
helps to keep the business effectively and makes sure that the customers needs are fulfilled
through company's production. The department also helps in forecasting such that it also make
an estimation regarding certain events which may be occur in future. In the quoted firm, the
operational manager also supervise their employees and identify the defects and then rectify as
well. This helps to provide the best quality of products to their customers so that it directly affect
to sustain its brand image in market.
Marketing department: It plays an effective role for promoting the business and its
mission. Such that whatever new product is introduced by the business, the marketing
department develop the strategy to promote the products in market so that it helps to generate
high profit and improve the financial condition of a business (Tregear 2015). Apart from this, it
also producing marketing and promotional material that helps to keep contact with the customers
and analysing their needs as well.
It is very important to build strong relations with the each department of the organisation.
Interrelation of various functional department of the organisation are as follows:
Marketing with research and development department
The marketing department is interrelated to the research and development department.
Marketing department sets the goals and objectives market activities. In this, marketing team
take support from R&D department. On the other hand, R&D team is analysis the market with
the help of marketing needs and wants. By this both department are link to each other in
organisation.
Human resource and production department
Human resource and production department are interrelated to each other in the
organisation. Human resource department is hire the candidates of the production team with the
help of taking interview as per needs (vom Brocke, Zelt and Schmiedel, 2016). Other hand
production department sets the criteria for human resource team like education required, skills,
uses of machinery and so on. By this both human resource team and production department are
linked to each other.
Marketing with operation department
Marketing and operation department are closely related in the organisation. Operation
department is responsible for warehousing, packaging and labelling of product for market team.
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In that, marketing team sets dead line for all the activities and give idea of packaging because
with the help of packaging customers are highly attracted towards the company (Wheelen and
et.al., 2017). By this both marketing and operation department are interrelate to each other for
achieve goals and objectives of organisation.
These are the important department of the business and all are established their effective
and valuable roles in business for achieve goals and objectives of company.
CONCLUSION
By summing up above report, it has been concluded that there are three different
sector ;private, public and voluntary sector and they all have different purpose and objectives.
Further, the study also concludes that micro, small, medium and large business are also differ
from each other and medium size company have largest profit sharing as compared to others.
Further, it has been concluded that Marks and Spencer follow divisional organizational structure
and being a global firm it also faces some complexities as well. Lastly, study concluded that
organization's functions such as Human Resource, production department and operational
department interrelate with company's mission and objectives.
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REFERENCES
Books and Journals
Chang, J. F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Jaakkola, M., and et. al., 2016. Is more capability always beneficial for firm performance?
Market orientation, core business process capabilities and business environment.
Journal of Marketing Management. 32(13-14). pp.1359-1385.
Laudon, K. C. and Traver, C. G., 2016. E-commerce: business, technology, society.
Prajogo, D. I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics.171.
pp.241-249.
Quinlan, C., and et. al., 2019. Business research methods. South Western Cengage.
Saleem, S., 2015. BUSINESS ENVIRONMENT, 3/e. Pearson Education India.
Schaltegger, S., Hansen, E. G. and Lüdeke-Freund, F., 2016. Business models for sustainability:
Origins, present research, and future avenues.
Schaltegger, S., Lüdeke-Freund, F. and Hansen, E. G., 2016. Business models for sustainability:
A co-evolutionary analysis of sustainable entrepreneurship, innovation, and
transformation. Organization & Environment. 29(3). pp.264-289.
Teece, D. J., 2018. Business models and dynamic capabilities.Long Range Planning. 51(1).
pp.40-49.
Tregear, R., 2015. Business process standardization. In Handbook on Business Process
Management 2 (pp. 421-441). Springer, Berlin, Heidelberg.
vom Brocke, J., Zelt, S. and Schmiedel, T., 2016. On the role of context in business process
management. International Journal of Information Management. 36(3). pp.486-495.
Wheelen, T. L., and et. al., 2017. Strategic management and business policy(p. 55). Boston:
pearson.
Online
Different types of organizational structure. 2018. [Online]. Available through:
<https://smallbusiness.chron.com/different-types-organizational-structure-723.html>.
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