Business and Business Environment Analysis of Marks and Spencer

This report provides a comprehensive analysis of Marks & Spencer (M&S), a multinational clothing, food, and home essentials retailer. The report begins with an introduction to M&S, highlighting its founding and key principles. It then delves into the company's flat organizational structure, discussing its advantages and disadvantages, and how it facilitates communication and operational efficiency. The report further examines the external business environment of M&S using PESTEL analysis, assessing political, economic, social, technological, legal, and environmental factors impacting the company. An internal and external analysis using SWOT analysis is also included, identifying M&S's strengths, weaknesses, opportunities, and threats. The report concludes by summarizing the key findings and insights into M&S's business strategies and environment.

Business and Business
Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1,P2)...........................................................................................................................................3
Enclosed in ppt.............................................................................................................................3
P3)................................................................................................................................................3
TASK 2............................................................................................................................................5
P4)................................................................................................................................................5
P5)................................................................................................................................................7
P6)................................................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
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INTRODUCTION
Business is a form of trade that involves critical functioning and performance of
employees. The factors that constitute the business is the business environment. This
environment also constitutes of micro and macro environment that has certain impacts on the
business. Any business strategy is planned according to the analysis made on these factors.
Marks & Spencer is a multinational brand for clothing while it also has dealings in food and
home essentials. It was founded in 1884 by Sir Michael Marks and Thomas Spencer. PESTEL,
SWOT analysis are tools that are used to analyse the micro and macro environmental factors
impacting any business. For a successful business strategy and acquisition the company must
focus on use of such tools with proper knowledge of the type of organisation as well as the
elements constituting it.
TASK 1
P1,P2)
Enclosed in ppt.
P3)
Marks and Spencer (M&S) is a multinational clothe and fashion retailer based in UK. It
also has a broad variety of home products and luxury food products. It was establishes in 1884
in London, UK. The company has 852 stores and counting all over the globe. Being such a huge
multinational organisation it has to strategically define all the functions and the responsibilities
in the organisation to achieve its objective of obtaining maximum market share in UK and
worldwide. M&S works on five key principles regarding its products and these are Quality,
value, service, innovation and trust. These principles gives the company a sustainable
competitive advantage (Strategic Report. 2014)
Organisational structure in M&S is a flat organisational structure also known as
horizontal structure of organisation. The reason behind choosing a flat organisational structure
relates to the objectives of the company which mainly focus on effective operational department.
The company also believes in formation of trust and confidence in its employee (De Clercq,
Dimov and Thongpapanl, 2013). This structure also results in diminishing higher layers and
bridging the gap between the highest official and the lower level employees.
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The below given chart depicts the organisation function of M&S:
Flat organisation structure depicts that there are less layers between an employee and the director
or chairperson of the company. M&S opted for this structure as they wanted fair jurisdiction
within the organisation. On the contrary, the supervisors can perfectly observe the processing of
unfair means or malpractices.
Functions in M&S include manufacturing, sales, marketing and logistics. These are
supported by ground staff that are divided according to their skills and knowledge into their
respective departments. A group of ground staff is leaded by an executive. These executives
relate the functioning with the CEO( Chief Executive Officer) of the company. If the staff is ill-
treated or misguided they can directly inform the officer in power or the CEO without much
hesitation. Although this structure gives freedom to the ground level staff for communicating
with the higher officials but there are certain drawbacks also. The employees are subjected to
less scope of promotion (Lorange, 2013). Sometimes the work pressure may increase which can
create conflicting situations. Due to less promotion opportunities employees tend to leave their
company. This may incur losses to M&S.
For effective functioning and directing the company towards meeting the objectives of
providing high quality products to the consumer M&S must not have a boss but a leader. Leader
defines roles and responsibilities to the employees only after proper evaluation and analysis of
weakness and strengths (Gupta and Kumar, 2013). Good operational staff that is skilled and
educated labourers and employees will manufacture good quality product. This product will be
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delivered with highly efficient logistics to the customers as well as retail stores. The retail stores
have great managers that look after the consumer demands and suggestions if any. They are the
channelisers of productivity as well as control the quantity of good to be manufactured (Pugh,
2016). The final level that is the CEO looks after these supervisors so that no breach is figured in
the managing of staff.
Effective functioning of flat organisations also depends on the style, behaviour and
relations of the leader. Functions are in the form of chain from top to bottom while the control
span is wide. This implies more responsibilities and control is on the second layer from bottom
while the ground level employees just have to follow the instructions (Scarbrough and Corbett,
2013). They are least responsible people when comes to planning strategies for business
expansion or improvement. The senior most layer has highest responsibilities for making
decisions. Effectiveness of the decision can be visualised by measuring the status of market share
and response of the customers at different points of the financial year (Griffin, 2013).
M&S founders wanted to maintain decorum in their organisation and also wanted eagle
eye monitoring over their staff. Hence, they adapted the flat organisational structure. From staff
to senior executives everyone developed a sense of responsibility towards the company and
coordination is set amongst them (Stone, 2013). Any communication doesn't take much time
and is delivered within short span. Overall budget costs are also eliminated by reducing middle
level management layers. Hence, by adapting to flat organisation structure the company is able
to achieve its goals and objectives efficiently with good market share and better response from
the consumers (Becker, Kugeler and Rosemann, 2013).
TASK 2
P4)
Pestle Analysis of Marks and Spencer
Political factors: UK government sets regulations for company under Health and Safety
Standards but company fail to abide British standards and they were fined. Marks and Spencer is
first company to achieve fair trade policy route to cut fat and salt in M&S food. Company
believes in interaction with government to protect wider public objectives (Zhang and Huang,
2012). The major political factors that affect company is VAT policy set by British government.
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If Value Added tax is increased then M&S product prices also increases and their firms income
decreases.
Economic factors: Current economic growth is uncertain as people do not have much
money to spend on luxury items. M&S is retail store is also affect by this and closed number of
stores. Company needs to focus on long term and short term strategies to ensure their growth in
current economic situation in UK. It needs to focus on younger generation who spends their
income on clothing (Wild, Wild and Han, 2014). Issues like interest rates, inflation, GDP,
employment levels, etc. need to hold in marketing plan.
Social factors: Most of customers of M&S were over 40 years, that is why clothing range
offered by company was conservative in nature. But now people's choice have been changing
over the last ten years. Now company is focusing on demographic customer and store line of
clothing is more based on local taste. Now a days people are using credit cards so company has
allowed their customer to use credit cards so they can compete with their competitors
(Subramanian, 2013).
Technology factors: M&S already invest in technology to increase its efficiency they
offered free Wi-Fi to their customers to explore more products of the company. Other tactics
involved installing big screen in stores which promote clothing and other product so customers
enable to browse through products. Online shopping enabled to company to reduce supply cycle
(Rodriguez, Peterson and Krishnan, 2012). M&S' s book would be the opening of their
distribution in Castle Donington. That is exclusively made to serve as warehouse for online
orders. The centre is fully automated storage and includes word class warehousing technology.
Legal factors: The company has admitted that the suppliers of their company had worked
excessive overtime (Mellahi and Frynas, 2015). Company hired workers and forced them to
work seven days a week. A news reported that company was fined by 1 million GBP to avoid
the standards set by British government. M&S was accused for sweatshop sandal where Indian
workers paid only 25p per hour and forced to work overtime and those who refused to work to
leave and find new jobs.
Environmental factors: M&S company launched a program called “PLAN A” in Year
2007. The idea of shopping was to purchase new clothes and sold old clothes to Oxfam. It either
sold old clothes to third market where consumers demand is high but do not have money to buy
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clothes. Over four years Oxfam sold more than 11 million clothes which they got from
donations.
P5)
Internal and External analysis of Marks and Spencer
Carrying out Internal business environment analysis we need to identify external factors
which affects company's strengths and weaknesses. To find it SWOT analysis is done as follows:
Strength: Mark and Spencer is largest retailer in the UK which means they have more
customers than any other retail organization. Company offers a number of wide range of
products such as home products, clothes and food products. M&S has a brand recognition and
well established in UK market. Customers in UK market is nowadays is more retail users so they
purchase more retail products. The company delivery in quality of products. The company is
continuing to develop and expand its overseas suppliers (Isik, Jones and Sidorova, 2013).
Weakness: The primary weakness of the company is the nature of management which is
not fit between the company structure and its trade styles. There are large number of substitute
products and technology in the market which can become threats in future. Many consumers
have some issues regarding prices of company's product (Homburg, Wilczek and Hahn, 2014).
The customers perception is that company charges high amount of money for their products.
Entrance of new retailers in market with low prices could affect company's sales and their
incomes. Company has large number of customers, this makes it effective which makes it fit for
competition. It introduces new and innovative products which helps them in making further
move (Botha, Kourie and Snyman, 2014). Marks and Spencer to avoid small retailers they are
merging with them to capture large market in other country.
For External analysis of M&S
Strength of M&S is stakeholders. M&S is main strength is its ability to listen to
stakeholders. Company closely works with its stakeholders included a supplier conference,
meeting with regulators and involving wide range of Plan A. The company understand the the
perception of stakeholders. Company is making different formats which is used by its
customers .
Weakness of M&S is competitors with entrance of large numbers of small retailers cut
down the market share of company and government policies on FDI also affect on it's income.
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Ineffective implementation of proposed strategy. Small rival are bigger challenge for company
because of low priced products, M&S not able to cut down its profit and over reliance on high
costs UK-based consumers.
Strength and weakness influences decision making of M&S in external
Company has the ability to listen its stakeholders, each of them with different levels of
interest and power, in past stakeholders made strong decision making and help to bring more
customers to company and competitors bring more challenges in front of company to make their
business more effective in every manner and help them adopt market in more dynamic nature
(Bharadwaj and et. al., 2013).
P6)
SWOT analysis can be determined as the tool that makes the firm know about the issue
that are faced by the organization (Rana and Goel, 2015). Further, it includes strength,
opportunities and threats that affects the firm. With this respect, below given are the SWOT
analysis for Mark & Spencer:
Strength: High quality: The ultimate aim of cited firm to gain maximum profit and for this purpose,
they make sure that all the services that are provided to customers is of high quality.
Further, they understand the requirement of users and develop products accordingly. This
is beneficial for the firm as it enables to attract more and more customers and also satisfy
them(Bar-Isaac and Shapiro, 2013). Customer service: M&S make sure that they develop strong relationship with their
customers and this is done by making sure that they get even after sales services.
Weakness: Lack of segmentation: There are many segments for clothing but they are not able to get
the desired result. There segmentation done in this area is not effective and this affects
the business negatively (Campbell and Strikwerda, 2013). Waste store space: The physical store of M&S has many area left and this is weakness as
they can make use of these areas and utilize it for better services to their customers.
Opportunities:
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 Internet: The rate of internet users are increasing drastically and this is a type of
opportunity that they have. The rate of internet purchases are increasing and there are
many social sites in which promotion can be done. Home delivery: People tent to make use of service that are provided to their door steps. In
this context, it is an opportunity that they can make use of and they will be able to
develop positive perception among customers mind (Cosh, Fu and Hughes, 2012).
Threats: Competition: There are many organizations that provide their customers with similar
products and services like M&S. It is a type of threat they have to face and this has
negative impact over the business.
 Chemical pollution: Pollution is another threat that causes high issue to cited firm. Steps
should be take that will enable to make the organization comparable (Our Mission &
Beliefs. 2016).
These factors have close interrelationship with the external factors. However, steps can
be taken to reduce the impact of external factors but for external once its not easy. Internal can
be improved but only steps can be taken to reduce the impact (Persson, 2013).
CONCLUSION
The report consist of detailed description regarding organisation and its different types.
These types are further explained with details regarding the size, scope and background to which
they belong. By size and scope it is referred to the impact they have on the market and the
consumers. Flat organisation structure of Marks & Spencer is depicted with relation to its
functioning and the path by which an organisation can achieve its goals and objectives
efficiently. PESTEL and SWOT analysis is performed for gaining detailed knowledge of the
impact of macro and micro environment on the organisation. These tools are effectively used for
studying the effect of these environments on the strategy planning of the business.
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REFERENCES
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