Business Environment in Marks & Spencer (pdf)

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Different types and purposes of organisations.......................................................................3
P2 Size and scope of various kind of firms.................................................................................5
TASK 2............................................................................................................................................6
P3 Relationship between organisational functions and their link with objectives......................6
TASK 3............................................................................................................................................8
P4 Positive and negative impact of macro environment on business operations........................8
TASK 4..........................................................................................................................................10
P5 Internal and external analysis of Marks and Spencer..........................................................10
P6 Interrelation of Strength and weakness with external Macro factors..................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment is referred to the combination of internal and external factors that
can pose negative and positive effect on the company's operations. It also presents company with
opportunities as well as threats. Manager of an organisation identifies the environment
conditions and take necessary steps to get through it and maintain stability of company. Prior
knowledge of external environment helps enterprise to cope up with upcoming changes. Marks
and Spencer is one of the leading multinational retailer which was established in 1884. it is
headquartered in London, United Kingdom (Burns and Winter, 2011). They are specialized in
selling clothes, home products, food items, etc. M & S is an private limited company. This
assignment focuses on different types and purposes of organisation like, public, private and
voluntary sector with its scopes and sizes. It will also enlighten relationship between different
organisational functions and positive and negative impact the macro environment has on
business operations. In addition to this, analysis of internal and external factor has been
performed and at the end their interrelation between them is also given.
TASK 1
P1 Different types and purposes of organisations
Every organisation is working in different sectors like private, public and voluntary
sectors. Private organisation are those which is governed or controlled by individual body or
group of individuals. Their main aim is to earn money and extract maximum profits out of
different opportunities. Examples of this sector are franchise, companies, partnership and sole
traders. Public organisation are those which is governed by local, state or regional, central and
national government (Chow and et. al., 2011). Their main aim is to serve people of the nation.
They serves critical service such as police protection, fire fighting, urban planning, taxation,
homeland security, various social programs, etc. They uses resources for welfare of society. At
the end, voluntary sector are also referred as non profit organisation which provide help to poor
and needy people by offering them different services. It is also known as third sector of society.
Public sector: This area consist those organisation which are mainly concerned with
providing services to people such as military, police, infrastructure (public, roads, bridges, water
supply, etc.), public transportation, education, health care, etc. Enterprise involved in public
sectors are owned by government officials and funded mainly through taxations and financial

transfers from other levels of organisation. For example: National Institute and Care Excellence
(NICE) comes under public sector and is basically a health care organisation. They provide
health services and necessary care to people and patients coming to them.
Purpose: NICE provides quality health case services to the people and patients and
provide appropriate guidance related to diseases and their preventions and precautions.
Legal structure: Organisation working in public sector have fixed legal structure and
require continuous up gradations and management of those aspects. It mainly involves local,
regional and central government authorities. Local government: This body covers local area which is small and regulate functioning of
company. They enforce full control on local area and keep an eye on business operations. Central government: They handle legal and political issues at the national level. Their
functioning differ with countries.
 State government: They are the form of federal government and shares political power
with national government. Different states formulate different policies and regulations
and they function according to that.
Private sector: Organisation working in this sector are owned by individuals or group of
individuals as mentioned above. This sector is the backbone of any country as they contribute in
the stability of economy of nation (Commander and Svejnar, 2011). Marks and Spencer operates
in private sector and offers fashionable clothes, foods and other items.
Purpose: Main purpose of Marks and Spencer is to provide quality products in the areas
of clothes, foods , home and others and also offering them at affordable prices.
Legal structure: Enterprises operating in private sector formulate their own policies and
standards and operate according to their procedures. It contain high level of documentation due
to involvement of several franchise, mergers, acquisitions, sole trader, partnerships, limited
companies and so on.
Voluntary sector: This sector consist NGOs and non profit organisations that provide
necessary help and services to poor and needy ones. They are highly dependent on sponsors and
donors which provide financial support to their organisation. For example: Oxfam firm is an
organisation that is operating in voluntary sector. They conduct various seminar, campaigns and
events for collecting funds or donations.

Purpose: With the help of funds, they can achieve their purpose by providing them
appropriate services and goods to people who can not help themselves due to lack of money.
Legal structure: They formulate their own legal structures and legal procedures and
follow that strictly (Cronan and et. al., 2011). They also follow different acts which are enacted
by government related to the welfare of needy people.
P2 Size and scope of various kind of firms
As mentioned above, there are different sectors in which organisations are carrying out
their operations. These enterprise are operating their business operations at micro, small, medium
and large scale. Organisations are separated according to their sizes and members working in
them.
Private Sector Companies: The companies operating in private sector are considered as
important part of country as they make economy strong and also generate employment
opportunities for candidates. Like Marks and Spencer, they have been operating since 1884 and
plays vital role in country's stability as they have been enormous revenues and profits. Size of
private companies can be described as :
 Minimum Members- 2
 Maximum Members- 50.
Size of Marks and Spencer is given below:
 They have been operating in different countries with more than 900 stores.
 M & S has been operating more than 84000 employees.
Scope: Scope of Marks and Spencer is to provide quality products in every sector they
are operating and wants to increase their sales and market share in retailing.
Public Sector companies: Organisation involved in public sector operates in order to
provide services to the people of nation. It also focuses on needs and demands of people and
work in the direction of fulfilment of those needs. NICE is a health care organisation and
provides health care services to people and patients. he size of public companies are as follows :-
 Minimum Members- 7 Maximum members- Unlimited
Scope of NICE: In long term, they want to provide quality and affordable treatments to patients.
Voluntary Sector: This type of sector involves organisation which provide necessary
help to people with the help of funding given by sponsors and donors (Fernando, 2011). Oxfam

firm is registered in United Kingdom and more than 15 charitable trusts are operating under this.
It was founded in 1942 and is headquartered in England. It has been operating in more than 90
countries all round the world.
Shareholder Analysis: This analysis is done in order to identify and analyse about the
needs of stakeholders. Some of the stakeholders put their full efforts and help Marks and Spencer
with their operations. It basically involves customers, employees, government, etc. They help in
managing and providing necessary help to the project team. Without the there would be no
management of projects.
TASK 2
P3 Relationship between organisational functions and their link with objectives.
Every organisation works to fulfil their ultimate vision and missions set by them. In order
to achieve targets in specified time, it is necessary that their department functions properly and
smoothly as different department have various responsibilities and are needed to be carried out
properly. There should be proper communication between departments and should follow both
formal and informal practices in order to maintain healthy working atmosphere.
Marks and Spencer is a multinational retail store that offer varieties of product line such
as, clothes, financial services, food, home accessories, etc. They have been operating worldwide
with thousands of stores and employees (Gebauer, Paiola and Edvardsson, 2010). It requires
great management and leadership skill to handle such a huge business. Proper management and
coordination can lead to accomplishment of goals and objectives in time.

Source: Organisational structure of Marks and Spencer, 2017.
It has been observed that Marks and Spencer have flat organisation structure and have
limited levels of management between top level management and employees. This is an efficient
structure as it encourage employees to participate in decision making process and help them
developing their skills by authorizing them to make decisions. It also help in decreasing
bureaucracy within enterprise (Halbert and Ingulli, 2011). With this structure, company is able to
provide motivation and encouragement to their employees so that they can participate in
management procedures and enhance their skills.
There are several departments in M & S and they perform different roles that help
company to achieve their objectives.
Marketing department: This department is one of the important department as they
formulate marketing strategies in order to serve customers with their products and services. They
are responsible for selling company's good to customers, attracting them and distributing to
different markets. They also look out for promotional activities and Marks and Spencer uses
Illustration 1: Organisational structure

strong promotional tools to advertise their products and service. They develop marketing plans
which can ensure large amount of revenue flowing to company and this leads to accomplishment
of goals and objectives of company. Marketing department also help company to achieve
competitive advantage over other competitors. It helps in retaining the market position of
company for a longer duration of time.
Human Resource Department: This is another very crucial department of Marks and
Spencer which is responsible for managing, coordinating recruiting, hiring and selecting. Their
main function is to recruit and hire talented employees that can assist company in achieving their
goals and objectives. They hire capable persons which is most suitable for vacant position in
organisation (Hamilton and Webster, 2015). As employees are backbone of a company, they
have to recruit eligible candidates which can maximise the profits of company by performing
their duties in effective manner. Another function of them is to provide necessary resources to
the different departments so they can carry out their activities smoothly.
Finance department: This department provides financial support to Marks and Spencer
so that they can carry out their business operations in effective manner. Funds are very important
for a company to execute their ideas and this department performs that function. They also keep
record of financial transactions of company and other necessary details. Financial department
provides company with important information about where to invest, which market will be
profitable, etc.
TASK 3
P4 Positive and negative impact of macro environment on business operations
Company is influenced by lots of factors which pose both negative and positive impact
on business operations. They may be internal and external factors. Managers have to be aware
about both factors and formulate prior strategies to overcome any effect. These factors greatly
influence the stability of company at market place. Marks and Spencer is greatly influenced by
internal and external factors and to analyse this factors managers uses various tools to identify
their negative and positive aspects. PESTEL Analysis is one of the best tool to identify macro
factors and is given below:
Political factors – The government sets regulations which company have to follow such
as Health and Safety British standards which include risk determination, hazard assessment, risk

control & planning for hazard. This abide Marks and Spencer to follow so every employee be
safe in the work space. This concept directly increase the cost of the organisation as they have to
maintain all these standards properly otherwise they will be penalised or closed by the
government. Positive effect: Political stability helps company to carry out their work smoothly and
also expand their business in new markets.
 Negative effect: If Marks and Spencer ants to expand their business in different country
and lacks the knowledge about political environment, then they wont able to progress in
that country. So, it is required to know every detail related to political environment.
Economical factors - Nowadays economic outlook is very unsure,it more than likely
affect the retail market. The sector (UK) is recession prawn. Due to all this people don't have
enough cash to spend on the luxury items or heavy rated items, they only want necessities good.
M&S always focuses on the quality of the product which led to short term loss but gave long
term value (Agarwal, Grassl and Pahl, 2012). But the financial crises led to make compromise
with the quality to both customer and business. As their business need sustainable sales to
survive. Positive effect: If company is facing low inflation rate then the prices of products and
services will be lowered and thus attracting large number of customers towards them.
 Negative effect: If economic condition is unstable then this will effect the profitability of
country.
Social factors- Modification in style, taste and living standards are opportunities as well
as threats for the business sector. Earlier UK people are more concerned about the brand or the
quality but it stopped by fairly competitive pricing strategy from rival firm. Due to all this
company have to make time to time change in their product feature with competitive price.
Technological factors- Changes in trading methods such as internet usage for online
shopping help in increasing the sales and widen the scope of business. Paperless operation, use
of IT system provide flexibility and competitive advantage for company. But it should be save
from cyber attack which have the ability to destroy or make losses to trade. To save from this
situation proper measures should be adopted. Positive effect: It is necessary for M & S to update their technology and implement only
latest equipments, this will result in better productivity and more profits.

 Negative effect: Unable to update with technology can lead to poor quality of products
and thus reducing profits and maximising loss.
Legal factors- Laws changes with time. M&S always updated about new laws or
legislation regarding health and safety,employees law,minimum wages law and many more. Law
of “Fair Packing and Labelling”act 1996 states the manufacture what should on the pack, who
made it, how much it carry etc (Wild, Wild and Han, 2014). When it comes every business pack
their product according to it.
Environmental factors- The government is concern about the society for this they make
all the efforts and induce business to save environment. M&S established their own green policy
named “Plan A”.They support with sourcing of fresh milk from RSPCA dairy. Company and
their engineer focusing on carbon neutral, careful use of raw material,organic products,ethical
trading, zero-waste-to landfill and health concentrate business.
TASK 4
P5 Internal and external analysis of Marks and Spencer
Mark and Spencer is a popular retail clothing and accessories brand, headquartered in
London. Company essentially divides its operations into U.K and international. SWOT analysis
helps to know about behaviour of business enterprise or an organizational strengths, weaknesses,
opportunities and threats which helps managers at the time of strategic planning (Aterido,
Hallward-Driemeier and Pagés, 2011). Strengths and weaknesses calculate internal factor of an
organization and opportunities and threats assists to determine an external aspect of a company.
These are briefly described under below:
Strengths (S): In this, strengths of the company is analysed which is required to give
tough competition to rival business enterprises in marketplace. In this part, it covers all the good
qualities of a company which is able to compete others. Following are some strengths of Marks
and Spencer:
 Mark and Spencer works on its overall performance. This involves strong e-commerce
function, focuses on enhancing customer experience, effective customers relationship.
 They are involved in Corporate Social Responsibility activities.
 Higher recognition of brand all round the world.
 Variety of product line.

Weaknesses (W): These are the integral part of organisation and effects organizational
optimal performance (Auzair, 2011). Following are some weaknesses of Marks and Spencer:
 Face tough competition from other competitors.
 They have poor financial performance.
 More reliable to UK markets and exposed to different market conditions.
 Increase in labour costs.
Opportunities (O): In this part, it covers all opportunities that are available in external
environment in order to grab a chance to maximise their profitability and achieve success.
Following are some opportunities of Marks and Spencer:
 Coming on e – commerce websites.
 They can expand their business in new and different markets with their products and
services.
 They can attract customers by providing unseasonal discounts, upgrading their stocks
time to time.
Threats (T): This represents threats that can be faced by company in future. Managers
have to build strategies and plans in order to avoid threats and overcome as a rising star (Teece,
2010). Following are some threats faced by Marks and Spencer:
 Other retail stores that provide their products on discounted rate.
 Various government policies of different countries.
 Different companies have unique political structures and policies which affect the
functioning of company.
 Continuous change in clothing sector.
P6 Interrelation of Strength and weakness with external Macro factors
Marks and Spencer is one of the leading retail store and is famous worldwide. Managers
are efficient enough to analyse company's strength, weakness, threat, opportunities and other
factors. Due to this, they can make effective strategies that can maximise profitability of
company. Following is the inter- relation of some of the macro factors:
Political Factors: These factors are concerned with rules and regulation of country
which are crucial for company to follow (Ullah and Lai, 2011). According to these policies,
company can devise their own legal framework.

 Strength- Political stability of company is one of the key strength as they can functio
smoothly without any legal risks.
 Weaknesses: Political and legal factors are those mandatory factors that requires to
implement properly in firm. Ineffectiveness of such elements can reduce goodwill and
market image of firm.
Economic factor: For a company, it is crucial to analyse economic factors that can affect
company (Wetherly and Otter, 2014). As Mark and Spencer is operating worldwide, then they
should be aware of different economic conditions in order to avoid instability and loss. Strength: All these factors are beneficial to maximise economical values of a firm.
 Weakness: Fluctuations in inflation, exchange, growth rate can pose negative impact on
company.
Due to different changes in external environment, Marks and Spencer is formulating
different strategies and plans in order to adapt to those changes as soon as possible. They are
implementing latest equipments and digital technologies within their enterprise so that they can
maintain their position in the market. They are also improving their way of providing training
and development programmes and are using audio and visuals aids and smart room classes for
giving proper and latest training. They are aware about the recent legal rules and trading policies
and are using new ways and trading policies to import and export their products. They are
positively responding towards different changes of macro environment and with this they are
able to cope up with the competition.
CONCLUSION
From the above report, it can be concluded that organisation is affected by both internal
and external factors. They may pose negative as well as positive impact on business operation.
To analyse the these factors, managers use different tools like PESTEL and SWOT Analysis.
This helps in identifying possible risks and threats present in external environment. Better
knowledge of these factors can help company to achieve their goals and objectives and lead to
desired success.

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