Marks & Spencer Case Study: PESTEL and SWOT Analysis

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Business and the Business Environment
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Table of Contents
Section 1 – Essay (LO1 & LO2)..................................................................................3
Introduction..............................................................................................................3
Discussion...............................................................................................................3
Conclusion...............................................................................................................8
Part 2 – Case study (LO3 & LO4)...............................................................................9
Introduction..............................................................................................................9
Task.........................................................................................................................9
Conclusion.............................................................................................................13
Reference list............................................................................................................ 14
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Section 1 – Essay (LO1 & LO2)
Introduction
In the present times, every business undertaking operates with a specific purpose
and objective. This essay will shed light upon the difference between different
organisational types along with their purpose and motive of operation. In addition,
the paper will discuss the scope in terms of trading and size of different
organisations. Furthermore, different types of organisational structures and their way
of function will be outlined.
Discussion
1) Different types of organisations.
Differences between profit, not for profit and non-governmental organisations
(NGOs)
The profit organisations refer to the businesses whose key objective is to earn
profit. These organisations implement different strategies and tactics in order to
produce utmost revenue from the business. A significant example of a profit
organisation is “Marks & Spencer”. On contrary, not-for-profit organisations do
not earn profits for their owners; however, invests them in order to meet the
objectives of the organisation and continue its operations. The most important
purpose of such organisation is to provide essential services to the public (Solana,
2014). BBC can be considered as an example of not-for-profit organisation.
Furthermore, the non-governmental organisation or NGOs refers to the
organisation or voluntary groups that are organised at international, national or local
levels. These organisations are generally task oriented and run by individuals having
common interests. The NGOs carry out several humanitarian activities, as they
operate with the motive of serving the people and the community (Ramadan and
Borgonovi, 2015). One of the most suitable examples of an NGO is “Missing
People”.
Business purpose and supply of goods and services
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The purpose of the for-profit organisation is to create utmost profits and enhance
market share by meeting the expectations and needs of the customers. Marks &
Spencer provides its customers with a variety of goods and services; in that way,
catering to their demand and requirements and earning profits out of it. On the other
hand, the key purpose of setting up a not-for-profit is to provide necessary services
to the public and does not intend to earn massive profit. It is generally managed and
controlled by different governmental bodies. BBC broadcasting presently runs with
the motive of offering graduate training to individuals in reference to technology,
business, journalism, production and so forth through their latest talent schemes.
Additionally, the NGOs operate with the purpose of make certain the wellbeing of the
society (Hollensbe et al., 2014). Unlike the not-for-profit organisations, the NGOs run
without any interference of the government. The main motive of Missing People is to
bring missing adults and children back to their families.
2) Size and scope of the organisations.
Difference between micro, small, medium-size and large enterprises
A “micro enterprise” refers to the small businesses that encompass fewer
employees, with a turnover or balance sheet of less than a specific amount. In
context to UK, a micro business must possess not more than nine employees. Such
businesses are generally run within families (Prentice, 2017). On contrary, the “small
and medium enterprises” are witnessed to capture the majority of the market in the
present times. In UK context, an SME must not contain “more than 250
employees” and possess “less than £25m of turnover”. Its gross possessions
must not be “more than £12.5m” (Ward and Rhodes, 2014). Large enterprises in
UK, on the other hand, are the businesses that encompass a “minimum of 5000
employees” in addition to a “yearly turnover of more than 1.5 billion Euros”.
Additionally, these enterprises must have a “balance sheet sum of not less than 2
billion Euros” (Watts, 2018).
Market share, profit share, growth and sustainability
Every organisation adhere to certain types of legal structures such as, sole
proprietorship, partnership, public limited company, which determines their scope of
development, growth, profit and market share, sustainability, and so forth. The key
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reasons of growth of businesses are its objectives and aspirations. Additionally, the
business organisations ensure their growth by maintaining their market shares
aligned with its competitors; thereby, increasing profits. Different type of business
organisations encloses different scope. For instance, the business organisations
encompass the scope of improving its production, marketing, distribution and so on.
For instance, Marks & Spencer possesses massive scope of improving its
production, distribution as well as marketing functions by developing its business in
the global market through different strategies such as, partnership, joint ventures,
franchising, and so on.
3) Organisation structures and functions
Different kinds of structures relating to size and scope of operations
The different types of organisational structure in context to their size along with
scope are explained below:
Functional Organisational Structure
This organisational structure comprises of undertakings such as, allocation,
management, direction and supervision of responsibilities. It further plumps for the
presentations and processes that the company can perform. This structure further
classifies the relationship between different functions in an organisation by dividing
the different functions into different units. Some of the key functions include human
resource, marketing, finance, operations, research and development, production and
so forth (Chang, 2016). Such type of organisational structures is suitable for large
organisations, as it allows apposite division of work. Here, every function is
controlled and monitored by a specific manager.
Divisional Organisational Structure
This organisational structure adheres to the planning, which breaks the organisation
into different segment wherein, every segment is self-concerned. Such type of
business organisational structure is appropriate for the organisations that operate in
different geographical regions or posses more than one product or service type. This
structure is self-oriented as well as comprises of functions for making a product
(Behmer et al., 2016). Here, every division or section of the organisation benefits
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from certain amount of autonomy; thus, has the opportunity of making self-decisions
for the benefit of the organisation.
Matrix Organisational Structure
In this organisational structure, the duties and roles of the different job roles are
considered to be more prejudiced and complex. This structure connects the
workforce by both product and functions. Here, the employees need to report to
more than one manager, which may become perplexing for them. Such
organisational structures are suitable for the large sector organisations (Saunila et
al., 2014).
Marks & Spencer, being one of the largest retail organisations in UK, tags along the
functional organisational structure. The company has divided its business functions
into different departments such as, production, marketing, research and
development, finance and accounting, purchasing, and so on.
Complexities of transnational, international and global organisation structures
The companies that adhere to the international organisation structure do not
make any sort of investments outside their home nation and are fundamentally
exporters and importers (Morschett et al., 2015). On contrary, the global
organisations are the businesses that operate in multiple locations; however, follow
the same organisational culture along with a single set of procedures. This further
facilitates in ensuring a much effective and efficient single global business. Then
again, the transnational companies are considered much complex in nature. These
organisations are commercial in nature and function substantial services. It operates
in several nations; however, does not regard any nation as its home nation (Sezgin
and Dijkzeul, 2014). Marks & Spencer follows the global organisation structure;
thereby, having presence in a number of countries. It adheres to a single type of
organisational culture and ensures to abide by same processes throughout its
different outlets. Being a global organisation, Marks & Spencer has massive scope of
expansion. In the view of the fact that, the company is a public limited corporation, it
has the opportunity of selling its shares to the public and earns revenue from it.
How functions relate to overall organisation mission and objectives
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The different functions of the retail company, Marks & Spencer comprises of different
functional units. Every department and its functions are related to one another in
order to meet the goals along with the objectives of the business. The relation
between the different functions is explained below:
R&D (Research and Development)
This department is mainly accountable of initialising the processes or products of the
company at a regular basis. Commonly known as R&D, this department is primarily
related with the sales and marketing department. This is for the reason that, this
department is apprehensive of improving the existing processes, services or
products of the business (Waddock and Bodwell, 2017). It is also significantly related
to the purchasing department.
Purchasing
This department is concerned of acquiring the services and goods for the purpose of
the business. These services and products essentially comprise of raw materials,
equipments for manufacturing, and so on. This department is closely related to the
other various functional units of the company as it looks after the purchasing
requirements of the entire organisation. When purchasing the services and goods,
the purchasing managers consider the Purchasing Mix; that is, Quality, Quantity,
Price as well as Delivery. In order to certify the quality of the products being
purchased, the marketing, R&D and production departments needs to be conferred
with by the purchasing department.
Production
This department is concerned of conducting the process of production. It is related to
the R&D department for production process guidance. Additionally, it needs to
consult with the finance department for buying equipments and allowance of
inventories (Waddock and Bodwell, 2017). In context to the quality, appearance,
product functionality and durability of the product, this department needs to confer
with the marketing department.
Marketing
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This department is apprehensive of identifying and meeting the customer demand at
a suitable cost. This department is closely associated with the production
department. The marketing department carries out necessary market research to
identify product demand; thereby, facilitating the production department. For carrying
out the different marketing activities, this department needs to consult with the
finance department for budget allocation.
Human Resource
The human resource department is known to be the most noteworthy departments in
the organisation, as it is apprehensive of managing the most important resource of
the business, that is to say, the employees. It looks after a number of functions such
as, selection and recruitment, training, safety issues, employee relations and so forth
(Armstrong and Taylor, 2014). Therefore, this department is chiefly related to all the
other functioning units of the business.
Finance and Accounting
The finance department is responsible for keeping an account of the entire financial
concerns of the organisation (Waddock and Bodwell, 2017). This unit is also
associated with the different departments of the company such as, marketing,
production, purchasing and so on. It allocated the necessary budget for all the
departments; thus, ensuring smooth functioning of the business functions.
Conclusion
The above essay has highlighted the different types of organisations along with their
purpose and scope for growth. Additionally, the different types of organisational
structures along with the relation between the different functions of the business
have been drawn attention to.
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Part 2 – Case study (LO3 & LO4)
Introduction
In the recent times, with advancement in terms of technology and other processes,
the competition level in the market has raised largely. This has further compelled the
business organisations to reconsider their structures by effectively responding to the
ever changing business environment. In this section, the case company that has
been considered is Marks & Spencer. The macro with the micro environment of the
selected company will be assessed in order to identify their role in affecting the
decision making procedure of the business.
Task
a) Apply the PESTEL model to the sector to analyse how the macro
environment is impacting the UK retail sector.
In order to analyse the effect of the macro or external environment upon Marks &
Spencer in particular and the entire retail sector of UK in general, the following
PESTEL analysis has been conducted.
Factors Analysis
Political Presently, UK is considered one of the most secure nations in
comparison to the other countries. From this it can be
presumed that, Marks & Spencer has the opportunity of
carrying out its business operations smoothly. However, owing
to the initiation of Brexit, where UK has resolute to exit the
European Union, the retail company may experience trading
issues with the other nations under EU (Jensen and Snaith,
2016). Then again, the current political scenario of the country
has increased foreign direct investment; thus, facilitating better
and easier international trade.
Economic The United Kingdom is known to be the most economically
developed countries. However, due to the Brexit phenomenon,
the exchange rate of the nation state has amplified.
Furthermore, as per the reports of the year 2016, the inflation
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rate of the nation state has dropped down considerably to 2.1
percent from 2.3 percent; thus, being a major opportunity for
Marks & Spencer in the UK market (Jensen and Snaith, 2016).
Social The population of UK has been witnessed to be quite
apprehensive in terms of health; therefore, compelling Marks &
Spencer to come up with healthy products. In addition to this,
the majority of the population in the country belong to the higher
income section; thereby, allowing the retail company to market
and promote its premium products in the UK market (BBC
News., 2019).
Technological United Kingdom is believed to be highly advanced in terms of
technology. This can be a major advantage for the company, it
can make use of the latest technologies; thus, improving its
business processes and functions (Sumida, 2014). The trend of
e-commerce and social media is quite high within the
boundaries of UK. Therefore, Marks & Spencer can grab this
opportunity to market and promote its products and services
through different social media platforms.
Environmental Being a retail company, Marks & Spencer is indulged into
production of different materials. In the view of the fact that, the
UK government is highly apprehensive of environmental
protection, it is necessary for the retail company to ensure that
its manufacturing processes do not negatively affect the
environment of the country (Welford, 2014). As the company is
to a certain extend affecting the water bodies as well as
creating air pollution, it ensures to carry out different
sustainable activities to reduce the level of hazard being
caused.
Legal The government of the nation has made obligatory numerous
laws and legislations for the commerce and trade organisations
functioning in the premises of the country. Marks and Spencer
needs to put up with by numerous laws such as “the
employment act, equality act, health and safety”, and so for
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to function successfully in the market (Leyland, 2016).
Additionally, in reference with e-commerce, the organisation
needs to adhere to the data protection act; thereby, ensuring
lesser data larceny.
Table 1: PESTEL Analysis of Marks & Spencer
(Source: Created by the Learner)
b) Apply the SWOT/TOWS analysis and also Porter’s five forces analysis to
any UK Supermarket to determine how they influence decision of the
supermarket.
In order to assess the internal or micro environment of the retail company, the
following SWOT analysis has been carried out:
Strength Weakness
 Patent brand image can be
regarded as a major strengths of
the company. M&S majorly targets
the premium section of the
society; thus, positioning itself in
the higher-end of value product
(Rashid and Barnes, 2017).
 Its private labels is another
significant strengths of the retail
company, as along with trading
numerous premium brands such
as Vero Moda, Louis Vuitton and
Versace, the company also sell
their personal labels in more or
less every categories (Sogn‐
Grundvåg et al., 2014).
 Another important strength of
M&S is its innovation. The
company has continued to survive
 Irrespective of the fact that, M&S
is highly innovative and diverse,
the company has still not been
able to successfully penetrate into
the foreign markets.
 In terms of in-store experience
and return policy of the company,
the satisfaction level of the
customers is quite low. As a
result, it has amplified brand
switching of the customers;
thereby, reducing its brand loyalty.
 Poor scalability of supply chain is
the biggest weakness of the
company. Although the company
is making efforts to provide its
customers with global access of
its products, they have not yet
been able to expand their supply
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in the highly competitive market
only because of its innovative
business ideas and processes.
chain completely (Stevenson and
Cole, 2018).
Opportunity Treats
 In the present market, the fashion
industry is one of the most
growing sectors (Turker and
Altuntas, 2014). Therefore, the
company can introduce new and
better fashion products; thus,
improving its sales and
productivity.
 The company can further make
use of the ever-growing
technology and enhance its
different processes; thereby, being
able to improve its performance.
 The rising competition in the retail
market can prove to be a
significant threat for M&S. Some
of the top most retail companies
such as Tesco, Sainsbury, Asda,
and so forth are successfully
operating in the UK market and
giving a strong competition to
M&S.
Table 2: SWOT Analysis of M&S
(Source: Created by the Learner)
With the intension of evaluating the competitiveness of the market in context to
Marks & Spencer, the following Porter’s five forces analysis has been conducted:
Forces Analysis
Threat of new entrants The retail sector is believed to be a leading
industry in UK and comprises of a number of
large-scale retail companies and super markets
(Wrigley, 2014). In order to compete with these
large organisations, the new companies need
to put in huge investments; thus, making the
“threat of new entrants” low for the company.
Threat of substitutes The “threat of substitute” for M&S is
considerably low. This is for the reason that,
there are very few substitute products that
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