Impact of Environmental Factors on Business

The study discusses how different environmental forces affect businesses, highlighting the importance of understanding stakeholder maturity and building healthy relationships with external stakeholders. The project examines the effect of various environmental factors on business growth and success.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 Organisational Types and purposes of businesses.............................................................1
TASK 2. Understanding the nature of environment that organisation operates .............................3
TASK 3 Impact of various environmental forces on company at micro and macro level..............3
TASK 4 The significance of the impact of environment at an organisation , market sector or
industry level....................................................................................................................................4
TASK 5 The requirement of various stakeholder to Marks and Spencer Organisation..................5
TASK 6 Measuring the effectiveness of the responses of organisation to policy actions taken by
Key stakeholders..............................................................................................................................5
Conclusion.......................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business environment refers to the sum total of all external and internal factors
that have direct impact on business operation. The business environment include those
external elements that are beyond the control of organisation and they have direct impact
on the functioning of business unit. The various external forces include technology,
economy, social and cultural factors. Internal factors are controllable factors these
elements include employees, management, and corporate culture that indicates the
behaviour of employees. Some of these factor have effect on organisation as a whole
whereas other constituents have influence on manager decision making process.
Marks and Spencer Plc organisation have been selected for conducting the
research. Marks and Spencer company is a multinational British organisation that is
located in London (Spencers makes fine living affordable, 2017) The enterprise specialises
in selling clothes , home products and luxury food products. The firm is being chosen as
it is dealing in different product that will assist in explaining the concept of business
environment in much better way (Marks and Spencer to launch mortgage range, 2017)
The study will have focus on exploring the organisation types and purposes of
business range. It aims at developing understanding of nature of environment in which
business operates.
TASK 1 Organisational Types and purposes of businesses
There are various types and purposes of business from the range of sectors. These are:
Private sectors- The private sectors companies are owned and managed by individual owner.
The most of private sectors' enterprise are established with the purpose of earning profit. This
sector is also referred to as citizen sector. In private sector most of the activities are guided by
the motive to earn money. In many countries private sector is wider and places fewer constraints
on firm. The private sector is a part of country economic system that is run by individual or
group usually as a means for organisation for Profit. The main types of business enterprise in the
private sectors are:
Sole traders: The sole trader is the common types of business ownership and engaged in wide
range of activities such as window cleaning, plumbing, electrical work, busking etc. The 20
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percent sole trader organisation in Uk are operating in construction industry, further 20 percent
are retail enterprise, 10 percent are delivering Financial services, and 10 percent organisation are
providing catering services. It is required by individual to complete complicated document
process in order to establish sole trader business. In sole proprietor the decision making process
is very Quick. As there is only one single owner therefore he is the only person responsible for
profits and fulling various responsibilities. Sole trader is a person who managed and control
business. The sole trader is only a person who is entitled to keep all profit and responsible for
losses. When organisation is owned by single person it is known as sole trader organisation.
Partnership:The normal partnership firm consist of minimum two and maximum twenty
members. But according to partnership act that has made it legal for particular partnership
organisation that is bid accountancy enterprise to haver more partners so that they could enjoy
limited liability. The purpose of partnership is to increase creditability with customer as well as
with suppliers. Partnership is referred to as relationship between two or more person who agreed
to share profits and losses. A business Partner is a commercial entity with which another
business entity has form alliance. This relationship may be contractual exclusive bond in which
both entities commit not to ally with third parties.
Voluntary organisations-Voluntary organisations comprise sf group of people who enter into a
voluntary agreement to achieve common goals. Voluntary organisation consists of those
individuals or group of people who have willingness to work for social benefit. Some examples
of voluntary organisation are trade companion,groups and environmental associations , teachers
union etc. These organisations may be incorporated or unincorporated. This forms of enterprises
includes all kind of groups small local resident to large legal registered associations. Voluntary
organisation refers to the group of individual who enter into an agreement in order to accomplish
common purpose. Voluntary organisation is an organisation which relies on occasional or
regular volunteers for its business activities and may not have paid employees.
Charitable organisation-This type of organisation is also known as non profit organisations.
The purpose of this type of organisation is to provide social welfare. This form of enterprises are
generally depended on the donations. These organisations can be established , managed and
controlled public ally or privately. Some charitable firm may have focus on providing specific
services such as religious, educational, other services related to other public interest. These
activities performed by them are philanthropic in nature. The liability of paying taxes depend on
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the region nor country in which these sectors are operating. Charitable organisation is a non
profit organisation whose primary objective are Philanthropy and social well being.
Public sector- These organisations are owned and controlled by legal authorities. They intend to
provide public services often free at the point of delivery. The composition of public sector
varies with country to country. The public sector provides various services such as military,
police, defence, telecommunication, transportation, water, heath care services etc. These services
are being provided by elected officials. The public sector enterprise has the right to provide
services that a non payer cannot be excluded from such as street lighting services that provides
benefit top all people of society. This type of organisation generate revenue from taxation. The
individual deciding to establish this enterprise generally does not require meeting commercial
criteria. All the major decision are taken by the government authorities. The segment of
economy under control of government is known as Public sector.
Public ally owned corporations have greater commercial freedom and are expected to
operate according to commercial criteria. There are three levels at which public sectors are
organised. These are Federal or national, regional and local level. Partial outsourcing is referred
to as public sector model (Worthington and Wilkinson, 2014)
TASK 2.
Business environment consists of combination of various internal and external factors. It
could be considered as aggregative in nature. The business environment may be static or
Dynamic. When environment presents important changes then it is refereed to as static
environment. When frequent changes can be analysed it could be considered as dynamic
environment. It is impossible to predict nature and degree of change in environment. This
environment is relative in nature. Business environment provided framework in which business
entity operates.
It is very important for Marks and Spenser organisation to develop their understanding
about the nature of environment in order to run their business operation successfully and
effectively. As the environmental factors have great influence on every aspect of business-to-
business such as on its nature, location, product price, distribution system ,policies etc.The
growth and success of any organisation is depended on these forces it is essential for firm to
adapt itself to the environment. The different approaches such as system approach , social
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responsibility and creative approach can be used by Marks and Spencer company in order to
develop their understanding regarding the nature of environment.
System Approach- This concept states that organisation consist of system using which it
produces products and services for fulfilling their wants , by using several inputs such as raw
material, capital, labour etc. from environment in which it is operating. The marks and Spenser
uses these approach to develop products and services in order to meet the demand of their
customers.
Social responsibility approach:According to this framework it is required by enterprise to fulfil
their responsibility towards various stakeholders internal and external. It essential for business
unit to fulfil their responsibility towards various categories of society such as customers,
stockholders, employees and legal authorities (Campbell & Craig, 2005)Marks and spenser has
been very successful in catering to the needs and demand OF its stakeholders. In return its
stakeholders are providing company support in order to accomplish its mission and vision.
Stakeholders have achieved their level of job satisfaction while working with Marks and spencer
and they are contributing a lot in finding innovative solutions to various problems in
oragsniastion.
TASK 3 IMPACT of various enviroMental forces on company at macro and micro level
Macro environment factors are uncontrollable factors and they have direct influence and
control on the various business activities. These forces have major effect on the functions of
organisation. External factors includes individual, groups, agencies , events , situation etc. It
helps in establishing god interaction and interdependent relation in form of conducting various
business transitions. The proper strategies and policies can be framed by enterprise in order to
cope with various changes in these forces. The macro environment consists of various elements.
These are economic, political, legal, socio cultural, natural and technological environment.
Impact of various macro environment forces on Marks and Spencer organisation
Economic factors- The economic elements have significant impact on the prosperity of Marks
and Spencer. These elements have direct impact on the buying and selling power of the
company. Rising prices , overflowing interest rate, increasing tax rate have direct effect on the
revenue generation capacity and profitability of firm. Economic crisis and economic instability
have direct impact on financial condition of Marks and Spenser. It has great effect on the buying
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and purchasing power of enterprise. Financial crisis in UK has lead to decrease in demand of
Firm products.
Technical factors-The technological forces have direct impact on the quality of products and
services that are being deliver by enterprise. It also has great effect on production capacity.
Social factors- These factors may have positive and negative impact on organisation. These
factors include trends, culture, belief, taste etc. This forces have direct impact on the profitability
of business unit. These factors have great impact on Mark and Spenser employees. Many
workers have to lose their job because the company has become much depended on technology
rather than human resources. The positive impact of this factor is that it has supported
organisation to produce innovative product and improve quality of existing goods.
Legal forces-These elements have great effect on the sustainability of Firm. This unit include
government laws, code of conducts etc. Linen t government policies have supported Marks and
spencer to enhance growth and expand its business.
Environmental factors- these factor have direct effect on the quality and demand of product at
marketplace. Favourable Environmental has supported firm to increase their market share by
providing good quality product. Increase in competition has encouraged to innovate new product
and formulate effective strategies in order to gain competitive advantage.
Impact of Micro environment factors are:
Employees: these have direct impact on the performance and other activities of business. These
factors also have great effect on the image of organisation.
Organisation Culture:This forces have direct effect on working of enterprise as well as on its
growth .These elements have great impact on the various decision process of business (Drucker,
2017.)
Swot analysis
Strength :Marks and spencer is more
recognised brand.
Producing good quality and wide range of
products.
Comp[any is developing their own brand
labels.
It has many stores worldwide that has helped
Weaknesses :
Ineffective marketing strategy.
Low market share.
Non trendy store.
Increase in cost of production.
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firm in increasing their profit and generating
revenue.
Skilled and talented employees that are
operating business in systematic manner
worldwide.
Opportunities
It has opportunity to create its own website.
Company can expand its core business
activities in other countries as well.
Firm has potential to increase its market share
by using market segmentation technique.
Threats :Misuse of brand name.
Increase in competition.
Bargaining power of buyers and suppliers.
Great of economic factors.
Impact of legal factors such as government
policies for retail store.
TASK 4 The significance of the impact of environment at an organisation , market sector
or industry level
The Marks and Spencer can conduct pestle analysis in order to analyse the impact of
various factors on business performance and on organisational culture.
Political: The main political factor includes tax, government policies, legal policies etc. these all
are the factors affect the Marks and spencer performance. Due to Increase in the tax for the firm
is the negative impact for the firm. Such kind of changes and modification by the government is
effect firm performance and also the sales revenue that is generated by the Marks and Spencer.
Positive impact is like update the strategies and plan of marketing depends on the updated
policies.
Economic: The improvement in economic condition has positive impact on the organisation.
Due to this factor the enterprise was able to increase their profit margins. The decrease economic
growth has negative impact. It has lead to decrease in demand for Marks and Spencer products .
Social: change in trend and preference has positive impact on the organisation. It has increased
the demand for the company product in market.
Technology: It has helped Marks and Spencer organisation to improve their production process
and quality of products.
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Environmental: The business environment is the internal and the external both environment
affect the company performance. The main objective of business unit is to maintain the product
quality and give the efficient and effective services. If Mark and Spencer is not following the
updated environment that is good for the enterprise that will be and disadvantage for the
organization (Johnsen, Miemczyk and Howard, 2017.)
TASK 5 The requirement of various stakeholder to Marks and Spencer Organisation
Stakeholder requirement represents the views of those enterprises operating at different
operational level that includes user, acquires and customers and stakeholders that relate to the
opportunity and problem, as a set of requirement for conclusion that can provide services needed
by stakeholders. Stake holder requirement play significant role in system engineering as they
form the basis of system requirement activities(Listening and taking actions, 2015) The
stakeholders are needed to identify and define various business problems , developing innovative
solution, for improving system of interest. The aim of stakeholders need is to elicit a set of
concise requirement related to new or modified mission for an organisation. The stakeholders are
ned to conduct various activities in organisation and to assist business unit in achieving goals
and objectives (Harlow: Pearson Harrison, 2013).
TASK 6 Measuring the effectiveness of the responses of organisation to policy actions
taken by Key stakeholders
It is very essential for firm to understand the maturity of stakeholders needs and to
understand the way to improve upon that maturity.
Operator Role not considered- sometime stakeholders do not consider the employees activities in
organisation (How to tackle gender bias at work, 2017).Exchanges with external objects
forgotten- This include exhaustiveness of requirement that can create various issues in enterprise
by interfacing with external objects .
Relationship with external stakeholders- Within the interface issue healthy relationship with
external stakeholders can assist key holder in taking effective and accurate decision (Kew and
Stredwick, 2017)
Conclusion
The study has concluded that various environmental factors have great impact on overall
growth of the firm. It has presented the effect of various environmental forces on Business. The
Project has successfully explained the different types of organisation and their purposes.
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REFERENCES
Harlow: Pearson Harrison, A. (2013),Business Environment in a Global Context. 2nd edn.
Oxford: Oxford University Press Needle, D. (2015) Business in Context. 6th edn.
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Worthington, I. and Wilkinson, G. (2014) The Business Environment. 7th edn. Harlow: Pearson
Wetherly, P. and Otter, D. (2014) The Business Environment: Themes and Issues in a
Globalizing World. 3rd edn. Oxford: Oxford University Press
Campbell, D. & Craig, T. (2005) Organisations and the Business Environment. Oxford
Johnsen, T.E., Miemczyk, J. and Howard, M., 2017. A systematic literature review of
sustainable purchasing and supply research: Theoretical perspectives and opportunities
for IMP-based research. Industrial Marketing Management. 61. pp.130-143.
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Drucker, P.F., 2017. The Theory of the Business (Harvard Business Review Classics). Harvard
Business Press.
Kew, J. and Stredwick, J., 2017. Business environment: managing in a strategic context. Kogan
Page Publishers.
Online
Marks and Spencer to launch mortgage range, 2017 [Online] Available through:
<https://www.ft.com/content/9280ddee-b4dc-11e7-aa26-bb002965bce8>. [Accessed on 21
October 2017].
How to tackle gender bias at work, 2017 Available through [Online]
<www.managementtoday.co.uk/linkedins-uk-boss-tackle-gender-bias-work/women-in-
business/article/1447295> [Accessed on 21 October 2017].
Listening and taking actions, 2015 Available through [Online]
<https://corporate.marksandspencer.com/plan-a/our-approach/delivering-plan-a/listening-and-
taking-action> [Accessed on 21 October 2017].
Spencers makes fine living affordable, 2017[Online] Available through:
<http://www.spencersretail.com/>. [Accessed on 21 October 2017].
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