The UK Business Environment

This presentation discusses the positive and negative impacts of the macro environment on the UK business environment. It also explores how strengths and weaknesses interrelate with external factors. The case study focuses on Marks and Spencer, a well-known British clothing brand.

The UK Business environment

Table of Content
 Introduction
 Positive and negative impacts the macro environment
 Internal analysis
 How strengths and weaknesses interrelate with external macro factors
 Conclusion
 References

Introduction
Business environment can be defined as various factors either micro or macro, internal as well
as external factors that impact the performance of a business either positively or negatively.
The company considered in this report is Marks and Spencer which is a British clothing brand
headquartered in London, United Kingdom. It is a well known brand recognized by people
globally.

Positive and negative impacts the macro
environment
Being a British multinational, Marks & Spencer has faced a number of challenges that were a
result of the various macro environmental factors. The positive and negative impacts of
these factors are explained below -
 Political Factors – These factors can include the stability or instability of the political
environment and intrusion of the government in various matters.
Positive Impact : Different government policies to get into trading businesses with
other nations will leave a positive impact on Marks & Spencer as they will be able to sell
and promote their products globally.
Negative Impact : Restriction on the migration of people to UK will result in
Marks & Spencer losing the chance to hire skilled and efficient labour from across
different countries.

Cont.…
 Economic Factors – Factors like inflation rates, tax rates, unemployment etc. are counted
as economic factors. This makes global stability is of utmost importance for a company.
Positive Impact : For example- Increase in the buying power of consumers will have a
positive impact on the operations of Marks & Spencer as the customers will then be able to
purchase more products and will be attracted to the brand.
Negative Impact : The manufacture and production of the products requires more labour.
Hence, increased labour costs will result in an increased product price.

Cont.…
• Social Factors – Factors such as income level of the people, their education background,
employment etc. come under social factors.
Positive Impact : Having customers that are educated will help Marks and Spencer in
creating a community of qualified and intelligent customers who understand the product
and price offering of the brand.
Negative Impact : Low or no employment will lead to low levels of income and thus will
have a negative impact on Marks and Spencer as the customers will not be able to afford
and purchase its products.

Cont.…
 Technological Factors – Advanced technology today has made it possible for the brands to
reach out to more number of customers. But it can have both positive as well as negative
impacts.
Positive Impact : For example- Implementing new technologies in the system will help
Marks and Spencer to formulate new strategies by carefully analysing the demand for the
products.
Negative Impact : Innovation and technology have made it possible for companies to hold
meetings over the Internet. Marks and Spencer will lose the personal and being face to face
aspect of meetings and hence there is no proper process of idea generation.

Cont.…
 Environmental Factors – These factors include weather and climate changes, various
policies pertaining to the environment etc.
Positive Impact : Different regions with distinct weathers and climates will leave a positive
impact on Marks and Spencer as the brand will have a great opportunity to expand its
product portfolio and serve a greater segment of customers.
Negative Impact : Various nations have different polices regarding environmental changes
as different regions have different climate. This will lead to increased production and
labour costs as the company will have to conduct season hires.

Cont.…
Legal Factors – Legal factors play an important role in the functioning of the operations of a
business. These factors include various laws that are intended for consumers, employment,
fraud, imports and exports etc.
Positive Impact : The company can issue trademark or copyright in order to preserve the
uniqueness of its products instead of them getting copied.
Negative Impact : For example- Marks and Spencer will not be able to change the prices of
its products due to various laws.

Internal analysis
Marks and Spencer is one of the most popular clothing brands and in order to identify the
company’s strengths, weaknesses, opportunities and threats the SWOT analysis of the same is
described below –
Internal Factors
 Strengths – Marks and Spencer is a brand that is recognized globally offering products that
are of high quality with innovative designs. The company has a diverse culture with
employees from all across the world.
 Weaknesses – Marks and Spencer has been facing a lot of competition from new entrants in
the industry. Therefore, to overcome these it will have to formulate new strategies.

Cont.…
External Factors
Opportunities – Fashion is a kind of business that keeps on evolving with new ideas being
generated and implemented every now and then. Therefore, Marks and Spencer has an
opportunity to gear up with the designs of products in order to stand out from its competitors.
Threats – With the prices of raw material rising, there are chances of Marks and Spencer
facing a threat from the same. The company faces competitive threat from brands like Zara,
Tommy Hilfiger etc. and local brands imitating Marks and Spencer’s designs and clothing
styles.

How strengths and weaknesses interrelate
with external macro factors
Changes in the environment can be a result of macro factors. An organisation must carefully
analyse these factors in order to get insight of the challenges that the company can face
over time. Interrelation of various macro factors with strengths and weakness is described
below -
 Political factors – There are always chances of the government interfering in the retail
industry. Also, various trade regulations relating to consumer services also come under
political factors. The retail industry offers a number of benefits for the customers. Marks
and Spencer offers products that are in line with the trend of the market. But countries
offering trade act that is not free can act as a weakness.

Cont.…
 Economic factors - Education and employment levels of a countries can act as both
strengths and weaknesses as educated and employed customers will understand the product
offering of Marks and Spencer more. Whereas in cases where both are negative it will
result in poor recognition of the brand. Educated customers will also have a better
knowledge about the products and services.
 Social factors – Skill levels of the population, gender, cultures etc. come in the category of
social factors. Marks and Spencer operates in regions with different gender roles and
demographics and thus has a better reach to its customers. Whereas there have been cases
where customers have now started to associate the brand with past

Cont.…
 Technological factors – The company has introduced the use of AR and VR technologies
and is thus able create a buzz in order to compete with brands like Zara. Late or delayed
delivery of products when people shop online can prove out to be a weakness in drifting
off customers. Thus, the company’s strength to implement latest technology in its system
will help in overcoming any technological issues in the future.
 Legal factors – Being involved in a number of legal disputes has led to the company not
being able to hold its brand image in the industry. Changes in the laws and regulations of
Britain after Brexit can pose to be a weakness for Marks and Spencer.

Cont.…
 Environmental factors – One of the strengths of the company is its usage of sustainable
and environment friendly raw material during the manufacture of its products.
Implementing new machinery every now and then will lead to increased levels of waste
that can cause harm to the environment.

Conclusion
In order to conclude, various macro factors affect the business environment either positively or
negatively. Also, some of them can act as strengths while others can act as weaknesses for an
organisation and hence hamper its growth. Therefore, an organization must carefully analyse
all these factors and the impact they can have on the functioning of the company. For the
factors that can't be controlled, necessary precautions must be taken by the organisation in
order to safeguard itself from suffering from a negative impact.

References
 Rocha, E. A. G., 2012. The impact of the business environment on the size of the micro,
small and medium enterprise sector; preliminary findings from a cross-country
comparison. Procedia Economics and Finance. 4. pp.335-349.
 Iyer, B. and Henderson, J.C., 2012. Business value from clouds: Learning from users. MIS
Quarterly Executive. 11(1).

Thank You