Understanding the Business Environment - Analysis of Mark and Spencer

This report provides an analysis of Mark and Spencer's business environment, including a PESTLE analysis and examination of the company's behavior using Porter's 5 forces model. It also discusses the company's stakeholders, market structure, and recommendations for improvement. The report is based on the BUS4001 course on Understanding the Business Environment.

Understanding the Business
Environment

TABLE OF CONTENT
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK-1 ...........................................................................................................................................3
Introduction of Business Organisations.......................................................................................3
TASK-2............................................................................................................................................5
Analysis of stakeholder of Mark and Spencer.............................................................................5
TASK-3............................................................................................................................................6
a) PESTLE analysis of Mark and Spencer.................................................................................6
b) Examination of current behaviour of M&S with the help of Porter's five forces model.........9
TASK-4..........................................................................................................................................10
Current situation of Mark and Spencer in the market place along with certain
recommendations to improve the company image....................................................................10
CONCLUSION..........................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business Environment is a mixture of circumstances, objects or conditions in which
business is operated. It consists of various internal and external factors that affects the overall
operations and performance of business. The external factors are beyond the control of business
like customers, suppliers, government, competitors, political, economic etc (Cepel and et.al.,
2019). Business environment enables the firm to identify opportunities and threats prior so that
corrective majors can implement to cope up with the challenges. The concept is about Marks and
Spencer which is British multinational retailer headquarter in London. Apart from this, the study
describes Marks and Spencer market structure along with its main objectives. Various terms are
defined and stakeholder analysis is performed to remove the barriers and risks in the
organization. It further includes business environment analysis tools and framework to identify
the problems and challenges of M&S. At the end of report the recommendations are given to
increase the business performance.
MAIN BODY
TASK-1
Introduction of Business Organisations
M&S is a foreign international retailer brand in England in 1884. The organization deals
in clothes, apparels, home merchandise and food products. The brand is built to make better
quality goods accessible to consumers by offering range of goods. The company presently has
many stores across the country and operates maximum stores exclusive in selling eatable
commodity. Marks and Spencers also provide network food delivery service by combining with
other business. M&S is a public limited company which offers the shares to public through the
stock exchange. The company's main purpose is to inspire and engage more of peoples who
simultaneously visit the shops worldwide. This will promote to improvement in lifestyle. The
main motive of M&S is to stand a sustainable enterprise through increasing economic growth.
M&S follows a flat structure in the administration with minimum steps involved in
communication process between the subordinates and upper level managers. By appropriate
formation in the system, helps to promote employees in efficient in their responsibilities.
Market constitution defines the industry's classification and differentiation. It is accomplished on
the level and basis of rivalry for the goods and services (Farboodi, Jarosch and Shimer, 2017).

The company operates its activities under competitive situation. The belief of M&S are prime
offerings, reasonable spendings and work below the operations of its challenger. The company
operates various stores and has many competitors like Lawson, Macy's, John Lewis partnership,
Tesco etc. The M&S was successful by introducing different stylish, consumer goods likely for
all gender of consumers.
Marks & Spencer operates under the market structure of oligopoly. Oligopoly market is scenario
which is dominated by small number of suppliers. These markets are often termed as competitive
as there are same offerings of products and services in the market. Through innovations and
creative ideas the brand design unique clothing with appropriate quality of goods. M&S as an
Oligopoly market structure is a well-known British retailer and has many stores around 30
countries globally. In UK alone, it has more than 500 chain stores, that it is the largest clothing
retailers in the country (Pellegrino, 2019). The company has huge investment in food and
clothing retailing industry. In terms of revenue the company is currently enjoying the increasing
growth of its income and revenue. The new entrants in the market is difficult to operate because
the brand loyalty of M&S is great among the customers. Trade name serves the bases of
operations for the loyal customers (Adamseged and Grundmann, 2020). Moreover, the company
is facing more cut-throat competition in the market. In this scenario, the company can adopt the
strategy to lower down the prices in order to attract more customers. However, this strategy will
make less possibility of new entrants to survive.
The M&S can also use its knowledge and experience about the market to make new
innovations on their products and services. This will eliminate the existing and new entrants in
the industry. Organisation often cooperate to set a particular cost of products rather than makin g
comparison with each other to gain customers attention. (Dedahanov, Rhee and Yoon, 2017).
Businesses in oligopoly market control the prices which makes more competition. The main
objective of the company is to earn profit which helps in further growth and expansion of the
business.
TASK-2
Analysis of stakeholder of Mark and Spencer
Stakeholder is a individual or a group of individual that has invest in a company. Who
can be affect by the company. Business stakeholder can be internal and external of the company.

Internal stakeholder is who has direct relation with the company. For e.g. Employees as M&S
work deliberately in an organisation and totally devoted towards their work (Jahn, and et.al,
2019). Company have hotline internally as they conduct some activity that involve employees
and external stakeholder of the company do not connected with the company directly and still
affected by the company performance for e.g. provider in M&S their supplier of the raw
resource are from all For internal stakeholders, they are important because the organisation
activity depends on company capability to work together against the organisation objectives.
External stakeholders on the other hand can affect the business indirectly. over the globe and
they need security for their fair prices of the goods they provide. The coordination an
contribution of the stakeholder mainly internal stakeholder is important in the company.
Stakeholder analysis
This is the process of knowing the stakeholder of the company before begin the project.
And categorise them according to the work and their skills. Purpose for bring the stakeholder in
the company is because stakeholder help the company analysis the people who can bring the
achievement in the project of the company and they help company to resolve the issue and
problems company seeing.
Stakeholders are important for the business because they enhance the ability of the objective
and business approaches. By approaching to the stakeholder of the company in early stage before
project start is beneficial because they influence and give wisdom to the company. M&S uses
stakeholder management to identify the capable stakeholder of the company. M&S conduct the
stakeholder analysis by determining their stakeholder such as management, owners, personnel,

shareholders are the internal stakeholders and suppliers, customers, creditors, public are the
external stakeholder of the company (Penuel, and et.al., 2020).
After that company categories them and make a priority list of the stakeholder who has
high power and high interest(manage closely) are the most important stakeholders of the
company they managed closely. Company engage their workers in work and motivate them to do
work.
high power but low interest( keep satisfied) company have to keep satisfy these type of
stakeholders and make them more interest towards the projects. Like M&S they satisfy their
worker by giving them a healthy environment and some kind of activity during work.
Low power but high interest(keep inform) company have to informed them. Because these
type of people in company need more attention because they are just not motivated M&S
motivated their employees by giving them rewards (Unterhitzenberger, and et.al 2020).
Low power and low interest ( monitor) company have to monitor them. Company doesn't want
this kind of people in their organisation but still company have to inform them time to time.
M&S Stakeholder analysis help the company to make their project into shapes and they
give company a better advice and opinion for achieving their goals and also they help M&S to
winning their resources such as suppliers. M&S knows their stakeholder very much because
every stakeholder have their own identity and rather it's financial or motivator stakeholder.
TASK-3
a) PESTLE analysis of Mark and Spencer
Business environment is the collection of all external factors of the business which
greatly impacts the operations and functions of business. In context to M&S, the study of macro
environment is important for the company in certain ways such as M&S can successful conduct
the business activities and operation. The chances of losses are minimized and M&S can operate
in long run with its strong financial base. By carefully scanning of external factors will help the
company for growth and expansion. The environment analysis will help M&S to make realistic
plans with the assurance of effective implementation.
By understanding the reasons to analyse the business environment there is influence of
macro environment on M&S which affects the overall productivity. The external analysis is a
structure is an imperative study for companies such as M&S, as it helps to realize market

dynamics and improve its business operations (Pan, Chen and Zhan, 2019). From conducting
pestle analysis it will easier to understand the external factors which are as follows-
 Political Factors- The organization has affected its exports and imports through
government restrictions and highly duties are applied to goods and services. In other
countries, where they strictly don't have political stability. The M&S specially follow the
regulations of government authorities to have rightful business act. Any changes in taxes
and duties directly affects the performance and operations of the company. This results as
increases in prices of the commodity.
 Economic Factor- This factor includes many factors like inflation rates, interest rates,
foreign exchange rates and economic growth structure etc. A rise in inflation rate of the
economy affects the operations of the M&S in economy price of their products and
services. The M&S follows certain strategy to promote their goods to its customers such
as it highly focus on producing quality based goods. Financial crises can lead to decrease
in the demand for high quality products of M&S because the consumers will have low
disposable income which further bring down the ability to expend on lavishness or high
life. The financial condition has affected the organization ability to provide various offers
and discounts.
 Social Factors- Their are certain factors that affects M&S such as level of education,
lifestyles, population and income distribution. To be in competitive market the company
has plan to become a multi-channel retailer by online selling of food, clothing and other
products. The consumers buying are often influenced by the recent happening in ethnic
culture, societal, individual and physiological modification in the marketplace. M&S is
suffering from the cheap clothing industry which is increasingly meeting the dynamic
tendency in the industry which are providing inferior quality clothes with the least prices
associated are provided to consumers. There was increase in trade by credit cards
availability to the consumers. The company took the plus point as chance and allowed its
consumers to give or pay direct with the use of digital cards, this promotes increases its
gross revenue and receipts.
 Technology Factor- With the introduction of self-checkout system based retail and food
joints appropriate into the consideration by current industries. M&S has introduced
multiple technology such as virtual stores and planning to gain the usage of Artificial

Intelligence based checkout in the upcoming generation. It also has establishment of e-
commerce store which is efficient in the country (Guerrero-Bote, Moed and De-Moya-
Anegón, 2021). All their goods and services can be found on the company's website
which ultimately saves the time of consumers by shopping online. This form of
adaptation in the new technology leads to make brand image more-stronger among the
current generation. It is totally focusing on creation of new technology adaptation by the
company helps in operating model, which would efficient significantly help the company
in exploiting new technology by including the adoption of industry with various
techniques. The M&S has announced Technology Transformation Programme that
enables to become a digital first business and deliver a diversified customer experience.
This is deigned to create consumer awareness about faster commercial technology that
would results in growth for the business.
 Legal Factors- M&S has been involved in multiple legal disputes. These have made it
hard for the brand to hold its image and position at a constant state in the market. The c
change in Britain's trade laws post Brexit will be another legal factor that will affect the
brand hugely. It is continuously focusing on the implementations of various grooming
sessions on areas such as well-being and making advancement every year in order to keep
themselves updated with the government rules and legislations. The company come
below the eyes of consumers when it was accused in failing to assist its worker and
workers from potential risks of exposures.
 Environmental Factors- The M&S has adopted their own Green policy refereed as
“Plan A”, it is the commitment to sustainability and environmental management that
business will implement. It is an initiative adopted by the organization to make optimistic
impact on peoples and environment. The company is also conducting CSR activities in
which it integrates social and environmental concerns in the business operations.
Donations to charitable organizations are done by local M&S stores along with the
donation of returned clothes. It also conducts various activity by focusing on the mixture
of areas such as elimination of additional fats from the eatable item, reducing the use of
force and encourage appropriate value to commerce.

b) Examination of current behaviour of M&S with the help of Porter's 5 forces model
This is a tool for understanding the forces that shape competition within an industry. It is
beneficial for the business organization to modify scheme to proceed with the external
surroundings and to improve the potential economic growth. It is used by the companies to
understand new products or services are potentially profitable. This model helps the businesses
to evaluate the competitive analysis (Bruijl, 2018).
Porter's analysis and their consequence on Marks and Spencers .
 Fear of new businesses in the markets (High)- M&S as a retailer, makes difficulty for
new entrants because the investments are highly required to make position in the
industry. It offers well differentiated products to its customers. For accomplishing the
effectiveness and efficiency in the cost, retailers are struggling to make a competitive
position in the market. It is difficult to survive in the changing market scenario as there
are many competitors offering various discounts and lowering the price to gain market
attention.
 Terror of Substitute Products (High)- The declaration of substitute goods is high as
many company can easily copy the designs with least cost required. M&S requires
continuous innovation in their products and services to maintain the trade name stable .
Also to remain identifiable and recognized in meeting customers demand. Many
competitors for example Tesco has innovate a lot of creative ideas and uniqueness to their
products and services.
 Bargaining Power of Buyers (Low)- Customers ability in bargaining activity is low due
to the price sensitivity of competitors products. The customers has many alternatives
available which makes them switching from goods and services. The company must
focuses on building its brand loyalty and offering of goods to consumers with distinctive
products. The M&S has formed long-term relationships with its customers and requires
efficient efforts to manage and maintain these human relations.
 Bargaining Power of Suppliers (Low)- The M&S has a varied base of suppliers and has
developed long term relationships with all supplier. This makes the company to
determine its prices rather than accepting the prices offered by suppliers. This greatly
reduces bargaining power of suppliers against the organization. M&S suppliers were
primarily British people, but competitive pressure forced the company to outsource The

goods and reduction in costs weakens the quality of suppliers. By focusing on other
companies strategies also gives the ability to exports the commodity easily. The
switching costs of the company's outsourcing goods impacts in reduction of suppliers.
 Competitors Rivalry (High)- The M&S dealing in retail sector, where the competition is
high from other retailers such as Tesco, Sainsbury, Walmart etc. The growing
competition leads to consumer more flexible in choosing their products online so the
additional costs is eliminated. The company has improve its virtual sales by using the
technology also impacts in increment of retail gross revenue increasing rapidly.
TASK-4
Current situation of Mark and Spencer in the market place along with certain recommendations
to improve the company image
In recent years, M&S has recorded with the poor sales due to increasing competition in the
market. The competitors are also offering the same range of products and services to consumers.
The M&S competitors like Sainsbury, Tesco, Walmart etc are also providing related goods with
low prices which is attracting more and more consumers. Due to the current pandemic situation ,
the M&S is heavily suffering from many challenges (Gorlova, 2020). This leads to
unemployment in the country by which people are not having enough incomes to make spending
for the luxury lifestyles. Another challenge is facing by M&S is huge availability of competitors
by which the company's sales and revenue is affected. However, the M&S is applying the variety
of strategies to boost the brand loyalty. By adopting various promotional strategies such as to
launch new product on digital platform will lead the company to increase its market share.
Currently, Marks and Spencer origin its resources and materials from the own country and the
rest of all imports from other country which ultimately will addition in the production of
products. Rather than importing raw material from outside the country, the company should
make the availability of resources within the area. This will remove the additional costs of goods
and will easily available to customers with their affordable price. M&S is becoming
unfashionable with the involvement of high prices it provides as an opportunity to many new of
competitors offering with lower prices. M&S is facing with challenges like lack of technology up
gradation in the exchanging process between consumers and sellers. The factors which makes
M&S successful are the introduction of different, stylish article of clothing likely to make attract

the personnel. This is believed to be more powerful and willingness to be succeed in commercial
industry.
Their are some recommendations by which Marks & Spencer can improve its
performance. With the use of advanced technology company can built its own site under the
name of M&S, which will help the consumers to easily accessible the store quickly. The
company can easily attract the youth customers with the help of promotions on social sites. This
strategy will make existing customers more satisfied by offering various discounts and offers. As
consumers are demanding for contactless delivery directly at home. So M&S can upgrade the
changing requirements of customers by delivering their goods and services at home. This process
will eliminate the human resource required to operate the stores. It can also adopt the services of
free delivery and returns for the customers. The M&S can perform CSR activities (Corporate
social responsibility) like generating employments. The company can hire more employees to
parcel the delivery of customers safely. M&S can also develop and uplift certain areas which are
backward in resources through which it will come under the eye of large audience. This will help
in promoting the brand name to big targeted audience. M&S can increase its range of products
and services along with consideration of prices which consumers can easily afford. The higher
prices will distract the consumer and tends to buy the related products which are low in prices.
By evaluating business analysis the company can increase its sustainable supply chain which will
benefited both the company and its suppliers. The company can follow competitors pricing
scheme to cope up with the changing prices and preferences of the consumers.
CONCLUSION
From above report it can conclude that business environment is dynamic and complex in nature.
As the external forces greatly affects the overall operations and performances of the
organizations. However, business environment helps in determining various business
opportunities, resources and also assists in forming plans and strategies for future growth. The
report provides with complete understanding of Marks and Spencers business operations along
with the market structure under which it operates. Apart from this, stakeholder analysis is
structured with the needs and influences of the company. It further demonstrates the macro
environment of M&S with the use of Pestle analysis and porter's five force model. The report
also provides certain recommendations to improve Marks and Spencer performance.

REFERENCES
Books and Journals
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Online
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