Marks and Spencer: Business Environment Analysis in the United States

This report examines the business environment in the United States for Marks and Spencer, a multinational retailer. It begins with an introduction to the global economy and the company's nature as a private limited company. The report explores factors affecting the US business environment, including geographical factors, demographics, suppliers, customers, and competition. It highlights issues such as environmental and technological considerations. The analysis also applies Porter's Five Forces to assess the competitive landscape. The report emphasizes the importance of market research and strategic decision-making for successful expansion into the US market. It considers the challenges and opportunities presented by the competitive environment and the need for Marks and Spencer to adapt its strategies to meet customer needs and preferences in the US.

Business Organizations
in a Global Economy

Contents
INTRODUCTION.....................................................................................................................................3
MAIN BODY.............................................................................................................................................3
Type and Nature of the organization.......................................................................................................3
Main factors, issues and considerations affecting business environment in the US.................................5
Porter’s Five Forces Analysis..................................................................................................................7
CONCLUSION..........................................................................................................................................8
REFERENCES........................................................................................................................................10

INTRODUCTION
The global economy involves exchange of products and services internationally that is
represented in monetary terms. There are three different sectors in the global economy, private,
public and voluntary. Global economy has made it easier for countries to attract both short-ter as
well as long-term investments (Alden, 2017). Organizations of different nature operate within the
global economy and can be affected by different external factors which can be determined
through PESTEL analysis. Organization chosen for this report is Marks and Spencer, which is a
multinational retailer of high-quality household and clothing products. The company also sells
food and beverage products and was founded in the year 1884 by Michael Marks and Thomas
Spencer. The report explains the nature ad type of organization along with the main issues,
factors and considerations affecting the overall business environment where the company has
decided to start its operations.
MAIN BODY
Type and Nature of the organization
Marks and Spencer is a multinational retailer based in the United Kingdom that was
founded by Michael Marks and Thomas Spencer. The company was founded in the year 1884
and is still recognized by people across the world. The company offers high quality and value
homecare, clothing and food products. The food products sold by the company are known for
their quality, innovations as well as freshness. Whereas home and clothing products are known
for their contemporary and wearable styles respectively. Marks and Spencer is a private limited
company that is now considering expanding its business operations in the United States. A
private limited company is an organization that is a privately held business wherein the owner
liability is limited to shares, which means that the company has a limited number of shareholders
(Bartley, 2018). Such companies are owned by individual people or organizations.
Marks and Spencer operates across different countries and over the years has emerged as
one of the leading retailers of the UK. The nature of an organization can be determined through
some common features that include process, structure, accomplishment of goals and objectives,
and grouping different activities within the workplace. There are different types of organizations

which includes flat organization, functional organization, divisional and matrix organization. The
different types are explained below –
Flat Organization – A flat organization is also referred to as self-managed organization
and have very few or no levels of management between the higher authorities as well as
employees. The main aim of this type of organizations is to encourage and empower employees
to take effective decisions and approach a problem in a creative manner (Cano-Kollmann,
Hannigan and Mudambi, 2018). Companies that are of this type are more productive with faster
decision-making processes. Marks and Spencer is a flat organization, which means that there are
no different levels of management between the employees and managers. This has led to an
increase in individual responsibilities of employees.
Functional Organization – A functional organization on the other hand, divides the
operations of an organization based on their specialties. A single person has the responsibility of
monitoring the performance of all employees in the company. Functional organizations consist
of different departments like sales, human relations and marketing departments and every
employee within the company is responsible for a particular specialist task (Types of
Organizations, 2020). One of the main features of these types of organizations is that each and
every employee working in the company gets guidance from a specialist.
Divisional Organization – Divisional organizations have activities and tasks that are
divided based on a market, a particular group of customers or product. Organizations falling
under this category usually have a wide variety of product offerings or operations in which they
operate. Apart from this, if a particular division fails, it does not necessarily affect the other
divisions.
Matrix Organization – Lastly, a matrix organization is a more complexed organization
because there is more than one reporting line of authority (Chiu, 2018). In simple words, it can
be said that employees working in these types of organizations are accountable to two managers.
Organizations that fall under this category have more than one line of command and therefore
include a clear flow of information across the company.
The nature of Marks and Spencer is that of a flat organization, wherein the employees of
the company have and increased individual responsibilities. It eliminates excess layers of

management and therefore improves coronation among different departments. The respective
company is considering to expand its business operations within the US. The company will
launch its existing products in the US market in order to attract a greater number of customers,
understand their needs and requirements and fulfil them. There are a number of factors, issues
and considerations that can affect its business environment. The company operates in a highly
competitive business environment with a number of competitors within the fashion retail
industry.
Respective company is among the leading retailers within the United Kingdom and will
not face any tough barriers while starting its operations in the US. But there can be various
macro environmental factors that can impact the overall process of doing do (Cohen, 2017). The
company should conduct a market research in order to understand the needs and requirements of
people living there. This will help in making strategic decisions that are beneficial for the
company as well as the customers will also be satisfied. This will lead to an increase in the
overall performance as well as productivity of the company.
Main factors, issues and considerations affecting business environment in the US
Since Marks and Spencer is considering to expand business operations in the US, there
can be various factors that can affect the business environment in the country there and various
issues that it will have to take into consideration. The different factors and issues are described
below –
Geographical or Natural Factors – Natural or geographical factors can influence the
decision of an organization to operate its business in a particular region. This is because people
who live within a particular geographical area tend to have similar preferences and requirements.
But people living in other regions may not like the products as compared to people living in
same geographical areas. This means that the tastes and preferences of people living in the
United States will be different from people living in the United Kingdom. Therefore, Marks and
Spencer should consider natural factors like weather conditions, pollution control measures,
availability of raw material etc. before starting operations in the US.
Demographic Environment – Demographic environment can include various factors
like language, caste, educational levels, population, tastes, preferences etc. These factors can
affect the business environment of the US because the educational levels of people living there

along with their tastes and preferences can differ from each other (De Massis and et. al., 2018). If
the educational levels or level of disposable income of people living in the US will not be up to
the mark, they will not be able to afford the products that the respective company offers.
Therefore, it is important for Marks and Spencer to conduct a market research that will help it in
finding out the difference between people living in the UK as well as people in the US.
Suppliers – Suppliers are another important factor that can affect overall operations of an
organization. This is because they link the company with all the important material that is
required in order to develop a product. They can affect the overall strategy of the company and
therefore, it is important for Marks and Spencer to maintain healthy relation with the suppliers
and not just get the raw material delivered from one supplier (Forsgren, 2017). Before starting its
operations in the United States, the management of respective company should develop a clear
understanding of the best suppliers available in the nation along with negotiations, if required
any.
Customers – Customers are the most important factor that can affect the business
environment of the company. This is because they are the people who will purchase the products
and services. Respective company should understand the different customer influences and make
sure that it is aware of the changing preferences and tastes of the customers. This can either
create opportunities for the company as well as threats and only having a good knowledge of the
same will help Marks and Spencer in addressing the needs of the customers in the most effective
way possible. Because the company will be able to develop and design products that will be
according to the needs and preferences of customers in the US.
Competition – Competitors operating within the same market is another factor that can
affect the company’s operations. Marks and Spencer is one of the leading retailers in the UK that
is recognized by people across the world and also operates in a highly competitive environment.
US has many fashion retailers that already have a large base of customers and can pose
competition to it (Knoke, 2018). Therefore, the respective company should formulate strategies,
policies and position its products in such a way that they not only stand out in the US market, but
the company also gain a competitive advantage against competitor brands.
Apart from this, environmental issues should be taken into consideration because people
are now increasingly becoming aware about the environment and the harm caused to it. Some of

the primary issues relating to the environment can include pollution, usage of materials that can
affect it. Therefore, it is important for the company to analyze these issues and position itself as a
sustainable and an environment friendly business. This will help it in attracting people who are
conscious about the environment and seek products that are sustainable yet fashionable at the
same time. Also, the company can adopt the concept of recycling once its business operations are
accepted by the customers and the sales increase. Technological issues should also be taken into
consideration because using technology and tools relating to it that are outdated can impact the
overall business in a negative manner. Therefore, all the factors as well as issues stated above
should be taken into account by Marks and Spencer before executing the plans of expanding
business in the US.
Porter’s Five Forces Analysis
It is a framework that helps organizations in analyzing their respective competitive
environments. The framework was developed by Michael Porter and includes five forces that can
affect the overall performance as well as productivity of an organization (Mayer and Phillips, N.,
2017). The different forces can shape competition in the industry that an organization operates.
Results of this analysis further be used to make informed decisions regarding whether to start
operations in a new market or not. The five different forces of the framework are explained
below in context to Marks and Spencer when it expands business operations in the US.
Threat of New Entrants – This is a weak force because the fashion industry with the US
is densely populated leaving little or no chance for the new entrants to start their business and
find immediate success. And in order to be successful, it is important to offer products that are
highly differentiated and innovative from the ones already being offered by other companies. But
there have been brands that have gained popularity by entering into the segment of fast fashion.
Another reason why this force is weak within the US market is because setting up a new business
can involve a lot of investment in advertising, marketing, distribution, product development etc.
So, the threat of new entrants is not very significant within the US fashion retail industry.
Bargaining Power of Suppliers – This is also a comparatively weaker force because
there are a lot of suppliers within the industry. This means that companies can get their material
supplied from a different supplier if one of the suppliers if not ready to supply products at
effective rates. Also, companies like Marks and Spencer have a high purchasing power and can

switch from one supplier to another easily (Phillips, 2017). This is also because companies can
use their power to influence overall prices of the products within the industry. Therefore, it can
be said that the suppliers within the industry have very little control over negotiations and thus
their overall bargaining power is not significant. Another reason behind this is also that prices for
inputs within this industry are relatively low as compared to other industries.
Bargaining Power of Buyers – This is a strong force because buyers have the choice of
bringing down the prices of products by either choosing to not buying the products or switching
to other brands. This is also because if shoppers do not get clothes or other products of their
choice, they will easily shift to the competitors (Sun, Strang and Firmin, 2017). They can lose
their motivation from buying products from other brands in the industry. Marks and spencer is a
widely recognized brand and should therefore offer high quality products at affordable prices
within the US market in order to attract a large number of customers as well as understand their
needs in a much more effective manner. This is also because the buyers possess a lot of
bargaining power.
Threat of Substitutes– This is a weak force because setting up and operating a business
within the US fashion industry is difficult and not all businesses can do so. Although competitors
can still come up with some substitute for the products that Marks and Spencer offers to the
customers. Therefore, it is important for the company to carefully understand the needs of the
customers and offer products that are highly differentiated as well as innovative at the same time.
Also, the company should not just focus on its products but also on the service provided to the
customers so that they get a chance to go through a seamless experience whenever they shop
from the respective brand. The company can also increase its switching costs once the business
operations start running smoothly in the US.
Rivalry among Existing Competitors – The fashion industry is a highly competitive
industry with a large number of organizations operating in it. There are many retailers that sell
products similar to each other at their respective rates (Wright and Nyberg, 2017). Companies
these days focus on highly innovating their products in order to attract as many customers as
possible. But the industry is increasingly becoming highly saturated because nearly all
organizations offer similar products. And since Marks and Spencer is a widely recognized
organization across the world, there are a lot of competitors that can pose threat. Therefore, the

company must look into differentiating its products or even collaborating with competitors. This
will help in enhancing its overall productivity as well as performance.
CONCLUSION
From the above report, it can be concluded that global economy plays an important role
and contributes to the overall success of different organizations. Also, organizations of different
types and nature operate globally like private company, public company, flat organizations,
functional organizations etc. These organizations can be affected by a variety of factors, both
internal as well as external. So, it is important for organizations to take into account these factors
and develop strategies accordingly. Lastly, Porter’s Five Force’s Analysis can be used in order to
identify and understand the impact of various external forces on the overall performance of an
organization.

REFERENCES
Books & Journals
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Wright, C. and Nyberg, D., 2017. An inconvenient truth: How organizations translate climate
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Online
Types of Organizations. 2020. [Online]. Available through:<
https://corporatefinanceinstitute.com/resources/knowledge/other/types-of-organizations/
>.