The Impact of Business Environment on Firms

This assignment delves into the relationship between a firm's business environment and its ability to grow and succeed. Students are tasked with analyzing various academic sources, including books and journals, as well as online materials, to understand how factors such as regulations, competition, and access to finance impact firm performance. The focus is on examining the challenges faced by small firms and exploring strategies for overcoming them.

The Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1- Describe the type of business, purpose and ownership of two contrasting businesses........1
P2- Describe the different stakeholders who influence the purpose ..........................................2
TASK 2............................................................................................................................................3
P3 Describe how two businesses are organised..........................................................................3
P4 Explain how their style of organisation helps them to fulfil their purposes.........................4
TASK 3............................................................................................................................................4
P5 Describe the influence of two contrasting economic environments on business activities . .4
TASK 4............................................................................................................................................5
P6 Describe how political, legal and social factors are impacting upon the business activities
.....................................................................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
In the recent time period, business environment is regularly change due top customers
taste and market trends. That's why all consumers wants something new and attractive products
and goods form company (Welford, 2013). It is very necessary to properly analyse and identify
the customers demand as per that should be produce products and supply services to them. This
research report will be discussing about different type of business which their has major purpose.
There will be explain some factors which can be impacting on business firm which can be
negative and positive in nature. Along with this, for effectively manage business environment so
have to be implement better management system so all employees can systemically complete
their decided task and achieve goals as well.
TASK 1
P1- Describe the type of business, purpose and ownership of two contrasting businesses
Marks and Spencer (M&S) M&S is an international company and is part of the tertiary
sector. An international business is a business that operates and sells products/services around
the world, M&S trades in Europe, the Middle East and Asia. M&S is a public limited company,
the public part of it means that shares can be brought by the public and the limited company part
means that it has limited liability (Moutinho, 2011). Having limited liability has many
advantages as it protects a shareholder from being responsible for more than their share of the
company so they wouldn’t be accountable for the liabilities resulting from the bankruptcy. Being
part of the tertiary sector means that M&S provides services in the form of selling groceries,
clothing and home products.
The purpose of M&S is to supply products; M&S also offers services but that isn’t their
primary way of doing business. M&S is driven by profit meaning that they make sure that their
sales cover all of their running costs and more (in order for them to make a profit). Running costs
include anything that the organisation needs to spend money on in order for the company to
operate. When M&S was founded the main goal was to only sell British made goods that were of
a high quality, this started to change in the 1990s but they continue to aim to offer high quality
clothes at a fair price.
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Oxfam is a global charity where it aims to help vulnerable people in developing world so
they people can get power and free from problems like poverty. Oxfam was founded in England
in 1942. Right now the head once of Oxfam GB is located in Cowley. The name came from the
Oxford Committee for Famine Relief (Hamilton and Webster, 2015). The Committee was a
group of people who were concerned for the people of Greece. The people in the group were
Canon Theodore Richard Milford, Professor Gilbert Murray and his wife Lady Mary, Cecil
Jackson Cle and Sir Alan Pim. There objective was to help reduce the starvation of the citizens
of Greece, by persuading the British government to allow food relief thorough the allied
blockade.
P2- Describe the different stakeholders who influence the purpose
A stakeholder is anyone with an interest in a business. Stakeholders are individuals,
groups or organisations that are affected by the activity of the business. There are two different
types of stakeholders; internal and external. Internal stakeholders are groups within the business
e.g owner/workers and employees. External stakeholders are local and national communities and
governments, these are groups outside of the business. The key stakeholders in a business
include customers, suppliers, employees, local and national communities and governments
(Aterido, Hallward-Driemeier and Pagés, 2011).
Customers want a business to produce high quality value for money products. Customers
like to see promotions and offers that give them better value for money, they also may like to see
products that provide relief to the less fortunate or products that are environmentally friendly.
Customers can influence M&S by deciding to continue to purchase goods and services.
Customized can choose to take their custom elsewhere, therefore this influences the profits that
M&S would make.
The people who donate to the charity Oxfam are major stakeholders as Oxfam would not
be able to be a successful charity without the donations as they are the key to the money that is
raised. Donators are major stakeholders as they’re also the largest investors to charities like
Oxfam and influence it greatly (Chavis, Klapper and Love, 2011). The staff/employees of
Oxfam influence the charity greatly and are the main reason as to why the charity is successful.
They provide the friendly customer service to those who decide to shop at the Oxfam stores.
Staff usually do work for free so this allows Oxfam to spend more on developing third world
countries, again this has an impressive influence.
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Oxfam is a voluntary ownership which means that each member is considered a trustee.
Trustees influence the charity as its success would be limited with out them. Trustees often put
money into the charity, hot to gain a profit for the charity. This allows Oxfam to expand and
continue work around the world. Trustees often make important decisions that can improve the
amount of money that is raised. Local and national communities. The actions of business can
have a dramatic effect on communities, for example, if a supermarket brought a vast amount of
land the public may not be pleased by the noise pollution and changes. Community leaders,
therefore, represent important interest groups. Oxfam- The community are often interested by
Oxfams work as they either want to buy good from shops or help with raising money. The
community influences the charity by offering its support to help with fund raising. With out the
community support Oxfam would not be able to keep shops open and raise money as their would
be no custom (Commander and Svejnar, 2011).
TASK 2
P3 Describe how two businesses are organised
The primary function of any business is to make money and invest if it doesn't do that, it
can't exist. M&S is a major clothing company in UK. As cited organization is a profit-based
business, it maximises their sales and profit, expanding to maintain its competitiveness in
addition to outshining competitor. It also focuses on providing shareholders with progressive
returns on their investment improving profitability through investment in efficient stores and
distribution depots, in productivity improvements and in new technology, developing the talents
of its people through sound management and training practices, while rewarding them fairly with
equal opportunities for all.
An organizational structure consists of activities such as task allocation, coordination and
supervision, which are directed towards the achievement of organizational aims. It can also be
considered as the viewing glass or perspective through which individuals see their organization
and its environment. There are a number of ways of structuring organizations, through their
function, geographical area, products groups and types of customer. With M&S their functions
are designed to meet specific purposes to help work together as a successful clothing business. It
has different departments that operate different functions to all combine and help M&S achieve
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their objectives and their purpose as a globally well-known clothing seller (Gecevska and et.al.,
2010).
P4 Explain how their style of organisation helps them to fulfil their purposes
M&S talk about ‘Every Little Helps’ a lot, but it's not just a catchphrase or marketing
slogan, it represents the company as a whole and what they stand for. For the people and their
customers, it's how they run our businesses from all over the globe. As M&S has grown, so has
the importance of Every Little Helps. Over time, they’ve gone from simply selling Clothing to
providing anything from loans to mobile phones. By setting out in all these new directions Cited
company ran the risk of losing our way (Laumer, Eckhardt and Weitzel, 2010). So, they have
relied on Every Little Helps more and more over the years, to act as a common philosophy to
bind the company and make it work together. The Corporate Steering Wheel can be used
throughout all M&S businesses across the world; it measures their performance through the
Steering Wheel, whether it’s within work in distribution, head office or in stores(Blanchard,
Tolbert and Mencken, 2011).
Strategic aims and objectives
As M&S is a profit-based business, it maximises their sales and profit, expanding to
maintain its competitiveness in addition to outshining competitor. It also focuses on providing
shareholders with progressive returns on their investment improving profitability through
investment in efficient stores and distribution depots, in productivity improvements and in new
technology, developing the talents of its people through sound management and training
practices, while rewarding them fairly with equal opportunities.
TASK 3
P5 Describe the influence of two contrasting economic environments on business activities
Boom – Boom is generally very good for a business as the customers will usually have
more money, when a boom happens the unemployment rates go down in the economy; this helps
M&S because the shoppers will have more money than if they were unemployed. This means
that M&S will put more money into their stores so they may need to employ more so they will
also reduce the number of unemployment more. Although a boom could also be bad news for the
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more valued stores like M&S as the people with more money will go to the higher end
supermarkets like Sainsbury’s etc, as these target people with loads of money (Cordes, Richerson
and Schwesinger, 2010).
Recession – A recession is a period of general economic decline; and is typically defined
as a decline in GDP, and is typically a drop in the stock market, an increase in unemployment
also people fear that they may lose their jobs, and often do which means they will have to cut
back and spend less. Also during a recession M&S is one of the ‘value’ supermarkets that as
performed well compared to others, this is because cited company as always sold itself as a value
supermarket. But everyone still needs to buy food so they look for somewhere cheap, which
means M&S is the choice for them.
Economy – The economy is the system of production, exchange, distribution and the
spending of the goods individuals will tend to buy products at the current prices before goods
and services become more expensive and less affordable. When unemployment is high in a
recession it then means that people won’t have as much money to spend on products, also the
businesses don’t have much to sell and will have to close, this will then lead to more people
becoming unemployed which will lead to more of a downward spiral (Smallbone and et.al.,
2010).
TASK 4
P6 Describe how political, legal and social factors are impacting upon the business activities
(Source: External environment theory, 2017)
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Illustration 1: Major
environmental factors

Within my selected organisation, M&S there are two important economic environments
that have an influence on business activities. Both economic environments will have a different
way on impacting M&S. The economic environments are growth and recession. Economic
growth occurs when more goods are being produced and consumed, and incomes are rising. A
growth company tends to have very profitable reinvestment opportunities for its own retained
earnings (Cavalcante, Kesting and Ulhøi, 2011).
Economic growth will affect M&S as it would increase their profits due to more people
wanting more products and wanting to spend their money. As people have more money to spend
on luxuries instead of the essentials it means that the higher value products will be brought.
Recession occurs when people involved save more Manufactures and sellers cut back on their
orders, produce fewer goods and start to cut back costs in general, including by laying of
workers. Because economic recessions will put M&S customers under money worries they will
only be purchasing from the store, instead of what they want; only what they need(Teece, 2010).
CONCLUSION
As per above mention research report on business environment, it is very important to
maintain and control all over business activities in appropriate manner. By which employees can
systemically complete their decided works and achieve goals as well. Business environment
basically divided into two parts internal and secondary, which is affected by various factors that
may be negative and positive in nature. There has been discussed about business style and
working environment as per that easy to identify type of enterprise.
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REFERENCES
Books and Journals
Aterido, R., Hallward-Driemeier, M. and Pagés, C., 2011. Big constraints to small firms’
growth? Business environment and employment growth across firms. Economic
Development and Cultural Change. 59(3). pp.609-647.
Blanchard, T. C., Tolbert, C. and Mencken, C., 2011. The health and wealth of US counties: how
the small business environment impacts alternative measures of development.
Cambridge Journal of Regions, Economy and Society.5(1). pp.149-162.
Cavalcante, S., Kesting, P. and Ulhøi, J., 2011. Business model dynamics and innovation:(re)
establishing the missing linkages. Management Decision. 49(8). pp.1327-1342.
Chavis, L. W., Klapper, L. F. and Love, I., 2011. The impact of the business environment on
young firm financing. The world bank economic review. 25(3). pp.486-507.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Cordes, C., Richerson, P. J. and Schwesinger, G., 2010. How corporate cultures coevolve with
the business environment: The case of firm growth crises and industry evolution.
Journal of Economic Behavior & Organization. 76(3). pp.465-480.
Gecevska, V., and et.al., 2010. Product lifecycle management through innovative and
competitive business environment. Journal of Industrial Engineering and
Management.3(2). pp.323-336.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Moutinho, L. ed., 2011. Strategic management in tourism. Cabi.
Smallbone, D., and et.al., 2010. Government and entrepreneurship in transition economies: the
case of small firms in business services in Ukraine. The Service Industries Journal.
30(5). pp.655-670.
Teece, D. J., 2010. Business models, business strategy and innovation. Long range planning.
43(2). pp.172-194.
Welford, R., 2013. Hijacking environmentalism: Corporate responses to sustainable
development. Routledge.
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Online
Business Environment and Skills Group, 2010.[Online] Available through:
<http://www.automotivecouncil.co.uk/business-environment-and-skills-group/>.
[Accessed on 19th July 2017]
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