Business Environment Analysis and Impact: H&M Case Study Report

This report provides a comprehensive analysis of H&M's business environment. It begins by exploring different organizational types, including public, private (focusing on H&M), and voluntary organizations, detailing their purposes, legal structures, and stakeholders. The report then examines the size and scope of these organizations, highlighting H&M's global presence. It proceeds to explain the interrelationships between various organizational functions, such as marketing, research and development, and finance, emphasizing the importance of collaboration. Furthermore, the report identifies both the positive and negative impacts of the macro environment on business operations, considering factors such as political, economic, and social conditions. Internal and external analyses of H&M are conducted to identify its strengths and weaknesses, and the report concludes by explaining how these internal factors interrelate with external macro factors, offering insights into H&M's strategic position and challenges within the global apparel market. References are included from various sources.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Organisational types with purposes, legal structure as well as stakeholders...................1
P2 Explain the size and scope of a range of different types of organisations........................3
TASK 2............................................................................................................................................5
P3 Explain the relationship between different organisational functions................................5
TASK 3............................................................................................................................................6
P4 Identify the positive and negative impacts the macro environment has upon business
operations...............................................................................................................................6
TASK 4............................................................................................................................................9
P5 Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses.......................................................................................................9
P6 Explain how strengths and weaknesses interrelate with external macro factors.............10
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................13
Number of H&M Group stores as of 2018, by selected country. 2019. [Online]. Available
Through:<https://www.statista.com/statistics/268522/number-of-stores-worldwide-of-the-
hundm-group-by-country/>...........................................................................................................13

INTRODUCTION
The term business environment consists both internal and external factors which can
impact to business operations and activities. This is essential for companies to make their plans
and strategies as per environmental condition. In the environment, various kind of factors are
included such as political, economic condition, social factors and many more. Thus, it is
important for companies to run their operations as accordance of environmental aspects (Bah and
Fang, 2015). In order to address various tasks of project report a company is selected which is H
& M retail clothing. The company is involved in manufacturing of cloths and located in 62
nations with more then 4500 stores all around the world. The report is based on North west
London chamber of commerce which helps to companies in becoming more successful. The
project report covers about various types of organisations along with their size and scope. As
well as interrelation of different functions of organisation are included. Further part of project
report covers about strength and weaknesses of a particular selected business entity.
TASK 1
P1. Organisational types with purposes, legal structure as well as stakeholders.
In the terms of ownership, organisations are categorised into different types which have
various scope, objectives and stakeholders. Mainly, the organisations are evolved by individual
or group of individuals which are controlled by them. Herein, below some types of organisations
are mentioned that are as follows :
Public sector organisations – The public organisations can be defined as those business
entities which are not controlled and managed by any particular individual. These organisations
are controlled by government which can be central or state (Belás and et. al., 2014). In this
aspect, a company is selected that is National health service. This company is located in United
Kingdom and provides heath services to general public. Purpose – Main purpose of the public organisations is to helping those whose income
level is lower and can not afford basic services. Such as the purpose of NHS organisation
is to providing basic healthcare services to general public at lower price. Basically, these
kind of companies do not focus on increasing market share or growth because they do not
want to earn profit. This is so because their funding is done by government and
employees serve on a permanent contract with higher pay-scale.
1

 Legal structure – The legal structure of public organisations consists ownership of
central, local or domestic government. In broad sense, the government of any particular
nation sets the rules, regulations and policies to operate businesses successfully without
intervention of any private entity. Such as in NHS, their legal structure comprises
ownership and control of central government of United Kingdom.
 Stakeholders – Key stakeholders of this company are general public, government and
financial entities. Apart from it, there are no any other stakeholders of public
organisations. It is so because they do not deal with any external stakeholders because all
functions are managed and controlled by government.
Private sector organisation – The public sector organisations are those business entities
which are operated by private parties. Basically, main objective of these organisations is to
earning higher amount of profit by attracting more and maximum customers (Belás and et. al.,
2015). As well as these types of organisations can be categorised into three types which are sole,
partnership and private. The sole properties businesses are controlled by individual while in the
partnerships there are two or more individuals who perform any legal activity in order to gain
profitability. In the aspect of business environment, most of companies' ownership is private.
Such as in the United Kingdom some major private organisations are ASDA, tesco plc, Mark and
Spencer etc. Herein, the aspect of project report a company is selected which is H & M clothing
company. Purpose – Main purpose of private sector organisations is to making a strong brand
image in the competitive environment so that higher number of customers can be attract.
As well as these kind of organisations want to achieve maximum amount of profit over
the expenses or investment of cost. Such as the purpose of H & M clothing company is to
increasing their market growth and share so that level of profitability can be increase. Legal structure – The legal structure of private sector companies can be of corporate or
unincorporated. It varies from different companies. Under these organisations legislations
and rules are determined by owner of companies. Like in the context of above H & M
clothing company, their legal structure is of corporate.
 Stakeholders – These kind of organisations consist a vital range of stakeholders because
larger aspect of business. For example for above respective company H&M clothing their
main stakeholders are both external and internal stakeholders. Their external stakeholders
2

are customers, suppliers, government and internal stakeholders are employees, managers,
board of directors etc.
Voluntary organisation – These organisations are also known by non profit entities.
This kind of organisation includes some other small and larger entities such as educational,
healthcare and charitable entities. Under these organisations, different groups are included such
as trusts and charitable entities which donate fund to these organisations. In the aspect of United
Kingdom, there are various kind of voluntary organisations like British heart foundation, Oxfam
and some other organisations. Under this project report, Oxfam company is selected which
operates in the aspect of development of poor people. Purpose – The purpose of these organisations is to helping those people who are living
under BPL and standard is poor. Like the above Oxfam company's objective is to serving
in context of raising living standard of poor people. Legal structure – The legal structure of these kind of organisations can be of corporate
level and unincorporated level. In these organisations, legislation and rules are set by
various parties who donate funds. The Oxfam company's legal structure is of
unincorporated level. It is so because these organisations are not formed as per any fix
structure. As well as another reason of this type of structure is that these are operated for
non profit purpose.
 Stakeholders – These types of organisations consist both kind of stakeholders including
external and internal stakeholder (Erasmus, Strydom and Rudansky-Kloppers, 2016).
Like the above Oxfam company's key stakeholders are general public, donation parties,
willing person who donate funds.
P2 Explain the size and scope of a range of different types of organisations.
Types of Organisation Scope Size
Public Organisation NHS intent to bring few
reforms that perform for both
as an opportunity as well as
challenges for pharmacy
profession. The current
Respective organisation has
various hospitals, community
as well as primary care with
approx 150, 000 doctors a
swell as 320, 000 nurses as
3

movement or shifts into
commissioning framework,
concentrating through
integrated care that aids in
developing patients results
from medicines (The NHS
Workforce in numbers, 2019).
well as midwives which are
providing to its patients (The
NHS Workforce in numbers,
2019).
Private Organisation H&M scope is to open its
outlet in almost all the
countries at which they can
able to sell its goods or
services effectively and
efficiently. As they are
operating in clothing and
apparel industry also plan to
expand their business
operation within another
sectors by producing
innovative and new products.
It assists them to enhance sales
as well as profitability
efficaciously.
The size of H&M is large as its
operates around 5000 stores as
well as employees more than
120,000 staff. moreover
known to be the second most
valuable apparel brand in all
over the world (Number of
H&M Group stores as of 2018,
by selected country. 2019).
Voluntary Organisation Oxfam may extent its services
into several parts of world. It
works with partner firm and
serve free service to people
who are not so much
financially strong. This
ascertained for modification
which assists them to mobilize
This company serves their
services to UK individuals for
removing poverty etc.
moreover, there are around 20
independent charitable
organisation who works for
nation for making country
poverty free. Also, their
4

the individuals power against
destitution.
independent charitabel firms
performs into 94 nations as
well as accountable for charity
assets, activities and
governance.
TASK 2
P3 Explain the relationship between different organisational functions
This is very importance for the chosen company is to maintain relationship with the
others function for performing the work in effectual and efficacious way. A single department
can not able to do the task of organisation for gainful outcomes (Georgescu and Popescul, 2015).
Whole functional department have to be work together in order to achieve goals. As whole
company has to perform their task for accomplishing their own targets which can vary
organisation to organisation. The relational ship among many functions of firm that is linked
towards objective as well as structure are mentioned below:
5

 Marketing and Research & Development: When marketing and Research&
Development both are concentrated upon getting knowledge about the requirements of
clients then they both should develop its job easier and outcomes become highly
effective. The information facilitated through the marketing manager aids research and
development manager to formulate appropriate research in order to attained results.
Moreover, both have to perform together for knowing about the recent trends as well as
fashion in order to enhance the output. So, H&M have to develop decisions as per the
data facilitated through both the manager for its formulation as well s changing of
products.
 Marketing and finance: The total task of finance may be managed by the manager of
finance. They need to do the several work such as funds allocation to many department
and activities, budgeting and others. Within, this marketing division has to evaluate the
6
Illustration 1: Organisational chart, 2019
(Source: Organisational chart. 2019)

market area efficaciously as well as analyse the cost required to perform promotion,
planning and branding (Grewal and et. al., 2015). Both the sections has to do the work
together so that efficacious apportion can be performed within all area for achievement of
gainful results into H&M. In order to operate the activities related to finance, skilful
manager is required. With maximisation into competition, both marketing and finance
section has to do the work together for maximising the share of market and creating a
bottom line. If finance manager can understand the marketing activities then effectual
relationship can be developed.
TASK 3
P4 Identify the positive and negative impacts the macro environment has upon business
operations
Macro environment involves many factors that may not be controlled through company
as well as these aspects will has major effects upon business activities as well as operations
(Kljucnikov and et. al., 2016). Moreover, this consists all those external factors which are
significant for the H&M enterprises and this will effects their business operations positively and
negatively. All these are explained below:
Political factors:
It is the factors which involves several regulations formed through the UK governing
body as well s political party. Moreover, this consists foreign trade, taxation policies and many
more. As H&M is a international operating brand and having franchised outlets into various
market as well as countries so the political instability of respective country impact their business
negatively and positively. Positive impact: As the UK has very stable government and also they formulate policies
for the development of retail industry so it will aids them to expand their business
operations by opening more outlets into respective countries (PESTLE Analysis. 2019)
 Negative impact: There are several strict regulation related to trade restriction which are
established through the government of UK that will has negative effects upon their
business activities (PESTLE Analysis. 2019). It directly impacts its sales as well as
profitability of respective organisation.
7

Economic factors: It is the factors that involves interest rate, inflation rate and others. All these
has significant affects upon business operations of H&M. Both positive and negative affect are
discussed below: Positive impact: As UK country have developing economic condition so it will has
optimistic affects upon Hennes & Mauritz enterprises (PESTLE Analysis. 2019). It will
drives towards sales as well as profitability maximisation of respective organisation.
 Negative impact: As the economic condition of respective country is developing then
there is possibility of economic changes due to which their sales and profitability may
get decreases.
Social factors: It is the factors that involves attitudes, behaviours, lifestyle and so on. It plays
significant role in grabbing the attention of clients and influence them to buy Hennes & Mauritz
firm products (Quinlan and et. al., 2019). As currently, Hennes & Mauritz enhancing the
transparency level related to off business so this effects their business operations in positive and
negative manner. Positive impact: When the transparency level get enhanced their employees get to know
about their customers requirements so that they can able to produce products accordingly
and enhance consumer satisfaction level.
 Negative impact: Due to enhancement into transparency level the consumers also get
knowledge about their business loop holes which may drop down their sales and
profitability (PESTLE Analysis. 2019).
Technological factors: This is the factors that is related to changing technology, technology
regulation and others. As Hennes & Mauritz continue to make its application for mobile devices
this impact its business operation in positive and negative manner. Moreover, they applied the
third party logistic provider within UK. Positive impact: As in UK technology situation is enhancing so the company has
extended network of supply chain technology which assists them to supply their products
largely as well as track the overall logistic operations and enhance the sales effectively
and efficiently.
 Negative impact: If they do not adopt the new technology as per the changing situation so
respective organisation can not able to generate new products and services which is in
demand of UK people.
8

Environmental factors: This consists whole that factors that is associated to the surroundings
like weather, climate and others (Saleem, 2017). As Hennes & Mauritz intent to be 100%
circular as well as renewable through 2030. so this impact their operations positively and
negatively. Positive impact: So, with the assistance of this they can able to produced its new goods
by recycling the old ones. This minimises their material cost and enhance profitability
(PESTLE Analysis. 2019).
 Negative impact: Moreover, this effects negatively as they change their production
process so they has to restart their manufacturing procedures from beginning which will
be burden or them and affects its operations.
Legal factors: It is the factors that consists whole regulation and laws which is established with
the aim to keep secure atmosphere as well as safety for staff and clients. Positive impact: H&M has to comply the various legislation such as health and safety etc.
which is beneficiary of the staff so that they can perform effectively and effeiciently.
 Negative impact: If they do not comply the regulation so this will directly has affects on
its business profitability into respective country (PESTLE Analysis. 2019).
TASK 4
P5 Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses.
SWOT analysis is a business tool which is use to estimate company's position and to
develop critical planning. As the name suggests, SWOT analysis stands for organization's
strength, weaknesses, opportunities and threats where strength and weakness are internal factors
of an organization whereas, opportunities and threats are external factors (Saleem, 2015). The
SWOT analyses applies on almost every Organization. The SWOT analysis of of H&M is:
 Strength: H&M is a multinational company. It serves a wide range of products such as
cloths, shoes, cosmetics, accessories to a wide range of customers. H&M has a strong
presence across the globe. H&M has stores in around 60 countries. The stores supply
good quality of products with affordable prices. They have been connected with
celebrities and designers (Savrul, Incekara and Sener, 2014). The investors of H&M
provide flexibility to the company.
9

 Weakness: For the business, H&M is depend on third party suppliers. H&M has invested
a lot of money in different machines for clothing production, The company is dependent
on suppliers, which can effect the order commitments of the company and eventually
effect the brand image of the company due to bad experience of customers. Affordable
prices of the company products has to deal with bad quality of cloths also.
 Opportunities: The company can expand its business in E-commerce field. H&M can
gain a share in the market of E-commerce. The company needs to focus on quality and
can capitalise on need of customers who are brand conscious.
 Threats: Cloth industry is a matter of doing changes according to the trends. H&M has
to deliver their products according to the trends otherwise it will lag behind in the
industry. There are several other competitors of H&M in local or across the globe and E-
commerce is also giving platforms to the new entrants or new clothing companies in the
market.
SWOT analysis of NHS Strengths: The main strengths of this particular company is that there is not any real
competitors. Moreover, there are various hospital in UK but they provide some unique
services like accident and emergency. Also, they are known as the highest earning charity
firm within UK. Weaknesses: It main weaknesses is that, they cannot accomplish the demand of patients
due to large UK population. This influences the decision making of respective
organisation as they has to expand their services as per the enhancing populations. Opportunities: NHS can utilises the effective marketing strategies for raising their
profile. Moreover, also they can enhance recent social media platforms like Facebook,
YouTube, twitter and others. As this allows them to reach a broad range of public.
 Threats: As UK leaving the EU then this can outcomes into loss of funding as 45% of
revenue comes from government so the more dependent companies upon government
funds like NHS so the government funds for charities within third sectors are being cut
(SWOT analysis of NHS. 2019).
P6 Explain how strengths and weaknesses interrelate with external macro factors
H&M NHS
10

Political Factors: As UK has very stable
government and also they formulate policies
for the development of retail industry. Strengths: They can enhance their
outlets into respective firm.
 Weaknesses: Trade restriction into UK
decreases their profitability.
Political Factors: This involves foreign trade,
taxation policies etc. Also, due to Brexit , the
UK government changes their policies etc.
 Strengths: There are several changes
into regulation so they can expand their
service more into another countries.
 Weaknesses: They can not bale to meet
its approx 350 million promises.
Economic Factors: As UK country have
developing economic condition. That involves
recession, inflation rate etc. Strengths: Due to recession
enhancement in profit.
 Weaknesses: Maximisation in rates
increase the H&M product price which
decrease sales.
Economic Factors: As UK economic
condition is developing.
 Strengths: NHS can able to enhance
their profitability by serving more
quality services to their patients.
 Weaknesses: Also, they employ more
staff for providing effective services
this increases costs.
Social Factors: As the Strengths: Transparency helps
respective firm to formulate effective
decisions (Wetherly, 2014).
 Weaknesses: Through their internal
information may get steal.
Social Factors: This is related to people
beliefs, attitudes and so on.
 Strengths: NHS provide quality services
to their patients which enhance the
loyalty and satisfaction level.
 Weaknesses: It have long waiting lists.
Technological factors: As technology
situation in UK is developing day by day so
respective firm can adopts new technologies
effectively. Strengths: With the help of this, they
can able to track the whole logistic
operations.
Technological factors: In UK technology is
enhancing because of this firms have to adopt
the new technology.
 Strengths: this help them to provide fast
and effective services to its patients.
 Weaknesses: advance machinery
enhances the company cost. .
11

 Weaknesses: Maximises cost of
products .
CONCLUSION
On the basis of above project report it has been articulated that various factors of business
environment are important for companies to prepare strategies and plans. In the context of
business environment there are different types of organisations such as public , private and
voluntary. All these business entities have different purpose, scope and stakeholders that help
them to attain its objectives. All the functional department are interlinked with one another
which aids them to accomplish the task effectively and achieve its goals. Moreover, the macro
environment impact the business entities in both the manner positively as well s negatively. In
addition to this, SWOT analysis is performed as this assists them to make profitable decisions in
effective and effectual way.
12