Analyzing the Impact of Macro Environment on Business Strategies

This assignment discusses the impact of macro environment on business strategies using a case study on Marks & Spencer. It analyzes the influence of political, economic, social, technological, legal, and environmental factors on the organization. It also explores the internal environment and capabilities of the company using the SWOT analysis and VRIO model.

Business Strategy

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
P1.Analyse the impact and influence of the macro environment on organisation and its
strategies......................................................................................................................................1
TASK 2............................................................................................................................................4
P2.Analyse the internal environment and capabilities by using effective framework................4
TASK 3............................................................................................................................................6
P3. Application of Porter's five force model to evaluate the competitive force of the specific
market industry............................................................................................................................6
TASK 4............................................................................................................................................7
P4. Applying a range of theories, concepts and models to interpret and advise strategic
planning.......................................................................................................................................7
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business strategy refers to that plan of actions which is developed and formulated by the
management of company so that organisation can run its business in effective and efficient
manner. It can be the set of practices and moves which can be utilised by the organisation for
getting attention of its potential clients, strengthening execution, accomplishing organisation's
objectives and compete effectively (Akter and et. al., 2016). It is a master plan which is utilised
by the management for securing competitive position in marketplace, carrying operations and
attaining aims and objective of the company. With the help of business strategy, company find
out its strengths and weakness. Effective business plan of actions is good for the company in
term of maximising profitability and sustain market position. This assignment is based on Marks
& Spencer which is a British international retail firm and operated its business across the world.
This organisation was established in 1884 by Michael marks and Thomas Spencer and
headquartered in Westminster, London. This report will discuss about the impact of macro and
micro environment on organisation and its strategies. Further, will explain about competitive
forces of specific market industry for the company. Models, theories and concepts will also
define that help in acknowledging and interpretation of strategic planning of a company.
TASK 1
P1.Analyse the impact and influence of the macro environment on organisation and its strategies
Macro environment refers to those major external and uncontrollable components that create
impact upon a company, its business strategies and decision making. Basically, this macro
environment consist external factors like economic, social, legal and environmental etc. In Mark
& Spencer, these macro environmental factors also affect the company and its business
strategies. So, to determine the impact and influence of the macro environment on business and
its strategies, the management of company can use PESTEL analysis.
PESTEL Analysis- It is a tool and technique which is use by the management of company to
determine and analyse the macro environment factors that have an influences on the
organisation. This analysis provide information about the impact of external environment upon
business strategy and organisation (Amran and et. al., 2016). This analysis consist factors like
political, social, economical, technological, legal and environmental. The brief explanation of
these components are described as below:
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Political factor- This factor is totally about the government interventions which are make
in context of nation’s activities, strategies, laws, plans and policies. This consist government
policies, corruption, political stability and instability, taxation policies, foreign trade policy, trade
restrictions and others. Free trade is one of the most favourable aspects of present time that has
been set up among a multitude of nations (Boyd and et. al, 2017). Mark & Spencer who mainly
run its business in UK but it has its locations in different nations so this factor positively affects
M&S. It permits the respective company to import foreign commodities for selling in to their
outlets or stores at low price in comparison to others with maintaining a healthy profitability
ratio. Brexit influence the respective company unfavourably because due to Brexit the cost of
raw material and machinery increased cause of inflation so the production costs for M&S which
negatively affect the profitability of the firm.
Economical factor- It is another factor of the respective analysis and it includes tax rate,
currency rate, exchange rate, growth rate, inflation and deflation rate, employment and
unemployment rates of the nation. These all components create their direct and indirect impact
upon the business strategies of the specific company till long or short term. These factors also
affect the buying behaviour of the individual and make change in their needs and demands. M&S
is a retail company and in UK the current market trend is shifting towards small retail stores.
These outlets offer a low mark-up cost thereby permitting the respective company to retain a
premium status and influence it favourably in term of investing low cost and provide maximum
profitability. In UK, current economic situation is favourable with low to moderate interest rates
which show a sign of healthy economy and good economic situation of the country is a signal of
maximising disposal income which helps in doing the good business of the respective
organisation. This facto positively affect because interest rate is low the firm can borrow fund to
make expansion in their business. M&S is operating its business globally so when the changes
are occurred in taxation of different countries then it affect negatively and unfavourably to the
business and business plan of action to the respective company.
Social factor- This factor consists culture, trends, population trends like population
growth rate, age, gender, income, occupation, living standard, needs, taste and preferences etc.
These elements affect the plan of action of a particular organisation when changes are occurred
and generated within them (Burlton, 2015). Change in trends and taste & preferences of the
customers are the main elements which affect the business of M&S because when trends and
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fashion change then needs and tastes of potential clients of the respective firm also change. This
negatively affects the organisation because the company does not offer trendy clothes as per the
needs of its global customers. Another factor is culture which unfavourably influence the
company because M&S run its business in Asian countries but not offer the clothing products as
per the culture of these countries so the sales of the firm is minimising due to low purchasing
power of the consumers. For example the respective does not offer ethnic and traditional it only
provide western wear. But in Asian countries people prefer traditional cloths and it negatively
affect the company in term of sales.
Technological factor- This component of PESTEL analysis relate to advancements in
technologies that may create impact upon the business operations and strategies of the company
and the market positively and negatively (Eaton and Kilby, 2015). It involves technological
incentives, the extent of creation, automation, investigation and development activity,
technological change and awareness about technologies etc. These all components may affect
decision making to enter certain sector with the purpose of launching specific goods or to expand
the production process in other nations. In M&S, the management of the company use online
shopping technology in its business which positively influence the business of the respective
organisation because in UK and other nations people more prefer online shopping due to lack of
time or busy life schedule. Another technical factor is utilisation of big screens in stores which
promote apparel which assists consumers to browse by the products and place orders.
Legal factor- This factor refers to the laws and regulations which are formulated by the
government of the particular nation to produce products and operate the business of the
company. It consist different laws like discrimination act, consumer protection act, employment
laws, intellectual property rights, health and safety laws etc. This factor also influences the
company and strategies of it when the management of the company does not aware with them
and not follow them effectively. The management of M&S effectively follow employment laws
and legislation like equality and discrimination acts which provide equal rights and opportunities
to the workers within the company which positivity affect the firm in term of growth and
success. Another factor is heath and security laws which also positively affect the company
because the respective company provide safe, secure, healthy and friendly work place to their
employees where they deliver their efforts and effectiveness.
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Environmental factor- This is the last component of this analysis and most crucial due to
maximising scarcity of raw materials, pollution targets, carbon footprints, environmental laws
that are established by the national authorities (Grayson and Hodges, 2017). These components
consist ecological and environmental aspects like weather, climate, change which may affect the
business of the company. In M&S, the management of the company use plastic bags in
packaging of its products which adversely affect the business of company because in current
time, customer is conscious about the environment and they prefer packing of recycling material
which did not create negative impact upon the business of the organisation. For example, the
management of marks & Spencer conduct its production process in effective manner so that did
not harm or negatively affect the environs. The administration of the company also conduct
activities for the welfare of the surrounding like plantation etc. within its CSR activities. This
strategy favourably affect the company in term of improving its brand images and profitability.
The company also appropriately follow environmental laws and regulations which are developed
by the national authorities of various nations in which it is operating its business.
TASK 2
P2.Analyse the internal environment and capabilities by using effective framework
Internal analysis is the process and activity of analysing and monitoring the strength and
weakness of the company that focuses on those components within its domain (Higgins, and et.
al., 2015). This analysis provides an insight to a company in terms of competencies and desirable
improvements which can be beneficial for the company in directing the ways and assist the
business to develop operations and accomplish consumer fulfilment and higher profitability. The
management of Marks & Spencer use SWOT analysis for determining the strengths and
weakness of the company.
SWOT analysis- It is a strategic tool and technique which is used by the companies to analyse
the strengths, weaknesses, opportunities and threats to firm. Strengths and weaknesses are
the internal factors of company whereas opportunities and threats are external because they
can be analysed by observing the extrinsic environment.
Strengths
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High quality products- the products which are provided by Marks & Spencer are of high
quality and this company believes in offering better quality products and services to its potential
clients.
Strong brand image- The respective company has good position in the market because it offer
high-end value goods which target the premium segment (Johnson, 2016). The organisation sells
stylish, modern, trendy and sophisticated apparel in its clothing line. This has resulted in a clear
branding and target audiences are loyal and sure of what to expect from the store of respective
firm.
Innovation- The management of company make innovation in its business operation by
using new technologies regarding promotion such as social media, web advertisement etc.,
making innovation in exploring its product line and others which has been the respective
company, in the race primarily because of their spirit of innovation (Lehmann, 2016).
Diversity- It is an another strength of this company that it have approx 80,000 employees
who make their contribution in running the business of this respective firm. The organisation
encourages diversity and thus employees from all ethnicities, religion, culture and genders are
recruited by it to make contribution in running its business. The firm also provide equal
opportunity to its workforce so that there is no discrimination takes place at the workplace.
Weaknesses
Customer satisfaction- The product and services provide low satisfaction to the needs
and demands of customers and there have been a lot of problems in context of returns policy as
well as in store experience. This provides negative outcomes in term of poor brand loyalty and
maximised brand switching.
Supply chain scalability- It is another weakness of the respective company that it has
poor scalability of the supply chain. Though, the organisation has been trying to provide
international access to their products by their online store but they are not able to scale up their
supply chain to deliver to all locations transnationally.
Inability to penetrate successfully in foreign markets- Marks & Spencer basically has a
presence in Europe, UK and US. Though they opened their store in Asia and middle East but
they have been unsuccessful to get customer or in winning them because most of their designs
are western and not traditional.
Opportunities
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New Segments- Fashion industry is an developing business sector so new segments come
up on a ongoing basis. In Asia, there is large demand for ethnic and tradition wear so making
segmentation in this sphere they can get various growth options in term of maximising
profitability, productivity and customer base (Malerba and et. al., 2015). This is one area which
can display a lot of expectation to the retailer.
Internationalisation- It is another way to gain growth opportunities. Marks & Spencer is
operating its business by starting its stores in UK, US and Asia so expanding its business in those
nations where it is not operating, the firm can get several; chance of making development in its
business. It can design product as per consumer’s needs and their culture which will help in
providing success to the business of repetitive firm.
Treats
Competition- There is number of organisation which provides similar products as Marks
& Spencer and creating high level of competition (Martinez-Simarro, Devece and Llopis-Albert,
2015). This generates threat and risk of competition and affects the competitive advantages of
the company in negative manner.
Changing trends in the clothing space- The modifications and changes are occurred in
clothing industry due to generate change in fashion and trend frequently. This makes change in
consumers’ needs, taste and preferences which generate threat for the business of company.
To analyse the capability of the company, the management can use VRIO model for this.
It is as beneath:
VRIO Analysis of Marks & Spencer
Basis Valuable Rare Inimitable Organised
Brand reputation Yes No No No
Infrastructure Yes Yes
Technical
resources
Yes Yes Yes No
Human
resources
Yes Yes Yes Yes
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Valuable- In Marks & Spencer, the brand images of the company is a valuable resource
for the company because the organisation offer quality products that are liked by its customers.
This help in improving the brand image of the company in favourable manner.
Rare- The infrastructure of the respective company is good because it help in
manufacturing quality products. It work as per the regular innovation so able to fulfil the needs
and demands of the customers so it is valuable. The firm use unique technologies of production
which is rare.
Inimitable- The management of the respective company use new and unique
technologies and machinery which is rare and valuable for the company. The company has
patent for its technical resource so they are inimitable.
Organisation- The administration of Marks & Spencer have skilled, qualified and
knowledgable workforce which in running the business of the company and accomplishing the
set business objectives of the firm. So they are valuable, rare due to have specific skills, imitable
and organised cause of working in a structured way.
TASK 3
P3. Application of Porter's five force model to evaluate the competitive force of the specific
market industry
Porter’s five force analysis of Marks & Spencer
It is an analysis which used for analysing the competition in the specific industry with
which an organisation run and operate its business. This model was developed by Michael Porter
in 1979 to understand the five key competitive forces that are influencing an industry. These
components determine a sector’s framework and the extent of competition in that industry. This
analysis is basically used for find out an industry’s structure to monitor corporate strategy. In
context of M&S, the brief description of this model in term of measure competition intensity,
attractiveness and profitability of a sector and market.
Threat of new entrant- M&S operating its business in retail sector so it is on safer side
because of the barriers to enter this industry. It is hard to enter in this sector because there is need
of huge investment of fund to operate business within it. There are also several rules and
regulations which are compulsory to follow by the company which want to operate within this
sector so it is not easy to enter in it. Another factor is trust and brand images of the company
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which is maintained by it cause of offering quality products and services as per the needs and
demands of the consumers (Motohashi, 2015). Absence of experience and knowledge also create
barrier for new entrant. So treat of new entrant is low in context of the respective company.
Bargaining power of supplier- In context of M&S, the bargaining power of suppliers is
low because it is not totally dependent on the suppliers as it sell its own products. The
management of the respective company basically purchases raw materials from primary labels
suppliers and not purchase final products so it is the benefit for the organisation and they can go
for large margin base (Mourdoukoutas, 2015). There are many suppliers who are from
developing nations which depend on western organisations for their contracts.
Bargaining power of buyer- The management of the company focus more its own
products in comparison to its rivals who are making their concentration on customers instead of
products at the same time. So this force highly affects the company in term of high bargaining
power of purchasers. The reason of it is that the organisation makes its concentration on product
oriented approach. There are number of organisation in the market and they make focus on
customer oriented approach which leads to loss of loyal consumers and hence the loss of
business in context of M&S. The respective company focus on its product but other companies
concentrates on the customers needs so M&S loss its loyal clients.
Threats of substitute- M&S is selling food and clothes that have no such substitutes
accessible in the marketplace. But the threat is created by the competitors because they are
selling same kind of product like as M&S. There are number of organisations in the market
which operating their business in food and fashion sector and they offer similar products as per
the respective company so generate adequate threat. The another reason of generating this kind
of threat is that the company is offering branded or quality product so there are some people
which make compromise with quality and prefer to pay less to low quality products.
Threats of competitors- There are number of organisation which are operating their
business in similar sector like ASDA, Tesco, Sainsbury etc. which create competition for its food
products and ZARA, John Lewis, GAP, Topshop etc, generate competition for its apparel
products (Nohria, 2017). There are several organisations which provide good quality products at
affordable and reasonable prices in comparison to M&S so it generate moderate risk of
competition for Marks & Spencer.
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TASK 4
P4. Applying a range of theories, concepts and models to interpret and advise strategic planning
Strategic planning is a process and activity of a company which explain its strategies,
decision making distribution of the resources to pursue plan of action. It can be an art of framing
business strategies, implementation of them and analysing their impact upon the business and
activities of the company. This planning process is done or organised by the organisations for
making growth and development in the business of the company in term of gaining profit and
enhancing productivity of the firm (Pisano, 2015). In M&S, the management of the company
use Ansoff Matrix for making development in its business and do strategic planning in context of
it.
Ansoff Matrix
It is a growth and development model which is developed by Igor Ansoff in 1957 to
make improvement in the business. This matrix also helps in analysing the risks of growing their
business. It is a strategic marketing tool so it is affiliate an organisation’s marketing strategy with
its general strategy and outlines the options of growth, development for the company. This model
consist four growth strategies like penetration, market development, product development and
diversification. The brief explanation of this concept in context of M&S is as following:
Market Penetration- It is the first business development strategy which can be adopt by
the companies for making development and growth in their business. In this strategy, the
management of the firm make development in the growth of the company by offering its existing
products in existing market by making improvement in its promotional tools and pricing
strategies with the motive of getting attention of number of consumers and development in
business. There is less risk because the present commodities are sold within current marketplace.
Product development- It is another growth strategy of Ansoff Matrix which is also
crucial for improving the business of an organisation. Within this plan of action, the management
of the company make development in the business of the firm by launching new products in
existing market with the purpose of fulfilling consumer’s needs. It helps in maximising the sales
of the company, increasing customer base and improving market share (PONIATOWSKA-
JAKSCH and Pakulska, 2015). This strategy is more risky in comparison of market penetration
because within it, new product is launching within existing market so it does not confirm that the
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new goods are liked by the potential clients of the firm or not. So it can affect the company
positively as well as negatively when customer like product or not like respectively.
Market development- Within this growth strategy, the management of a company can
make development and growth in the business by making expansion of business in another
market or nation. Within it, the organisation can operate its business in to different countries and
expand its business in other different industries (Thompson, Strickland and Gamble, 2015). For
example, if the company operate in food industry then it can also operate in clothing sector,
tourism industry and others. This business development plan of action is risky more than product
development because within a company offers its products and services into new market or
sector, it is not clear that the commodities are liked by the people of that nation in which
company make expansion.
Diversification- It is the last growths strategy of Ansoff matrix within which organisation
make growth and development in their business by making expansion in their business by
launching new products and services. There is high risk because it is not sure that product and
services are liked by the new market and customers because in the market there are number of
consumers and they belong from different culture and have diverse needs, taste & preferences.
From the above mentioned information it can be said that management of M&S can
adopt product development strategy which is crucial for the company because by accepting it
the firm can launch its new products in to existing marketplace in term of fulfilling consumers
needs, increasing sales and profit margins, maximising customer base and others. Because in
Asian nations the company operate its business but not offer clothing products as per the culture
of that countries. So by offering ethnic and traditional clothing products, the firm can make
success in its business. In that sphere people prefer products as per their culture so fulfilling
consumer needs and making development in the profitability the firm can adopt product
development growth strategy.
Executive summery- Strategic planning is a process of making strategic or purposeful plan for
the business of the organisation to make development and success in the business of the
company. This planning process consist information about the growth of the company by using
product development strategy. It also includes the vision, mission an objectives which are
developed for success of the firm.
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Overview of the company- Marks & Spencer is a British international retailer that specialise in
selling high quality clothing products, home commodities and food products (Yoffie and
Cusumano, 2015). This firm was established by Michael Marks and Thomas Spencer in 1884
and is headquartered in London UK. At present time, it has 959 stores across UK in which 615
only sell food products. There are approax 80,787 employees who are employed by the
respective company and they make their contribution in running the business activities of Marks
& Spencer (Akter and et. al., 2016). The respective company offer products of different brands
like Per Una, Autograph, Limited, Rosie, Blue Harbour, M&S Collection and M&S Energy etc.
Marks & Spencer operate its business at 1463 location across the world (About M&S. 2019).
Mission- The mission statement of the company is to offer products as per the needs, culture,
taste & preferences of the consumers which provide satisfaction to their desires.
Vision- The vision of the organisation is to earn profit, maximising market share and improving
profitability of the company by providing quality products as per consumer’s requirements.
Objective- The business objectives of M&S are as follow:
 To increase 5% sales of the company within 2 years by offering quality products as
per customer’s needs.
 To maximise the profit margins of the organisation by 4% within 1.5 year time
period.
Strategy-It refers to those tactics and plan of actions which are formulated by the company to
resolving issues which are occurring in the business of the organisation. The management of
M&S can use product development growth strategy which help in providing the success and
development to the company in term of making development in product lien of the company.
The management of M&S can use marketing mix which helps in providing information about the
products to its customer that the organisation manufactures traditional and ethnic wear in its
clothing products. In prices the company can use competitive and penetration pricing strategies.
For promoting and provide information about its new products, the management of the company
will use social media, TV, web advertisement and other which help in awaring and making
familiar consumers with the company (Amran and et. al., 2016). For offering its products, the
company can provide its products in its store or choose online option as the place of offering
products. It will help in accomplishing the set aims and objectives of the firm within its set time
frame.
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CONCLUSION
From the above information, it can be summarised that business strategy indicates to those
plan of action which are formulated by the management of company for effective running of the
organisation. For the growth and success of a business, it is crucial for the firm to develop
effective policies which help in running the business of the company in competitive marketplace
and assist in gaining competitive advantages. PESTEL analysis helps in providing information
about the outside factor of the environment in which organisation running. SWOT analysis
provides information about the strengths, weaknesses, threats and growth options so that the firm
can make development in its business. Porter’s five force model is effective to monitor the
competition in the industry in which specific organisation operates its business. Different
theories, models, framework and concepts help in making strategic planning for the success and
growth of the firm in effective and efficient manner.
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Online
SWOT analysis of Marks & Spencer. 2019. [Online]. Available Through:
<https://www.marketing91.com/swot-analysis-of-marks-spencer/>.
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ms/>.
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