Macro Environmental Influence.

Macro Environmental
Influence
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Explain different types of organisation and their purpose...............................................3
P2. Size and Scope of different types of organisations..........................................................5
TASK 2............................................................................................................................................7
P3. Determine the relationship between different functions of organisation and their link with
organisation's objectives and structure. .................................................................................7
TASK 3............................................................................................................................................8
P4. Positive and Negative impact of macro environment on business operations.................8
TASK 4..........................................................................................................................................10
P5. Explain internal and external analysis of organisations in order to identify strengths and
weaknesses...........................................................................................................................10
P6. Explain how strengths and weaknesses are inter-related with external factors.............12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14
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INTRODUCTION
When an organization functions in an economy and a society, there are factors in its
environment on which it has no control (Birnleitner and Student, 2013). Therefore, the success of
the organization depends on it's ability to adapt to the changes in the external environment and
for that company need to closely monitor the various factors of environment. The organization
chosen for this report is Marks & Spencer. Marks and Spencer was established by Michael
Marks and Thomas Spencer in year 1886 in Leeds England. The company is one of the leading
retail brand because of its high quality, affordable prices and core British values. The report
covers following topics that are different types of organizations along with its purpose and legal
structure, their size and scope, relationship between different functions and their link with
organization's objectives and structure, impact of macro environment upon operations, internal
and external analysis to identify strengths and weaknesses, and how external factors interrelate
with strengths and weaknesses of organization.
TASK 1
P1. Explain different types of organisation and their purpose
Organisation is defined as groups or structures set up with the purpose of achieving
certain goals and objectives (Cherunilam, 2016). In this modern business world different types of
organisations are set up to serve something unique and to meet the various needs of the society.
The types of organisations are as follow-
Private Sector Organisations
The private sector organisations refers to that part of economy which is set up and run by
individuals with the profit earning motive and is not controlled by government. For example:
Marks & Spencer is an private sector organisation established by Michael Marks and Thomas
Spencer with the profit earning motive.
Purpose
The purpose of Marks & Spencer is to become sustainable and international multi-
channel retailer with motive of enhancing lives of their customers.
The types of private sector organisations in UK
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 Sole Trader- A sole trader refers to the business which is owned by one person, who rely
on their own savings and size of firm is usually small in this case.
 Partnership- Partnership refers to that type of private organisation where minimum of
two or maximum of 20 partners do business together. The terms of partnership are set out
by the deed of partnership document.
 Private limited company- Private limited companies are the one which has limited
liability and ownership is divided up into equal parts (Craig and Campbell, 2012). The
owners of the company are not personally liable for debts and have their own legal
identity.
Legal Structure
Marks & Spencer fall in the category of public limit company with the motive of
becoming largest retailer in marketplace. The shares of company are offered to general public
with the help of stock exchange and its share prices are displayed in the daily press. The
company first started as a sole trader but with the time and success it has able to become public
limited company.
Public Sector Organisations
Public sector organisations are owned and run by the government where goods and
services are provided for the benefit of the community. For example: NHS refers to National
Health Service which is a government funded medical and health care services, provided to the
people of UK.
Purpose
The purpose of the NHS is to improve the health and well-being of the UK population
and having professional staff with innovation and excellence in care.
The types of public sector organisations in UK
 Public corporations and nationalised – Public corporates and nationalised are those
type of public sector companies which functions for the interest of public and use funds
provided by the government (Gimbert, 2011).
 State Services – A state owned organisations is a public sector entity are created by a
government in order to perform commercial activities on the behalf of government.
 Local Authority Undertakings – Local authority undertakings are the undertakings
which are directly or indirectly dominated by public authorities.
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Legal Structure
NHS fall in the category of Public corporations functioning for public interest and fully
financed and regulated by government.
Voluntary Sector Organisations
These organisations are the one which are not run for profit making but to help the
community(betterment of society) and function with the money received from donations and
gifts (Golubkova and Iljina, 2014). For example, Oxfam is a voluntary sector organization
functioning in UK, who are fighting against inequality to remove poverty.
Purpose of Voluntary sector organization
The purpose of Oxfam is to work together to fight against inequality to beat poverty and
build a future where everybody can live safely, and have equal rights.
Types of Voluntary Sector organizations in UK-
 Unincorporated Association – Unincorporated association involves a small group of
members who come together for a purpose and where there is no intention to gain
property or employ staff.
 Trust – A trust is form for the benefit of a wider community where they establishes
formal relationship between needed people and income is used to promote public welfare.
 Industrial and Provident Society – Industrial and Provident Society refers to those
organizations that operates as co-operative to provide benefits to its members or to
community at wider scale.
Legal Structure
Oxfam falls in the category of Trust organisation where main motive of organization is to
provide help and support to people who are facing difficulty in life.
P2. Size and Scope of different types of organisations
On the bases of structure of organisations it's objectives, goals, market share, profit share,
growth, size, scope and sustainability, all these elements varies (Gürhan-Canli, Hayran and
Sarial-Abi, 2016).
Marks & Spencer
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 Size- Marks & Spencer is operating at international level that is present in around 29
countries with employees size of around 80,000 and covers approximately 10.66% of
market share in clothing sector.
 Scope- The company is one of the biggest retailing giant in UK which is focusing
towards taking tangible steps for making themselves more sustainable and competitive in
the market.
 Vision- The vision of the company is to stand out and set a benchmark in market which
helps working with mutual understanding.
 Mission- M&S mission is to provide quality products and services accessible to
customers.
NHS(National Health Service)
 Size- The organisation is operating in UK with the largest employees size of around 1.3
million with the aim of improving public healthcare system (LETKOVÁ, 2018).
 Scope- The scope of the organisation is quite wide where focus is on improving the
health of public and providing care to the needed families.
 Vision- The vision of the company is to deliver better healthcare services and value to the
people who are in need.
 Mission- The mission of the company is to provide the quality care services to every
person who is in need on daily bases. The company want to create an healthy
environment where no one suffers due to health problems.
Oxfam
 Size- The Oxfam has a large reach with employees size more than 10,000 with the aim of
improving the living standards of people (Lim and et. al., 2010).
 Scope- Oxfam is a global movement with the motive to build world rice in resources and
remove poverty, hence has wide scope.
 Vision- The vision of the organization is to have a world where people are valued and
treated equally that is poverty free world.
 Mission- The mission of the organization is to create deep-rooted solutions to the
injustice of poverty. As a part of global movement, they are trying to empower people to
create a secure future.
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TASK 2
P3. Determine the relationship between different functions of organisation and their link with
organisation's objectives and structure.
In order to establish presence in market through production and sell of products or
services, organisations need to function together so that the aims and objectives get fulfilled.
Organisation arrange the resources into different business functions which are inter-related and
connected.
Human Resource and Finance: Human resource is responsible for the recruitment,
selection and training of the staff members and new employees (Mbithi, Muturi and Rambo,
2017). The human resource team in Marks & Spencer is involve in building and developing staff
in order to maximise their potential in a manner that objectives get accomplished. Where as
finance section of the organisation is responsible for keeping record of all the activities which are
involving money. In Marks & Spencer finance team is responsible to produce and handle
management accounts to enable senior managers to plan and review business strategies. Both the
functions are related as finance team is responsible for allocating budgets according to the
available resources where is human resource team is responsible for forming teams according to
the capabilities and potential so that objectives get fulfilled. These functions helped the company
in accomplishing the objective of managing a stable balance between resources and budgets.
Marketing and Sales: Marketing department is responsible to investigate the market
which they are aiming at that is type of customers and preferences of the customers within the
market (Mithas, Tafti and Mitchell, 2013). In Mark & Spencer marketing department is
responsible for identifying customer needs to develop strategy accordingly to produce products
as per customer preferences. Where as sales team is responsible for convincing the customers to
purchase the final product and for that company is using selling strategies like mail shots,
telephone sales, and digital sales etc. Both the functions are related and dependent on each other
as marketing team functions on the bases of research and sales team experience with customer,
as sales team is the one who is in direct contact with the customers. These functions helped the
company in achieving its objective of profit margin, as both the departments operate and develop
strategies for increasing profits.
Structure of Marks & Spencer
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The company is following flat organizational structure in which there is a limited levels
of management between administrative and front line staff members. The company is following
this structure so that the front line employees can have interaction with top level management as
this helps in better decision making. This structure has helped the company in attaining goals and
objectives as relationship between employees and management is quite interactive and
employees feels free to provides suggestions in the decision making process which lead to fast
and effective functioning within the company. The functional areas at both the levels that is as a
whole and as a individuals managing the structure of Marks & Spencer. Human resource and
finance department is responsible for managing resources and budgets within the company
according to the strategies set by top management. Marketing and sales team are responsible for
identifying customers needs and function according to their preferences.
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Illustration 1: Flat Organisational Structure, 2020

TASK 3
P4. Positive and Negative impact of macro environment on business operations.
PESTEL analysis the Political, Economic, Social, Technological, Environmental and
Legal factors that effects the functioning of organisation (Önsel Ekici and Ekici, 2011). These
changes in the external environment has direct impact on the Marks & Spencer and has effected
its functioning and profitability in the market. These factors are as follow-
Political Factors
The political environment of a country depends on the beliefs and ideologies of the ruling
government. Political factors play a crucial role in identifying the factors that can impact the
Marks & Spencer's long term profitability in certain market.
 Positive Impact: As Marks & Spencer is operating at international level, the free trade
facility provided by modern day politics has benefited the company. Free trade allows the
company to import and export products for sale in their stores at cheaper prices which has
lead to increase in sales volume and helped in maintaining and increasing the profit
margin.
 Negative Impact: UK government decision to leave the European union and start
following Brexit has negatively effect the company. Due to introduction of Brexit, the
terms of trade regulations and traffics effect the functioning of company as they has
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reduced its employee size which lead to lot of work pressure and also resulted in the
higher production cost.
Economic Factors
The external environment factors like inflation rate, saving rate, interest rate, foreign
exchange rate and economic cycle decides the aggregate demand and investment in an economy
(Schaltegger and Wagner, 2017). Marks & Spencer uses these economic factors to forecast the
growth within the organisation.
 Positive Impact: The exchange rates and stability in currency of host country proved
beneficial for company as they are able to save extra cost that is incurring and effecting
the budget and hence able to maintained prices for its product range.
 Negative Impact: Variation in prices always been a big factor in the retail industry and
this has affect the sales of company. Clothing store budget to supermarkets budget, due to
this, new competitors are stealing away market share by providing similar products at
much lower prices.
Social Factors
Society's way of doing things and its culture impact the functioning of Marks & Spencer
and shared beliefs and attitudes of the population play a important role in determining the trends
(Shtal and et. al., 2018).
 Positive Impact: With the help of market study company come to know that society is
shifting towards the consumption of ready meals. Marks & Spencer identified the
massive opportunity for food store and captured large market share.
 Negative Impact: Marks & Spencer has established its long standing reputation in the UK
market but new and trendy retail chain such as Arcadia, Uniqlo, Primark, etc. pop up
every year and effect the reputation of company as less trendy brand for consumers.
Technological Factors
In this fast moving world technology play a crucial role that is over the last five year the
company has been transforming really fast, not giving chance to the competitors to cope with the
changes.
 Positive Impact: One of the modern day retail trend especially in food stores, is self
checkout. This has helped the company as they require less man-power at stores and save
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the cost. Another trend in retail market is that of online shopping, Marks & Spencer has
already established its online presence, offering almost all of their goods and services.
 Negative Impact: Technology up-graduation at few points create problem for the
company that is issues like wrong item delivered, product didn't deliver, etc. need to be
solved by the staff members and creates lot of confusion and problems.
Environmental Factors
Different markets have different environmental standards(laws and liabilities) which has
impact on the profitability of Marks & Spencer. So, its important to study and evaluate the
standards and market before entering new market.
 Positive Impact: Marks & Spencer has become a more sustainable retailer and this relates
to a multitude of environmental factor (Van Buren III, Syed and Mir, 2020). Company's
decision to sell the fair trade products created better compensate foreign producers.
 Negative Impact: Laws regarding air and water pollution has lead to decrease in the per
day production capacity of the company. More over the delivery services to customers
lead to increase in the cost hence, effected the budgets and strategies.
Legal Factors
Legal regulations and laws are being formulated and companies are monitor on the bases
of these legal rules so, its mandatory for companies to follow all set of rules.
 Positive Impact: Marks & Spencer cover a large market share, so has huge amount of
data of customers which they are able to protect and established trust in the eyes of
customers. Thus, this helped in gaining customer attention towards their products and
lead to increased in the sales volume.
 Negative Impact: Due to addition in employment law and increase in wage rate
percentage, the expenses of company has increased and lead to decrease in profit
margins.
TASK 4
P5. Explain internal and external analysis of organisations in order to identify strengths and
weaknesses.
The SWOT analysis involves factors that influences the external and internal situations
within the organisation that is a study undertaken to identify company's strengths and
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weaknesses(internal) as well as its opportunities and threats(external). SWOT analysis of Marks
& Spencer is as follow-
Strengths
Strengths describe at what organisation is performing excellent and what factors
separates it from the competition in the market. Marks & Spencer strength's are as follow-
 The company is offering wide range of product lines with latest industry trends that is
introduction of WOW range for promoting health food among the customers. This
strategy is providing competitive advantage to the company.
 Marks & Spencer is having strong e-commerce infrastructure as it has spread its wings
abroad and spending heavily on systems and logistics in order to reach customers through
mobile devices, stores and the web.
Weaknesses
Weaknesses involves those elements which stop an organisation from performing at
finest level. These are those areas where company needs to improve to sustain in market. M&S
weaknesses are as follow-
 Company is focusing and relying too much on UK market which make it unsafe to
market conditions in the local market.
 Customers always expect something new and unique where as frequent recall of
products by company leads to loss in confidence of customers. This is because there are
so many substitutes in market which are giving strong competition to the brand.
Opportunities
Opportunities refers to those external factors which are favourable for the organisation
and provides competitive advantage. M&S opportunities are as follow-
 With the help of digital platform(you-tube advertising, through websites, etc.) company
has and continuously increasing its online presence to bolster its market position. This
has helped company in entering new marketplace with help of online presence.
 Company has improved its clothing segment by reshaping cloths according to the
requirements of customers which has lead to increase in the sales volume.
Threats
Threats refers to those factors which has the potential to have negative impact or harms
the functioning within the company. M&S threats are as follow-
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 Company is facing difficulty in UK food sector due to tough competition and due the
changes in the taste of customers.
 Due to frequent change in customers preferences and attitude regarding trendy cloths,
company is facing difficulty.
SWOT analysis of Zara is as follow-
 Strength- The company is providing designer cloths which are preferable by customers
and is having large number of stores across the globe. Moreover they refresher its
collection in week in order to provide quality and fashionable range of products.
 Weakness- The changing in the trends and preferences of people lead to increase in the
need of fast fashion changes due to which its work load and press increases which lead to
many problems in various departments.
 Opportunities- The company has vast opportunity in the marketplace as it provides rapid
delivery to its customers with new and fashionable range. It is preferred by people due to
its quality and design hence covering large market area.
 Threat- Due to increase in competition they are facing problem as other brands are
providing tough competition to them with their range of products.
P6. Explain how strengths and weaknesses are inter-related with external factors.
Planning process involves factors that has a impact on the success of the business where
external or internal factors effects the organisation in negative or positive way.
Political factors has helped Marks & Spencer in strengthening its position in market
because free trade facility has lead to reduction in expenses as at low cost company can supply
its product (Yüksel, 2012). This has helped company in maintaining regularity in its pricing
range as M&S usually don't make changes in its price on frequent bases.
Economic factors has lead to weakened the position of Marks & Spencer in the market
as due to various in prices, the company budgets get effected and lead to increase the cost. New
competitors are entering the market and stealing away market share by providing substitutes at
comparatively at lower cost.
Social factors has strengthened the position of company in the food sector as with the
introduction of new range in food line (50% of production is shifted to healthy food) they are
able to maximise its profitability ratio.
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Technological factors has helped the company by increasing its presence in the market
with the help of digital mediums which has lead to increase in sales. The marketing strategy of
using online tools has helped in attracting the customers towards the company products and lead
to strengthened its market position.
Environmental factors has lead to weakened the position of Marks & Spencer as due to
rules and regulation regarding pollution level has lead to reduction in production capabilities and
increased the expenses and require more man-power.
Legal factors has lead to strengthened the position of company as it is follow all the
legal rules within the country which has helped in establishing good brand image in the market
and increase the sales volume and profit margin.
CONCLUSION
From the above report it has been concluded that with over a hundred years on the UK
market, Marks & Spencer is a successful company with 17% of UK's market share in clothing
category. The company obey and follow all the policies of government and also protects the
natural environment. All the external and internal factors are consider by them while formulating
business strategies and has created a healthy and long-lasting relationship with the customers and
suppliers. By maintaining high quality products M&S stands in terms of customer satisfaction
and gained the customer's loyalty. On the other hand, the lack of clothing market segmentation
has lead to lose in the existing customers(major disadvantage). To sum up, Marks & Spencer has
able to formulate its business structure according to trends in society, manage its position in
market, and increase its potential market share.
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Online
Flat Organisational Structure. 2020.[online].available
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