Marks & Spencer's Business and Sustainability Challenges

This assignment provides a comprehensive analysis of Marks & Spencer's (M&S) business and sustainability challenges. It covers various topics such as the company's struggle with supply chain sustainability, data breaches, digital transformation, and the impact of Brexit uncertainty on their operations. The assignment also discusses M&S' efforts to innovate and adapt to these challenges through partnerships with companies like TCS and True. Furthermore, it highlights the company's commitment to becoming a 'digital first retailer'. Overall, this assignment offers a detailed examination of M&S' business issues and their attempts to address them.

BUSINESS AND
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
Section 1...........................................................................................................................................3
LO1 Different types of organisations..........................................................................................3
Size and scope of the organisations............................................................................................4
LO2 Interrelationship of various structures and functions within an organisation.....................5
Section 2...........................................................................................................................................6
LO3 PESTEL model of the sector for analysing impact of macro environment on UK retail
sector...........................................................................................................................................6
LO4 SWOT analysis and Porter five forces analysis for determining the influence on decision
of the supermarket.......................................................................................................................9
Impact of macro and micro environmental factors on business objectives and decision
making.......................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment refers to the system in which businesses and individuals perform
their function for accomplishing the desired organisational goals. The business environment is
highly competitive due to which companies need to determine the changes in it. The taken firm
for this assessment report is Marks and Spencer, which is a retail firm in UK, providing services
and products to the customers worldwide. The assignment is divided into two parts. First part
will cover the various types of organisations and their purpose along with the difference between
large,, medium-size, micro and small enterprises in terms of market share, growth and profit..
Further, this report will also cover the different kinds of structures relating to size and scope of
operations along with the complexities of transnational, international and global organisation
structures. The second part will cover a case study which includes a PESTEL model of the sector
for analysing the impact of macro environment on UK retail sector. Furthermore, the second part
will include a SWOT analysis and Porter’s five forces analysis for determining their influence on
the decision making process of the supermarket.
Section 1
LO1 Different types of organisations
Business organisations main purpose is to provide their products and services to the
customers in return of money. These businesses differ from each other in terms of size and
purpose as well as the products provided to the customers. These businesses are formed for
achieving their vision and purpose for earning the money. The businesses are mainly classified
into three types which are profit, Non-profit and public organisations which are having their own
purpose for establishing the business. Public organisations are the firms which are operated and
regulated by government and the owners or individuals are not liable for the loss and profit of the
firm rather the loss is bared by government. The purpose of this organisation is to provide
products and services to the customers at no charge or lower rates so that they can purchase the
offerings for improving their life standard as well as to achieve the sustainability. Example of
such organisation is NHS which is a UK based health care organisation providing services to
patients of UK at low prices (Barringer, 2015). NHS is providing health services to the citizens
of UK, settled people or EEA citizens. The purpose of this organisation is to provide health
treatment and services to the people at affordable and lower rates so that they can take the

treatment for improving their life standard. However the government has made some changes in
2015 when the Immigration Act 2014, has introduced ‘’the immigration health surcharge ‘’
where international citizens are charged a fee with the immigration application to cover basic
health expenses (Powell and Bate, 2019). Profit organisations are companies which provide
their offerings to the customers for earning money rather than enhancing the life standard of the
people. The purpose of these organisations is to achieve high market share and profitability for
themselves. Owners are liable for losses. Example includes: M&S which is a UK based firm
providing products and services to customers for enhancing their profit. The company is
providing a large range of products such as clothes, daily household, fashion accessories etc. of
different brands in one place to customers. The purpose of this organisation is to achieve high
market share and profitability for themselves as well as to cover more market share in order to
improve their revenue. Non-Profit organisations are the firms which are formed by the
individuals for the welfare of the society, where individuals work together for a common scope.
Purpose of such entities is to improve the life of people who are facing issues in achieving
standard decent living conditions. In such companies,, people come forward as volunteers to
improve the standards of the society. Example of such organisation includes Save the children
which is a UK based firm providing their services for improving the life standard of the children
by providing them opportunities. Purpose of this firm is to change the life of the children who are
working from a young age, so that they can have decent living conditions (Bennett, 2014). The
non-profit organisation is providing services for improving the life of children who are exploited
and harassed by people.
Size and scope of the organisations
Organisations perform their operations and functions for providing their products to the
customers. The size and scope of these organisations differs from each other due to their type of
products and services as well as due to the revenue and sales. The organisations are mainly
classified into three types based on the size and scope which are micro, small, medium-size and
large enterprises. Micro organisations are the firms which are established with the help of less
than £1million. These organisations have few employees i.e. around 5 to 10 and net income of
around £0.5 million. The scope of such organisation is narrow as they are providing their
products and services to the customers for earning their livelihood. Examples are Adams

restaurant, Casamis etc. which are operating in private sector of UK (Type of firms in terms of
Size, 2017).
Small organisations are the firms who are having less than 50 employees with a net
worth of £2 million. These organisations have narrow scope, as they are operating at small scale
and provide their products and services to a niche market. The types of organisations are
established through partnerships and sole proprietorship. These firms usually have low market
share and profit due to operating at a niche market. However, these can gain quick growth if
innovative ideas are generated by the firm which will also assist in achieving sustainability.
These organisations can be established with an amount of more than £1 million. Examples of
these firms are Electrotech limited, Clarasys etc. which are operating in private sector.
Medium organisations are the firms which are formed with an amount of around £10
million to £50 million. These organisations employ 50 to 249 employees with revenue of less
than £50 million (Bowersox, 2013). These firms usually operate at more than one location. The
scope and size of such organisations is wide as these operates their functions and processes at
medium level and also the functions are performed at more than one location. The examples of
these firms include Travelodge and Rowlinson Knitwear which are operating in private sector of
UK. Such companies take time in gaining growth due to the wide range of operations and
functions. However these can easily sustain the market for a long period of time by providing
innovative products and services. The market share and profit of these firms usually varies based
on the market and industry in which the business operations are performed.
Large organisations are the companies which have more than 1000 employees with an
annual revenue of over 1 £billion (Chesher and Kaura, 2012). The size and scope of these firms
is very wide as these operates their business operations in various countries and provide the
products and services to a large number of people for improving the profit and sales. The
examples of such firms include M&S, Morrisons, and Volkswagen etc. which are operating their
business in private sector of UK. Such businesses takes huge amount of time for gaining the
growth as such firms cover more market share and profit which is also consumed in operating the
business at global level.

LO2 Interrelationship of various structures and functions within an organisation
There are various departments in Marks and Spencer’s which work interrelated in order
to provide their maximum contribution to the company. These departments and their interrelation
with other departments are as follows:
Marketing and sales department need to coordinate with each other for determining the
suitable channels through which sales can be improved. Marketing department provides the
suitable channel for gathering the potential customers and sales department targets these
customers to attract them towards the offerings of the company. However, this coordination
should be monitored by managers in order to eliminate the challenges of working together such
conflicts among departments (Forsgren and Johanson, 2014). This will support the organisational
structure as these departments can provide their effective contribution in success and growth of
the company.
Marketing and finance department of M&S are also working together. Marketing
department is responsible for promoting the brand image and products of the company. This is
done by using the help from finance department which provides the money for purchasing
different equipment and tools required for the marketing strategies proposed. Through this
coordination, both departments can perform the work effectively as marketing department can
guide the finance in determining the suitable sources for gathering the funds (Holcombe and
Ipate, 2012). However, without this coordination, both departments can fail in performing their
role which can have an impact on the sales and profit. This coordination is also beneficial in
supporting the organisational structure of the company as the revenue and culture of organisation
can improve.
Human Resource and Marketing department are coordinating with each other so that
the HR department can attract a large number of skilled candidates for any of the vacant
positions in the company. The marketing department posts the vacancies on different platforms
in order to attract the suitable candidates which are then screened and hired by the HR
department (Laudon, and Traver, 2016). However, there are chances that the firm can recruit the
unskilled employees as a large number of applications will be received by HR department. This
coordination between departments is beneficial as the company is maintaining the good working
relationship which will also improve the structure of the business.

Section 2
LO3 PESTEL model of the sector for analysing impact of macro environment on UK retail
sector
PESTLE analysis is used by the business organisations in order to determine the external
environmental factors which can impact the business as well as to determine the impact of these
factors on the business operations and performance. This model covers the factors such as Social,
technological, political etc. which are discussed below:
Political: These factors are associated with government policies, stability, political
conditions etc. in which the business operations of retail companies are performed. These factors
can impact the retail sector of UK as the revenue and profitability of any retail store are impacted
by the policies of government. These policies impact the economy, consumer buying habits, and
international trade laws which should be followed by the retail companies in order to reduce the
impact (Neelankavil, 2015). Brexit is an ongoing concern for the business in UK which is
negatively impacting the retail firms. For example: Due to the Brexit, Tesco has seen a sharp
drop in the value of the pound which raises the cost of importing goods. Due to this, the
company gets negatively impacted as their sales and profit is diminishing slowly. However, the
company recovered easily from this as the business is providing the products at low prices to
customers, strategy which has improved the sales and revenue and also reduced the impact of
Brexit (Tesco says price rises are last resort as UK growth hits seven-year high, 2017). The
Brexit and EU Referendum has also impacted the M&S as their sales and profit are decreasing
due to the changes (Brexit uncertainty hits M&S, 2016).
Economical: These factors are related with the interest rate, inflation etc. which should
be considered by retail companies in deciding the prices of their products. Through these factors,
retail companies can offer their products to customers according to the economic conditions for
improving the sales. If not done so, then customers won't purchase the products as prices are
high as compared to their economic conditions. Brexit in UK is influencing the purchasing habits
of customers due to which sales of retail firms are decreasing. For example: M&S is having a
large number of stores closed and for fulfilling the needs of these stores, the prices of the
products are high then the expectation of customers due to which the company is facing the
issue of low profit and sales (Reason why M&S is in trouble, 2018). Also M&S has seen sharp

decline in their sales and profit due to the 2018 retail crises in UK which is negatively impacting
the firm (Retail crisis catching up M&S, 2018).
Social: These factors are associated with taste, attitude, preferences of the customers
which can impact the retail firms in terms of reduced sales and customer dissatisfaction. Retail
industry provides products to customers which should be provided based on their needs and
demands. If these needs and demands are not considered by the management of the retail
companies, then customers may not get the products they desire due to which dissatisfaction can
arise among them. This will have a high impact on the productivity and performance of the
retailers. Retail firms needs to provide the products according to demand of consumers otherwise
customer can purchase from other stores which is also considered as social factors. Marks and
Spencer is a retail business that failed in providing the right products to customers according to
their demand which resulted in decreased sales and profit. In order to eliminate this issue, the
company had to shut down 22 stores as well as another 14 still to be planned for closures ( Marks
& Spencer to close 100-plus stores by 2022, 2018).
Technological: These factors are associated with the technological progress which should
be considered by the management for implementing them in business operations. This factor has
the capability to enhance the efficiency and performance of business if implemented properly or
can reduce the efficiency if not implemented according to the business requirements. Updated
technology is a technological factors which is lowering the customer satisfaction along with the
productivity of the company. For example: Aldi is a retail firm which has not been quite
successful in UK market when they started. In order to improve their growth, the company has
installed the bar code readers, quick checkout and online delivery etc. for providing the products
to customer in an easy and proper manner. This has improved the performance and productivity
of the company which is a positive impact (The untold truth of Aldi, 2018). M&S is also facing
technological challenges due to which their profit is lowering. However company is focused on
bringing latest technology in business operations with collaboration with TCS (M&S speed up
the digital transformation, 2018).
Environmental: Such factors include the regulations and laws of the government
regarding the conservation of natural resources and for eliminating the environmental waste.
These can impact the company in terms of reduced brand image, sales and profitability as people
can feel dissatisfied from the retail companies if they are harming the environment. The retail

companies need to take the suitable measures for reducing their environmental waste from
business operations as well as to protect the natural resources and environment. Environment
conservation is another factors which is impacting the retail firms of UK. For example: M&S in
2012 started to charge for plastic bags in order to handle the issue of use of plastic for protecting
the environment. This resulted in good reputation of the company as well as the company get
support from government due to this initiative which has a positive impact on the company and
retail industry (Marks & Spencer green chief attacks government's 'uncertain' policy, 2012).
Legal: These factors are associated with the different employment laws and regulations
which have to be followed by the retail firms of UK. The retail companies in UK should abide by
these employment laws in order to avoid the penalty and punishment from the government. For
example: Morrisons is a retail firm of UK which has been involved in a data leak scandal. One of
the auditors of company leaked details of customers. These factors includes the laws formulated
by government of UK which should be followed by the retail firms. Following this the company
had to pay a huge amount of fine as well as the leads to dissatisfaction among employees
(Morrisons faces ‘vast’ payout after losing data leak legal challenge, 2018). IN 2011, M&S is
fined with £1m after the company failed in protecting the customers, staff and workers from
potential exposure to asbestos. This results in failure of following the health and safety at work
which negatively impacted the firm (Marks & Spencer fined £1m over asbestos risk, 2011).
LO4 SWOT analysis and Porter five forces analysis for determining the influence on decision of
the supermarket
SWOT analysis is used by the companies for determining their internal strengths and
weaknesses as well as external threats and opportunities. Through this model, M&S can evaluate
their competencies in order to get competitive advantage. The SWOT analysis of M&S is as
follows:
Strengths Weaknesses
 Brand value and customer base of the
company is high due to quality based
products provided by the skilled
workers.
 Innovation is essential part of the
 Brexit has resulted in loss of the firm as
the company has to provide the
products at low prices which will also
impact the profit.
 The company is still using the out dated

business due to which the company is
successfully operating their business in
different countries with a wide range of
products (Oriesek and Schwarz, 2016).
machines in some of the stores which
are impacting their profit and sales as
well as efficiency.
Threats Opportunities
 The company is facing stiff competition
from the competitors such as Tesco
who are investing in research and
development activities.
 The company is also facing the threats
fromMarks & Spencer fined £1m over
asbestos risk. 2011 UK government as
a large number of policies of the
government are changing.
 The company has huge opportunities
for expansion in India due to the lower
trade barriers.
 Company is providing fashion
accessories in which new trends rises
on regular basis (Schaltegger, Lüdeke-
Freund and Hansen, 2012). The
company has opportunities in fashion
market which can be grabbed by
innovating new fashion products.
Porter’s five forces analysis
Porter five forces model is used for determining the five forces which can have
significant impact on the profitability and performance of a company in its industry. This
analysis for M&S is as follows:
Threats of New Entrants: New players in retail industry bring innovation and better
strategies which can impact the M&S operations. These innovations can be in form of lower
pricing strategy, reducing costs, etc. which should be considered by the management of M&S.
The threat from new entrants in retail industry is comparatively low as huge amount of money
and investment is needed along with the time for getting the success. However, M&S is taking
suitable measures in order to eliminate this threat which is done by developing innovation in
products as well as by building economies of scale in order to enhance the profit and lower the
fixed cost per unit (M&S scales back ambitions in turnaround effort, 2017).
Bargaining Power of Suppliers: This force exisst when there are few or dominant
suppliers in market which can decrease the margins of M&S. This force is high in retail sector

due to less availability of suppliers and high number of firms. M&S is handling this by building a
team of suppliers. If any supplier enhances their prices then M&S switches to another for
eliminating the impact. Company is also building efficient supply chain with multiple suppliers
(M&S: supply chain champions of sustainable business, 2013).
Bargaining Power of Buyers: Bargaining power of the buyers is very high in the retail
market of UK as there are a large number of companies providing the same products to
customers as compared to M&S. This is impacting the profitability of M&S in the long run. In
order to handle this challenge, M&S is building a large number of customer base by providing
them value with the products. Also the company is investing in the innovation for developing the
products according with the demand and need of customers which is essential for retaining them
for a long period of time (Marks & Spencer Selects True To Drive Digital Innovation Agenda,
2018)
Threats of Substitute Products or Services: Threats of substitutes products is also high in
retail industry of UK as companies are focused on developing similar products which can impact
the sales of the products provided by M&S. Marks and Spencer’s is handling this situation by
being service oriented rather than just product oriented and determines the needs of customers
for providing them products accordingly. The company is also using innovative strategies for
modifying their existing products so that competitors won't copy them. Company has ties up with
Tata Consultancy Services for innovations in products (Marks and Spencer aims to become a
'digital first retailer' with TCS tie-up, 2018).
Rivalry among the Existing Competitors: Rivalry among the retail sector is high due to
availability of multiple firms. These players are competing with each other in order to grasp
more market share. M&S is handling this force by building a sustainable differentiation as well
as by building scale so that it can compete better with other firms. Also the firm is coordinating
with other firms to for grasping more market share and profitability (Schneider and Spieth,
2013). M&S is working in collaboration with TCS which is an Indian company for updating the
technology in business as well as for innovating new products and services for satisfying the
needs of customers.
Impact of macro and micro environmental factors on business objectives and decision making
Marks and Spencer’s is an important retailer whose main objective is to become the first in
line in the retail market for covering maximum market share. This vision or objective can be

achieved by the company by determining the macro and micro environmental factors which also
influences the decisions taken by the firm. For example, by analysing the social and economic
factors as well as the weaknesses and threats, the company can improve the way their products
are provided to the customers. Similarly, by analysing the technological and environmental
factors along with the opportunities, the company can determine the aspects through which the
objective can be achieved effectively (Zairi, 2012). These macro environmental factors also
influences the decisions taken by the management as without proper information and
understanding of these factors, the developed strategies can negatively impact the firm in terms
of revenue, dissatisfaction among employees and customers etc. which will also impact the
accomplishment of the objectives.
CONCLUSION
It has been concluded from the above report that the size, scope and purpose of the
organisations differ with each other due to the scale of operations performed by the companies.
The different departments within an organisation need to coordinate with each other in order to
perform the business roles effectively. Also the management team needs to determine the macro
and micro environmental factors by using the SWOT and Pestle analysis in order to eliminate
their impact on business. The companies can also use Porter’s Five Forces for determining the
effectiveness of the industry in which the business operations of the companies are performed.
Finally, by using all these tools businesses can prevent and predict any negative impact on their
business and find new ways of growing their profit and minimise their expenses and retaining
their customers at the same time.

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