Impact of Business Environment on Hennes & Mauritz Performance

This report scrutinizes how various factors within the business environment impact organizational performance, specifically focusing on Hennes & Mauritz. It delves into both internal and external analyses and compares these insights with Marks & Spencer, emphasizing the role of macroeconomic and microeconomic elements in shaping their strategic directions. The study identifies how different types of organizations navigate diverse objectives amidst changing market conditions.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Various types of organisations..........................................................................................3
Legal structure for public, private and voluntary organisations.............................................4
P2 Size and Scope of various types of businesses or organisations. .....................................5
P3 Various organisational functions linked to the structure and objective of the organisation.. 7
TASK 2 ...........................................................................................................................................8
P4 Impacts of macro environment on various business operations........................................8
P5 Internal and External analysis ........................................................................................11
P6 Relationship of strengths and weaknesses with the external macro factors ...................13
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Business Environment refers to all the external as well as internal factors or elements
affecting the various functions of an organisation including the customers, employees, business
regulations, management or supply and demand of the company. These factors are sometime
controllable and sometime not, the report will analyse and determine all those factor which are
affecting the various types of organisations in a market. This report will identify and describe the
size as well as scope of various types of organisations. The report will focus on identifying the
factors affecting the business operations of Hennes & Mauritz(H&M), a UK based apparel brand
along with the SWOT analysis. Furthermore, the report will also describe various functions of an
organisation and their relation with the business objective or structure.
TASK 1
P1 Various types of organisations
There are many types or organisations or businesses within a business environment, these
organisations have different business operations, nature, objectives and purposes. The various
types of organisation operating in a business environment are as described below -
 Private organisations – The Private organisations are the firms or companies which are
establishes and operated by private investors and individuals. A person or individual
plans, develop and implement different organisational strategies to a business as well as
personal goal or objective. The people are making their investments in different
organisations in order to generate income and profit. The private owners of various
organisations or businesses focus on generating revenue form different types of business
or economic activities in a marketplace. Further segmentation of the private organisations
includes sole proprietorship, co-operation and partnership firms. The sole-proprietorship
company or organisation is operated and owned by a single individual, investor or owner.
All the losses and profit is handled and managed buy a single person or the sole
proprietor of the organisation. The other type of private organisation is a partnership firm,
a partnership firm is establishes by two or more than two individuals or investors for a
common goal of generating profit. The profit and loss of this type of organisations is
distributed among the partners of the company. There are many successful and leading
private companies generating high profit within the market for example – Marks and
Spencer's, Tesco etc(Popescu,2013).

 Public organisations – These organisations are established, owned and operated by
government bodies, The government of a country or nation establish many businesses
and organisations to provide various types of effective services to the people within a
society or community. The main objective or goal of Public organisations is to supply
public services for the welfare of the society. These organisations are established by a
government of the country, the tax paid by the citizen of a nation is used for developing
and operating these public organisations. The public organisations do not focus on
achieving high profit or revenue from the public, the main motive of these types of
organisations is to offer effective services to the public and ensure their welfare or well-
being. They provided various kinds of services which assist in the development and
growth of the community or society. Each and every services provided by the public
organisations are designed according to the government legislations or policies. The
revenue generated by these organisations are further used for the establishment of new
services or expansion of the exiting organisations related to public welfare and services.
The different types of public organisations operated by government are government
schools, hospitals, fire department etc(Teece,2015).
 Charity – The organisations working for the society by offering service free of cost is
known as Charity or social organisations. These types of organisations focus on
providing various types social and health care services to the people of the society. These
bodies provide social and health care services to the people without any cost, these
organisations are established and operated by funds generated from the charities or
donations from the public or individuals. There are many such organisations such as Red
cross and Christian aid in UK which are offering effective services to the people without
charging any cost for the care of the people. These organisations provide services like
food and shelter, care to old age people. Poor people, homeless people etc. These
organisations generate donations not profit for the development of their own services or
facilities.
Legal structure for public, private and voluntary organisations
Private organisations
The private sector is generally
combined of organizations that
Public organisations
The public sector is composed
of organizations that are
Voluntary organisations
The rules governing a
voluntary group are set out in a

are privately owned and not
part of the government. These
usually consists corporations
both profit & non-profit and
partnerships.
operated and owned by the
government. This consists
federal, provincial, state, or
municipal governments,
depending on the country or
state. Privacy legislation
normally calls organizations in
the public sector a public body
or a public authority.
constitution, the exact kind of
which depends on the adopted
legal structure. There are three
important legal structures
utilized by voluntary groups; a
Trust, an unincorporated
Association and a company
limited by guarantee.
P2 Size and Scope of various types of businesses or organisations.
According to the goals and objectives, each and every business or organisations design its
size or structure of their business and company. The Hennes and Mauritz(H&M) is a successful
MNC in retail industry or company which operates around 4,500 retail stores in almost 62
countries all around the world. The H&M has more than 1,32,000 employees working together to
achieve the organisational objectives. The various types of organisations have different size and
scope of their businesses. The size and scope of various organisations with respect to their types
are as described below -
1. Private organisations – The private organisations can be established at both a small and
large scale depending upon the availability of resources as well as business goals. The
owner or proprietor of a private organisation is the main person who controls and
manages the organisational operations or policies. The investment on a specific company
or business is deciding the size of an organisation or firm. The private organisations focus
on selling or distributing their services and products to the customers to gain an
impressive position in the market as well as generate high revenue. The Director of a
private organisation is responsible for designing, developing and implementing the

organisational strategy which is followed by various number of employees in order to
achieve the business goal. The scope of a private organisation depends upon effectiveness
of business operations as well as market position of the firm(Iskanius,Page and
Anbuudayasankar,2013).
2. Sole trader – This type of organisations are generally established and operated at a small
scale. The owner of this business is a sole trader or proprietor who establish, manage and
operate each and every activity within the business or firm. The size of a sole trader firm
is the smallest among all the other types of organisations or businesses. The size makes a
great reduction in the risk involved within the business or trade. The goal or objective of
this type of organisation or business is to earn profit with a small scale firm avoiding high
risk and investment.
3. Partnership firms – Size of a partnership organisation or business highly depends on the
number or investors or partners which are collaborating in order to establish the company
or firm. Each and every partner comes with some financial resources or investment which
decides the ratio he or she will share in the profit or loss of the business. The decision
making power is distributed equally among the partners of the partnership organisations.
The size of these organisations is large due to the availability of financial resources and
investments, the private organisations are generally huge companies with a lot of
employees working in a specific organisational structure. Huge investment also helps in
providing a better scope for the business, production of these organisations is high which
have a direct impact on the profitability of the firm or organisation(Kim,Suresh and
Kocabasoglu,2013).
4. Public organisations – The organisations which are established and operated by the
government are known as the public organisations. The government utilise and invest a
huge amount of financial resources on the public organisations. The size of the public
organisation is relatively large as compared to the other types of organisations. These
organisations provide a high employment for the society as well as focus on offering
effective services and products to the public and community. These organisations
generate profit but further use it in the development and growth of the society as well as
providing public services. The main objective of these organisations is to contribute in
the economic, social and infrastructural development of a country.

5. Charity – The size of these organisations or firms depends upon the level and area it is
operating its activities. These firms are established with the help of donations and fund
collected by the people. The main objective of these organisations is to offer free of cost
services to the people such as social and health care services. These organisations can be
operated at small as well as large size, but the objective remains same at every size or
scale which is to offer priceless services to the people in need. These organisations work
for the welfares and well-being of the people of the society or community. The major
example of this type of organisation is the Oxfam, it is a multinational volunteer firm that
works with an objective of reducing poverty, providing disaster relief and other social or
health care services to the people. The Oxfam focus on providing services related to
justice, economic, gender equality and rights in crisis to the people of the society.
P3 Various organisational functions linked to the structure and objective of the organisation.
The structure of an organisation represents the whole model of a business or firm
including it business functions, operations and strategies to achieve the organisational goals
effectively. The structure of an organisation can be different from other depending upon the
goals and functions, Hennes and Maurtiz has many departments in their organisational structure
which performs different functions and tasks in order to manage the business operations.
According to the needs and requirement various departments perform their functions and tasks,
these functional departments within the organisation are as mentioned below -
 Human resource department – The Human resource management or department performs
most important function within the Hennes and Maurtiz, this functions refers to
searching, recruiting and managing the skilled and talented workers or human resources.
The Human resources or employees of an organisation are the main elements and factor
responsible for the performance of the business. The Human resource department in the
Hennes and Maurtiz plays an important role in developing an effective employee team
that works and perform impressively to achieve the business goal.
 Production – Each and every organisation which works in manufacturing sector needs to
have a well and effective production department. The production department within an
organisation ensure effectiveness and efficiency in the production of goods which needs
to be sold in the market for attracting more and more customers. This department is
managed and controlled by a production manager under which various skilled employees

work to manufacture product at a low cost to generate high profit(Wetherly and
Otter,2014).
 Marketing department – The marketing department in Hennes and Maurtiz also plays a
vital role in promoting its products or services in the market. This department develops
various effective promotional and marketing strategies which helps the organisation to
achieve publicity and effective position in the market. Marketing function is very
important in order to launch or relaunch a product as well as provide relevant information
to the customers in a marketplace.
 Finance department – The Financial is responsible for managing various types of
financial functions and components within an organisation such as Hennes and Maurtiz.
There are many elements which are managed and controlled by the financial department
such as income, expenses, loss, cost and so on. This department also develop and design
different types of budgets and other financial strategies essential for the organisation.
All the above department within Hennes and Maurtiz performs different roles and functions for
the achievement of objectives and goals effectively. The departments within an organisation are
interlinked and shares a strong relationship in order to develop coordination and cooperation for
performing the business operations. The production departments manufacture products,
marketing department assist in promoting those products, the finance department helps in
managing the cost of production, expenses, loss and profit of the business. The coordination
among all the department is very essential in order to ensure the smooth flow of the business
operations and activities.
TASK 2
P4 Impacts of macro environment on various business operations.
There are many factors or elements in the macro environment which has a great impact
on the functions and activities performed by an organisation or business. These factors have both
negative and positive impact on the business operations within an organisation such as Hennes
and Maurtiz. The various factors affecting business activities of Hennes and Maurtiz are
described as follows -
1. Environmental factors – The environmental factors such as climate, trends etc has a great
impact on the various business activities or operations. The H&M focus on performing
environmental friendly business operations in order to develop a healthy and safe

environment. The organisation consider environment as an important factor while
planning, developing and implementing business functions or activities.
2. Legal factors – The legal factor includes various laws and regulations designed and
imposed by the government on the business operations performed by the organisations.
The legal authorities develop certain laws regarding the business activities that are very
important to be followed by each and every type of businesses or organisation in order to
sustain and avoid legal consequences. The Hennes and Maurtiz effectively follows the
legislations in order to stay clean and create a positive position in the market.
3. Political factors – The government plays an important role on the business operations
within an organisation. The political factors such as change in policies due to fluctuating
government has a great effect on the businesses and their functions. It is important to
consider the political factors while planning the business strategies and implementing
them(Welford,2013).
4. Economic factors – Different countries have various differences in their economic
conditions. The economic conditions of a country has a high impact on the business
operations on the organisations. For example – healthy or strong economy increase the
purchasing power among people while a weak economy reduces it which has a negative
impact on the sales of companies.
5. Social factors – The social factors such as preferences or taste of the people or customers.
The customer preferences is very important and essential to consider for an organisation
such as H&M. The number of sales depends on the factor that the customers are
accepting and satisfied by the product offered by an organisation or company.
6. Technological factors – The technological development is also a major factor that
influence the business operations and functions. The adoption of new and innovative
technology can assist in increasing the productivity of an organisation which leads to
increase in profit and achievement of goals or objective. The Hennes and Maurtiz focus
on implementing the use of modern technology in order to offer effective products and
services to the customers(Aterido,Hallward-Driemeier and Pagés,2016).
All the above factors are included into macro environment and has a high impact on the
business functions or operation of each and every organisation. The Macro environment factors
are the not in control of the management or organisation. These are uncontrollable elements

which negatively or positively affects the business and its functions. In order to sustain and
achieve a good position in the market or industry Hennes and Maurtiz needs to ensure that they
manage and handle them effectively to reduce the negative effect of all these factors on their
business operations.
Positive impact of the factors in macro environment
The macro environment can beneficial for organisations if the changes are in favour of
the business operations or activities. There are many positive impacts of different factors within
the macro environment as described above. For example – The government policies and laws can
be changed in favour of businesses such as tax reduction, subsidies etc which can have a great
positive effect on the organisational functions and overall performance of the firm. The growth
in the economy can also be favourable for organisations and businesses operating in various
sectors within that particular economy. The other factors such as social elements can also
positively effect various business functions and operations within an organisation such as Hennes
and Maurtiz. They focus on fulfilling social and environmental responsibilities effectively which
also helps the organisation to develop a positive brand image within the community or
marketplace. The organisation manages all these factors in order to achieve an effective and
leading position within the market or industry and achieve customer support.
Negative impact of the factors within macro environment
The changes in the macro environment factors can not be always favourable for the
organisations and their functions. The government can increase the taxes for production of
goods, transportation of raw materials etc which can give rise to cost or expense of the business
affective the productivity as well as profit margin. The lack in technological development or
understanding the new technologies can also have a negative impact on the business and its
functions. The customer's needs and preferences as well as trends changes according to time, it is
difficult to manage and satisfy those fluctuating choices. It also has a negative effect on the
productivity as well as profitability of the organisations. The legal consequences can also greatly
affect an organisation in a negative way, the company can lose its good image in the market and
customers may hesitate to use its product or services.

P5 Internal and External analysis
Every last association have quality and shortcoming as per the distinctive components that will
influence on the interior and outside condition of the association will influence on the execution
if the business(Virglerová,Dobes and Vojtovic,2016).
External Analysis
 Political Factors: As the organization mediation on the affiliation have the genuine effect
on the customer. As the new course of action report by the organization for evaluate is
inconvenience on H&M.
 Financial components: As the money related condition of the collected kingdom is
presently in not in control which bring the swelling as the cost of rough materiel and
other variable cost have been stack on the H&M. As the customer have been not prepared
to spend more money on the luxuries stock at this situation is affected on affiliation
bargains.
 Social variables: As the social components of the affiliation can be the customer and
other accomplice of the affiliation. These will set the brand and as demonstrated by
publicize affiliation moreover affect the overall population with different activities.
 Technological Factors: revive of headways giving the preventions for the business and
business condition. From the use of the distinctive hardware in the generation procedure
will improve item advancement.
 Environmental Factors: As the fundamental contemplations of the affiliation can be affect
the regular. That can be the tainting make by the affiliation resources can be hinders for
the earth have influence on the H&M execution. It is essential for the association to
design better to spare nature.
 Legal components: These factor will be influenced on the business condition due to
various establishment have been made by the affiliation it is basic to streams the H&M.
As the present wage law is starting at now stack on the H&M which cause the back as the
high compensation need to pay for specialist and distinctive works. The laws are critical
to considerer in the detailing of different key choice in the association.
Internal Analysis

Quality: The key nature of the affiliation is their picture and the amount of stores of H&M is
more in examination of the other contender.
Shortcomings: The genuine weakness of the H&M is their Marketing and arrangements
divisions.
Opportunity:H&M have opportunity to pull in customer with different techniques of publicizing
and improve the business gathering to extend the arrangements.
Danger: As the contender can be the genuine hazard for the affiliations that can pull in H&M
customer by giving better organizations.
SWOT investigation of Mark and Spencer:
M&S is a contender of the H&M which have strength, weakness , opportunity, weakness and
Threat, for example, takes after:
Strength :
 M&S offer bigger number of item, for example, wine, dress which demonstrates higher
brand estimation of the association.
 M&S trust in serving quality items to the client.
Weaknesses:
 Absence of development: This can be the significant shortcoming of the association in
which the new thoughts and advancement are not contributing in the organization's
generation process.
 Taste and inclination: M&S not ready to comprehend the client taste and inclination
uncommon in the ladies wearing which can build the organization's altruism.
Opportunity:
 Check and Spencer had extended their business in the Asia and furthermore put resources
into different countries.
Threats:
 High rivalry: M&S piece of the pie have been decrease because of high rivalry from the
contender(Chavis,Klapper and Love2,013).

P6 Relationship of strengths and weaknesses with the external macro factors
 Dangers of new competitors - There are numerous individuals who are getting pulled in
to apparel and form industry by observing the measure of benefits. That is the reason it
turns into the risk for H&M. This is the shortcoming of refereed to organization. Dangers
of substitutes, There are numerous associations who are working in a similar industry. It
is normal that if refereed to organization won't satisfy the necessities of clients than they
will select. For different organizations. It is soft spot for H&M. Power of service
providers or suppliers, This is the qualities of refereed to firm since they take materials
from the providers gives them at the ease. Purchasing Power of buyers, This is dealt with
as the shortcoming since costs of items are particularly imperative for the clients. Level
of rivalry, This is the shortcoming on the grounds that there are numerous associations
who are working in a similar industry. This expands the level of rivalry in the market.
This expresses there are numerous shortcomings of the refereed to association as per this
model. The main quality of the organization is power of effective service provider.
 Political factors – The Political factors can generally be considered as a weakness for an
organisation such as Hennes and Maurtiz, the political factors are uncertain and
uncontrollable which makes it very difficult for the organisations to change or modify the
functions of the business or organisation. This is a major weakness for the firms, Political
factors can be strengths if the parties are in favour of the organisation(Cai and
Yang,2014).
 Economy – The other major factor is the economic conditions of a country in which the
organisations operates its functions. The rise or development in the economy can be a
strength of organisations in that particular country whereas as it can be a weakness for the
organisations operating in a country having a low or poor economic conditions.
CONCLUSION
The above report concluded that the business environment plays and important role in the
performance of an organisation. There are various factors within the macro and micro
environment which have a great impact on an organisation and its functions as described in the
report. The report also described various types of organisations such as private, public and
charity which are operated for various objectives or goals. The report identified various impacts

of macro environment factors that are affecting different types of organisations and their
functions. Furthermore, the report also includes internal and external analysis of Hennes and
Maurtiz along with the comparison with Marks and Spencer. The various functional departments
within the Hennes and Maurtiz are also described in the report.

REFERENCES
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