Contemporary Business Environment

This report discusses the factors that affect the working operations and activities of a business in the contemporary business environment. It explores the impact of economic and non-economic factors on organizational behavior, using the example of Marks and Spencer. The report includes a SWOT analysis and PESTLE analysis of the company, highlighting its strengths, weaknesses, opportunities, and threats. It also examines the influence of political, social, economic, technological, environmental, and legal factors on business.

Contemporary
Business Environment

Contents
INTRODUCTION.......................................................................................................................................3
LITERATURE REVIEW............................................................................................................................3
Economic environment which impact the business.................................................................................3
Non- economic environment and its impact............................................................................................5
DISCUSSION AND ANALYSIS...............................................................................................................6
SWOT Analysis.......................................................................................................................................6
Pestle Analysis........................................................................................................................................7
CONCLUSION...........................................................................................................................................8
REFERENCES..........................................................................................................................................10

INTRODUCTION
There are many factors which affects the working operations and activities of a business.
These factors can be internal and external factors. Internal factors are the factors which may
include employee, organization culture and structure, customers, ethics and many more. These
factors can get control by an organization. Whereas external factors are the factors which are not
in control of any business. There working are independent from each other. These factors may
include economical factors, social factors, political factors, environmental factor and so on. All
these factors whether internal or external, economical or non- economical gives the shape to
organizational behavior. Organizational behavior refers to the attitude and behavior of an
individual in group or into the work place. The structure and culture defines the organizational
behavior of any business (Bansal and Hoffman, 2012). There are two kinds of business
environment i.e. economic business environment and non- economical business environment.
The economic business environment refers to the factors which influence the behavior of an
individual or customer; these factors are beyond the control of a business. Whereas non-
economic environment includes political system, governmental policies, legal framework,
technology advancements and so on. For reference this report has taken an example of a
company, Marks and Spencer. Marks and Spencer is a British multinational company which
specialized in high clothing, home products and food products. The company is also listed on the
London Stock Exchange and also is a constituent of FTSE 250 Index. The company has its stores
at 1463 locations and covers majority of the countries of the world. Marks and Spencer was
founded in the year 1884 by Michael Marks and Thomas Spencer.
This report will discuss about how the business, culture, and natural environment shapes
the behavior of Marks and Spencer. This may include the economic policies, economic system
and economic conditions of a country or region. The report also includes the SWOT analysis and
PESTEL analysis of the above mentioned company. SWOT analysis is the internal analysis
where the company can evaluate about its strengths, weakness, opportunities and threat. It helps
the company in setting its strategies and goals accordingly (Brinkman, Navarro and Harper,
2014). Whereas PESTEL analysis is used to analyze the external factors of the company which
may affects its operations and business activities. PESTEL stands for political, social,
economical, technological, environmental and legal factors which have an impact on business.
The report talks about all contemporary factors in business environment which is very much
necessary to undertakes for success of business.
LITERATURE REVIEW
Economic environment which impact the business
Economic environment are the factors which affects the customer behavior or
commercial behavior. These factors have an impact upon business about how it operates and

frame strategies for the market place. The economic environment factors consist of micro and
macro environment.
Micro economic environment impacts only an individual company or consumer level.
These factors do not affect the whole industry. Some of these factors may include:
Competition: A company gets affected by the increase in competition into the industry. As in the
case with Marks and Spencer, the company sales and market share gets affected by the entrance
of new companies which are providing the same product to their customers at a better price
(Dahles and Susilowati, 2015). Any new entry into the industry creates a burden upon the
company.
 Demand: The demand for the product also affects the operations of a company. For
example the demand for the clothing style which Marks and Spencer has just launched is
very low because customers do not like the launch design then for selling purpose the
company has to lower its price. But if the demand for the product is very huge into the
market then the company can set high prices for it.
 Supply: If the supply is huge into the market place then the price for the product will be
low because the product is easily available into the market place. But whereas the supply
for the commodity is low and the demand for the commodity is very high then its price
will be also high.
Macro economic factors are the factors which affects the entire economy. These factors
may include:
Economic Policies: Economic policies are the rule and regulation which is set by the
government of a country. These rules and regulations may include trade restrictions, policies on
MNC’s regulating their operations into guest country, fiscal policy, and the so forth. Every
business has to undertake its business activities or operations within these policies only. For
example the company Marks and Spencer did faced problem at the time of Brexit, as the
company do not know how or was very confuse about how to operate its business activities after
Brexit. The company also faced problem related to employees who migrate from other places to
work with them. Apart from this Marks and Spencer has to do many changes into their structure
due to Brexit which did cause them loss of time and efforts (Glen,2015). Whereas the UK has
political stability which is very much beneficial for the companies as they need not have to
change their structure or activities according to the laws implemented by new government.
Stability in government also brings stability into the business which helps the businesses in
proper growth and development. Else the companies would be busy only in changing their
structure with accordance to the new laws.
Economic Conditions: The economic condition of the UK is very much good. The country
comes into the category of developed nation. UK government is very wealthy and the people are
also lives a standard life there. As the country is economically stable it does not faces any sort of

poverty. Also the technology level is very much advanced. The resources used by the country are
very much efficient and advanced as compared with other nations. The lifestyles which people
live there are kind of lavish. Apart from this the country marks for 76% employment rate which
is a very significant sign of stating it a developed and prosperous country. But at the time for
Brexit, the country economy did fall. All the companies or industry operations were not good.
Brexit stopped the migrations of people to Britain which causes huge loss in labor. Due to Brexit
many employees lost their jobs and become unemployed which created a huge loss for the
people and as well as for the country. As the employment rate gets decreased, the GDP for the
nation automatically gets decreased. As in the case with Marks and Spencer, the company did
face a financial drop down at the time of Brexit (Heidari and Loucopoulos, 2014). The company
operational activities were low also the company has to remove some of it migrated employees
which also caused trouble for employees to find a new work. Apart from it the company faced
some transportation issues as the raw materials it imported comes out of Britain, and the state has
imposed any kind of flow of goods and services out of Britain. Therefore, at the time of Brexit,
the company did face many problems which largely include the financial drop down.
Economic system: Economic system may include the taxes, policies, and trade restrictions,
allocation of resources and how these resources are then distributed among the society. The
system refers to the factors for production, which includes the labor, capital, physical resources
such as raw materials, machinery, and much more. The country follows the mixed economy.
Mixed economy is in system which combines both the private and public state enterprises. The
country entertains both type of industry i.e.; privately owned and publicly owned. Privately
owned companies are the companies which are owned by a particular individual. Whereas
publicly owned companies are the companies which are owned by the government. The motive
of public companies is to serve the people of country but whereas the motive of privately owned
business is to generate profits for themselves by catering the needs of customers. As in the case
with Marks and Spencer, it is a private company which earns profits by catering the needs of
targeted customers. The company does research about the trends and preferences of people and
then manufactures the designs for clothes and also for home products (IşıK, Jones and Sidorova,
2013).
Non- economic environment and its impact.
The non- economic environment are the factors which affects the working and operations
for whole country or region. These factors are also out of control for the industries. Such factors
may include:
Natural: The natural factors are related to environment. The environmental factors may include
any law or rules which company needs to follow into its structure or operations. For example the
company manufacturing practices should be environmental friendly, it should produce goods
which are eco friendly and does not cause any harm to the earth. The recent trend of not using
any kind of plastic and the use of sustainable products is very vogue into the business
environment. There are also many companies which take an element as their marketing point

(Khan and Quaddus, 2015). Means, there are companies which advertise them by claiming their
products as sustainable. In fact the customers also prefer to use the sustainable products and
services. They do not prefer the products which are not environmentally friendly. In UK there
are major laws regarding environmental loss, no company is allowed to produce the substance
which cause damages to human body and also to the earth. The companies also have to dispose
their waste only after processing it so the chemicals which are present into the waste do not
affect the water bodies. As in the case with Marks and Spencer the company uses the
environmental friendly manufacturing system. The company also gives the paper bags to the
customers so that they can carry their shopping item in it rather in a plastic bag.
Demographic factor: Demographic factor includes the age, income, lifestyles, gender, and
many more. The demographic factor affects the wor4king of a business. If in a country more
number of kids are there then the company would be more profitable when it produces the
products for the kids as they constitute a huge population into a country. Whereas if a country
has more number of men then the companies would be profitable to produce the products and
services for men because there are more number of customers are available to cater them. In the
country like UK, where the income of majority of population is above average there the
companies can manufacture the product which are of high cost because they have the customer
for it. Marks and Spencer is specialize in making high quality clothes and they main to target the
people who belongs to the above average categories as they set their prices accordingly.
Therefore the demographic factor does put an impact upon the businesses.
Cultural factors: Cultural factors refer to the norms, ethics, code of conduct, behavior, attitude,
practice, religion and so on. Culture does forms the attitude and behavior is an individual. By
knowing about the culture, the company can determine the attitude and behavior of people
regarding a particular topic. Cultural factors impact upon the business of a company. For
example a country where the people prohibits the use of animal skin clothes there the company
cannot sell this kind of product (Lee and et. al.,2015). Or if a country does not entertain jeans,
tops, and the like for women, then Marks and Spencer cannot sell its clothing at such places
because there the culture of wearing these clothes has not been entertained yet. Therefore,
cultural does take a shape with the passage of time and increase in globalization which leads to
travel and tourism, shifting of people from a place to another, this somewhere also brings change
to the attitude and culture of people.
DISCUSSION AND ANALYSIS
SWOT Analysis
This Analysis will give us strength, weaknesses, opportunities, and most important threats
experienced by this organisation. Hence, for Marks and Spencer Company, the SWOT analysis
of the company is elaborated below:

Strengths:
One of the biggest strengths of Marks and Spencer is associated with the fact that it maintains
effective exclusivity with its products that are related with high quality, as well as differentiation.
Moreover, another strength that is related to the firm is that all the clothes manufactured within
the company are superior with advanced technology which contributes to their material strength
and durability of clothes (Mitrega and Pfajfar, 2015).
Weaknesses:
Its biggest weakness is that Marks and Spencer’s target market is very much limited, which
includes just high income sector that fails the company to capture the desired share in the market.
Moreover, another weakness is that the products of the company generate more waste materialsin
clothes and strength of fabric should have durability in every weather, which again is a
limitation.
Opportunities:
One of the key opportunities for the company as witnessed from its external environment
analysis is that the company could ensure a segment of recycle clothesof waste material found
everywhere in clothing foams that would help the firm in capturing wider market share by
announcing bring old clothes take new ones at 50% off which are recycled clothes, as well as
becoming environmental friendly. Moreover, better marketing and promotions would lead the
company to ensure that its awareness is further expanded to more segments and its products have
high demand despite the political or economical conditions (Lee, 2015).
Threats:
A threat which the company is currently facing is related to Brexit. The government is
currently imposing uncertain laws which refrains the firm to make a long term strategy.
Moreover, competition from companies like Inditex towards environmental protection is also a
constant threat to the firm.
Pestle Analysis
Political:
Political Environment of the firm is very challenging, following the events of Brexit.
Moreover, with changing EU trade conditions, this factor has emerged as a threat for the firm.
Economical:
As for the economical factor, inflation is a constant challenge to the company as the country will
take time to recover from its current state. Moreover, costlier supply chain in EU nations is also a
threat which the organisation is facing in the market (Matijević, VrdoljakRaguž and Filipovıć,
2015).
Social:

The current trend of recycle clothes from waste material in fabric foams and old clothes has
been very much effective for the organisation, which is beneficial for the company in order to
ensure a larger share in the market. Moreover, the firm also has an opportunity to develop
models of recycled clothes that are affordable so that younger individuals also seek to buy its
new recycled clothes.
Technological:
With technological advancements such as Artificial Intelligence and Automation, the firm
could manufacture clothes with Autopilot feature, or could ensure robotics in the manufacturing
process, which would replace the need of human resources, as well as would reduce the men
power level as well.
Legal:
The laws pertaining to UK and beyond are not in the favour of clothing sector. For instance, the
supply regulations of EU and the uncertainty of the UK policies are being witnessed as a threat
to the company (Kurtz and Berston, 2019).
Environmental:
Rising environmental concerns and issues related to global warming are an opportunity for
the company to manufacture recycle clothes from waste fabric material and old clothes, as well
as deploy sustainable technologies in the manufacturing clothes and use best technology for
making clothes which are durable in every weather.
Hence, both the internal and external markets have several competencies and threat, which
requires the firm to interrelate both its environments to ensure development of competent
strategies. For instance, the firm must maintain effective supply chain on contractual basis within
the EU nations, which would safeguard the company from any sort of disturbances related to
political uncertainties. Moreover, sustainable technologies and frugal innovation could also be
adopted by the firm to leverage its strength, as well as overcome the economic downfall within
the country. This would also help the firm in reducing its prices to make its clothes more
affordable. Furthermore, recycle clothes must be manufactured by the firm on a larger scale
which would help the company in ensuring environmental protection in an effective manner
(Barr and et. al., 2018).
CONCLUSION
From the report discuss above, this can be include that there are many factors both
internal and external which can affect the working of an organization. There are internal and
external factors which put impact on business. The internal factors are the factors which can be
control by an organization whereas external factors are the factors which an organization can’t
control; they are independent towards each other. There are also two types of environment i.e.

economic and non- economic factors. Economic factors are the factor which affects the behavior
of commercial or customers. These factors may include demand for the product, competition into
the industry, supply for the product and many more. The non- economical factors may include
demographic factor, geographical factor, cultural factor, environmental factor and many more.
These factors affects the whole industry instead of a particular country. The report also includes
the economic system, conditions and policies of UK which puts an impact upon Marks and
Spencer company. the report also includes the SWOT analyses which can helps the company in
framing its future policies and strategies for its growth and success purpose. Along with it the
PESTEL analysis is also performed which states the impact of external factors upon the
company. Pestel stands for political, social, economical, technological, environmental and legal
factors which are out of the control of any industry or business but does impact its operations and
activities.

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