Business and the Business Environment Analysis Report for H&M

This report provides a comprehensive analysis of H&M's business environment. It begins with an introduction defining the business environment and its impact on organizational development, focusing on H&M as a case study. The report then explores different types of organizations, including public, private (with H&M as an example), and voluntary sectors, detailing their legal structures, purposes, objectives, stakeholders, core values, and services. It further examines organizational size and scope, differentiating between public and private limited companies, as well as voluntary organizations. The report then delves into the organizational functions and structure of H&M, including functional structures and their interrelationships within the company, highlighting how these elements contribute to its overall performance and profitability.

Business & the
Business Environment

INTRODUCTION
Business environment can be define as collection or sum of internal as well as external
factors which affect the functioning of organisation (Aithal, 2016). This play a crucial role in
development as well as growth of business. There are various factor such as employees,
customers, suppliers, government, market trends and many more which influences the decision
making as well as have major impact on business. Company chosen for conducting this report is
Hennes & maruritz AB. This company is a Swedish multinational organisation which usually
deals in fashion merchandising sector. H&M company was implanted in 1947 and founding
father of this organisation is Erling Persson. Headquarter of respective company is situated in
Stockholm, Sweden and it is supplying its goods and services to different parts of the world. This
report consist of different sorts of organisation as well as their legal structure. It includes size and
ranges different organisation and relations between various roles of a company. Apart from this
both positive and negative impact of external environment is evaluated and micro and macro
environment of business is identified.
TASK 1
P1
Organisation refers to any business which includes process as well as skilled worker who
are using their full capabilities in order to attain specific goals and objectives. There are various
kinds of organisation and contrary purpose which are working in three different sectors such as
public, private, voluntary company (Apăvăloaie, 2014). Organisations have legal structure on
which it business activities flow and employees work in effective manner to accomplished
desired goals. Different organisation dealing in different sectors are mention below with their
legal structure.
Public sector: This sector comprises of various organisation which are owned as well as
operated by government. In public sector all major decisions are taken by government and they
have authority to control business activities. Public sector company major does not work to earn
profits as they are specially developed for the welfare to citizen. In this sector funds are raised
from various methods such as taxes, fees and so on. For example NHS company which is run
and controlled by government of UK. National health care company was founded in 1948 and its
is providing its products and service to different parts of UK. It is specially developed with the
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motive of providing heath care services with high quality care facilities to provide healthy and
better life.
 Purpose: NHS purpose is to provide improvement in heath services as well as provide
best support care to its patients.
 Objectives: Their objective is to meet with the needs of every client and able to delivery
free and best heath care services to patients.
 Stakeholders: Stakeholder of NHS company consist of Chief Scientific Officer who
work arccos the heath system parters as well as cross government which is considered as
a heath care service adviser.
 Core values: NHS core values includes that they want to improve lives as well as
provide equal respect and dignity. They are working together for patients.
 Supply of Services: There are various services provide by NHS hospitals in order to
meet with requirements of each and every patients such as NHS app, Urgent care
facilities, different hospitals with good staff members and emergency care services many
more.
 Mission: NHS mission is to provide better services and caution to it patients. Vision: Their vision is to become the best healthcare service provider of the nation and
meet with the requirements of customers.
Legal structure: NHS legal structure includes how clinicians are employed, the options open to
them, the ways in which patients can be referred for treatment and how funds flow from the
Department of Health to meet the costs of providing NHS services.
Private sector: Private sector companies includes all those companies that is owned and
controlled by individual or a group of people. In this owner have right to take major decision of
the company. Businesses dealing in this sector aim at earning more and more revenue through
their goods and services to targeted customers (Cai and Yang, 2014). Example of private sector
company is H&M. High quality products are provided by the company in order to earn more
profits. This company is considered as one of the leading company of which is dealing in a fast
fashion industry. H&M is a Swedish multinational company which is providing high quality
fashionable products to customers.
 Purpose: Purpose of H&M company is to develop high quality products in order to
provide top-quality good and work to its targeted consumer.
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 Objectives: H&M objective is to be the top most brand by offering their fashionable and
quality products to customers so that they can satisfy needs and wants of their consumers.
 Stakeholder: It stakeholder consist of consumers, different communities, suppliers,
industry persons, government and political parties.
 Core values: H&M company core values incudes, integrity, strong work ethics,
compassion as well as responsibilities and accountability.
 Supply of Services: High quality fashionable products are provided to their customers
which includes ready to wear cloths, footwear and accessories.
 Mission: The mission of H&M is to carry a long lasting positive changes as well as
improvement in living standards of the company.
 Vision: There vision is to lead changes towards the fashion industry as well as become
the leaders of respective industry.
Different types of Private sector company Sole proprietorship: This is considered as a simplest from of business in which one
person owns a company. Owner of the company have right to take major decisions as
well as control activities of organisation. In sole proprietorship business, single person is
entitled to run and manage business activities and gain profits. Partnership: In this type of business, two or more person formally arrange and meet with
the business requirements (Erasmus and et.al., 2016). In partnership business, power and
authorise to make decision and control as well as manage activities is divided between all
partners of the company.
 Large multinational company: This refers to all those corporation which is supplying its
products and services to various parts globally. Multinational companies are those
companies which is hiring large numbers of employees and work to meet with the
necessity of customers of different nations.
Legal structure: Legal structure of H&M company is held under limited company or
corporation. This company is supplying its high quality services and good in order to meet with
requirements of different customers.
Voluntary sector: This sector comprise all those organisations which are developed for
providing benefits to the society. Companies dealing in this sector does not aim at gaining more
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profits business. These companies are providing products and services which are beneficial for
citizens and society as well as help in solving major issues of society. For example Ofxam
company. This is a non profit organisation which is developed with the motive of providing
welfare to society and envelopment. This company is working to end the injustice of poverty as
well as provide basic rights to each and every person.
 Purpose: Oxfam is developed with the purpose to remove poverty from the society and
help citizens to live better lives as well as enjoy equal right.
 Objectives: Objective of Oxfam organisation is to save life as well as provide better
facilitate to the poor citizen (Gupta, 2013). This company wants to safeguard global food
supplies and enhance living standards.
 Stakeholder: Oxfam stakeholder consist of its customers, trustees and donors, various
partners and local project partner which are helping them to achieve desire goals.
 Core values: Core values of Oxfam company consist of empowerment, accountability as
well as inclusiveness in order to reduce the impact of poverty from society.
 Supply of Services: This company is providing heath care and educational services to
people who are below poverty line.
 Mission: Oxfam mission statement emphasize that they are working to create an
environment where people do not have to deal with poverty. Vision: Oxfam company wants to create a world without poverty in which each and
every person is living a healthy lives.
Different types of voluntary sector company Trust voluntary company: These are non profitable organisation which is working for
benefit of society and getting funds for trustees. Trust based organisation is completely
dependent on funds provided by trustees.
 Charity voluntary company: Charitable organisations are those companies which is
collecting funds from charity bases. They are working for society benefits and anyone
who wants to contributes in this can voluntary as well as provide funds to this
organisation.
Legal structure: Oxfam is working under charitable trust as in this funds are provided by people
as per their wish and capability. Funds of this organisation is used to for welfare of society and
meet the needs of needy ones.
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P2
Each and all organisation have assorted size and scope. It is very important to determine
size as well as future scope of company with the motive of meet with desired aims and objective
of organisation. Organisational size can be define as a number of people working in organisation
as well as overall size of the company. Scope of organisation refers to the future scope of
development for particular organisation.
Public Limited company: This type of company is completely run and managed by the
government (Harrison, 2013). NHS is a open aspect organisation which is closely-held and
dominated by the authority of government of England. This company is providing its product
and services to UK area and their motive is not to earn profit.
 Market Share: This company is majorly carrying business activities in all over the
England and providing its services in differ parts of UK.
 Scope: Scope of NHS business is to serve its variety of services such as heath care, dental
care and hospital services to large number of populations.
Private Limited company: Private limited company comprises of all those companies which is
run to earn revenues through offering high quality good and services to the consumers. H&M is a
private limited organization which is dealing fashion retail sector. This company is dealing in
fast fashion industry as well as providing high quality of products to set customers.
 Market Share: H&M is an international organization which is offering its services and
manufactured goods to different parts of the world. It's market share includes different
parts of the world.
 Scope: H&M is a Swedish company which is one of the leading brand in fashion retail
sector. This company has approx 2600 stores which is located in 43 different countries.
 Growth: There are various growth opportunities for H&M company as they can improve
its products and services as well as grow in different part of the world.
Voluntary Limited company: This type of organisation refers to non profit organisation as they
are not working to earn profits (Hillary, 2017). Voluntary company motive is to do some welfare
of citizens by resolving major issues of society. Oxfam is not profit organisation of UK which is
working to provide welfare to society.
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 Market Share: This company is operating with different independent charitable
organisation. There market share includes is to provide various benefits to citizens of
organisation by solving issue of poverty.
TASK 2
P3
There are various functions of organisation which helps in improve its performance and
helps in earning more and more profits. Various functions of H&M company with its
interrelationships are mention below.
Structure of organization:
An organizational structure is a theory that defines how activities are conducted to
achieve certain goals and objectives of an organization. These activities can involve
responsibilities, roles, rules etc. An organization structure also depicts the information flow of
the company. There are four basic types of organizational structures executed in every
organization:
 Functional structure: It is based on division of an organization into smaller groups or
departments. Each group has a manager who look after all the activities and tasks and
control the operations of department.
 Divisional structure: In this type of structure each department control its own resources
and operates as its own company. It analyse all the expenses of the department and how
much money spends on certain projects.
 Matrix structure: It is a hybrid organizational structure or a blend of functional as well
as projected organizational structure. In such structures, employees are supposed to give
reports to two or more authorities depending on the situations and projects assigned.
 Flat structure: It includes more decision making within an organization. There are fewer
levels of management which cause a direct communication and fast decision making and
better understanding of company goals.
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H&M follows matrix organizational structures which means that there are high level of
management and a effective communication between high authorities and staff members. They
believe in quick decision making and co-ordinate with their staffs. Hence, they give fast response
to new business issues and complications.
Different areas of business:
 Scope of control: Span of control refers to managing and controlling subordinates of an
organization by higher authorities. It gives a link between superiors and subordinates
within an organization. It basically tells the ratio of superiors and subordinates.
 Centralization: It is a process of allotting and assigning decision-making power to
higher authorities of an organization.
 Decentralization: It is a procedure of assigning and transferring decision-making power
to lower levels or subordinates of an organization.
Organisation functions: Organisational functions can be describe as those activities as
well as department of company which help in conducting business operations in more effective
and efficient manner. H&M company is consist of different important function such as
operations, human resource, finance, production and marketing.
Marketing and Finance department
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Illustration 1: H&M organisational structure
Source: H&M IMC Campaign.

Marketing function refers to all those activities of organisation which helps in improving
sales of company. Finance department is responsible for managing all assets as well as financial
resources of organisation (Hilton and Platt, 2013). It is very crucial that both of these function
coordinated with each other and work in effective and efficient manner. Marketing department of
H&M company needs funds and financial resources to promote and market its services to
different market area. This department will also identity market trends which could be followed
by financial department of H&M company so that they can work in effective and efficient
manner. Interrelation of marketing and finance department will help in achieving organisational
objectives of respective company. For example marketing department can identify new tools an
techniques for economical sector.
Human resource and production department
Production and human resource both of these are essential functions of H&M company.
Human resource department will help in selecting right employees for right place and production
department is responsible for manufacturing and producing high quality of products. Human
resource department have to train employees of production department so that they can work in
effective and efficient manner (Janita and et.al, 2013). For example training employees of
production department to improve their skill regrading lean manufacturing process. This will be
very helpful for achieving desired goals and objectives of H&M company and providing high
quality products to targeted customers.
Organisational objectives can be define as a goal and aim of company and it is a motive
of company. This helps in providing guidelines to organisation as well as employees in order to
achieve set goals of company. For example, objectives of H&M company is to provide better
product and services to customers in order to increase its sale.
Relationship between organisational structure, functions and objectives
There is huge relationship between the organisational structures of H&M company as
well as their functions and objectives. This company wants to increase its sales by providing
better and high quality products to customers. In this it is using matrix organisational structures
which helps in smooth functioning of organisation as well as accomplishing set goals.
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TASK 3
P4
External environment includes various factors which can not be controlled by
organisation and these factor will have major effect on work and actions of organisation. It
includes all those external factor that are very important for growth and survival of H&M
business as well as it will have positive as well as negative effect on enterprise trading
operations. In order to analyse the impact these factors on business PESTLE analyse could be
evaluated (Kim and et.al., 2013). It includes political, economical, social, technological, legal
and environmental factor. All of these factor with their both positive as well as negative effect
on H&M business is mention below.
Political factor: This factor includes different rules and regulations that is made by government
and political party. Political factor consist of political stability or insatiability, foreign trade,
taxation polices and trade restrictions developed by government. Positive- This factor will have positive impact on H&M company as they UK have very
stable government and they are developing polices for the growth of retail sector. This
will help in growth and development of organisation.
 Negative- There are many strict rule as well as trade restriction set by UK government
which will have negative impact on business. This is directly affect the sales and profits
of H&M company.
Economical factor: This will have significant impact on H&M business as it is majorly related
to economic growth, interest rate, exchange rate of a country (Kolk, 2016). It is will both positive
as well as negative effect on company.
 Positive- UK country has growing economic conditions so this will have constructive
impact on H&M business. This will lead to increase sales and profits of H&M company.
 Negative- Negative impact of economical factor on H&M company will be increase in
interest rate. This will lead to increase their price of products manufactured by H&M
company and will have negative impact on sales of H&M company.
Social factor: This section consist of population size, society, attitude, behaviour and so on. This
factor play a crucial role in attracting customers as well as influencing them to purchase products
of H&M company.
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 Positive- This company is developing and designing high quality products which is able
to match with aa the of necessity of customers.
 Negative- Customers requirement is ceaselessly ever-changing and change in market
trends can have negative impact on H&M company.
Technological factor: This factor includes new and innovative technology of producing and
manufacturing products. This helps in conducting business activities in more effective and
efficient manner.
 Positive- UK has one of the most advance and innovative technology. This is very
helpful in achieving desired goals.
 Negative- H&M company needs to train its employees so that they can correctly use high
technology. This is very cost consuming for respective company.
Legal factor: Legal factor includes all rule and legislations that is developed with the motive of
keeping safety and security of employees as well as customers.
 Positive- This company have patents and copyrights of its products which will have
affirmative impact on H&M business.
 Negative- Negative impact of legal factor on H&M organisation is increase in wages
rates. This rule will directly affect the profitability of respective organisation.
Environmental factor: It includes all those factors which are linked to the environment such as
climate, weather, pollution, ecology and many more.
 Positive – This company is performing it business activities by consider the climate and
weather conditions of targeted market area.
 Negative – Increase in global warming and changing in climate will have major negative
impact on business of H&M.
TASK 4
P5
There are various micro and macro factor of organisation which will helpful in successful
running of organisation (Meiners and et.al, 2014). In order to determine all factors of external
and internal environment of H&M company they need conduct SWOT analysis. Internal factor
includes strengths and weakness where as external environment consist of possibility and threats.
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