Analyzing the Business Environment of Marks and Spencer

This report analyzes the business environment of Marks and Spencer using PEST analysis and Porter's five forces model. It identifies the factors that have a great impact on the business activities of the company and provides insights into the competition level in the industry. The report also discusses the impact of Covid-19 pandemic on the company's strategies and actions.

Business
Environment

Table of Contents
• Introduction
• PEST analysis
• Porters five forces model
• Conclusion
• References

INTRODUCTION
A business environment analyse the strategies and actions
of the competitors so that a firm can get the competitive
advantage. In this report, Marks and Spencer is taken into
consideration, which is a UK based public limited
company headquartered in London. It involves in the
business of selling food products, clothing and home
products.

PEST analysis
It is the way to identify the factors which have a great impact on the business activities to get the
clear understanding of the situation. With reference to Mark and Spencer, the identification of the
factors has been done which are depicted as under:
• Political factors: This factor refers to the involvement of a government that may have
influence on particular industry or company. This may include tax policies, trade restrictions,
reforms, tariffs, political stability and so on. In relation to M&S, free trade policies have been a
good benefit because it enables a company to open its stores across the world. But due to
Covid 19 pandemic, it has to complied with the restrictions and policies of government so that
it can protect its business from being restricted.

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• Economical factor: This refers to the economic growth of a firm and its profitability which
may involves the interest rates, exchange rates, inflation, wages rates and so on. In context
to M&S, the purchasing power of the customers have been hit after the pandemic. This
result in decreasing of sale and revenues of a company due to the lock down prevailing
everywhere.

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• Social factor: This factor is related to the behaviour and demand of the consumer that
include cultural norms and expectations, health consciousness, safety and so on. This
help the marketer to understand the needs of to customers and provide them goods
according to their preferences. With reference to M&S, people become more conscious
about their health and safety after such pandemic. This increased the demand for the
products which are safe for the people and environment as well.

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Technological factor: This factor refers to the innovation, automation, research and
development which may affect an organisation. A company bring new technologies to
increase its market share and profitability. In context to M&S, so after the pandemic,
company uses social media platform to promote its technologies which help in attracting the
customers.

Porters five forces model
This model is developed by the Michael porter to assist the business executive to understand the
competition level in the industry. In relation to M&S, the description is given below:
• Competition on the industry: It refers to the competitors present in the industry with the
number of the equivalent products and services. With reference to M&S, it has many competitors
in the industry like ASDA, ALDI and so on that have loyal customers. So, it is difficult for the
company to force the customers to switch for its products, therefore a company needs to analyse
its suppliers and customers and develop some strategies to increase its market share.

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• Potential of a new entrants into the industry: A business of a firm can be affected by a new
entrant in the market. But M&S is a well known brand which provides premium quality products
so it not possible for new business to enter into this market. Since it has huge capital investment to
achieve cost effectiveness and economies of scale so there is entry barrier.
• Power of supplier: It refers to the cost of the inputs of good and services that the suppliers sell to
a business concern. In context to M&S, the profit margin of a company can be impacted as the
price of the finished good are determined according to the raw material sold by the suppliers.

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• Power of buyer: This refers to the power of negotiation for lower prices and better deal by the
customers. In relation to M&S, customer ha many alternative to buy the products so a company
has to provide the products at lower prices with good quality to overcome the competitors.
• Threat of substitute products: the substitutes products provide more opportunity to the customers
on the basis of the quality and prices. In relation to M&S, there is high competition on the
industry so the buyer always go for quality and low price products. So, it need to develop
strategies of providing great quality products.

Conclusion
From the above discussion, it has been concluded that it is very crucial for an organization to
identify external factors so that it may remain aware from the future uncertainty. Here the pest
analysis has been done to know the factors which may impact the business of Mark and
Spencer after Covid 19 pandemic. The competitor’s analysis has also been done through porters
five force model to know the competition level in the industry.

References
• de Sousa, G.C. and Castañeda-Ayarza, J.A., 2022. PESTEL analysis and the macro-environmental
factors that influence the development of the electric and hybrid vehicles industry in Brazil. Case
Studies on Transport Policy.
• Sigcha, E., Martinez-Moscoso, A., Siguenza-Guzman, L. and Jadan, D., 2020, July. PESTEL Analysis
as a Baseline to Support Decision-Making in the Local Textile Industry. In International Conference on
Systems and Information Sciences (pp. 144-156). Springer, Cham.
• Wellner, S. and Lakotta, J., 2020. Porter's Five Forces in the German railway industry. Journal of Rail
Transport Planning & Management, 14, p.100181.
• Phillips, P. and Moutinho, L., 2018. Contemporary issues in strategic management. Routledge.

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