M&S Business Environment Analysis: Functions, Macro Factors & Impacts

This report provides a comprehensive analysis of the business environment, focusing on different types of companies (private, public, and voluntary sectors) and their legal structures, using Marks & Spencer (M&S) as a case study. It explores the relationship between various organizational functions, such as HR, marketing, finance, and production, and how they link to the firm's objectives. The report also identifies the positive and negative impacts of the macro environment on business operations. Furthermore, it includes an external and internal analysis of M&S, highlighting its strengths and weaknesses and their interrelation with external macro factors. The analysis covers aspects like mission, objectives, legal structure, revenue, and employee numbers, offering a detailed overview of M&S's operational environment and strategic considerations.

BUSINESS AND BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1) Different kinds and objective of company and its legal structure.........................................1
P2)Size and scope of different kinds of firm...............................................................................2
LO2..................................................................................................................................................3
P3) The relationship between various organizational functions and link the objective of firm. .3
LO3..................................................................................................................................................5
P4 Identification of positive and negative impacts of macro environment on business
operations.....................................................................................................................................5
LO4..................................................................................................................................................7
P5) External and internal analysis of particular organization......................................................7
P6 Strength and weaknesses interrelation with external macro factors.......................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment is collection or sum of all external and internal factors such as
customer needs, employees and expectations, demand and supply, suppliers, government
activities, clients, innovation in the technology, management, market trends, social trends,
economic changes etc. In this report Marks & Spencer (M&S) is taken as an organization which
is a British MNC retailer company and it specializes in the sell of high quality home products,
clothing nad food products (Evans and et.al., 2017). Headquarter is located in London, UK and
founded in 1884. This report highlights the different purpose has type of company such as
public, private, voluntary sector and its legal structure of firm and scope & size of the different
kind of company. Also, the relationship between the various company functions & its objective
and structure. Negative & positive impacts of the macro environment upon the business
operations. Report also reveals the external and internal analysis of particular company, order
finding weakness ans strength and interrelate with the external factors.
LO1
P1) Different kinds and objective of company and its legal structure
There are different types of firm that are private, public & voluntary sectors.
Private sector- Private enterprises is a privately held company, it is kind of business that
are owned by the non- government organization. For example- M&S organization is the private
company that main aim of making money & try to hire more employees as compare to the public
sector. This company is created by making a new business or privatizing the public sector
company. In this the government imposes few restriction on the private business (Saleem, 2017).
It is the segment of national economy that is control, owned and managed by the M&S company.
Where the business in the M&S drive down prices for services and goods while competing for
buyers money.
Also, company makes big portion of economy that opposed to the nation which are more
control over the economy. Such company are mainly control by the private owner of the
organization and mainly focus to make money for that, they are using various strategy and
implement in plan to increase the sales rate of the company and try to increase the sales of the
organization. Legal structure of the M&S company in which it is typical for the larger business.
It has a tall hierarchy- that is multiple layer & longer the chain of command. Where the
employees of the M&S are ranked at various different levels in the organization, where each
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level is one above the other level (Hillary, 2017). Such as resembling the pyramid, company
structure can get wider as move down- In hierarchical structure with one executive at top-level,
which is followed by the senior management, middle management, middle management and
finally the workers. Where the employee roles are to be clearly defined in the company, as the
nature of relationship with the other employees.
Public sector- It is a government services that include the military, enforcement,
infrastructure (like- bridges, roads, tunnels, water supply, electrical grids, sewers,
telecommunications etc.) public education and transit, along with the health care & those
working for government. For example- British petroleum is British MNC oil and gas firm and it
is the public sector company, where it main purpose is to provide the services to the public that
includes the public goods and provide various government services public education and the
health care (Wood and Logsdon, 2017). British petroleum has flat structure where the company
structure with the few levels or no level of the management between the management & staff
level of the employees. Where in flat structure company supervises the employees less while
promoting the raised involvement in decision-making process.
Voluntary sector- It is a civil sector and such company undertake the duty of social
activity by the organization that are nonprofit organizations. It is also called the nonprofit sector.
For example- Oxfam is the best nonprofit organization tat working for the support the poor
needy children and the main purpose of the company is to help the society and often without the
profit as motive and with no government intervention. Hence, main purpose of the Oxfam
organization is to make the social wealth rather than the material wealth. Where this organization
follow the flat structure where there is no level is their between the manager and staff (Bashir and
Verma, 2017). It involves less supervision in the organization.
Particulars Private Public Voluntary
Mission M&S mission is to
provide customers
with quality products
& services.
BP is focusing on
fundamental qualities
such as integrity and
honesty. It
emphasizes on
making best efforts
which in turn ensures
Mission is to offer
protection to the
individuals from
humanitarian crises.
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mutual advantage.
Objectives The main motive of
firm is to build and
ensure sustainable
business growth
which in turn meets
requirements of both
shareholders and other
stakeholders.
Objective of BP is
enhance profitability
by 20% through the
means of increasing
production and
financial by meeting
high demand level.
Oxfam is emphasizing
on assessing solutions
pertaining to
undesirable activities
such as poverty. It
mainly focuses on
empowering people
pertaining to secured
future that completely
free from poverty.
Legal structure Hierarchical Hierarchical Flat
Example For instance Marks &
Spencer is the private
limited company, it is
a retail industry and
the number of
location is 1463 in the
global world and the
number of employees
that are working in the
M&S are 80,787 and
has subsidiaries with
M&S bank that is own
by the HSBC (Evans
and et.al., 2017). Net
income of the
company is £37.3
million and operating
income is £601.0
million. Scope of the
For instance British
petroleum is the MNC
oil and gas company it
is the public sector
company, Its
headquarter are
located in the
London ,UK. It cover
worldwide and the
number of employees
that are working in the
British petroleum
company is 73,000
and have subsidiary
with Amoco Castrol.
Revenue of the
company is US$
303.73 billion where
the operating income
Oxfam- It is an
independent
charitable company
that are focusing on
the global poverty
(Saleem, 2017). It is
international non-
government
organization (NGO)
and area served is
worldwide and the
scope of the Oxfam
organization is
poverty eradication,
advocacy, disaster
relief, policy research
and pro-migration.
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company is per Una
Autograph limited,
Rosie Blue Harbour,
M&S collection,
M&S Energy.
is US$19.38 billion,
Net income US$9.58
billion and the scope
of the company is
petroleum, motor fuel,
natural gas,
Petrochemicals,
Aviation fuels.
Particulars Marks & Spencer British petroleum Oxfam-
Revenue £10377.3 million US $ 303.73 billion
Employees 80787 73000 Volunteers
Area served Worldwide At global level Over the globe
P2) Size and scope of different kinds of firm
The size and scope of different firms are as follows:
Sole proprietorship: These firms are highly flexible and are required to make quick decisions.
The scope of this type of firms is numerous and it can also be established in partnership with the
consent of its owners.
Partnership business: These types of firms can add any number of partners with increasing
investment with numerous scopes of growth. It is very easy to perform complex business
operations by joint efforts of business related problems.
Private limited company: Private limited organisations can be considered to have vast
opportunities for industrial expansion. However they are restricted by investment limitations and
contribution of individuals operating the business.
Public limited company: The opportunities for these businesses are huge and for this purpose
they can seek finance from shared issued to public. In this type of businesses managers are held
responsible for mismanagement issues. However for ensuring fast growth in future company can
raise its funds by improving service quality and public value.
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LO2
P3) The relationship between various organizational functions and link the objective of firm
There are various relations between the different firms and its functions that are.
HR and marketing- when the marketing and the HR department work together than it is
beneficial for the M&S organization. As the Hr department first serve the organization
employees, because of the connections of the employees, department share the brand massaging
that make in the marketing through the employees by training sessions, employee orientations
and evaluations (Couto, Lopes and Sousa, 2015). The brand messaging can advertise through out
the firm by an internal communication where workforce become brand ambassadors that can
strengthen the marketing department and spread the message to the customer, which result help
the organization for making aware of the new products and increase the sale rates of the
company.
Whereas the marketing team connections with the customers, it helps in promotes values
and mission of the organizations. By these promotions, which help in attract the potential
workforce. And it help the HR department & other workforce to adapt the communications type
and style that marketing the workforce as have experience in communication with the buyers.
Hence, it helps department for getting more potential employees, which indirectly help the
organization as the potential employee can with effectively and help in increasing the
productivity of the M&S organization.
Finance and HR- As both finance and HR department are work together to achieve the
goal to achive the target of higher level of the profitability and performance (Davies, 2016).
Where the HR department perform some duties that are traditionally thoughts of the financial
duties. For instance The HR must consider benefits and cost for recruiting new workforce. Also,
considered impact of HR policies on profitability of M&S organization. For that it require the
data analysis & the financial projections. Which help the HR to bring more potential candidates
in the organizations.
Whereas the financial manager go beyond the considering workforce by determine the costs and
the source through which profitability can be improved with the help of human capital. This
result the finance officer estimate an impact of increment salary, bonus and various other
motivational program or activities organized for the profitability of the M&S company.
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Finance and Production- Production and finance both are integral part of enterprises.
As the production insure tat the organization can't run without the stock of raw material because
as there no stock of the finished goods than the company can not able to meet demand which
lead loss of sale and the company in lose (Doleski, 2015). While on the other hand the finance
ensure that the organization have enough capital, so that company does not go in trouble .
Production department require raw material, machinery and the employee for that it
require money expenditure that is the function of the finance, as the finance making the budget
for production for services and goods and allocating the funds to the production. As without
functions production function can be in trouble and no production can be done without finance .
As the finance help the production department which result in increase the production and make
the innovative production and helps the organization to increase in the productivity of the M&S
company. And if the production of the goods does not happen fairly than company not able to
sell its products which lead fall in sales and ultimately weaken the finance department, as it have
less fund at disposal (Georgescu and Popescul, 2015). If the production happen successfully than
it increase the capital of the organization, which result it increase the revenue of the M&S
organization and helps to achieve the goal of the company.
Marketing and Production- The relation between the marketing and the production
department is very essential to meet the customer expectation and the performance of company.
Marketing helps the firm for the friendly communication which helps the cooperation between
the production and marketing functions. Which helps the M&S organization to fulfill the needs
of the consumer and increase the sales and profit of the firm. As the production department
mainly focus on the quality and quantity of the products which can only be possible with the help
of marketing as through the marketing production department can come to know the demand and
the current trend of the customer on the basis of this they do production (Monroe, Rikala and
Somervuori, 2015). And also production provide the innovative products and varieties of
production information to the marketing, Which help the M&S to increase the sale and
profitability of the organization.
LO3
P4 Identification of positive and negative impacts of macro environment on business operations.
Macro environment in the organizations includes all economic and political protocol
which is been implemented in the market. Macro environment includes Changes in gross
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domestic product (GDP), employment, inflation, spending, changes in monetary and fiscal
policies.
Positive impact of macro environment on business operations:
The factors which comes under the category of macro environment are political and legal
factors. As this impacts the business operations of Marks and Spencer in this way that any good
change in the political factors assist the organization in doing more business. Good political
conditions the country assist the organization in doing more business. When there is no conflicts
in the country business operations of Marks and Spencer will be carried out in an smooth way.
Change in technolo9gies also impacts the business operations as when good and advance
machines used in the organization more products can be manufactured in lesser time (Dyllick
and Muff, 2016).
Modifications in technologies assist the organization by making business operations fast,
thus in lesser time more productivity is generated by Marks and Spencer. Environmental factors
like climate & weather impacts the business practices in this way as when the environment of the
country is good and pleasant the goods manufactured by Marks and Spencer can survive for
longer duration.
Economic factors like GDP rate and currency rates, employment factors, interest rates
and inflation rates have major impact on day to day task of business, as when the country has
more financial resources the business tasks are done and Marks and Spencer can also expand
their business (Vaida and Diana, 2017). Employment factors like wage rates etc also impacts the
business task as when the country has low wage rates more employees can be appointed by
Marks and Spencer. Legal factors like government laws and regulations impacts the business
task as when the rules and regulations of the government are satisfactory all the operations are
performed in an desired way without any issues. Legal factors includes import and export
polices, as when these polices are good enough more products and can be imported and exported
by Marks and Spencer.
Negative impact of macro environment on business operations:
Macro environment factors have both positive as well as negative impacts on business
operations of Marks and Spencer. Demographic forces like religion, age, education level,
lifestyle, culture impacts the business operations as when the goods manufactured by Marks and
Spencer is not suitable with the culture of the people they will not purchase that. Organization
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has to take care of belief and culture as when the goods and services are not apportioned withe
their culture the demand for that will be decreased (Battistella and et.al., 2017). Education factors
also impacts the business task as when people of nation are highly educated they can understand
the real advantage of buying the products. As when they are not so much educated they will not
understand the benefits of products, thus they don't make purchases which results in decreasing
organizational productivity.
Technological factors impacts the business operations of Marks and Spencer in this way
as when there is lack of advance machines the manufacturing and production task can not be
carried out in an efficient way. Less work is done in more, thus impacting the productivity of the
organization. Environmental factors also influence the business operations as when the
environment of the nation is not so good, ie extreme hot or extreme cold the products
manufactured by organization can not survive for longer duration (García-Sánchez, Cuadrado-
Ballesteros and Frias-Aceituno, 2016). Social and cultural factors influence the business
practices as there are different types of people in different nation, and they also follow different
culture, so it makes difficult for Marks and Spencer to make the products which are suitable
with their cultures.
Government laws and regulations impacts the business task as when government make
any changes in the polices Marks and Spencer also has to make changes according to that so that
the businesses operations can be carried out in an smooth way. As for making this change
organization has to spend lot of time, thus results in decreasing organizational productivity.
Legal factors like laws related to import export policies are not so satisfactory it makes
difficult for organization to transfer their products (Davies, 2016). Any change made in the
government policy impacts the business operations of Marks and Spencer as they also have to
renew their policies in accordance with the government laws. Political factors also affects the
business operations as when the political conditions of the countries is not so good transfer of
goods between countries becomes difficult, thus affecting the overall productivity of Marks and
Spencer (Davies, 2016).
LO4
P5) External and internal analysis of particular organization
SWOT study is undertaken by the M&S company to identify its weakness and strength, as well
as the external threats and opportunities.
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Strength-
Variety of products- M&S organization provide the different varieties of products to the
customer in its each store, it is one of the strength of the company, which lead to the customer
satisfaction by fulfilling the requirement of the consumer and hence, make the buyer to retain at
the same product which increase the sales of the company and raise the productivity of the firm.
Best customer experience- As the organizing providing the best quality product and
services to the customer, by keeping consumer needs and expectation in mind. So that which can
satisfy the consumer (Rosile, 2016). By getting the good services from the product it satisfies the
user, and they remain continue to buy the things next because of the previous experience, which
lead to strengthen the organization by increasing the sales.
Super performance in new market- M&S company as it expand the business new
market and by providing the best quality product to the customer as compare to the other
competitor. Which make the consumer to divert the other product to its product and make the
customer loyal. Because of super performance in the new market it improves the brand value and
increase the sales of the company.
Weakness-
Lack in financial planning- Due to lack in the financial planning of the organization, It
creates various problem to the sales, as the company not having the proper finance planning
which creates various issues to the other department such as production, marketing etc (Wrigley,
Bucolo and Straker, 2016). Hence, which result in reduce the sales of the company.
Lack in technology- As the company lack in technology and need more investment on
the new technology, so to improve the smoothing of work in the organization. It is one of the
weakness of the company as the company not adopting the new technology, which are running in
the business market, because of lacking in technology its sales decline in the current market.
Lack in facing current market- It is one of the weakness of the M&S organization, as it
unable to face the other competition market in the business market. As the other company
providing the best quality product as compare to the M&S. But the organization can't able to
tackle the competitor which results decline in the sales rates of the firm (Couto, Lopes and
Sousa, 2015).
Opportunities-
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Low cost transportation- Due to reduction in the cost of the transportation such as
lowering the shipping cost which help the M&S company to reduce the cost of the organization
products, thus which provide the opportunity of the firm to increase the profitability by selling
the products at the lower cost which benefits the customers and gain the market share.
Lower inflation rate- As low in the inflation rate of the economy, it brings more stability
of the M&S organization in the business market, which enable the lower credit interest rates to
the consumers of the firm.
Stable Free cash flow- Through the stable free cash flow, it provides one of the
opportunity that help to invest in the adjacent of product segments (Davies, 2016). As with more
fund in the bank, more company can do investment on new technologies and also in new
segments of products. It provides a good opportunity to the M&S organization.
Opening new market government agreement- As the adoption of the new government
trade agreement that provided Marks & Spencer an opportunity that to enter in new emerging
market.
Threats-
Local distributors- Due to continuously growth of the local distributors, it presents a
threat in the business market, as the competition paying the higher margin to local distribution. It
is one of the major threats of the M&S company.
Currency fluctuation- As the M&S organization operating the numerous nations that
exposed to the currency fluctuations while specially given volatile political climate that are
numerous market all over the world (Doleski, 2015).
Liability laws- Different countries have the different liability laws which may exposed
the various liability of claim that given policy change in the market. It is also one of the threats
for the M&S organization.
P6 Strength and weaknesses interrelation with external macro factors.
Strength interrelation with external macro factors:
The biggest strength of the Marks and Spencer is that they have variety of products in
each stores which assist the customers to select the best according to their choice. Organization
makes different types of products to satisfy the consumers. The political condition of the nation
is very good so this makes the import export of the goods manufactured easy, thus Marks and
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