Business Environment Analysis and Risk Management

This report analyses the internal and external environment of Marks and Spencer, identifies business risks, and prepares an action plan to manage them. It includes VRIO framework, SWOT analysis, PESTEL analysis, and risk assessment.

Business Environment
Analysis and Risk
Management

Table of Contents
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
An internal environment analysis...........................................................................................3
An external environment........................................................................................................6
Undertake a risk assessment, identify business risks and prepare an action plan showing
how these risks could be managed.........................................................................................8
CONCLUSION........................................................................................................................10
REFERENCES.........................................................................................................................11
Books and Journals:.............................................................................................................11

INTRODUCTION
This report aims to analysing internal and external environment of business with the
help of using conceptual models. It will also include risk assessment and management of the
company. Today's business environment is becoming very complex and competitive in nature
(Möller, Nenonen and Storbacka, 2020). In addition to this, competition is also increasing
and the main reason of this is globalisation. Due to globalisation, the business environment is
becoming more dynamic as it includes many other organisations from different nations. In
this respect, Marks and Spencer will be undertaking in order to identify and analyse the
business environment which impacts on the organisation performances of company. Marks
and Spencer is found to be a British multinational retailer that deals in selling home products,
clothing and food. The headquartered of Marks and Spencer is situated in London, England.
Currently in May 2021, it is announced by company that they are close and other 30 shops
over the next 10 years as it is the part of its turnaround plan.
MAIN BODY
An internal environment analysis
The success is depending on strong behaviour of internal environment of any
organisation. It is identified that internal environment plays a very important role in the
organisation as it helps in understanding that what are the strengths and weakness of
company which is the main reason for their success and failure (Cepel and et.al., 2019). If
company is able to know the strengths and weakness of internal environment then they are
able to take right decisions which are really helpful for their success and growth. For that
purpose, Marks and Spencer use two different conceptual models that help them to analyse
the internal environment of business. It includes VRIO framework and SWOT analysis
model. Both are important for the purpose of analysing internal environment. The explanation
of each framework is mentioned below:
VRIO analysis
It is a framework which is used by Organisation in order to assess internal
environment of company. It is a tool that looks organisational internal resources and then
categorise them accordingly on the basis of overall value which they contribute in the
company (Nudurupati, Garengo and Bititci, 2021). This tool allows an organisation in order

to identify the areas which are responsible for gaining competitive advantage and also
promoting development of consistency that will turn into sustainable competitive advantage.
VRIO analysis framework of Marks and Spencer is mentioned below:
Resources Value Rare Imitable Organization
Alignment of
Activities with
corporate
strategy
Yes Yes No Yes
Global and
Local Presence
Yes Yes Yes Yes
Customer
Community
Yes Yes No No
Financial
Resources
Yes Yes No Yes
 Value: It is found that global and local presence of Marks and Spencer is valuable
because of the diversification of revenue streams. That means company has varieties
of products and services which increases the revenue source and have an isolate
companies balance sheet from economic cycle (Belas and et.al., 2019). It is also found
at customer community of Marks and Spencer is also valuable for them as it is the
main motive of every organisation that they have loyal customers.
 Rare: It is found that customers can be considered as rare as it becomes very tough for
organisation to build a special relationship with their customers and this work is
effectively done by Marks and Spencer. But in the case of aligning activities with the
plan of Marks and Spencer not be considered rare. It is also identified that financial
resources of company is rare for them.
 Imitation: Global and local presence of company can be imitated by competitors. But
in the case of alignment of activities with corporate strategy of company cannot easily
imitated as each and every firm has its own strategy (Hrechyshkina and Samakhavets,
2019). Financial resources cannot be easily imitated as it requires time and success.

 Organisation: It is found that global and local presence of organisation is one of the
most important resources which provide the strong competitive advantage. The reason
behind this is Marks and Spencer is found to be one of the most diversified companies
in its industry. The products and services of an organisation has properly organised
which provides them competitive advantage in the market.
SWOT analysis
SWOT analysis is found to be an important model which is used for the purpose of
analysing internal environment of organisation (Hamilton and Webster, 2018). It includes
strength, weakness, opportunity and threats. SWOT analysis of Marks and Spencer is
mentioned below:
Strengths Weaknesses
 Marks and Spencer is found to be
well experienced company in the
market as it is one of the leading
retail businesses in UK. Company
has a reputation of providing
quality products to their customers
in the market and it is identified
that Marks and Spencer is found to
be recognised brand and it is the
second most popular supermarket
in UK.
 It is also identified that Marks and
Spencer is offering a variety of
products to their customers.
 It is found that Marks and Spencer is
identify they are declining their sales
by the end of 2019. The reason
behind this is non availability of
products and poor supply chain
system.
 It is found that company is relying on
manual operations. Due to this, it is
identified that it consumes a lot of
time and cost.
Opportunities Threats
 Marks and Spencer is found to be a
multinational brand that run their
business not only in one country
but in many countries such as
Russia, India, Brazil, Indonesia and
 Every day the competition is
increasing which becomes very tough
for organisation to beat the
competition.

Poland. So they have high chances
to expand their business in Asian
countries.
 It is identified that Marks and
Spencer has many stores online as
well as offline and due to the set
covers a lot of customer segment. It
is found that Marks and Spencer is
found to be the world's leading
online retail organisation.
 Rely on only one strategy is
becoming a threat for organisation as
it reduces the chances of success and
growth.
From the analysis of internal environment, it is analysed that Marks and Spencer is
the leading organisation and UK which have many possible risk because of threats that are
identified with the help of SWOT analysis (Krajnakova, Navickas and Kontautienė, 2018). It
is also found that Marks and Spencer is the second most popular supermarket that runs their
business very well in online stores. Due to this, they can beat the competition as well as many
threats. It is necessary for Marks and Spencer to change their strategy time by time and
according to the situation so that they cannot stuck at one position.
An external environment
Analysis of external environment is very important for organisation as it is identified
in the business environment that there are many factors which influence on organisational
performance. For that reason, analysis of external environment is becoming crucial for Marks
and Spencer and this is the main reason that they used PESTEL analysis model. It is the
framework which consists of 6 important factors that influence on organisational
performances. The description is mentioned below:
Political factor
It is identified that Marks and Spencer is a multinational organisation that run in many
countries and that's why it is found that political factors provided a great impact on Marks
and Spencer. It is crucial for organisation that they need to understand the impact of political
factors on organisation (Bejtkovský, Rózsa and Mulyaningsih, 2018). It is identified that
there is one of the most positive aspect of today is politics is free trade. With the help of these

political factors, Marks and Spencer is able to trade not only in one country but also in many
countries. On the other hand, Brexit is found to be a political factors in which UK is
separated from European Union and it provides a huge impact on operations of Marks and
Spencer. It is identified that there may be a loss of numerous free trade policies with
European suppliers due to Brexit.
Economic factors
In the economic factor it is found that economy of country is declining due to covid-
19. It becomes crucial for organisation that they need to take correct steps in order to deal
with economic declining situations. In addition to this, economic factor also include inflation
rate, interest rate and exchange rate. Any changes in these rates provided an impact on prices
of products and services of Marks and Spencer. Currently it is found that Marks and Spencer
stores provide a low market price so that they can retain a premium status in the market. It is
also identified that majority of population in UK is referring local retail stores rather than
premium products of Marks and Spencer and because of that it becomes a threat for
organisation success.
Social factors
Every day the taste and preferences of customers is changing which becomes a threat
for organisation as they need to do more research in the market as well as it is important for
them to innovate their products and services regularly (Kozubikova and et.al., 2019). In the
case of Marks and Spencer, it is found in the latest generation that majority of customers are
left from company as they want to get products with minimum prices.
Technological factors
Technology is one of the important constant features which is necessary for
organisation to understand the importance as it becomes the reason for change in the
company. It is found that Marks and Spencer introduced multiple self checkout stores as they
know the importance of use of artificial intelligence. This is the main reason that still they are
running their business in an effective way.
Legal factors
It is identified that Marks and Spencer found to be involved in multiple legal disputes
and because of that it becomes hard for brand to hold its image in the market. One example of

legal dispute is Fascati landlord and this is the main reason that company needs to comply all
the rules and regulation.
Environmental factors
It is the responsibility of Marks and Spencer that they should promote sustainable
development as their products provided many environmental effects. It is identified that
company is promoting as a luxury brand and because of that they are highly concerned about
environment. In order to combat with the environmental harms, they are promoting concept
of sustainable retail industry.
It is analysed from the discussion of external environment that company needs to
regularly check the external environment as there are many possible chances of negative
impact due to changes in external environment. For example, political changes pressurise
organisation to change their policies of trade which becomes very complex for organisation
as employees are always not ready to accept the change. This is similarly found in
technological factor as it is found that it promotes change in organisation.
Undertake a risk assessment, identify business risks and prepare an action plan showing how
these risks could be managed
Risk is defined as a possibility of loss or injury which can be arising anytime. It is not
something which is raised after planning. It creates hazards for organisation and this is the
main reason that company needs to do to a risk assessment which is defined as a systematic
process that involves identifying, analysing and controlling risk and hazards. Risk assessment
can be done with the help of using a risk assessment framework which is a strategy that used
by organisation in order to prioritise and share information about the security risk (What is a
Risk Assessment?, 2022). Risk assessment includes important steps which are mentioned
below that needs to perform by Marks and Spencer:
 Identify hazards: It is important for organisation that they should survey in the
workplace in order to identify the expected cause of harm. Marks and Spencer can
identify hazard with the help of using checklist. It is important for Marks and Spencer
to cover risk assessment so that they can reduce the possible hazards.

 Evaluate the risk: After identification of hazard, it is necessary for Marks and
Spencer to evaluate a hazards risk so that they can measure that how this risk can
provide an impact on organisational operations.
 Decide on control measure to implement: It is an important step which is performed
after assigning a risk rating that it is a time where company needs to come up with
effective controls. For that purpose, company need to protect properties, workers,
civilians and the environment.
 Document findings: It is very important note that organization needs to
documentation of risk. It is about for keeping a formal record of risk assessment. This
is necessary for organisation that they should keep track of risk, hazards, and control
measures. It includes a detailed description of necessary documents such as assessing
risk, detailed explanations, and outline of evaluations.
 Review assessment and update if necessary: It is necessary for organisation that
they need to do regularly review assessment so that they can achieve organisational
success and growth. If organisation found any deviations then it is very important for
company to update if necessary.
With the help of this process, Marks and Spencer is identified business risks such as
loss of engagement with core customers, flawed execution of new selling channels, financial
conditions, etc. It is very important for organisation that they should formulate mitigation risk
plan. Some risk mitigation options are mentioned below:
 Assume/Accept: This is the first and foremost option in which Marks and Spencer
need to accept the change so that they can formulate plan accordingly. In this option,
organisation needs not to do any special efforts in order to control.
 Avoid: It includes adjustment that requires eliminating or reducing the risk. It can be
possible with the help of change in schedule, funding, or technical requirements.
 Control: After that company need to implement actions so that they can minimize the
impact of risk.
 Transfer: It is very important for Marks and Spencer to reassign organizational
authority, accountability, and responsibility to another stakeholder so that they can
willingly to accept the risk.
 Watch/Monitor: This is an important option in which company need to monitor the
environment for changes as it affects the impact of the risk.

CONCLUSION
It can be concluded from the above discussion that it is very important for an
organisation to analyse the environment both internally and externally as every day it
becomes complex and competitive in nature. In addition to this, it also covered risk
assessment of company as it is identified that there are many risk found in the organisation
which create barriers in the success in growth path of company so it becomes crucial for
organisation to assess the risk. In order to combat with the risk, company needs to prepare an
action plan which is very helpful in order to manage their risk. For the purpose of analysing
internal and external environment, company is used different conceptual models such as
VRIO, SWOT analysis and PESTEL analysis model. These models are very helpful for
organisation as they are able to analyse the environment in an effective way.

REFERENCES
Books and Journals:
Bejtkovský, J., Rózsa, Z. and Mulyaningsih, H. D., 2018. A phenomenon of digitalization
and E-recruitment in business environment. Polish Journal of Management
Studies, 18.
Belas, J., and et.al., 2019. The impact of the public sector on the quality of the business
environment in the SME segment. Administratie si Management Public.
Cepel, M., and et.al., 2019. Selected economic factors of the quality of business
environment. Journal of International Studies.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford
University Press.
Hrechyshkina, O. and Samakhavets, M., 2019. Foreign trade of the Republic of Belarus in the
international business environment.
Kozubikova, L., and et.al., 2019. The impact of political factors' perception on suitability of
international business environment: the case of startups. Economics & Sociology.
Krajnakova, E., Navickas, V. and Kontautienė, R., 2018. Effect of macroeconomic business
environment on the development of corporate social responsibility in Baltic Countries
and Slovakia. Oeconomia Copernicana, 9(3), pp.477-492.
Möller, K., Nenonen, S. and Storbacka, K., 2020. Networks, ecosystems, fields, market
systems? Making sense of the business environment. Industrial Marketing
Management, 90, pp.380-399.
Nudurupati, S. S., Garengo, P. and Bititci, U. S., 2021. Impact of the changing business
environment on performance measurement and management practices. International
Journal of Production Economics, 232, p.107942.
Online:
What is a Risk Assessment?, 2022. [Online] Available through:
<https://safetyculture.com/topics/risk-assessment/#:~:text=A%20risk%20assessment%20is
%20a,workplace%20in%20any%20potential%20situation.>