Business Environment: Macro and Micro Environmental Factors

BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1 Macro environment.................................................................................................................3
LO2..................................................................................................................................................7
P2 Micro environmental..............................................................................................................7
LO3..................................................................................................................................................9
P3 Porter's Five Force model.......................................................................................................9
LO4................................................................................................................................................11
P4 Strategic management plan ..................................................................................................11
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business environment refers as the combination of all internal and external elements
which gives impact on organization performance. Internal factors are employees, management,
supplier, owners and economic changes gives impact in organization functions. On the other
hand, external factors are social trends, customers, client, supply and demand gives impact on
organization performance. Business environment plays essential role in organization because
they enable to recognize opportunities, supports in trapping beneficial resources as well helps in
planning for business growth. To understand business environment have an example of Marks
and Spencer. It is a British multinational retailer which is headquartered in a Westminster,
London, UK. It offers wide variety products i.e. home products, food products and standard
quality clothing to customers. This report covers macro and micro environmental factors. It
covers appropriate framework such as Pestle analysis for understanding external environment of
company. It includes Swot analysis frameworks to understand internal environment of business.
It covers porter's five forces model for understand competition in market sector for organization.
LO1
P1 Macro environment
Macro environment can be defined as a set of external condition which influences
decision-making and gives impact on organization performance either positive or negative.
Macro environmental comprises various factors such as gross domestic product (GDP), inflation,
employment, monetary and fiscal policy (Kljucnikov, and et.al., 2016)Hamilton and Webster,
2018). Additionally, it contains six different forces i.e. demographic, economical, political,
socio-cultural and technological forces.
M&S is a famous British multinational company in UK which applies Pestle analysis
framework to analyse external environment of company. Apart from this, it's impact on strategic
management decisions.
PESTLE ANALYSIS
Pestle analysis is a tool which use for analysing and monitoring macro environmental
factors. These factors give impact on business performance as well (Bashir and Verma, 2017).

M&S applies pestle analysis framework to analyse its impact on organization. It includes various
factors which is described below:
Political factors: In UK, political factors are free trade policies, political stability, trade
restriction etc. M&S is UK company which gets impact in organization performance and
strategic management decision.
Positive impact: Political stability can give positive impact on organization because they
don't have to change their policies during trading with other companies. UK's government offers
free trade policies to retailer where organization can get positive impact because they don't have
to pay high tax during retailing products or introducing new products within UK market (Cepel
and et.al., 2018). Apart from this, government stability can influence strategic management
decision of promoting trade business to other sector i.e. fashion industry. Brexit gives
transparency in trading which can give positive impact on M&S during promoting business to
other countries.
Negative impact: Organization can get negative impact during trading business in various
countries because there is a trade restriction policy. According to policies a company can't trade
to multiple companies. Strategic management prepare plan to expand business in other countries
as result trade restriction policies will give negative impact on decision (Almalki, Al-fleit and
Zafar, 2017). Brexit also can give negative impact on organization because it is hanged close free
trial policies (FTP). It gives negative impact on M&S because they have to pay high taxes during
import raw material from neighbour countries. It will enhance cost of production, in that state
organization have to enhance cost of product as result purchasing behaviour of customer can
reduce. Thus, organization can get negative impact on strategic management decision.
Economic factors: In UK, economic factors are inflation rate, recession rate, interest rate,
discount competitors etc. It gives impact on M&S:
Positive impact: Inflation rate is high in UK which can give positive impact on strategic
management decision. For example, strategic management makes plan to offer premium branded
cloth on low price. There are various competitors who sell clothing but on high cost in UK. It
gives huge competition to service providers. To improve purchasing behaviour of customers
offers discount strategy on premium brand by organization. High inflation rate can influence
discount strategy decision because customer gets similar product on low cost automatically
purchasing behaviour boost up of customers in UK.