Business Environment Analysis and Strategy

This assignment delves into the analysis of the business environment using key frameworks such as PESTEL, SWOT, and Porter's Five Forces. Students are tasked with understanding how these frameworks can be applied to assess external and internal factors influencing a business and subsequently develop effective strategies for success.

Business Strategy

TABLE OF CONTENTS
INTRODUCTION:.........................................................................................................................1
TASK 1............................................................................................................................................1
P 1 PESTEL analysis of Marks and Spencer..............................................................................1
M 1 Macro environment and strategic management decisions...................................................4
TASK 2............................................................................................................................................4
P 2 Internal environment of Marks and Spencer.........................................................................4
M 2 Accessing the strengths and weakness of Marks and Spencer...........................................6
TASK 3............................................................................................................................................7
P 3 Porters five force model for Marks and Spencer..................................................................7
M 3 Strategies to improve competitive edge and market position..............................................9
TASK 4............................................................................................................................................9
P 4 Strategic planning for Marks and Spencer............................................................................9
M 4 Management plan with strategic objectives.......................................................................13
CONCLUSION:.............................................................................................................................13
REFERENCES:.............................................................................................................................14

INTRODUCTION:
. The growth and development of every business entity is entirely dependent on
formulating and implementing of strategies. Business strategies plays a crucial role in survival
and long term success of organisations. These strategies affect the internal and external
environment of overall business. This report shows the external environment and its influence in
developing strategies of the business. Further, internal environment that includes strengths and
weakness of organisation is shown.. The porter five force model and its effect market is shown.
In the end the models and strategies that are used to take strategic decisions are described.
For undertaking this the present organisation is selected is Marks and Spencer. The cited
firm belongs to retail sector and operates globally. The existence of the company on such a great
level requires effective business strategies. Thus, this report will help in developing a relevant
one for the cited establishment.
TASK 1
P 1 PESTEL analysis of Marks and Spencer
PESTEL is a mnemonic which denotes P for political, E for economical, S for social, T
for technological, E for environmental and L for legal. Every business is affected by the external
business environment in which they operate. It is due to the various factors which influence the
business decisions that are to be taken. It is a concept which defines the marketing principles.
The business like marks and Spencer will analyse these factors while taking decisions. The
explanation of these factors are given below:

Political factors- They are those factors which are controlled by government. Sectors which
involves government anticipation are trade policy, trade restrictions, political stability, etc.
decision regarding what kind and quantity of goods or services will enter or go out of country is
taken by government. Other than these rules and regulations such as safety, health, risk control
has to be abide by every company. These factors influence the business to a great extent. Marks
and Spencer interact with government in order to protect their interest and develop policies. It is
one of the most powerful company in retail sector so it is difficult to compete with them. Factors
which affect marks and Spencer are political stability and VAT of different countries. Increase in
taxes and VAT forces them to increase their prices that leads to decrease in sales volume
(Prajogo,., 2016.)
Economic factors- It determines the performance of economy of the nation which directly
impacts the long term run of business. It included factors like inflation rate, GDP, etc. foreign
exchange rate and economic growth helps in defining the economy. To control the inflation
fiscal and monetary policies are properly managed by government. Marks and Spencer consider
issues like interest rates, GDP to ensure sustainability for long run. The clothing sector
contributes their in GDP as gives employment to many people. A healthy economy will be good
Illustration 1: PESTEL analysis

for business to grow and develop. Marks and Spencer concentrate on youngsters as they spend
more on clothing. (Wetherly,. and Otter, eds., 2014.)
Social factors- These factor can not be controlled but it affects the business and its strategies
directly. In this company have to think about people. The aspects needed to be considered here
are age, culture and needs of people. Change in trends of society affects the demand of product.
Marks and Spencer focuses on the changing tastes of people according to the culture which helps
them in fulfilling their needs. Recent recession has affected the sales of marks and Spencer in
UK due to this they have to lower their price. Business strategy that has been followed by marks
and Spencer is reuse, recycle the waste to protect the environment. This has showed their
concerned towards the society and has attracted a lot of customers.
Technological factors- Frequent changes in technology has helped in lowering the cost and
increasing productivity. It helps the business to innovate new product to attract new customers.
Online shopping has enabled the people across the globe to purchase items online and get
delivery at their home. Marks and Spencer has developed their website for customers to provide
ease in business. Displaying advertisement on big screens outside the store helps in promoting
the product . The introduction an online warehouse known as marks and Spencer books has
boosted the sales in online sector (Welford,, 2013)
Environment factors- It includes both the internal and external factors which affects the
operations of business. These factors are helpful in understanding the climatic conditions of the
surroundings. Business operations must be done regarding the environment. Marks and Spencer
charges for plastic bags and the amount is been invested inn maintaining public parks and play
gardens in UK. They have been practising eco friendly techniques which has help has cut down
the carbon dioxide by 40%. Suppliers are been encouraged to practice these which will help in
achieving higher efficiency in sales.
Legal factors- These include the laws like safety, consumer protection, etc which are been
made by the government in the country. It determines the way in which business responds to
people as they are set according to the standards of country. Marks and Spencer are dealing wit
some legal issues due to the protection of staff and customers. Some workers left the job as they

were not paid for overtime. Suppliers are forcing the workers to work 7 days a week. This had a
great impact on the brand image and resulted in decrease in goodwill of marks and Spencer.
Conclusion: There are many macro factors which has affected the strategies of marks and
Spencer but they have been successful in defining their image and quality of goods. They are
focused more on youngsters due to their change in clothing trends. Cost incurred in protecting
the environment is huge but it will help in long run and growth of business. (Routledge
Menychtas, .,and et. al., 2014.)
M 1 Macro environment and strategic management decisions
Factors that are considered above needs to be analysed and evaluated in decision making
process. Any strategy that has to be formulated must involve all these factors as it can affect the
results of strategies. Management makes strategies which determines the growth and
development of marks and Spencer. According to market situation marks and Spencer should
focus on the technological factors. They must adopt the latest techniques for production which
will reduce the price of product and improves efficiency in productivity. Further website can be
made in order to increase the sales and also increasing global presence. Second factor needed to
be considered is legal factor in which marks and spencer must provide equal wages to them.
Proper laws must be imposed on suppliers to ensure the proper regulating of workers.
TASK 2
P 2 Internal environment of Marks and Spencer
Internal environment defines the strategic position of marks and Spencer. It includes SWOT
analysis which is describes as below:-

Strengths- Marks and Spencer is having strengths which focuses on the band value and wide
range of products which helps in growing the business. Some of them are:
 Highly recognised- It provides a high brand value to its customers by providing quality
in their products. There stores only exits in high street market where they can attract large
number of audience. High class and high standard people can do whole shopping in once
if they enter in the store (Kolios,. and Read,, 2013)
 Wide range products- Large variety of products helps customers to choose from various
options available. They sell almost all types of foods and products to the customers. More
than 1200 suppliers and farmers are connected with them which provides various quality
products.
 Stores and outlets- They have 900 outlets in all over the world which helps in expanding
the business and increasing sales. Increase in outlets leads to generating more daily sales
and profits. It helps in creating awareness in consumer about the product and company.
the commodities that are available to them is of good quality and reasonable cost.
 Popular brands- They are having popular brands associated with them which helps in
providing wide range of products. Men's wear includes brands like autograph, big and
tall, blue harbour, etc whereas women wear includes classic, indigo collection, etc. Due
to the availability of these brands the business grows and develops (Culp,.,and et. al.,
2015.)
Weakness- Due to its out fashioned and non trendy products there is bad effect on their brand
image. Even having a wide range of products, there is only a little available for youngsters and
teens. This is affecting the business a lot. They should make strategies for those people who are
attracted towards them but not getting their desired product. Management must develop new
strategy and products for young people to attract them. The increasing competition from brands
like oxygen, H&M, etc. is affecting the sales of enterprise. Due to using of old techniques in
production the cost and time increases which in turn rises prices of finished goods. There main

drawback is of not utilising the technology for production. They prefer manual work which
reduces the productivity and increases costs (Shoham, and Paun,., 2015.)
Opportunities- the global presence can be increased by expanding business. This helps in
creating brand image and increasing goodwill in the market. Markets like India and China are
great opportunities for them to grow their business. Further by making new products' and
strategies for fulfilling the demands of youngsters they can earn profits. This can be done by
segmenting the market and then developing strategies for each one. by opening small store the
maintenance will be reduced and profits will rise as usage of manual power will decrease. Also,
by effectively using technology they can do business online through website. It will help in both
ways ie. Increasing global presence and generating more sales.
Threats- the major threat is influence of political factors of government in various countries.
Polices which are made by government for retail stores will affect them in the future. Another
threat is increasing competition in market from various other brands like tesco, asda, etc. they are
expansion of these brands through small stores is worrying about marks and Spencer. Relaying
on mega store for sales is risky for them. Management need to develop new strategy for this to
overcome.(Routledge Menychtas,.,and et. al., 2014.)
Conclusion- It is concluded that marks and spencer have the opportunity to cover the rest of
market by providing the newly fashioned clothes to youngsters. This can be done by segmenting
the market and creating product for each segment. Also, technology can be used to develop
website which will boost up the sales and profits.
M 2 Accessing the strengths and weakness of Marks and Spencer
Marks and spencer strengths varies from its competitor. It is having a wide range of
products for different segments and it successful in creating a brand name in the market. This
results in increase in brand value and generating profits. Its strengths in good product quality and
wide range of stores available makes it a MNC. On the outer side the major weakness of it is the
old fashioned products and manual working which gives a bad image. Also, using of manual
technology makes the final price of product very high which is not affordable to middle class
people. This can be removed by using new technology in production which will reduce the final
price.

TASK 3
P 3 Porters five force model for Marks and Spencer
Porter's five force model helps in understanding the strategies that must be made to increase sales
and profits.
Competition- the force of competition in the industry defines the power of particular company.
Intensive competition means that the number of companies are more and customers are having
more choices of products that is available. Companies are affected by competition as they have
to innovate their products and strategies in order to attract customers. Large company will be
able to dominate the market to decease competition. This will make them more powerful as
competitive rivalry will be decreased. Marks and Spencer although having big role in market is
Illustration 3: Porter's five force model

not able to control the competition. They are not able to execute their power as many more retail
companies are there which is giving competition to them.
New market entry- it states that company power is also affected by new entry in the market.
This affects the price and demand of products. Therefore, company have to reduce their price to
maintain stability in profits. This can be stopped by creating strong barriers to ensure that
competition is not affected by new entrants. Marks and Spencer should focus on opening small
stores and segmentation of market because these opportunities can invite the new entrants in
market. It will affect their sales and it will lead to reduction in profits (Pestle, Crowley,. and
Weirauch,., 2014.)
Suppliers power- suppliers can easily affect the price of goods and services. This is due to the
number of suppliers that contributes in selling of products. If fewer suppliers are there the
company will be entirely depend upon them for selling of goods. Moreover, they can change the
price of product because they will be holding more power. This will affect the company profit
and brand image in the market. High price will lead to loss of customers and low price will affect
the profits. Suppliers can also ask for more commission from the company. Marks and Spencer
is entirely dependent on suppliers for their sales so they have made strong policies regarding
their power and contribution in profits. No supplier is allowed to change price until company
give them orders. Marks and Spencer is having full control on their suppliers. They can increase
or decrease it according to market situations.
Buyers power- apart from suppliers, buyers can also affect the price of products. It is due to the
power number of buyers is having. Large amount of buyers affects price of product due to
change in their demands. If price is not changed then customers will quickly switch to other
brand. Small amount of client base will highly affect the price. Marks and Spencer client base is
very huge so they do not hold any power to change the price. All the decisions is taken by
company regarding price changes. Marks and Spencer prices for all the stores are same
excluding the taxes. Therefore, buyers affect will not change the prices of product (Kolios, and
Read,., 2013)
Substitute threat- it comes from products that exist outside the industry. Customers can turn up
to use substitute if they find the cost of product low. Substitute compete with company product

and increases the competition in industry. This effect the overall industry sales as it becomes
difficult to retain customers. Marks and Spencer products are of high quality so customers will
only be attracted if substitute quality is as good as them. Also, they will prefer to buy from other
company rather than using the substitute.
M 3 Strategies to improve competitive edge and market position
Competition can be reduced by imposing various barriers in the market. Marks and
spencer can improve its market position by maintaining the quality of products or expanding
their business to create brand image. Or else it can determine the price according to different
market segments. The best strategy can be used is to segment the market by opening small stores
and then fulfilling the demands of different people. Also, online presence can be used to expand
business. Intensity in competition will be reduced when they will dominate the market with
positive brand image and maximum number of customers. .(Oh,, Han,, Nah,. and Kwon, 2016.)
TASK 4
P 4 Strategic planning for Marks and Spencer
Strategic planning is a process of defining the strategies that will help in achieving the
vision and mission of the organisation. Marks and spencer can develop their plan for growth by
implementing various strategies. This will help them in identifying different needs of specific
segment and according to it they can produce the product. The strategic plan will determine the
structure on how the market should be segmented.
Boston matrix- it is a planning model which helps in market growth. It consist of four
categories.
 Dogs- it shows that both the market share and growth is low which means that there will
be no generation of cash. Business is having a very little potential of growth. The current
situation of marks and spencer is focused on the people who are above the age of 40
which consumes low market share and growth ( Chiang,, Chen,. and Ho, ., 2016)
 Question marks- it is having the power to be market leader which will generate huge
amount of cash. In this market share is gained which brings cash in the company. Marks

and spencer must determine the growth of online market and then make investment in it.
It will show that the investment made will be worth or not. It can become the star if
successful.
 Stars- it generates more cash due to strong market share and high growth rate. If
company is not able to maintain star it will become cash cow when growth rate declines.
Marks and spencer must capture the market share so that it can maintain its brand image
and profits. This can be done by introducing new products or improving the quality.
 Cash cows- in this the cash generated is higher than the market growth rate. Profits
generated are stable to cover the administrative cost or paying dividends to shareholders.
Marks and spencer is having stable profits that makes them the cash cows. Due to this the
market value of marks and spencer can be determined.
Capability maturity model- it helps in improving the new product development with various
levels .Kolios,. and Read,, 2013. )
 Initial level- in this organisation is not in position to develop new product as the
environment changes frequently.
 Repeatable level- in this stage the policies are established for developing projects. the
focus is on developing strong customer supplier relationship.
 Defined level- the process regarding the development of new products is made. It
integrates the practices and process as a whole.
 Managed level- the managers establish process for measuring the results. It allows
organisation to predict trends in product quality.
 Optimised level- the entire organisation focuses on continuous product development.
Ansoff matrix- it is a marketing tool that is made to develop a new product or market. With the
use of this business can expand or grow in different markets. It contains four strategies:-
 Market penetration- it states that the enterprise should focus on selling existing product
in existing markets. It helps in increasing customer satisfaction and loyalty. Marks and
spencer should focus on this to maintain stable profits. This will help in retaining their
customers increasing market share (Prajogo,., 2016.)

 Market development- in this new markets are searched out to sell the existing products.
It is useful when there is no growth in exiting market. This is done when there are
opportunities to expand in new market. Marks and spencer is already involve in UK so
they should now focus on markets like India and China where ample opportunities for
growth exist.
 Product development- it can be applied only when the firm is already having a strong
market share and do not want to expand in new market. In this new products are
developed to attract existing customers. It helps in retaining customers. The client base of
Marks and Spencer is very large so it make innovation in their products or can introduce
entirely new products. It will attract them to buy which will lead to rise in volume of
sales.
 Diversification- it suggests that new products can be introduced in new market to attract
new customers. This provides a new client base for company and a new market to focus
on. But it is the most risky strategy to follow as it can lead to complete failure. Marks and
spencer needs to have a depth research for following this strategy. If they go on with this
surely they will be benefited because markets like India and china is having vast
opportunities for them to grow (Welford,., 2013)
Four corner analysis- it is a useful tool for analysing the competitors' strategy. The main
objective is to develop future strategies by analysing the competitors. It is used to develop a
profile of each competitor and their response to strategy. Further it determines reaction of
competitor in environment change that may occur. The four corners are:
 Drivers- in this competitors current performance and market position is analysed. It
helps in getting their reaction on external forces and how their strategy will be changed. It
will help Marks and spencer in analysing their competitors strategy and according to it
they develop their strategy.
 Management assumptions- what assumption a competitor is having about in the
industry will influence its strategic decisions. With these competitors biases and

weakness can be analysed. Marks and spencer can take advantage of their competitors
weakness in better differentiating of products and reducing competition.
 Strategy- it shows that how company is competing in the market. If current strategy is
giving good results it is expected that it will compete in same way in the future. Marks
and spencer should focus on strategy that is giving better results (Kolios, . and Read, ,
2013.)
 Capabilities- it determines the ability to respond to external change. All of above
determines the nature and timings of competitors actions that they will take in the future.
In marks and spencer strategies must be made according to the change that might occur in
the future.
Value chain analysis- it shows the value of product to their customers. It is important to
understand how activities within the organisation create value for customers. There are three
steps in value chain analysis:-
 Separating operations- Primary activities involves delivering the product and after sales
services whereas supportive activities facilitates them. It will help marks and spencer in
satisfying customers and smooth business operations.
 Allocating cost- it gives an insight to managers about the internal capabilities of marks
and spencer. It provides financial support to focus on other activities. The managers of
given firm should focus on activities which needs improvements.
 Market success- for this three important considerations are evaluated for role in value
chain. The mission defines the activity of organisation. Industry type shows its nature and
influence on activities. Value system shows how goods are delivered to end consumers.
The given firm value chain system must be fast enough to satisfy the market needs.
Early warning systems- it is useful in predicting the events that affects the market situation. It
includes seven components that are used. Market defines the geographical region and the
information collected is filtered according to the significance. Predictions are made and potential

impact is found out. Events that have a high impact are analysed and contingency plans are made
in strategies (Shoham, and Paun,, 2015.)
War gaming- A technique which is used to identify the competitors assumptions about their
strategies. It is particularly used when organisation is facing critical strategic decision. It is done
by senior managers and in off site venue.
M 4 Management plan with strategic objectives
In order to achieve the vision and mission marks and spencer must make the strategy of
market segment. It will allow them to identify demands of different people. Accordingly, they
can produce products for various segments to satisfy their demands. It will help them to attract
new customers resulting in more sales. In this way they can gain market share and achieve their
objectives.
CONCLUSION:
Business strategies plays a crucial role in the development of effective organisation.
From the present report, it can be concluded that a great assistance is rendered by the strategic
planning of the organisational objectives. In the undertaken assignment different aspects of this
planning are explored. Different requirements of framing strategies for businesses are analysed
such as evaluation of external and internal environment, etc. Thus, the findings from this report
will assist in analysing the importance, application and execution of reliable business strategies
for growing organisation

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