Analysis of Business Sectors and Environment: Marks & Spencer Report

This report provides a comprehensive analysis of the business environment, focusing on private, public, and voluntary sectors with Marks and Spencer (M&S) as a primary example. The report begins with an introduction outlining the scope and objectives, followed by an exploration of the purposes and legal structures of private, public, and voluntary organizations. It delves into the size and scope of each sector, using M&S, The National Gallery, and Friends of Williamson's as illustrative examples. The report further examines the relationship between various functions within M&S to achieve business objectives. It then analyzes the positive and negative impacts of the macro environment on M&S's operations, followed by an internal and external analysis to identify strengths and weaknesses using PESTLE and SWOT analysis. Finally, it explores how these strengths and weaknesses interrelate with external factors, concluding with a summary of the key findings and a list of references.

BUSINESS AND
BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
P1 Purpose of private, public and voluntary organisation along with their legal structure........1
P2 Size and scope of private, public and voluntary organisation...............................................5
P3 Relationship between the various functions within M&S for achieving business objectives.
.....................................................................................................................................................7
PART 2 ...........................................................................................................................................8
P4 Positive and negative impacts of macro environment on business operation of M&S.........8
P5 Internal and External analysis of M&S to identify strengths and weaknesses......................9
P6 How strengths and weakness interrelates with the external factors.....................................12
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13
Illustration Index
Illustration 1: Legal structure of public and private sector..............................................................4
Illustration 2: Legal structure of Voluntary sector...........................................................................5
Illustration 3: PESTLE analysis.......................................................................................................9
Illustration 4: SWOT analysis........................................................................................................11

INTRODUCTION
Businesses are performed in an environment depending upon the size, scope and
purposes. On the basis of these parameters, they can be divided into private, public and voluntary
(Bhowmick and Prasad, 2017). This study will help in identifying different types of business and
will render knowledge of their functioning. Besides this, legal structure of all three types of
organisations will be explained in this workpiece. Further, relationship between various
departments will be described to achieve the organisational goals. There exist some internal and
external factors that impacts upon an entity. They are micro and macro environment factors
which do impact on business either directly or indirectly. In the present undertaking, both
internal and external analysis will be conducted to analyse the impact of micro and macro factors
on the effectiveness of the operations. Further, relationship between the strengths and
weaknesses with the external factors will be explained.
For the present report, the selected organisation Marks and Spencer (M&S) which
belongs to private sector will be taken into consideration. Cited organisation is a renowned name
in fashion industry and operates globally. Thus, in order to manage a company like M&S, it is
crucial to have understanding of business, its' functions and operating environment.
PART 1
P1 Purpose of private, public and voluntary organisation along with their legal structure.
There are mainly three types of business sectors based on their intents, which are: Private,
public and voluntary. Purposes of these units along with their legal structures are explained
below in detail:
Private Sectors: This sector is owned by a private individual who works for making maximum
profit out of the business activities. They are fully controlled and managed by the individual. It is
further categorised into two sections: Limited and Non-limited organisations. This type of
companies also contributes a major part in GDP of a nation. The selected firm, M&S belongs
from this group. The entity is controlled by the responsive company authorities. Further, it
belongs to the public limited company category of the sector (Roigé and et.al., 2017). The
purpose of the entity is to earn maximum profit by rendering their products and services to the
customers. It raises money from issuing shares and debentures. Some other examples of
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companies that belongs to this sector: Next, ZARA, etc. The legal structure that is followed by
the Marks and Spencer is as follows:
Legal Structure: Legal structure of this sector is based on four factors, ownership, business
control, method top raise finance and profit distribution. Depending upon these elements, some
different type of structures are as follows: Sole Traders: In this legal structure, there is a single person who runs the business with a
small amount of investment. M&S also started its business as sole traders. In 1884 when
the firm has established there was a single stall in the Britain. However, with the great
work and tremendous efforts, the organization has turned out to be a leading global
player in retail sector for clothing. It should be recognised that there are so many
disadvantages of this type of business such as all the risks and losses are to be handled by
a single person (Yadav and et. al., 2016). Partnership: This legal structure is mainly developed to overcome the issues that do
occurs in the sole trading. In this type of business, the value is shared between two or
more person/parties. Thus, all the members are then liable for the losses, risks, profit, etc. Private Limited Companies: Private limited or Pvt. Ltd companies are the joint-stock
entities possessing individual legal identity. There are various shareholders of this
category that are integral unit of the business. Mainly, such types of firms are controlled
by families which are later owned by the shareholders. Public Limited Companies: Public limited or PLC are comparatively larger form of joint-
stock entities than Private limited companies. The selected entity, Marks and Spencer
belongs to this business structure. The company is governed by the Board of Directors. Co-operation: In this type of business structure, the public-sector entities are transformed
into private firm due to some reasons. This process of transformation is termed as
privatisation (O’Brien and et. al., 2017). Franchising: In the recent years, this method of business has become an important tool
and used by various international organisations. This is the most effective method and the
selected firm also have various franchisees worldwide.
Public Sector: This sector is that section of a country's economy which is completely under
control of government. These firms may work under state, federal or regional administration.
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The purpose of these types of organisation is to serve the citizen of nation with their services.
There are various sources from which, this sector raises money such as revenue from public in
form of tax, duty, charges, penalty, etc. In addition to this, employment under this sector is
highly recommendable by the people as there is a job security. Some example of public sector
organisations are National development sectors, National trade authorities, NHS, etc.
Legal Structure: Public Co-operations and nationalised industries: Nationalised industries works in order
to provide goods and services to general public of the nation. Funds to this sector is
provided directly by the central government. The major objective of the organisations
working in public sector is to manage supply chain rather than strongly emphasising on
production and development. In context to UK, there were large number of public co-
operations before the government of Thatcher. Major services that are provided by
entities belonging to this sector are: Public goods (Emergency services such as fire,
accidents, etc.), Merit goods (education, employment, healthcare, etc.) and essential
services (road lights, libraries, other infrastructure) (Islam and et. al., 2016). Local authorities: In this type of legal structure, the responsive bodies are the local
authorities such as regional government. They are most essential for the overall
development of a country as they ensure betterment of smaller parts of nation. Their
objective is to provide general public with the basic facilities and services such as road
work, parks, healthcare homes, etc.
 State Services: In state structure of services, the business are handled by the state
government and high level authorities. They provide basic services to the people of the
state such as defence (police, army, etc.) and education (schools, colleges, etc.)
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Voluntary Sector: This sector highly varies from the private and public. It is also known as
community sector and is a non-profit body. They work for the empowerment and upliftment of
the society by working on social issues. There are no particular CEOs' rather entities belonging
from voluntary sector comprises a team that works to bring change in the community. The
motive of these entities is equal and sustainable development (Daries-Ramon and Cristobal-
Fransi, 2017). They aim on preserve, protect and promote their cause. Some example of this
sector includes National trust, Friends of Williamson's, etc.
Legal Structure: There are various legal structures for voluntary sectors, some major among
them are as follows: Trust: In this type of voluntary legal structure, there are trustees who runs the
organisations and there are no members. The formation of such entities is simple and
inexpensive. There is no separate legal body from the individual trustees. However, it
should be recognised that there are some risks of personal liability and administrative
issues such as actions of recruitment and retirement. Unincorporated association: In this kind of business structure there are trustees and
members who operates the organisation. People with common interests and purposes
comes together in this association. The work is performed by following the constitution.
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Illustration 1: Legal structure of public and private sector
Source: Eling and Schaper, 2017

Similar to the trusts, this method is also inexpensive and simpler. However, there are also
some issues in it such as transfer of assets, risk of personal liability, etc. Company limited by guarantee: In this type of legal structure there are directors who
manages the operations. Also, there are some trustees for charities. These type of entities
follows some memorandums and articles. Further, it is incorporated that is a separate
legal entity. They are monitored and controlled by Companies house.
 Charitable incorporated organisation: This is the modified form of voluntary legal
structure. In this type of legal structures, entities are governed completely by the charity
commission. In this, there are less risks associated with the personal liability (Eling and
Schaper, 2017).
P2 Size and scope of private, public and voluntary organisation.
In order to understand the difference between private, public and voluntary sectors, the
best method is to differentiate between their size and scope.
Size and Scope of Private sector organisation: In order to understand the deep in-sights of the
public sector organisation, Marks and Spencer is selected. This entity is owned by an individual.
All the business operations are managed by him. The chosen entity operates in international
market. There are numerous outlets and stores of M&S worldwide. In addition to this, the online
5
Illustration 2: Legal structure of Voluntary sector
Source: Roigé and et.al., 2017

facilities allows people of any corner to avail the services, increasing the market size of the firm.
There are further around 80,000 employees in the company. The reach of the entity is helpful in
increasing its profitability. The entity aims on offering best quality services and products to the
customers and achieving maximum profit. However, the increased competition in the retails
sector may limit the scope of the selected company. Although, there is rivalry in the sector but
the entity should grasp the opportunities to make its scope secured from the external factors
(Human, Bick and Singh, 2016).
.
Size and Scope of Public sector organisation: To explore the scope and size of public sector
organisation, the selected firm is The National Gallery. It is governed by an act of 1992:
Museum and Galleries Act. It is a non-profitable entity but is tax-exempt. This organisation has
around 2300 painting from different time period. It has been observed that the artworks of 13rtbh
to 20th century are present there. Besides this, this was initially royal art gallery of the Prince
which was later owned by the government. The size of the firm is comparatively smaller than
that of the other similar private entities. However, it should be recognised that it possess
encyclopaedic scope. The firm aims on serving the people of the country with the valuable
artwork and scholarly (Prajogo, 2016). This gallery is owned by the local government of the
region. Further, this formation is valid under the clause of section 1 of the Museums and
Galleries Act, 1992. The funds for the operations are taken from the government. Also, the rules
are also imposed by the local administrative body.
Size and Scope of Voluntary sector organisation: To study the size and scope of Voluntary
sector organisations, the selected firm is Friends of Williamson's. This non-profit company is
working in Liverpool in order to save the heritage tunnels of Williamson's. There are so many
people who are attached with this operation. Any person that have same interest can join the
social work of preservation of heritage site by becoming remember of the firm by following a
simple process. This entity is managed by a board of trustees and allows charities as funding
source. The aim of this entity is to preserve and protect the Liverpool's heritage for the future
generation (Jaakkola and et. al, 2016). The tunnels under from of the Friends of Williamson's
are not open to people so that they can not be harmed.
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P3 Relationship between the various functions within M&S for achieving business objectives.
There are various departments in an organisation that perform different function to meet
the business objectives. In context to M&S, there are some units which plays crucial roles in
achieving the goal which are as follows:
Research and development: The research unit of the Marks and Spencer performs a detailed
market research to understand the needs and demand of customers. It also their role to identify
the trends based on different demographic factors so that development of the product can be
proceeded in right direction. The functions of development unit is to ensure the appropriate
development of the products so that company sales can be increased. Hence, in this way R&D
department of M&S helps in achieving business objectives.
Production Department: This department works on the outcomes generated by research and
development team. Depending upon the recent market trends and demands, this section produces
the products accordingly. In order to achieve business objectives, it is very necessary to present
customers what they want. Thus, by developing the services as per the demands of consumers
their satisfaction can be raised which will directly impact upon the company sales (Camillus,
2016).
Marketing Functions: There are so many functions which are played by marketing department
such as market research, development of strategies, pricing, distribution, sales, customer service,
etc. However, there main function is to promote the company products and services by using
various promotional activities. The effectiveness of the promotion will raise the profitability of
the entity.
Sales Department: This section takes the feedback from the customers and advises it to
marketing department so that alteration/modifications can be done. The major portion of time of
people belonging from sales departments is invested in the talking directly to customers. They
are the key source that guide the development of appropriate products and services.
Social media unit: In the present digital era, it has became crucial to advertised business on
various social networking sites. These sites are accessed by a large number of people and hence,
entities can target a big group of audience. In this way, this department can increase the company
sales.
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Managers and Leaders: It is foremost duty of managers and leaders to increase the motivation
level of employees. Motivated employees works in more dedicated and committed manner that
can improve the performance of the business operations.
Human resource management: Human resource management team of any entity manages
communication between the different departments. In addition to this, they are responsible for
the recruitment of the candidates. In addition to this, they should also conduct appropriate
training and development sessions to develop the knowledge of the employees (Chow and et. al,
2016).
Thus, these are some different roles that should be played by the responsive bodies to
achieve the business objectives of Marks and Spencer. In context to the selected entity, it is
required that all these department do possess an effective relationship between them. This will
help in increasing the communication level between different organisational sections. This in
turn will maintain transparency in the business operations. Further, this clarity in functions will
assure the work effectiveness and thus increased productivity. Hence, in this way Marks and
Spencer can achieve its organisational goals and objectives.
PART 2
P4 Positive and negative impacts of macro environment on business operation of M&S.
There are several macro environmental factors that may have impact upon the
effectiveness of the M&S, some of them are explained further:
Political Factors: These factors have major impact upon the functioning of an organisation. The
instability in the political situations of a country influence the companies to alter their strategies.
This leads to additional cost with the development and implementation of new policies. In
context to M&S, the free trade policy resulted in the reduction of the sourcing costs. This cut
down of prices benefited Marks and Spencer by reducing cost associated with fat and salts in
foods, recycled packaging and animal welfare protection.
Economical factors: The economical factors directly impacts upon the financial condition of an
entity. For effective profitability, the GDP, interest rate, growth rare, etc. should be favourable to
the business. M&S in these terms facing some issues because of the conflicts over product price
rise with the small retailers due to the Brexit impact on currency (M&S EST. 1884, 2017).
8

Social Factors: The social factors are in favour with the entity. The increased rate of living
standard of people influence them to match the societal pressure. Consequently, M&S can get
benefited. However, it may be recognised that these socio-cultural factors has also raised
competition in the market which may decrease the company sales.
Technological Factors: These factors plays a major role in retail sector. The present era of
technology highly demands for the development in this order. In context to Marks and Spencer,
it's partnership with SureCloud will bring effectiveness in the business operations and thus, the
business objectives can be attained.
Legal Factors: There are numerous laws that organisations are required to be abide with, while
dealing in retail sector. M&S is having some financial conflicts with the Frascati Landlord. This
dispute is causing negative impacts on the firm.
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Ecological Factors: Organisations should ensure sustainable development so that environment
does not get harm. There are also some laws based on the ecology to which entities should stuck
by. It must be recognised that M&S has highly effective corporate social responsibilities.
P5 Internal and External analysis of M&S to identify strengths and weaknesses.
In order to assure effective running of a business, it is required to identify the strengths
and weaknesses of the company. This understanding helps in developing effective strategies that
can assist in achieving business objectives. In context to M&S, strengths and weaknesses are as
follows:
SWOT Analysis:
Strengths Weaknesses
M&S is a leading retailer with a strong brand
image.
There is a high level of competition in the
retail sector.
10
Illustration 3: PESTLE analysis
Source: .Heckroodt, 2014.

The organisation keeps a wide range of
products.
The products of the entity are considered as
"value for money" because of the high quality
maintained by the firm.
There are numerous outlets of the entity where
consumers can access the services. Also, M&S
provides online shopping platform.
There are over 80,000 human resources to the
firm.
The organisation has been working since 1884.
This long span has made the entity, a renowned
name in the industry on which large number of
customers' trusts.
M&S follows highly effective CSR.
The pricing structure of the firm is
comparatively higher than those of major
competitors.
As M&S is a popular brand name so there are
many people who make fake use of their name
in imitated products.
The manual operations performed in the entity
increases the operational cost.
There are criticisms that Marks and Spencer
creates out fashioned and non trendy products.
Financial performance of the entity is not up to
the mark (Bhowmick and Prasad, 2017).
M&S highly depend upon the UK markets
which makes it vulnerable to the market
conditions.
Opportunities Threats
M&S should pay attention on development on
online marketing through the company
website.
The entity can develop new market segments
to increase their target audience (Eling and
Schaper, 2017).
The rate of globalisation is consistently
increasing and M&S should increase their
roots to developing countries such as India.
Organisation should simplify their operating
model.
The biggest threat is that the entity can lose its'
scope because of high level of competition in
the sector.
The low pricing structure of other rivals is a
big threat to the M&S.
The organisation works in different countries
and faces so many political, legal and
economical issues.
The laws proposed by government for retail
sectors.
Highly variable trends in the clothing sector.
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P6 How strengths and weakness interrelates with the external factors.
After evaluating the strengths and weaknesses possessed by the selected organisation, it
is then required to identify how these points interrelates with the external factors. This
analysation will help in evaluating the effectiveness of the business environment.
Strengths: Marks and Spencer possess highly effective corporate social responsibilities. These
activities assists in sustainable development of the industry ensuring no harm to the ecology.
Further, the strong brand image of the entity helps in influence consumers to buy their services.
The quality in the services maintained by the firm is the main reason behind the customer
loyalty. Further, these high standards influence large number of people to avail their services.
There is large variety of products with which the entity can target large audience (Yadav and et.
al., 2016). The CSR activities followed by the firm are also helpful for the environment. Besides
this, there are over 80,000 human resources to the firm which can deal with the large amount of
external pressure to perform operations of the entity in effective manner.
Weaknesses: There are some criticism that the company have non trendy products. This thing
can reduce the customer figure of the company and thus, the sales will be decreased. This will
then impact upon the profitability of the entity. Further, the imitation of the products by other
companies will fail the quality standards of the original products. This will also impact upon the
12
Illustration 4: SWOT analysis
Source: Why Use SWOT Analysis?, 2016

consumer perceptions for the quality of the products(O’Brien and et. al., 2017). Also, high level
of competition in the market will decrease the company sales because of increase buying power
of the consumers. The high pricing structure makes customers to suffer financially. Thus,
product development and pricing department team should focus on the economical segmentation
of market. The highly variable trends in the clothing industry highly impacts upon the
organisational costs.
CONCLUSION
The surroundings of a business plays a major role in achieving the organisational goals
and objectives. It is thus significant to understand its impact on the functioning of the company.
In the present undertaking, three different types of organisation are taken to study the desired
business environment. Further, size, scope, purposes and legal structure of them are analysed. In
order to gain deep understanding of private sector organisation, Marks and Spencer is chosen for
studying various factors that may impact upon business.
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Online
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<https://corporate.marksandspencer.com/aboutus> . [Accessed on 31st October, 2017].
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