Business Environment Analysis and Risk Management

This report discusses the internal and external environment analysis for Marks and Spencer using SWOT, VRIO, PESTLE, and Porter's Five Forces models. It also identifies various business risks and suggests ways to overcome them. The report is useful for students studying business environment analysis and risk management.

Business Environment
Analysis and Risk
Management

Table of Contents
INTRODUCTION ..........................................................................................................................2
TASK...............................................................................................................................................3
1) Explain the internal environment analysis for the chosen organisation ...............................3
2) Give the external environment analysis of the business organisation....................................4
3) Identify the various business risk for the organisation and how the organisation can
overcome with the risk ...............................................................................................................7
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
The business environment is defined as the sum total of the or the collection of the
internal and external factors such as employees, customers, expectations, supply and demand,
management, clients, suppliers, innovation in technology, government interference. These are the
various factors which can influence in the operations and other activities of the business
organisation. It is very essential for the business organisation to adhere to the factors in order to
achieve the organisational goals and objectives. In this report the organisation which is taken into
consideration is Marks and Spencer which is the British multinational retailer. It is headquartered
in London, England. The company is specialised in selling clothing, food products, home
products etc. the organisation was established in 1884 by Michael Marks and Thomas Spencer.
(Halbert, and Ingulli, 2020). This report will include the various topic such as internal
environment analysis by sing SWOT and VRIO model, external environment analysis by using
the PESTLE and Porters five forces model and at last identifying the various business risk and
how the organisation overcome the risk.
TASK
1) Explain the internal environment analysis for the chosen organisation
The internal environment analysis is based within the organisation. This can be evaluated
by using the various models. Here is the use of the two models which can help in analysing the
internal factors which can influence the business organisation and its operations(Hillary, ed.,
2017)
SWOT Analysis
It is a tool which is used by the various business organisation in order t identity the
internal strength and weakness of the organisation. Also this helps in identifying the various
external opportunities and threats for the business enterprise. The swot analysis is been discussed
in context of the Marks and Spencer:

STRENGTHS WEAKNESSES
 Brand image- As the organisation is
offering the high end value products
which target the premium customers.
This creates the brand image of the
organisation and the company is known
for offering the stylish clothes which
can increase in the status of the people
of wearing the branded clothes.(Dana,
2018)
 Multinational presence- As the
company has both online and offline
stores and it is globally expanded. This
is the known company for the people.
 Customer satisfaction- In many stores
the customer were not satisfied with the
experience they were having in the
store. This resulted in the poor
customer satisfaction and and increase
in the brand switching for the
customers.
 Supply chain scalability- this is one of
the weakest of the organisation where it
has the poor scalability of the supply
chain. As it is expanded globally it has
the poor supply chain management
which has impacted the organisation.
OPPORTUNITIES THREATS
 New segments- the company has the
opportunity of expanded its business to
the new segments and target new
customers.
 Online store- The organisation can
expand its business by focusing on the
online stores and the availability of the
online products so that it can reach
more of the customers.
 Competition- The main competitors of
the Marks and Spencer are Uniqlo,
GAP, ZARA etc.

VRIO analysis
It is the analytical technique which is used by the business organisation for the evaluation
of the business organisations resources and the competitive advantages. This includes the various
elements which is discussed below:
 Value: The resources adds value to the firm only when there are exploitation
opportunities and a threat to mitigate in the internal and external environment. The
competitive parity of the organization gives an advantage to the company to outperform
and increase the goodwill in the market unlike their competitors. Marks and Spencer has
various resources which help in increase in the productivity(Ma,, 2020)
 Rare: Resources that can be acquired by some or few companies are considered rare. The
strategic competencies that are rare in nature helps in building competitive advantage.
The brand image of the Marks and Spencer is considered as the rarity resources in the
market.
 Inimitable: Precious and scarce resources helps business to adopt strategies that other
firms cannot pursue. However, there is no abundance of long-term competitiveness.
Those resources are going to give a major competitive advantage but the competitors
probably try to imitate those resources which are challenging. The patents and copyright
of the Marks and Spencer is the imitable resource as it cannot be taken over by the other
organisation.
 Organisation: To provide a sustainable competitive advantage, it is very important to
use the resources the best possible way, giving the minimum cost. The high manpower is
the resource of the company which is considered as an organised and helps the company
to achieve its goals and objectives(Furr,, Nel, and Ramsoy, 2018)
2) Give the external environment analysis of the business organisation
The external environment analysis can be conducted using the various model such as
pestle and porters five forces. This helps in analysing the external factors which can influence in
the operations of the business organisation. The two models is explained below in context of
Marks and Spencer:
PESTLE ANALYSIS

This is the tool which is used by the various business organisation in order to identify the
various eternal forces which can influence in the operations of the business organisation. This is
an important tool for the organisation in order to achieve the desired goal of the business
enterprise. The various factors are discussed below;
 Political- This is the factors related to the extent to which the government policies may
interfere in the operations of the business organisation. Such factors include trade policy,
trade barriers, trade restrictions etc. it is been identified that the Brexit move have
impacted the company has the export of the products were abided which resulted in the
negative impact for the Marks and Spencer(Elkington, Burke, and Hailes, 2017)
 Economical- These are the factors which are related to the direct economic performance
which can impact the operations of the business enterprise. Such factors include the
inflation rate, growth rate etc. The impact of the pandemic effected the company as there
w3as rise in the prices of the products and services which was not affordable by the
people because of the pandemic and resulted in the decline in the purchase of the
premium products.
 Social- This is the factor which helps the marketers in identifying the social and the
current trend in the market. Such factors include change in the lifestyle, behaviour,
attitude etc. It is very essential for the Marks and Spencer that it follows the current trend
in the market which can help the organisations to meet the expectations of the customers.
 Technological- This is related to the innovation and development across the world can
impact the business organisation. Such factors include research and development,
digitalisation, artificial intelligence etc. it is important for the organisation to use the
latest technology for the ease of the customers. The Marks and Spencer can adept the self
check in and out so that the customers do not have to stand in line for the long
hours(Aula, and Mantere, 2020)
 Legal- This is related to the certain laws which needed to be followed by the
organisation. As in case if the laws are been not followed than the government
interference can impact the business organisation. Such factors include the employment
safety laws, labour laws etc. It is important for the Marks and Spencer to abide to the
employment safety laws by taking the various measure so that the employees are not
getting any harmful effect with the use of the machinery.

 Environmental- This is related to the factors which can impact the surroundings of the
world. Such factors include sustainable development, climatic changes, natural disaster
etc. it is important for the Marks and Spencer to take initiative in the sustainable
development by producing the products which are made of the natural products such as
khadi clothes.(Melly, and Hanrahan, 2020)
Porters five forces
This is the model which is used by the business organisations in order to find out the
impact of the various external factors. This is the most common model which is used in order to
keep the competitive advantage for the company. The various factors which are included in this
model are discussed below:
 Competition in the industry- This is the force which is defined as the number of
competitors in the industry. It is identified that if there is the large number of the
competitors, the lesser ids the power of the business organisation. It is very important for
the Marks and Spencer to produce the sustainable differentiation the products and
services so that it helps in reducing the power of the competitors.
 Potential of the new entrants-The power of the business organisation is also affected by
the new entry of the business organisation. Here the Marks and Spencer has high power
in the case of the new entrants because it is the well known organisation and the new
entrants cannot take the market of the organisation(Sakhel, 2017)
 Bargaining power of suppliers- This means that as there are number of suppliers and
how they can drive into up the cost of the inputs. It is affected by the material provided
by the supplier is of good quality. But here the power is the suppliers is low as the
organisation can switch to the different supplier so in this case the supplier power is low
as they need to sell their product to such organisations.
 Bargaining power of buyers- This is the ability of the customers to lower the prices of
the products or services. It is depended on the quality of the products provided by the
business organisation. In the content of the Marks and Spencer the bargaining power of
the customers is moderate because of its exclusive products also the organisation can
innovate products in order to keep it low.
 Threats of substitute- This is related to the substitute in which the products and services
can be replaced with the substitute products. Here in this case the the Marks and Spencer

has the high threat of the substitute products because of its high prices in order to reduce
it the organisation can be service oriented rather than just product oriented.
3) Identify the various business risk for the organisation and how the organisation can overcome
with the risk
There are several business risk involved in any organisation. Without risk no business
enterprise can be successful. It is important that how the managers are able to manage those risk.
The several risk in context of the Marks and Spencer is discussed below:
 Financial risk- There is the risk of the credit extended to the customers which can lead to
the financial risk for the business organisation. In this case the organisation can be in the
loss. This type of risk can be also related to when the organisation invest in the wrong
projects which is not giving the profit to the business enterprise.
 Operational risk- This type of risk can be arise within the corporation, this type of risk
can be at the time of the operation management where the organisation is not able to
perform the various activities on the right time. There is the risk of the management of
the activities where the organisation can face loss(Manners-Bell, 2017).
Reputation risk- it is been identified that if the organisation faces any legal issues which can
lead to the reputation risk for the business organisation. The poor quality of the products is at
times related to this type of risk.
 Competitors- The business organisation has a risk of its competitors where there is a lot
of competition in the market and there is the risk of the loss of the customers.
 Strategic risk- the business organisation have a strategic risk if the business enterprises
is not working according to the strategic plan or the use of the various model which can
lead to the non effective planning of the business organisation. This can lead into the loss
of the customers.
The various in which the organisation can overcome to the risk: It is been suggested that the
Marks and Spencer can use the various ways in which it can over come with the business risk
some of them are discussed below:

 The business organisation can have a strategic planning and use the appropriate model so
that it can have a competitive advantage and the strategy to attract customers.
 It is important for the business organisation that it managers its financial resources
properly and investigate properly in order to invest at the right place and at the right time
to avoid the risk of the financial management.
 In order to avoid the risk of the competitors the company can focus on the both product
and service development by using the latest technology which can help in attracting
customers and also can give the competitive advantage to the business organisation.
(Watson and Andrews, 2018).
CONCLUSION
From the above report it is concluded that the business environment is related to the
different external factors which can impact the business organisation and its operations. Ity is
very important for the Marks and Spencer that bit analyses the various factors which can impact
the organisation. The company can evaluate using the different model. The internal factors can
be identified through the swot analysis and Vrio analysis which depicts that the organisation has
various opportunities t expand its business . The pestle analysis suggests that it is important for
the organisation to follow the strict guidelines after the pandemic for the safety of the customers
and staff member. It is also observed that the use of the latest technology can help the
organisation in the various ways. There are various business risk such as strategic, financial,
competitors risk. It is important for the Marks and Spencer to overcome such risk in order t
perform various activities and achieve the organisational goals.

REFERENCES
Books and Journals
Aula, P. and Mantere, S., 2020. Strategic reputation management: Towards a company of good.
Routledge.
Dana, L.P., 2018. African EntrepreneurshipChallenges and Opportunities for Doing Business.
Palgrave Macmillan.
Elkington, J., Burke, T. and Hailes, J., 2017. Green pages: the business of saving the world.
Routledge.
Furr, N., Nel, K. and Ramsoy, T.Z., 2018. Leading transformation: how to take charge of your
company's future. Harvard Business Press.
Halbert, T. and Ingulli, E., 2020. Law and ethics in the business environment. Cengage
Learning.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Ma, S., 2020. Economics of maritime business. Routledge.
Manners-Bell, J., 2017. Supply chain risk management: understanding emerging threats to
global supply chains. Kogan Page Publishers.
Melly, D. and Hanrahan, J., 2020. Tourism biosecurity risk management and planning: an
international comparative analysis and implications for Ireland. Tourism Review.
Sakhel, A., 2017. Corporate climate risk management: Are European companies
prepared?. Journal of Cleaner Production, 165, pp.103-118.
Watson, L. and Andrews, L., 2018. The effect of a Trauma Risk Management (TRiM) program
on stigma and barriers to help-seeking in the police. International journal of stress
management, 25(4), p.348.