Business and Business Environment: Marks and Spencer Analysis Report

This report provides a comprehensive analysis of the business environment, focusing on different types of organizations, their purposes, legal structures, sizes, and scopes. It differentiates between public, private, and voluntary sectors, using the BBC, Marks and Spencer, and the Wellcome Trust as ...Read More

BUSINESS AND BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Types and purposes of organizations with legal structures....................................................1
P2 Different type of organizations: Size and scope.....................................................................4
LO 2.................................................................................................................................................6
P3 Relationship between organizational functions and its link with organizational objectives
and structure.................................................................................................................................6
LO 3.................................................................................................................................................8
P4 Positive and negative impact of micro environment on business operation...........................8
LO 4...............................................................................................................................................11
P5 Internal and External analysis of Mark and Spencer to identify its Strength and Weaknesses
....................................................................................................................................................11
P6 Strength and Weaknesses inter-related with external macro factors....................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Business environment refers to the factors affecting the business internally as well as
externally for making the business decisions. These factors include employees, customers,
demand, supply, management, customer demand and clients which affects the decision making
and working of a business. It is also being affected by change in technologies and new
innovations, and it is an essential element of business because it presents the possible
opportunities and threats in the market. This benefits an organisation in improving performance,
adapting changes easily and identifying useful resources. Present study is based on Marks and
Spencer group. It is a British multinational retailer situated in Leeds that specialists in selling
high quality clothing, food products and home products and having 959 stores across UK which
includes 615 stores that only deals in food products. This project includes different types of
organizations that are public, private and voluntary sector with purposes and their legal structure,
size and scope of a range of different types of organizations is discussed in report. It is also
consisted of relationship between organisational functions with link to organisational objectives
and structure. Lastly this report includes internal and external analysis of specific organizations
in order to identify strengths and weakness(Coll Pérez, 2017).
LO 1
P1 Types and purposes of organizations with legal structures
The idea to put the things together in logical manner to achieve a common objective is
known as an organisation. The reason behind the long survival of an organisation is people
working together achieves much more than a people working alone that shows the impact of
team work. There are three types of organisations which includes public sector organisation,
private sector organisation and voluntary organisation(Haixing, Kai and Xu, 2015).
PUBLIC SECTOR
Definition:
Public sector organisations are those organisations which are being owned and operated
by government and exist to provide services to citizens, majorly not been seeking for profit. It
usually raises its funds from several methods which includes fees, taxes and through financial
transfers from other level of government. Different governments around the world can employ
1

their own unique method of funding. There are four types of public sector organisation which
consist of national, international, regional and local(Jinglei, 2015).
BBC – British Broadcasting Company
It is a public sector organisation which is involved in services of British public
broadcaster. Its headquarter is based in Broadcasting house, London which is the worlds oldest
and largest national broadcasting organisation with 20,950 employee in total from which 16,672
are involved in public sector broadcasting. Staff is being counted to 35,402 including part-time,
fixed and contracted staff. It is being established under a royal charter that operates under an
agreement with the secretary of state for digital, sport, media and culture(Khan, Ahmad and Butt,
2019).
Purpose of BBC
Its main purpose is to mission values with public purposes that acts in public interest by
serving the audience with the help of provision of distinctive, high quality and impartial output
and service which informs, educate and entertain. While public sector organisations major
purpose is to provide services such as government services and public goods that consist of
military, police, public education, etc. with emphasis on health care for the people working with
the government itself(Luger, 2015).
Legal Structure
Public sector organisations are not like private sector as it is separate from personal
finances by the members. It should have a minimum of two shareholders with the minimum
number of shares issued to public must be valued to £50,000 or prescribed equally in euros
before beginning the trading.
PRIVATE SECTOR
Definition:
Private sector organisations refers to all the corporations, partnerships, associations and
agencies operated for the purpose of profit making. It includes all those organisations which are
not being owned and operated by government with mainly aiming at profit earning. Private
foundations are charitable organisations that does not include public charity, they have to raise
their charity from private sources as they cannot approach public for the purpose of
charity(Meetei, 2017).
2

Marks and Spencer:
It is a private sector organisation headquartered in Westminster, London which deals in
selling of high quality clothings, home products and food products. It was the first company that
became the first British retailer to make a pre tax profit of £1 billion, while it went into a sudden
slump which took the stakeholders to surprise. It is having its 959 stores across UK from which
615 only sells food products that shows that it has covered a good market in food products in
UK(Mirghaed, 2015).
Purpose:
The organisation purpose is to become a major part of how the organisation runs its
business with maintaining high level of customer trust and employee engagement. It aims at
representing more than a better way of working by materially improving customers and partners
experience at Marks and Spencer.
Legal Structure:
Private organisation is a kind of joint stock company which is an incorporated business
where business have its own separate legal entity. It cannot accept deposits from public, it has to
generate its funds privately because it works on independent management and has its own
separate legal entity(Tawakkoli, 2015).
VOLUNTARY SECTOR
Definition:
Those organisations whose purpose are to benefit and enrich society without aiming at
profit earning are known as voluntary organisation. This can have a little government
involvement and its not necessary to involve government. It is not like private sector
organisation as it does not involve any profit making, but if profits are being generated by a
voluntary organisation then they are invested back to community and organisation(Vargas-
Hernández, Yesenia and Lerma, 2017).
Wellcome Trust:
It is a voluntary organisation which is based in London being established in 1936 with the
purpose of raising funds for the research of improvement of human and animals health. It also
funds the biomedical researches which helps in public understanding of science.
Purpose:
3

The major purpose of the organisation is to achieve extraordinary improvements in health
of humans and animals by supporting the brightest minds, in addition it works to fund
biomedical research which helps in supporting public understanding of science(Wu and Ho,
2016).
Legal Structure:
There is majorly three legal structures which are being followed by voluntary
organisation that includes it is an unincorporated association, it is a company and a trust with
limited guarantee
P2 Different type of organizations: Size and scope
BASIS PUBLIC SECTOR
(BBC)
PRIVATE SECTOR
(Marks and Spencer)
VOLUNTARY
SECTOR
(Wellcome Trust)
Company information BBC (British
Broadcasting
Corporation) is a
public sector
organisation which is
the largest and oldest
national broadcasting
organisation. BBC
operates some of
wholly owned
commercial divisions
which includes BBC
studio works, BBC
world news and BBC
studios(Xu, Kabam
Inc, 2017).
Marks and Spencer is
a private sector
organisation that is a
major British
multinational retailer
dealing in selling of
quality clothing, home
products and food
products with focusing
more on food products
as it have 959 stores in
UK from which 615
are involved in selling
of food products
which shows that it
has covered a huge
market in UK.
Wellcome Trust is a
voluntary organisation
established in 1936. It
was created to fund the
research to improve
human and animal
health, with addition to
funding biomedical
research which
supports the public
understandings of
science(Yesenia,
Vázquez and Vargas-
Hernández, 2018).
4

Mission Its mission is to act in
public interest by
serving the audience
through provision of
high quality, impartial
and distinctive outputs
and services which
educates, inform and
entertain.
Marks and Spencer
runs its business with
mission of maintaining
high level of customer
trust and employee
engagement by aiming
at better way of
working with good
customer and
employee
experiences(Zhanwen,
2015).
The mission of
Wellcome trust is to
improve animal and
human health by
funding the
researchers with
brilliant minds. It also
concentrates on
biomedical research
which supports the
public understandings
of science.
Objective Its objective is to give
quality and
distinctiveness while
serving audiences. The
service which is being
provided by BBC
should be value for
money. Openness and
transparency is to be
provided to all the
consumers(Zhao, and
Li, 2018).
The major objective of
Marks and Spencer is
to build a sustainable
business by consistent
profitable growth and
by making sure that
organisation
responsibly meets the
accountability to
shareholders and wider
stakeholders.
The objective of the
trust is to provide
sufficient funds for the
research of
improvement of
animal and human
health. Its objectives
are to thrive infectious
disease and the
immune system,
research environment
and population
health(Haixing, Kai
and Xu, 2015).
Market Size The total income
generated by BBC in
the year 2013-14 was
£5.066 billion which
Total revenue earned
by Marks and Spencer
for the year 2019 was
1037.73 crores GBP
Wellcome Trust with
an endowment of
£25.9 billion in 2018,
became the fourth
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shows that it has
covered the major
market.
which means it has a
good approach and
goodwill in the market
with this much of
revenue(Jinglei, 2015).
wealthiest charitable
foundation in the
world.
Legal Structure Minimum shares
issued to the public
must be valued to
£50,000 and it does
not allow any personal
finances by the
members and there
must be at least 2
shareholders(Khan,
Ahmad and Butt,
2019).
It cannot accept public
deposits as it works on
separate legal entity,
and it cannot transfer
or issue its share as it
have limited liability.
It is an unincorporated
association, trust and
company with limited
liability.
LO 2
P3 Relationship between organizational functions and its link with organizational objectives and
structure
Business have different functions to perform which includes sales, marketing, research
and development and also production part. On other side Organizational structure is basically
relationship of different parts of business function so that each and every level can make a
command on these functions to run business smoothly. Mark and Spencer have organisational
function and structure in a flow chart manner. Company has adopted functional organisational
structure so that they can have command on every functioning of the business. There are
different departments like finance, marketing, research and development, Human resource
department as so on. Every department is having separate functioning and they are monitored by
different managers who are skilled in that particular department(Coll Pérez, 2017).
6

Mark and Spencer follows flat organisational structure as it helps in proper management
because it has limited levels between administrative department and front line employees which
make organizational functioning easy going.
Figure:-1
Company has divided the departments according to there functioning so that they can
work properly and can optimize the performance of each individual working in the organisation.
Different department's and there relationship with each other is as follows:-
 Administration and finance department:- Administration department of mark and
Spencer is performing management activities which can help the other department and
basically includes top management personnel which have direct link with the head office
so that they can provide require material to all the staff and labour like computers. On
other side in Mark and Spencer finance department issue finance for purchase of different
needs coming in running the business which may include machinery or other equipment.
Both the departments are inter-related to each other as for fulfilling the financial need of
the business administration department have to reach finance department and if any issue
raises in the business function fiance department have to take help of Administration
7
Illustration 1: https://www.google.com/search?
q=mark+and+spencer+use+which+org+structure&source=ln
ms&sa=X&ved=0ahUKEwja_u65pcrjAhXBsI8KHQ6CBY0Q_A
UIDCgA&biw=1521&bih=810&dpr=1

department so that they can send the report to top authorities(Khan, Ahmad and Butt,
2019).
 Research and development and Marketing department:- Research and development
department in Mark and Spencer analyze the quality of the product in laboratories by
applying different test and also work on improvement of there quality. On other side
marketing department work on increasing the sale by various promotional activities. Both
the departments are inter-related as for increasing the sales of the business it is necessary
to do proper research about the actual need of the customers and accordingly improve the
quality of there products and services so that customers are satisfied(Luger, 2015).
 Purchasing and production department:- Mark and Spencer's purchasing department
work on purchase of raw materials at a suitable price so that cost of good can be
controlled. Quality, Quantity, Price and delivery of the product all depends on purchasing
department. They purchase at a reasonable price and then send it to production
department. Now Production department takes care whether raw materials is converted
into finished goods or not. They also take care of quality and demand of customers, as the
demand increase they increase the production level by taking support of Purchasing
department(Meetei, 2017).
 Human resource and Service department:- Main function of HRM department is to
make a good relation between different departments and also between top management
and labours. Service department work on providing good services to their customers so
that there customers are attracted towards the products. These services may be free of
cost which can help the company to build trust on customers. So HRM department check
the customers' satisfaction level and accordingly service department provide the services.
Both the departments work with coordination so that they can extract huge
market(Mirghaed, 2015).
LO 3
P4 Positive and negative impact of micro environment on business operation
Positive and negative impacts of micro environment on different business operation can
be explained with help of Pestle analysis of the Mark and Spencer as it is having marketing tools
which can easily identify these impacts. By identifying these impacts on business operation
8

company can take precautions to overcome the negative impacts and enhance the positive
impact. This will bring new opportunity for the firm and all drawbacks can be recognized as well
as can be overcome on time(Tawakkoli, 2015).
Figure:- 2
Political factor :- There are many political factors which any impact positively or negatively to
the company. It includes different government policies, taxation and political stability of the
business(Vargas-Hernández, Yesenia and Lerma, 2017).
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Illustration 2: https://www.google.com/search?
q=pestle+anaysis&oq=pestle+anaysis&aqs=chrome..69i57j0l5.5679j0j7
&sourceid=chrome&ie=UTF-8

 Positive impact:- As UK is having stable government policies so Mark and Spencer not
need to change there work function again and again. UK is having good relation with
other countries so it becomes easy for Mark and Spencer to do international business.
 Negative impact:- Company believe in CSR activities but UK government have no clarity
regarding the energy efficiency scheme which negatively impacts there hard work.
Economical factor:- There are different economic factors like Exchange rate, inflation,
economic growth which directly affect the business of Mark and Spencer positively and
negatively(Wu and Ho, 2016). Positive impact:- They are always come up with good quality products which only led to
short term losses. But in long run company will be leading the market.
 Negative impact:- Company is getting affected due to discounting pricing by there
competitors. Financial crisis has made the customers more price sensitive. Falling prices
has also affected the performance of Mark and Spencer.
Social factors:- There are different social factors like population, growth rate, attitude of
customers, age distribution which affect the business performance of Mark and Spencer. Positive impact:- Organic products are in need and company is already working on this as
they are contributing in different CSR activities. Providing products for all age groups
and customers are having positive attitude towards the brand(Xu, Kabam Inc, 2017).
 Negative impact:- Some changes are in need regarding different strategies to extract new
segments of market as Baby boomers are no longer in demand by the customers.
Technological factors:- Different technological factors like innovation, technological incentive
and research and development are affecting business performance and affect positively as well as
negatively. Positive impact:- Company is having good connections through social media as
consumers are more focused on digital technology and prefer mobile E-commerce and
online retailing.
 Negative impact:- Consumers preference regarding ethical green presence is increasing
so product modification and development is required to make the product attractive
towards the consumers(Yesenia, Vázquez and Vargas-Hernández, 2018).
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Legal Factors:- There are various legal factors which are affecting positively as well as
negatively toward the organisation. Some legal factors are employment laws, consumer
protection law, patent laws etc. Positive impact:- With help of patent law no other organisation can copy new ideas of
Mark and Spencer and they can become innovators by setting new trends in market. This
will help the company to compete in market and increase there market share.
 Negative impact:- Every organisation have their own rules and regulations so it becomes
tough for the company to trade their products internationally. They will be reserved to
the country level only and can not find new opportunity for the firm (Zhanwen, 2015).
Environmental factor:- Different environmental factors like carbon footprint, scarcity of raw
materials affects Mark and Spencer in many ways. Positive impact:- Company is already involved in various CSR activities which help them
to improve there operational part and produce eco-friendly products which is customers
first preference nowadays and help in increasing the production level. Company always
come up with environmental and sustainable products.
 Negative impact:- In near future scarcity of Raw materials may arise due to many
environmental changes which may affect production part of Mark and Spencer. This may
result in customers dissatisfaction as there need will not able to fulfilled(Zhao, and Li,
2018).
LO 4
P5 Internal and External analysis of Mark and Spencer to identify its Strength and Weaknesses
There are many internal and external factors which affect organisational growth. With
help of SWOT analysis internal factors like Strength and weaknesses and External factors like
opportunity and threat of business environment can be identified(Coll Pérez, 2017).
Strength:-
 Mark and Spencer is offering products which are in trend and can compete in market
which can build trust of customers towards the product offering and they are coming as
loyal customers
11

 Customers are having positive attitude towards the brand and products are available for
all age groups.
 They are having strong E-commerce infrastructure which help the company to get
connected with different customers all over the world at the same time. Technology is
increasing and customers expectations too. So digital technology is bringing business to
the firm.
 Due to good relation of UK with other countries Mark and Spencer are able to do
international business very easily(Haixing, Kai and Xu, 2015).
 Company is working for the welfare of environment and is involved in different CSR
activities. Nowadays customers are in search of eco-friendly products which Mark and
Spencer are offering at a reasonable rate with help of good research and development.
 There focus is clear and always able to enhance customers experience towards the
product with help of which customers are satisfied with the brand. Customers are finding
products different from other competitors and this help the firm to take a good
positioning in market(Meetei, 2017).
Weaknesses:-
 Financial performance is not good and need to be improved for sustaining in the business.
A proper financial planning need to be done so that business can run efficiently. Which
will help Mark and Spencer to have more profitability and overcome the losses which
they are facing over the years.
 More investment in new technology is required as competition is increasing day by day
and customers are having different options in market so they can easily switch to other
brands if they do not find any new options(Jinglei, 2015).
 Not able to face the challenges by new entrants and have lost small market segments. If
this continues then the company will face huge loss.
 Competitors are working on price strategy and due to this reason competitors are
grabbing the market.
 Profitability ratio is below to its average and this is leading to various financial losses of
the business.
Opportunities:-
12

 New technology can bring opportunity for the firm as customer are in search of
innovative products which are trendy in market and this can build trust of customers
towards the product.
 Lower inflation rate can bring stability in the market which can bring new opportunity for
the firm. Customers will be attracted towards the brand and market opportunity will
increase(Khan, Ahmad and Butt, 2019).
 Market development can lead to competitive advantage of the firm and can bring new
scope for the business. Mark and Spencer will be leading the market if are able innovate
such products which can easily attract potential customers towards them and this will
result in competitive advantage of the firm.
Threats:-
 Different countries have different laws which may leads to dissatisfaction as product may
not match the market standard.
 Low quality product may lower down the income from market(Luger, 2015).
 Growing strength of local distributors may results in high competition.
 As company is doing international business so currency fluctuation may be there.
P6 Strength and Weaknesses inter-related with external macro factors
Strength and weaknesses are inter-related with the various external macro factors as there
may be situations where outside factors can affect the work function of an organisation. This
may increase the risk related to various external factors as they directly or indirectly relates to
strength and weaknesses of the firm(Mirghaed, 2015).
Strength inter-related with external macro factors:-
CSR activities in which the company is involved is basic strength of the firm. These
activities help the organisation to bring positive impact on its environmental factors and
company is also involve in production of eco-friendly products which is nowadays customers
first preference. Company is having good brand recognition and providing products for all age
category and this is related to social factors like attitude of customers towards the brand and also
age distribution(Tawakkoli, 2015). Another strength of the firm that is strong E-commerce
infrastructure is directly related to technological factors which positively affects the firm and
13

which help the company to get connected with different customers all together can bring new
scope of the business. As Mark and Spencer are able to international business very smoothly due
to good connections of there country with other international market is directly inter-related with
the political factors which affects the trading of the firm(Vargas-Hernández, Yesenia and Lerma,
2017).
Weaknesses inter-related with external macro factors:-
Customers are having various options in market as all the competitors are having good
technology and giving tough competition to one another. So customers have option to switch the
brand if they do not find any new options this is how weakness of the firm is directly linking to
the negative impact of technological factors. So company is in need of product modification with
good research and development. As competition is increasing companies are making pricing
strategy to extract the market and financial crisis has also made the customers more price
sensitive. This is how this weakness of Mark and Spencer is directly relates to Economic factor
of the company(Wu and Ho, 2016).
CONCLUSION
From the above study it has been concluded that every organisation is having there
purpose according to type of the firm that is either it belongs to public, private or voluntary
sectors and also depends on legal structure of the firm. Mark and Spencer is also having different
purpose and legal structure. There are different types of the organisation having different scope
and sizes according to there structure. Further the report concludes about different organisational
functions and there link with organisational structure having different departments like HRM,
Finance, marketing, service department, purchasing and production department. There are some
positives as well as negative impact of micro environment on functioning of the business of
Mark and Spencer which have been concluded in the report with help of PESTLE analysis. At
last external and internal analysis of Mark and Spencer have been done to find strength and
weaknesses of the company and also concluded how they are inter-related with macro
environment as every strength and weakness of the organization is directly linked to one of the
macro environment factor.
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