(PDF) Business Environment Assignment : Mark and Spence

Business and Business
Environment

INTRODUCTION
Business environment refers to all external and internal components of an environment
that affects organisational activities (Avramenko, 2012). It include management, employees,
customers, demand and supply etc. This report is based on Mark and Spencer which is type of
public limited company and deals in retail industry. It was founded in 1884 in UK. Main purpose
of conducting this report is to analyse different types of organisations with their purpose, legal
structure, size and scope. Apart from this, interaction of different departments in a firm, positive
and negative impact of PESTLE analysis and SWOT analysis of a company is discuss. At last,
strength and weakness of a company in respect of external factors is discuss.
TASK1
P1.
Business environment is a total of all individuals and institutions that control business
activity (Business Environment, 2017). There are mainly three types of organisations: public,
private and voluntary. Description of these are as follows:-
Public Organisation
Public organisation refers to all those companies which are under controlled by
government. Public firms raises money from national revenue. For instance: National Audit
Office. It was formed in 1983 in UK. It is an audit department of parliament office of
government of UK.
Purpose
Primary objective of public firm is to serve the public of a nation. They distribute
financial gain and wealth for improving the structure of society. National Audit Office want to
build a strong socio economical infrastructure.
Legal structure
Local Government- It is an administrative structure of a small geographical area such as
town, city etc. Local government have only control over a specific region (Bovee, Thill and
Raina, 2016).
State government- It is a part of government that makes laws for state. State government
is liable for esteem the problems and local needs of a specific state.
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Central Government- It is a governmental authority that regulate whole country. All the
powers regarding to assign authorities have central government. It maintain domestic security
and global negotiation.
National Audit Office is comes under central government.
Private organisation
A part of country's economy which is run by an individual or partners is known as private
organisation. Mark and Spencer is a private company located in UK which deals in clothing and
food sector.
Purpose
The main purpose of M&S is to earn maximum profit. company select an accurate
organisation structure to achieve its objectives (Cavalcante, Kesting and Ulhøi, 2011).
Government imposed no restrictions on private firms so they can easily improve their culture and
environment at work place.
Legal structure
Sole proprietorship- A simple business structure which can operated by a single person is
known as sole proprietorship.
Partnership- Partnership refers to an agreement between two or more persons to start a
business for a common objective. They agrees to share burden of ownership and profit/loss.
Limited company- A kind of incorporation that control the amount of liability undertaken
by an organisation for investment is known as limited company.
Legal structure of M&s is limited company.
Voluntary organisation
Voluntary organisation is a team of individuals that It is a group of individuals that come
in a voluntary agreement to execute an objective (Hair, 2015). Cancer Research UK is voluntary
firm founded in 2002. located in UK. It conduct research into the prevention, diagnosis and
treatment of disease.
Purpose
Main purpose of this voluntary organisation is to reduce the number of deaths from
cancer.
Legal Structure
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Trust- Trust does not need a membership because it is form of charity which is
established by a group. It also have all the powers and duties which are covered under Trustee
act.
Association- It is a group of members who are agreed to attain a common purpose other
than profit.
Cancer Research UK is a type of c heritable organisation.
Firms can enlarge their business in global market by examine the environment of
international business and also analyse purpose and legal structure of other countries and then
organisations can expand their business (Hamilton and Webster, 2015).
P2:
Private organisation-Mark & Spencer:
Background details of the company: M&S was founded in 1884 by Thomas Spencer and
Michel Marks. Its headquarter is situated in London, United Kingdom. It is a British company
which is deal in retail sector (Karagiorgos, Drogalas and Giovanis, 2011).
Products and services: This company provide various types of products such as home
products, clothing, luxury food products etc.
Size: It have approximately 1380 stores around the world. It have around 300 websites
and full-line stores, that is M&S.com. They have approximately 84939 employees in their
company.
Scope: M&S served world wide i.e. Paris, Netherlands, India, Philippines, Ireland etc.
Mission & Vision: M&S mission is to create aspirational quality which reachable to all
and offering affordable rate. Vision is to be the standardised against which some others are
measured.
Objective: Its main objective is to established a sustainable business through profitable
growth, consistent. They want to recover their leadership in food and clothing.
Organisational and legal structure: M&S follows the flat organizational structure and
legal structure- it is a limited company.
Stakeholders: Its internal stakeholders are management, employees, owners,
shareholders and external stakeholders are customers, media/reporter, suppliers, general public
etc.
Public organisation-National Audit Office:
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Background details of the company: National Audit Office was founded in 1983 by the
government of the United Kingdom. Its roles and duties are auditing the government agencies,
non-departmental public structure and central government departments.
Products and services: It provide services of auditing and inspections of accounts.
Size: It have approximately 798 employees in their department.
Scope: They serve their services in United Kingdom and other supreme Audit
establishment around the world.
Mission & Vision: Its main mission is provided independent authority to the National
Assembly on the effective system of rules and use of public resources and support client to
modify their financial management. Its vision is to be extremely regarded establishment that
excel in public sector.
Objective: Their main objective is apply and develop its knowledge and deliver high
performance.
legal structure: This company audit the central governments reports and accounts.
Stakeholders: Clients and political parties.
Voluntary organisation-Cancer Research UK:
Background details of the company: Cancer Research UK was founded in 4 February
2002. It is a charitable organisation which us situated in London. Its main focus on health policy
and cancer research (Kolk, 2016).
Services: Its main services is to providing treatment and diagnosis of the disease.
Size: They have approximately 3,960 employees and 40,000 volunteers.
Scope: They provide their services world wide such as England, United Kingdom etc.
Mission & Vision: Its main mission is to cure and prevent cancer through originator
interdisciplinary research. Vision is to be providing highest level of compassionate, innovative
and safe care for patients.
Objective: Its main objective is to decrease the number of deaths from cancer.
Organisational and legal structure: Its organisational structure is non-profit and legal
structure is charitable organisation.
Stakeholders: Its main stakeholder is its employees, volunteers and government.
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TASK 2
P3.
Each department perform different roles and duties and they need to perform together for
achieving the organisational goals and objectives. Relationship of different departments are
define the process of different levels works (Nishitani and et. al., 2012). M&S company use
these different departments function for run the business smoothly. These departments are
influences each other which are as follows:
Human resource with marketing department
Human resource department's main duties is appraisal of performance, recruitment,
selection, development, training of employees, workforce planning and providing compensation
to them. In M&S company, Human resource and marketing department closely interconnected
with each other because HR function is liable for choosing the skilled and knowledgeable
candidates with the support of marketing sector in from of giving advertisement for job
vacancies. For example, choosing candidates have proper knowledge and skills about marketing
techniques and help to the company for achieving its goals of the maximum number of targeted
customers.
Marketing with production department
Marketing sector determine the customers' needs and demands and developing plan for
achieving and fulfilling those needs. M&S wants to improve their brand name in the market.
Thus, marketing sector taking help from production department for making the good and best
quality products at lower cost (Osterwalder and Pigneur, 2010). Marketing sector create
promotional strategy for advertisement of goods and services to achieve organisational objective
and improve organisational structure.
Financial with production department
Financial department of this company doing monetary transaction and keeping record of
money paid and received of the business. This function also maintain the financial stability
through increasing the funds from various sources i.e. financial institution, banks etc. this
department support production division to make best qualities products and services in effective
manner (Osterwalder and Pigneur, 2010). They want to achieve maximum utilisation from
available resources and reduce the cost of production for profit maximisation of the company.
Organisational structure:
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Organisational structure is a process of supervision, coordination and task allocation for
the accomplishing the business aims. M&S company needs to be flexible, caring, efficient and
innovative in respect to achieving a competitive advantage. For achieving the best result, M&S
choose the flat organisational structure which are as follows:
Flat organisational structure: M&S adopt flat organisational structure in their business.
Flat structure is also known as horizontal structure (Pikka, Iskanius and Page, 2011). This
structure refers that there is no level between employees and managers, thus top managements
can directly contact with their employees and sales people. This type of structure can provide
major benefits to the company such as faster response to the employees leads the work quality
very fast.
TASK3
P4.
PESTLE analysis is a strategic tool which is used by an organisation to scan the external
factors. It is conduct to analyse present situation of a company. It can be defined as what are the
factors which are faced by an organisation. Such factors includes political, economical, social,
technological, environmental and legal (Pulver, 2012). It is important for manager of Marks and
Spencer to analyse these factors along with their negative and positive impact. These are further
explained as below:
Political
Government plays an important role for organisation by imposing different policies and
rules. It affect the formulation of any brand name. Policies of government policies make a deep
impact on the performance of M&S.
 Positive- It reduce sourcing cost in European countries Energy efficiency is very
important for taking competitive advantage in current market scenario.
 Negative- Free trade policy in the European countries has finished a barrier which caused
to hard competition in market (Reed and et. al., 2013). It is very difficult to take initiate
for M&S without knowing the rules and regulations of other countries.
Economical
Economical factor play a vital role to make impact on organisational activities of M&S. It
includes national income, GDP etc.
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 Positive- M&S needs to work in online sector for their consumers lookout their deals and
it helps to reduce cost and time.
 Negative- M&S affected by various plans which are regulated by various competitors
like cashback, discount pricing etc. It gives a negative impact on their profitability
because customers want quality of their money.
Social
Social factors includes culture and norms of society that affect business of M&S. It
depends on lifestyle and preference of customers and important factor for a firm to achieve
success (Reinhardt and Stavins, 2010).
 Positive- M&S should implement trendy style in their stores which is profitable for their
business.
 Negative- M&S gave quality products to their customers with fair price policy. But over
dependency on single brand gave negative impact on organisation. Because their
challengers are giving various options in product line for attract their customers.
Technology
This factor is connect with advancement of technology in an organisation. It helps to
improve productivity of M&S and make a strong communication in a firm (Shigang, 2010).
 Positive- M&S have to use online marketing for attracting customers and taking
competitive advantage.
 Negative- There are many competitors who are using advanced technology and paper
less operations which is affecting the brand image of M&S in the market.
Environmental
It includes the cultural responsibility of a company to save natural resources and
optimum utilisation of available resources (Trevino and Nelson, 2016).
 Positive- M&S should uses ozone-friendly raw material through this, they can get
customer reliability.
 Negative- In case of heavy rain, delay is occur in transportation. Through this, customers
will not get product on time and become a negative impact on M&S.
Legal
Legal factors includes laws and legislation which must be followed by every company
such as consumer protection act, employment law etc.
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 Positive- M&S have to follow the rules and regulations made by governments. It helps to
build a brand image in market.
 Negative- If M&S will not follow laws then they have to face penalties and it also make
a negative impact on brand image of M&S.
TASK4
P5.
It consists of internal factors such as employee morale, lack of management support,
technological capacity etc. which may affect the performance level of company. For this, an
organisation requires to conduct SWOT analysis which help in implementing new strategies and
provide a tough competition to their rivals through evaluating these factors.
Strengths Weaknesses
 Company provides large number of
products due to which they would
be able to acquire high market and
customer share.
 M&S operates their business in
more than 40 countries which
means that company has ample of
market to cover.
 It has a huge range of brands which
helps to attract customers to their
stores.
 Due to positive balance sheet,
company can acquire advanced and
latest technology which would help
them to improve their quality and
quantity of products.
 Due to large number of
customers, it is hard for them to
satisfy all demands due to which
customers are changing their
brand usage.
 Due to old and existing product
design, M&S is not able to
acquire new customers resulting
loss for company.
 M&S has poor supply chain, so
that they can’t deliver product at
all locations.
 Company is not been able to
perform according to their
standards due to which company
could not concentrate on their
main products.
Opportunities Threats
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 Due to regularly change in demand,
M&S can acquire more market and
customers if they made their
products according to their needs
and demands.
 It needs to develop satisfaction
level of their customers so that,
potential consumers could attract to
the business.
 They can use their brand
leveraging while launching any
new product in the new market.
Chances of getting success
becomes high if they are using their
existence brand image.
 It has opportunity for expanding
business in Asian countries.
 Company have to modify their
way of working according to the
countries due to which their
productivity becomes low as
compare to their competitors.
 Poor image in some countries
affects the performance of
company in other country in a
negative way.
 Due to high number of
competitors , company have to
lower down the prices of products
to acquire customers resulting in
low profitability for company.
Influence of SWOT analysis in decision making process
It refers to bring attention of management on the weaknesses of an organisation as well as
threats from the competitors. It brings advantage on the strength of an organisation which helps
in improving brand image of an organisation (Werther Jr and Chandler, 2010). It helps to
organisation in setting objectives and creating strategies for achieving them. this also attract to
grab the opportunities so that it could attain their vision. In context to M&S, it may overcome
their weaknesses by using trendy stocks which attracts customers, recruits new staff which may
help to get satisfaction in their customers, establish a proper supply chain so that they can deliver
their product globally, By using technology they will achieve efficiencies in their work.
Management also required to make relevant changes in their existing plans and policies so as to
grab competitive opportunities such as increase in investment made in adoption of promotional
tools.
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P6.
External factors of M&S are interconnect with the strength and weakness of a firm. All
these factors will be explained below,
Political factor
This factor is consist of rules and regulations of local authority, taxation policy by
government, anti dumping duties etc. Strength- If all the rules and regulations are according to the M&S business operation
then it will create a positive impact on balance sheet of company (Wirtz, Schilke and
Ullrich, 2010).
 Weakness- When any firm is not pay tax timely then they feels government pressure and
create a point of weakness for M&S.
Economical Factor
This factors includes those things which are directly connected to the economic
conditions of country i.e., inflation rate, currency fluctuations, GDP etc Strength- If country GDP is increasing then it will also leads to increase in disposable
income of people resulting in enhancement of sales and profitability of M&S.
 Weakness- On the other side, if inflation rate is increase then it will also have a negative
impact on disposable income of people resulting in low sales for company.
Social factors
These are the factors which depicts social conditions of the country where M&S is
working which includes attitudes towards life, beliefs, social norms, etc (Avramenko, 2012). Strength- If M&S is making their products by considering customers needs and demands,
culture where they are living, beliefs which are inculcate in them then their sales will
increase to a certain level.
 Weakness- If M&S is ignoring all the sociological factors and making their products
according to their capabilities then people will switch to others brands which leads to loss
for company.
Technological factors
Technology assist company to gain competitive advantage over others as it assist them to
improve their quality of products. It includes advanced technology, R&D, automation etc
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 Strength- It will help M&S to improve their quality by reducing the price of products
which will persuade to more customer acquisition and high profit.
 Weakness- M&S will face less ROI in the starting as it will take some time to get the
expected results which means that company have to face financial burden in the starting.
CONCLUSION
As from the above discussion, it can be said that company have to set their objectives and
scope according to their pre set mission and vision and besides this company have to regularly
check the legal requirements which company have to full as then only they would avoid any
legal issues on them. There should be a better interaction between all departments, it helps to
increase profitability and sustainability of an organisation. Organisation have to regularly analyse
and monitor both the environment i.e., external and internal environment as then only they would
be able to take the benefits of opportunities and prepare themselves from the threats which they
could face in the future. Apart from this, all the departments have to work together to achieve
their common purpose as all of them are interrelated and if any one department does not perform
with its full productivity then it will also affect other performance in a negative way.
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REFERENCES
Books and Journals
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