Business Environment Assignment H&M

Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1) Different types and purpose of organisation and legal structure..........................................1
P2) Explain the size and scope of a range of different types of organisations............................3
TASK 2............................................................................................................................................4
P3) Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.......................................................................................5
TASK 3............................................................................................................................................6
P4) Positive as well as negative impacts that macro environment has on business operations. .6
TASK 4............................................................................................................................................7
P5) Internal and external analysis of particular firm to identify strengths and weakness...........7
P6) Strength and weaknesses interrelate with external macro factors........................................9
CONCLUSION..............................................................................................................................10
REFERENCE.................................................................................................................................11

INTRODUCTION
Business environment can be refers as all those factors of environment that can affect
business and its operations (Hilton and Platt, 2013). It include internal as well as external
environment of an organisation which influence business activities. Company should consider
business environment factors before developing any business decision and strategies for growth
of company. For this report chosen company is Hennes & Mauritz (H&M). It is a multinational
clothing retail company and its headquarter is located at Stockholm, Sweden. This organisation
is founded by Erling Persson in 1947. The purpose of this report is understand and evaluate
business environment for organisation success. This report contains different types of
organisation and sectors with their legal structure, size and scope of different organisation.
Interrelation between different department of company. Impact of macro and micro environment
on business operations and strength and weakness interrelation with external macro factors.
TASK 1
P1) Different types and purpose of organisation and legal structure
Public sector company
These are those companies which are owned by government body. Public sector
companies are controlled by government and all decisions are taken by government body
(Hamilton and Webster, 2018). These company motive to provide services to its citizens only.
Activities of this sector does not to earn profits. Public sector company example is Forestry
commission.
Purpose
Forestry commission of UK purpose is to expand and protect forest environment. This
organisation is also responsible for providing sustainable management of woodlands for
maintaining environment and society.
Objective – Its objective is to protect, improve and expand nations forests, woodlands which
will leads to increase forest and woodlands value to society and surrounding.
Types of public sector organisation State Government: This government is responsible for taking decisions-making for a
particular state. State government can govern its political power and develop law for
people and community within state.
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 Central governmental: Central government have right and authority to control over
citizens and communities of nations. In this level of government is to deal with entire
country
Legal structural
Legal structure followed by Forestry commission is a non-ministerial government. This
organisation follow systematic legal structural to save and grow natural resources. This legal
structure is a type of British government which deals with matters of for direct political oversight
. Non ministerial government help forestry commission to save land and forest of country. They
are headed by senior civil servants.
Private sector company
These are those company with is develop and run by one or more people. Companies in
private sector work with motive to earning profits and market share (Hillary, 2017). In this all
actives and decision-making make is done by owner of business that can be an individual or
group of people. Example of this sector is Hennes & Mauritz (H&M)
Purpose
H&M purpose is to provide high quality fashionable cloths to customers at best price. Its
aim is to continuously provide better products by manufacturing under good working
environment and limit impact on environment.
Objective – Main objective of H&M is to run business activities which help in maintaining
social, economical and environmental sustainability.
Types of private sector organisation Large corporation and multinational: These are those companies which deal and
operate in many other countries or nation to provide its products and services (Harrison,
2013). Large corporation and multinational companies have their own legal and septate
entity from its owners. Partnership: Its a legal form of organisation where all management of business
operations and profits is shared between two or more people which can be refer as
partners in business
 Sole proprietorship: In this business is managed and owned by one individual. Sole
proprietorship is a business when all decision-making and managing business activities
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for earning profits is responsibility of one single person. This type of private sector is
also known as sole trade.
Legal structure
H&M legal structure is private limited company to provide comfortable and fashionable
good quality products across world. This organisation is a large corporate and multinational
company. H&M operate its business functions in different countries across the world and provide
its services worldwide.
Voluntary sector company
Companies included in voluntary sector are those company whose primary motive is to
create impact on society (Kljucnikov and et.al, 2016). Voluntary organisation are non profit as
well as non governmental organisation. These company work for welfare or society and
responsible for taking business activities which leads to benefits of society. Wellcome Trust is an
example of voluntary sector company.
Purpose
Purpose of Wellcome Trust is to work and support research and science to make
knowledge more diverse and more inclusive about health in changing environment
Objective – the objective of Wellcome Trust is to look ahead by building strategic partnership
and promote policies globally to secure health of everyone.
Types of voluntary organisation Trustee: These companies are based on trustees and they hold power to take decision for
organisation. Trustee is an individual or a person who provide funds for organisation and
its activities which help in serving for society benefits.
 Charity: This organisation are non profitable organisation with primary objective to
provide social well being (Caiand and Yang, 2014). All activities are operated by funds
for many people and these funds are used to provide benefit to society or specific group
of people.
Legal structure
Legal structure of Wellcome Trust is based on trustee legal structure. They work to
support research science for developing better health to people of society. In this organisation
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trustees have power to take organisation decisions. Trust based organisation work by getting
funds from people who wants to helps organisation to achieve its objectives.
P2) Explain the size and scope of a range of different types of organisations.
Companies of all sector works with some special motive and have their own size, scope
to operate in market. Public, private and voluntary organisation with their respective companies
are mention below.
Public sector company – These organisation is owned and controlled by government of country.
All activities conductive by this organisation to provide benefits to citizens of nation.
Organisation such as Forestry commission Vision: To provide economic and regional development by regeneration of plantation and
forest resources Mission: To protect and expand forest and woodland for environmental benefits Size: It is responsible for operating and protect forestry in England. Large number of
employees who work in Forestry commission. All major decision regarding Forestry
commission are taken by its parent department which is department for environment and
foods or rural affairs.
 Scope: Scope of forestry commission of UK is to protect all natural resource including
water and lands of around the world. It is focusing to grow its child agencies that is
forestry England as well as forest research. This will help in achieving long term mission
and objective of forestry commission.
Private sector company – These organisation work to achieve profit and market share with aim
to increase in purchase of product and services offered by company (Belás and et.al, 2014).
Organisation this sector is control and maintain by individual or group of people. Vision: To lead and achieve change in circular and renewable fashion industry Mission:To drive and maintain long-lasting positive change in industry and improve
living standards of people by investing in innovative ideas. Size: This organisation is operating in worldwide area in many of location. There are
around lacks of employees working in this organisation. This organisation is dealing
clothing and accessories products. Its is providing its products worldwide and have stores
in 4,958 number of locations.
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 Scope: H&M scope is to provide high quality products to customers in order to capturing
major market share. H&M has its stores and production offices in approx 40 countries
only. It is planning to enter in new market area of different countries all over the world
with scope of continuously growing in global market.
Voluntary sector company – Organisation which work with motive of provide benefits to
society or people of society (Bocken and et.al, 2013). These organisation aims is to provide
social warfare without purpose of making profits. Organisation such as Wellcome Trust. Vision: To promote excellence research to meet global health challenges by supporting
researchers and institutions. Mission: To provide high quality research by supporting and mentoring researchers and
promote health. Size: There around 2057 employees working in this organisation and they people who
serve whole United kingdom. This organisation have total endowment is in billion. It is
currently servicing in United kingdom and overseas.
 Scope: There scope is to achieve extraordinary improvement in health of the world. It is
focusing on improvement in health of human as well as animal of all around the world. It
scope is to provide its products after proper research and experiment in order to create
healthy society.
TASK 2
P3) Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.
All department of H&M company have to play important role in effective and efficient
operations of business. Success of business can not be dependent upon only one department. All
department of company is interlinked and dependant on each other. There are various function
and department in organisation such as human resource, marketing , finance, sales etc. H&M
company have to interrelate all functioning and department with each other. By this company
can use all its resources in production of products to marketing of its products to reach end
consumers. Interrelation in different departments of H&M organisation is mention below.
Finance and marketing department
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Finance department is responsible for making budget for all department of H&M
organisation. Firm can not operate its activities without any money or finance. Finance team
deicide and distribute budget for marketing department. Marketing department major
responsibilities is to increase sales of H&M products in market. In order to earn more profits and
market growth, marketing team have to conduct proper research to identify needs and wants of
customers. Marketing team needs money for conducting its activities from finance department.
Finance department will identify actuate amount to be required by marketing team and analysing
profits earned by marketing activities.
Human resource and sales department
Human resource department of company will be responsible for maintaining and
developing strong sales teams (Sodeyfi, 2016). Sales department of H&M organisation is
responsible for increasing sales of H&M products as compare to other rival company. Sales team
work on field and identify needs and requirement of customers and marketplace. So it is very
important for developing effective and efficient sales department which help in growth of
company. Human resource team will identify requirements and ability in effective sales person in
organisation. This department will provide training to each and every member which help them
in better performing and maximum contribution in achieving objective of H&M company.
Marketing and production department
Marketing and production department of company needs to work closely for survival and
growth of H&M organisation. Marketing department will identify requirements of customers and
production department is responsible for creating and developing products which is required by
customers (Boonsand and Lüdeke-Freund, 2013). So it is very essential that both of these two
department coordinate with each other and achieve objective of company. Marketing department
conduct research to evaluate and analyse wants or demands of customers. According to research
report production department will manufacture their products. Marketing team will forecast
supply and demand of H&M products in marketplace and production department will
manufacture quality and quantity related to forecast of marketing team. Marketing team is
responsible for selling all products manufactured by production department.
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TASK 3
P4) Positive as well as negative impacts that macro environment has on business operations
There are various factors in macro environment which affect business operations and its
decision-making (IşıK, Jones and Sidorova, 2013). For effective function of H&M it is very
important to analyses and evaluate all external factors. It will help in understanding needs and
requirements of macro environment and decisions can be taken according to factors. In order to
understand macro environment, H&M company have to perform PESTLE analysis. It will
include positive and negative impact of various external factors in operation of business.
PESTLE analyses of H&M and Forestry commission is explained below.
Political factors: These factors include all rules and regulation,tax rate, trade policy etc.
set by political and government party which affect H&M company business decision. Political
factor have negative and positive affect on business.
Impact on H&M
 Positive: Ease in trade policy without any restriction can help H&M company to provide
its products in many countries across world. This will leads to increase market share and
profitability of company.
 Negative: Whereas rules and regulation and high taxes on H&M company products will
leads to high price of products. Products will not affordable to many customers and have
negative impact on business.
Impact on Forestry commission
 Positive: Forestry commission it will have majorly positive impact on organisation
functioning as this organisation is owned and controlled by government of UK. Political
and government party full support functioning of Forestry commission and its other
activities.
 Negative: Instability of political party can have negative impact on forestry commission
as it will affect organisation functioning with implementation of new and different rules.
Economic factors:These factors consist of interest rate, exchange rate, economy of scale
and so on. Economic condition of country will directly influence purchasing power of customers.
Economy of a particular country will have impact on H&M company business operation.
Impact on H&M
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 Positive: High quality labour with effective and efficient working can have positive
impact on H&M business as it will improve productive of company.
 Negative: In country where income rate is low, customers will not be able to afford
H&M products.
Impact on Forestry commission
 Positive: Economy of UK will have impact on Forestry commission as all functions of
this organisation is based on economy conditions of its country. Economy of UK is one
of the largest economy in the worlds and it have potential to provide working facilities to
Forestry commission and its workers.
 Negative: Insufficient labour for organisation working and high labour cost will leads to
have negative impact on company.
Social factors: These are those factors which is affected by social culture, customers,
individuals of market in which organisation operates (Andersson, Forsgren and Holm, 2015).
Choices of customer changes with times. This can have negative impact on business when
products of company will not match with requirement of customers.
Impact on H&M
 Positive: Social trends such as social media can help H&M company as it can use social
media trends to market products on various sites and this will leads to attract more
customers to brand.
 Negative: Constant changes in choices of customer as its changes with times can have
negative impact on business when products of company will not match with requirement
of customers.
Impact on Forestry commission
 Positive: Lifestyle of people and positive attitude towards saving forest and woodland of
country can have positive impact on forestry commission.
 Negative: Changes in forest of UK by Forestry commission are likely to have impact on
different people differently. It depends upon their social context, interest, values. Change
or unmitigated negative social impact may leads to creation of new conflicts in society
regarding Forestry commission of UK.
Technological factor: Technology is very important to stay updated. This will help
H&M company in having comparative advantages over other rival companies.
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Impact on H&M
 Positive: Organisation can use new and innovative technology in its business operations.
This help business working more effectively and effectively to capture more market
growth.
 Negative: Technology requires high skilled and knowledgeable person to operate it.
When technology is not used by H&M in proper way it can have negative impact on
business operations.
Impact on Forestry commission
 Positive: Technological factor affect Forestry commission includes, basic infrastructure,
research and development activities, competing technologies as emerging of new
technology in agriculture and forest will have positive impact.
 Negative: High technology with limited resources can have negative impact on forestry
commission organisation as well as forestry research department which help in effective
and efficient functioning of company.
Environmental factors: These factors include climate, climate change, weather,
pollution etc. (Wilden and et.al, 2013). Environment of country in which organisation is
operating will have impact on its business.
Impact on H&M
 Positive: Customer will be not willing to buy H&M company product when their climate
and weather does not match with products.
 Negative: when company is conducting more social activities to protect environment, it
will leads to build positive brand image of company and increase in sales of products.
Impact on Forestry commission
 Positive: Water consumption and other natural resources or water bodies can have
positive impact on forest and agriculture of UK
 Negative: Changes in climate and weather,pollution can have negative impact on soil
degradation, sedimentation, land degradation, sustainability of natural resource and
biodiversity.
Legal factors: This contain all those external factors which affect business operation.
Legal factors includes consumer law, discrimination law, health and safety, employment law ans
so on.
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Impact on H&M
 Positive: H&M company conducting it operations keeping all health and safety factors of
customers employees and environment will positive impact on business.
 Negative: If organisation does not follow fair employment policies and law, then H&M
company employees will not be loyal toward firm and can harm business operations.
Impact on Forestry commission
 Positive: Effective legislation constitutes a biding set of rules and regulations that define
legal framework within which Forestry commission have to operate. Legal factors for this
sector organisation includes right and responsibilities for company as well as public
sector. Legal factors helps organisation to perform its function without any disturbance.
 Negative: Legal factor can have negative impact on organisation when discrimination
between worker of organisation and company affect consumer sentiments.
TASK 4
P5) Internal and external analysis of particular firm to identify strengths and weakness
SWOT Analysis of H&M is done to evaluate the company's internal strengths and
weaknesses, as well as company's external threats and opportunities faced during the course of
business. This analysis is basically helpful in studying the environmental condition that are
prevailing in the market during a particular period of time phase.
Strengths: Strengths for the company are basically the internal strategic factors that are
used by the companies in order to gain advantage over in the competitors in the marketplace
(Erasmus, Strydom and Rudansky-Kloppers, 2016). These are favourable conditions for the
company that helps in overall enhancement. For H&M following are strengths that have helped
the company to attain good market share.
 H&M have global presence all over the world with strong brand value that helps the
company in increasing the overall turnover.
 It offers wide range of products to its consumers that includes: cosmetics, shoes , apparels
and many more. The company launches new catalogue regularly.
 The company's product are able to satisfy customers and this further helps the company
in customer retention and customer loyalty.
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 H&M offers affordability and value for the prices. The pricing strategy adopted by the
company accurately fits for the development of the company.
Weaknesses: Weakness for the company are the internal limitation that are faced (Caiand
and Yang 2014). This basically deals with the characteristics of a business which make
disadvantage for a company when it is compared to competitors. Weaknesses includes:
 High growth of emerging e-commerce business in market is creating a downfall in the
growth of H&M, therefore it should try expanding its online business.
 The customers wants and needs changes with rapid speed and the company sometimes
fails in judging the needs of the customers that is slow response to changing consumer
trends.
Opportunities: Opportunities of an organisation are connected with the external
environment that helps an organisation in formulating and implementing strategies to increase
profitability of the organisation (Apăvăloaie, 2014).
 Currently the focus of company is to expand its business outlets in major parts of the
world to increase in profitability as a whole. H&M have recently added 400 new stores,
which have helped the company in improving its bottom and top line.
 The overall purchasing power of the customers is increasing that eventually helps in
improving the lifestyle and further people become brand conscious, which creates
opportunity for H&M to capitalise and generate revenue.
Threats: This also deals with the external business environment, which basically are
unfavourable for an organisation.
 The company deals with intense competition in the marketplace that eventually lowers
the overall profit. Therefore H&M should study the market situation carefully before
making any strategy.
 H&M faces risk of foreign exchange fluctuation, this is the major threat for the company
and measures should to taken to improve this policy.
SWOT analysis of Forestry commission
Strength
Forestry commission is a UK based public sector company with the motive of saving and
protecting forest and woodland to country. So this organisation have full support from
government of UK. Political parties of UK support in working and operations of this
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organisation. Forestry commission have vast human potential which helps organisation to work
effectively and efficiently. This organisation have very vast and broader network that leads to
serve in rich experience in rural area also. It has institutional support with aim of functioning in
various societies fields.
Weakness
This organisation has to sometime suffer from poor resource base and lower reserve
availability of resources also. Public sector company have inadequate financial margin to cover
cost of management and sometime suffer financial autonomy. Forestry commission is run by non
ministerial government which means a person who is non liable for any office work so its can be
sometime proven as a disadvantage for this organisation. It does not have scientific human
development policies and this decrease in enthusiasm of worker of organisation. This will have
impact on overall functioning of organisation.
Opportunity
Forestry commission can have advantages with the changes in legislation which permit
this organisation to participate in commercial ventures as well as public and private partnerships.
This will help organisation to improve its relationship with customers and citizen of country and
build its new brand image. It can also focus on introducing new strategies related to forestry of
UK. New and innovative strategy will help and support forestry of England as well as forestry
research. Introduction of new policy and changes in rules and regulation can have positive
impact on Forestry commission of UK.
Threat
This organisation have continuous threat from loss of credibility when demand of public
for bio diverse does not match with the requirement. Changes in needs and requirement of
citizens of country can have negative impact on Forestry commission and forestry research of
UK. This will leads to decrease or low in level of recruitment into forestry education and
Forestry commission. Loss of countryside management skill can also be consider as a threat for
this organisation as it will affect overall functioning of company.
P6) Strength and weaknesses interrelate with external macro factors.
H&M company strength and weakness interrelation with factors of external environment
is mentioned below.
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Political factor – These factors cover all rules and regulation set by government that
include tax rate, trade policy, import and export restrictions and so on (Boons and Lüdeke-
Freund, 2013). Political and government parties of UK are more focusing on companies in retail
sector and motivating export of products by developing easy trade policy. Therefore its leads
H&M organisation to deal and provide products to customers across world. Government has
introducing heavy taxes on products which ultimately increase price of products. High prices of
product create dissatisfaction in customer and lower sales of company.
Economic factor – It consider factor have major impact on business operations such as
interest rates, inflation, demand or supply etc. Recession in country affect demand of H&M
products as customers will be saving money to fulfil their basic needs. Increase in effective
labour will help H&M in manufacturing good quality products.
Social factor – Life style, buying habits, culture of customers etc. have impact on sales
of organisation products. H&M adopting social media and online marketing helps in identifying
customers needs and more interaction with them. This leads to increase in sales of H&M
products. Continuous change in customer choice and social trends will trouble business decision-
making and sometimes fail to satisfy customers.
Technology factor – It includes new and innovative technology in market. Usage of new
and updated technology will help H&M to produce more products and increase supply of product
in market. Innovative technology of competitors will be weakness of H&M and reduce market
share of company.
CONCLUSION
For the above report it can be conclude that environment in which business and its
activities are surrounded play a crucial role in business operations. By understanding and
evaluating macro and micro environment effectively, it will help business to take correct
decisions and developing effective strategic plans for company. Each and every function or
department of company should coordinate and interlinked with other department to achieve
objective of organisation. Mangers are responsible for analysing internal and external
environment in which business have to deal and identity positive and negative impact of these
factors on business actives.
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