Business Environment Analysis Report: H&M's Macro Factors

This report provides a comprehensive analysis of the business environment, focusing on H&M as a case study. It begins by defining different types of organizations, including public, private, and charity organizations, and their respective sizes and scopes. The report then delves into H&M's organizational structure, outlining its various departments such as marketing, finance, production, and human resources, and their interconnections in achieving organizational objectives. The core of the report examines the positive and negative impacts of the macro environment, including political, economic, social, technological, and legal factors, on H&M's operations. Furthermore, it includes internal and external analyses using SWOT and PESTLE frameworks to identify H&M's strengths, weaknesses, and how they relate to external macro factors. The report concludes with a synthesis of the findings, highlighting key insights into H&M's business environment and strategic considerations.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................4
P1 Types of organisations...........................................................................................................4
P2 Size and Scope of different types of Organisations ..............................................................5
P3 Different organisational functions and their link to organisational objectives and structure 8
TASK 2............................................................................................................................................9
P 4- Positive and negative impacts the macro environment has upon the business operations.. 9
P.5 internal and external analysis of H&M to identify their strengthen and weakness............10
P 6- Explaining how strengths and weaknesses interrelate with external macro factors. ........11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
The Business and business environment if a firm is comprehensive of outer and inside
variables of the association. This sort of elements are outside the ability to control of clients,
director and workers of the association. It is essential with a specific end goal to extend the
business exercises so business can develop in showcase for longer period . This task will centre
the exercises of H&M who is disseminating its administrations as retail market and arrangement
in the item like sustenance, apparel, and numerous sorts of home wares. This report needs to give
thought about the degree and destinations of the firm. Notwithstanding this task needs to
influence assessment in the association to capacity of the business undertaking with a specific
end goal to go to different objectives and destinations of the firm. The substance is making
different powerful strides in connection to extend the business with the goal that it can
accomplish higher benefit and efficiency. This report will decide the inner and outside capacity
of association by utilizing SWOT and PESTLE investigation.
P1 Types of organisations.
A business environment includes various types of organisations operating with different
objectives and purposes. These various types of organisations have different operations, nature
and objectives. The various types of organisations are mentioned below -
 Public organisations – The public organisations are the business firms which are
managed and owned directly by the government. The main goal and objective of these
organisations is offer relevant services to the society and
community(WetherlyOtter2014).These organisations have a basic motive that is to work
for the public welfare. The government of a particular place is investing on the public
organisation so that the public can be benefited by the use of the services provided by
them. The public organisation is operated by the tax paid to the administration or the
government. The government generate profit from these organisations and use it for the
benefit of the people. The services provided by the public organisation is for growth and
development of a society and nation. There are various public organisation that offers
services to the people. The organisation in the public sector are owned and operated
directly by the government. The policies and business operations are also controlled by
the government bodies. There are various examples of the public organisations such as

the fire department, police department, government schools etc. These organisations are
working for the non-economic benefits, the social well-being and welfare.
 Private organisations – These organisations are the business firms or companies which
are owned and operated by the privet individuals and investors. An individual plans and
implement various business strategies to achieve the personal goals and desires. The
people are investing in various businesses to generate profits and income out of it. The
private business owners plan and make strategies to generate profit from various
economic activities and operations(Welford,2013). After analysing the market conditions
and needs of the people they establish a private organisation for selling products and
services in the market. There are many types of private organisations such as sole
proprietorship, partnership firms and co-operation. The sole-proprietorship firm is owned
and operated by a single owner or investor. The profit generated form these organisations
is in the hands of a single individual, that is the sole owner or proprietor. The Partnership
firms are owned and operated by various individuals or investors came together to start a
business or organisation. The profit earned by these organisations are distributed among
all the partners of the organisation. There are many leading private organisation in the
market such as Tesco, Marks and Spencer's etc.
 Charity – The Charity social organisations can be owned and operated by both the
government and private individuals. This organisation provides social care and benefits to
the citizens without any return. The one and only objective of these organisations is to
work for the public interest and social care. The Organisations such as Christian Aid and
Red cross are some examples of the Charity organisations. These organisations are not
generating any profits from their business operations. They just provide services like
food, shelter and home to the people in need.
P2 Size and Scope of different types of Organisations
 Sole trader: These organisations are owned and operated by a single owner or investor,
the Sole trader organisations are operated at a small scale. It is started and operated with
small amount of funds and capital. The risk involved in these organisations are minimum.
The sole trader is owned by a single individual that controls and directs the trading
activities or the business organisation. The main objective or goal of the sole trader is to
manage the trading practices and business by handling the profit and risk.

 Partnership: The size of partnership firms depends upon the number of partners and
investors that are starting, managing and operating the firm(Cai and Yang,2014). Each
and every partner or investor has the rights and power to trade. The distribution of power
is equal in the hands of every partner within the partnership organisation. The structure of
Partnership organisations is a little complex, there are two or more partners who controls
and directs the activities of the organisation. The profit as well as the risks are shared
among the partners of the firm. The goal of a partnership organisation is to establish a
business and generate profit that can b distributed among all the partners of the
organisation()Virglerová and DobesVojtovic,2016).
 Public: The public organisations are operated at a large scale. The organisations have
various levels and areas that perform their respective tasks. The government owns and
operates these organisations. The government establish various public organisation for
the society and public. The scope of these organisations is to provide effective services to
the people and generate income for the growth and development of the economy. There
huge number of employees in the public organisation. There can be one to fifty directors
within a public organisation that controls and directs the complete organisation. The key
objective of the public organisations is the growth and development of the country's
economy by increasing the shareholder values, generating income and providing services
to the people.
 Private: These organisations can be large or small depends upon the owner or investors.
The investment done in a particular private organisation decides the size of the firm. The
Private organisations are established and operated with a single objective, to generate
profit and income from the business. The private organisation is selling their products and
services to generate as much profit as they can. The Private organisations have a single
director and end number of employees can perform the organisational operations. The
Director controls and directs the employees working within the organisation. The private
organisation's goal is to increase the sale of products and services compared to the
competitors. Profit is the motive for this organisation.

 Size and Scope: Hennes and Mauritz is an Swedish MNCs of retail sector which is
associated companies operate in 62 countries with over 4,500 stores and as of 2015
employed around 132,000 people
 Charity: The charity or social organisations are generally operated at a local and small
scale, it only provides services to the people of the society therefore it does not need any
production process. These organisations do not focus on generating profit or income,
their motive is to offer free services to the people for the growth and development of the
society and its living standard. These organisations have effective board of director who
develops and implement the plans to solve the issues and problems of the people as well
as provide social care to them. Charity or social organisation are operated with a motive
of social welfare and development of the community.
 Size and scope: Oxfam is an International volunteer organisation which will focus on the
poverty eradication disaster relief advocacy policy research pro-migration. Oxfam has
four main focuses for its resources. These are: Economic Justice, Essential Services,
Rights in Crisis, and Gender Justice.
P3 Different organisational functions and their link to organisational objectives and structure
Organisational structure refers to the framework of the who organisation and its
operations to develop an effective business in order to increase the productivity and profitability
of the firm. The Hennes and Mauritz includes various departments within its organisational
structure which are performing their task and operations in order to achieve the organisational
goals or objectives. These departments and their functions are described as below -
 Marketing – The Marketing department plays a very important role in a business or
organisation. The Marketing department is responsible for the promotion of the products
and services within a target marketplace. The Marketing department of the Hennes and
Mauritz develops effective promotional plans and strategies to communicate effective
information about their company and products to the customers.
 Finance – The Finance department manges all the financial elements and functions
within the H&M. This department controls and manage the loss, income, expenses, cost

and other financial elements of the organisation. They also create various types of
financial budgets and controls the finance of the whole organisation and its operations.
 Production – Every organisation that produce its own products have a production or
manufacturing department. This department is responsible for the complete
manufacturing process of the products or goods. The production manager controls and
direct the production in order to produce products with effectiveness and at a reduced
cost.
 Human resource – The Human resource department of the Hennes and Mauritz search
for the best talent and skilled employees for their organisation. This department is
responsible for developing a strong and effective workforce within the organisation. The
employees are selected and get employed after a proper recruitment process and are
provided the most suitable departments.
The Hennes and Maurtiz have all these departments to perform various organisational functions
effectively in order to achieve the goals and objectives of the business. These departments are
interconnected and are operated with a strong relationship. The finance department is responsible
for the management of cost, finance and income of the organisation which is important for the
production and marketing process as well. The Production function is producing the products
which are been promoted and marketed by the marketing department. Each and every department
is inter-related and are depended upon each other(Kim,Suresh and Kocabasoglu,2013).
TASK 2
P 4- Positive and negative impacts the macro environment has upon the business operations.
 Political factors- These are the factors which create positive and negative impact on the
working of H&M. For example there will various regions where the company will be
working. This can be the negative impact which will faced by the cited organisation.
 Economic factors- Economic conditions of each countries are different from each other.
Sometimes they grow and sometimes they fall. For example, growing of economy will
create positive results whereas downfall of the economy will bring negative impact for
H&M.
 Social factors- These are the factors which are influenced by the changes in tastes and
preferences of the customers. For example, when the preferences are in favour then it will

create the positive impact. But if they are not then cited organisation will have to face
many negative impacts and its consequences.
 Technological factors- There are many technologies which comes in the market. Those
can create many positive affects on the business. For example, Better technology will
increase the productivity.
 Legal factors- There are many laws and legislations which are included in the legal
factor. These forces the company to follow some guidelines in their activities and
operations. For example, this will have negative impact because H&M will have to work
according to these laws and legislations.
 Environmental factors- Working of the cited organisation towards making world a better
place and use those technologies which are environment friendly. For example, creating
safe and healthy environment.
Macro environment is that environment which is not controllable and it carries many
positive and negative impact upon the business organisation. Positive impacts will help the
company to grow further and negative impact will make the company face some situations which
will be not good for them (Teece, 2010). These macro factors are to be handled very carefully to
give sustainable business performance. This environment contains external and internal factors.
Positive impacts of the macro environment
Situations due to internal and external factors of the macro environment which brings
some benefits or advantages for the H&M. These are the positive impacts. Government made
some changes in their policies which will increase the revenue or income of the cited
organisation. Stable economy or growing economy will definitely bring positive changes in the
working style of the company and will help them to gain many rewards and benefits. By
effectively fulfilling all the social responsibilities which makes their customers satisfied. It
makes them to fulfil need and demands of the consumers. Keeping healthy relationship with all
the persons who are related to their business activities solves many legal problems. It makes the
company to use all the strengths which they contain in handling the business operations of the
cited firm. It will definitely bring some positive impacts upon the activities which are held in
business.
Negative impacts of the macro environment

This environment also have many negative impacts on the business operations of H&M.
Changes in the policies which are forced to be followed by the company. Economy is unstable
which brings many negative changes in the business operations (Iskanius, Page, and
Anbuudayasankar, 2010). Using old technologies and never updating also will bring some bad
impacts on the workings of the cited business. Needs and wants of customers changes very
rapidly. It can be difficult to fulfil them all. Having some legal issues with someone. These are
some cases of having the negative impact on the business operations of the organisation.
These are some positive and negative impacts of the macro environment which it has
upon the business operations.
P.5 internal and external analysis of H&M to identify their strengthen and weakness.
Each and every organisation have strength and weakness according to the different
factors that will affect on the internal and external environment of the organisation will affect on
the performance if the business.
Internal analysis.
Political Factors: As the administration intercession on the association have the real impact on
the client. As the new arrangement report by the administration for assess is trouble on H&M.
Economic factors: As the monetary state of the assembled kingdom is now in not in charge
which bring the swelling as the cost of crude materiel and other variable cost have been load on
the H&M. As the client have been not ready to spend more cash on the extravagances
merchandise at this circumstance is impacted on association deals (Prajogo, 2016).
Social factors: As the social elements of the association can be the client and other partner of the
association. These will set the brand and as indicated by advertise association additionally impact
the general public with various exercises.
Technological Factors: refresh of advancements giving the preventions for the business and
business environment. From the utilisation of the different machinery in the production process
will help to make better product development.
Environment Factors: As the main considerations of the association can be impact the natural.
That can be the contamination make by the association assets can be blocks for the earth have
affect on the H&M execution (Popescu, 2013.). It is important for the organisation to plan better
to save the environment.

Legal factors: These factor will be affected on the business environment because of different
enactment have been made by the association it is critical to streams the H&M. As the present
wage law is as of now load on the H&M which cause the back as the high remuneration need to
pay for worker and different works. The laws are important to considerer in the formulation of
various key decision in the organisation.
Internal Analysis
 Strength: The key quality of the association is their image and the quantity of stores of
H&M is more in examination of the other contender.
 Weaknesses: The real shortcoming of the H&M is their Marketing and deals divisions.
 Opportunity:H&M have chance to pull in client with various procedures of advertising
and enhance the business group to expand the deals.
 Threat: As the contender can be the real risk for the associations that can pull in H&M
client by giving better administrations.
SWOT analysis of Mark and spencer:
M&S is an competitor of the H&M whic have streangth, wekaness , opporunity, weakneses and
Threat such as follows:
Strength:
 M&S offer larger number of product such as wine, clothing which shows higher brand
value of the organisation.
 M&S believe in serving quality products to the customer.
Weaknesses:
 Lack of innovation: This can be the major weakness of the organisation in which the new
ideas and innovation are not contributing in the firms production process.
 Taste and preference: M&S not able to understand the customer taste and preference
special in the women wearing which can increase the firms goodwill.
Opportunity:
 Mark and Spencer had expanded their business in the Asia and also invest in various
nations.
Threat:
 High competition: M&S market share have been decline due to high competition from
the competitor.

P 6- Explaining how strengths and weaknesses interrelate with external macro factors.
External macro factors are very uncontrollable it needs strengths to be used effectively to
give sustainable performance.
Threats of new entrants, There are many people who are getting attracted to clothing and fashion
industry by seeing the amount of profits. That's why it becomes the threat for H&M. This is the
weakness of cited company. Threats of substitutes, There are many organisations who are
working in the same industry. It is expected that if cited company will not fulfil the needs of
customers than they will opt. For other businesses. It is weakness for H&M. Power of suppliers,
This is the strengths of cited firm because they take materials from the suppliers provides them at
the low cost. Power of byers, This is treated as the weakness because prices of products are very
much important for the customers. Degree of competition, This the weakness because there are
many organisations who are working in the same industry. This increases the level of
competition in the market.
This states that there are many weaknesses of the cited organisation in accordance with
this model. The only strength of the company is power of suppliers.
Political factors will strengths because they are the changes in the policies which can change the
whole working activities. Government makes those because they want welfare of the public.
Company is forced to follow all the legislations (Chavis, Klapper and Love, 2011). Company
using all its strengths will effectively handle its political factor of the macro environment.
Economy is never certain they change weaknesses of the cited organisation will lead them
towards loss. The organisation strengths will help it to sustain in this economy. Social factors are
those which are based on the needs and demands of the customers which changes very rapidly.
The cited firm will need strengths to fulfil all the needs in the effective manner. This will make
the company to satisfy all its consumers. H&M will be able to achieve all their objectives and
goals by fulfilling all the social responsibilities. It will increase their market share by using all
the strengths and overcoming weaknesses. Technological factors is strongly connected with the
strength of H&M. If company has adequate financial resources then it would be bale to
implement advance technologies effectively. But in the absence of sufficient financial resources
it would be difficult for the entity to adopt new technologies because it requires huge investment.