Business Environment Impact on Marks & Spencer: A Detailed Report

This report provides a comprehensive analysis of the business environment, focusing on Marks & Spencer (M&S). It begins by categorizing organizations based on their types and purposes, including public, private, and voluntary sectors, and then classifies them by size and scope. The report explores the interrelation between organizational functions (finance, human resources, and marketing) and their impact on organizational structure, highlighting the advantages and disadvantages of these interconnections. Furthermore, it examines the impact of macro-environmental factors (political, economic, social, technological, environmental, and legal) on M&S's operations, including the effects of Brexit. The report also applies SWOT and TOWS analyses to assess M&S's strengths, weaknesses, and their relationship with external macro factors, illustrating how these factors influence decision-making and the achievement of organizational objectives. The report concludes by summarizing the key findings and providing recommendations based on the analysis.

BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
Types and Purpose of Organizations...........................................................................................3
Classification of Organizations on the basis of Size and Scope..................................................5
LO2..................................................................................................................................................7
Interrelation between functions of Organizations and their influence on its structure................7
LO 3.................................................................................................................................................9
Impact of macro environment factors on Mark & Spencer.........................................................9
LO 4...............................................................................................................................................12
Strength and Weakness interrelation with external Macro factors............................................12
Internal and External Factors Impact on decision making and objective..................................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Business Environment mainly describes the impact of internal and external factors on
various factors on various functions of business or organization such as employees, management
body, customers, rules and regulations along with demand and supply. The main focus of the
business environment is on meeting the customer’s demands and needs. It also helps to identify
the opportunities by using the available resources and plan accordingly in order to enhance the
overall performance and profitability.
Marks and Spencer, headquartered in London, England is a well-known British Multinational
Retailer which is specialized in selling clothing, food and home products with a label on each
and every product. It uses various platform such as via television, online and also promotes
online service for delivering in advertising all products. Its aim to satisfy the changing demands
of the customers helped it to become the first British Retailer which made a profit of pre-tax of
over £1 billion. The company faced a rapid growth till the year 2020 in terms of turnover which
was £7,233.7M in 1996 which became £10,181.9M in the year 2020 (Toms and Zhang, 2016). It
also focussed on preserving and protecting the environment in all its processes of operations and
manufacturing the products which also helped the customers and employees to live a healthier
life-style.
The report below will discuss different types, sizes and scope of the organizations by mentioning
the difference in their purposes. It will also evaluate how the various different functions of the
organizations interrelates with each other and the structure of the organization. The PESTLE
factors will be highlighted to examine their positive and negative impact on the operations of the
business. The report will also describe the strengths and weakness of Marks and Spencer and
their interrelationship between external macro factors. This will be done by applying the SWOT
or TOWS analysis and the ways in which it influences the decision-making.
LO1
Types and Purpose of Organizations
There are many types of organizations across the world having their own advantages,
disadvantages and purposes. They benefit their internal stakeholders like owners, managers,
employees etc. and external stakeholders like customers, government, suppliers, banks etc.
Stakeholders show much interest in the operations of the businesses because they have
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contributed the organization in the one way or other and also they want benefit from it as they
are involved in the decision-making processes. Marks and Spencer, being private sector
employer in UK is giving a tough competition to all the other sectors in every whether it is
quality of product, services, advertising etc. Based on the purpose, the organizations are majorly
classified into 3 sectors which are as follows:
Public Sector
Purpose: These are owned and run by the government. they focus on providing goods and
services which can benefit the society in any way. These use the money raised from the taxes
such as Income Tax, VAT, Fuel duty etc. in all its operations (Reissner, 2019).
Merits: These types of organizations provide security of jobs, help the employees financially
through attractive retirements. The turnover rates are very low and also gives various healthcare
benefits.
Legal Structure: Along with benefitting the communities and society, it also helps the
employees to develop partnership along with building strong relationships with them. It also
contributes in developing sustainable profits to their stakeholders like community including local
ones, government etc.
Example: ESPO is a public sector organization in UK which mainly aims in providing its goods
and services to the people. If any extra product is also made, then also it sells to the public
sectors.
Private Sector
Purpose: These are mostly earned by one or more shareholders which can be family members
too. Owners are not involved in its finances as they are not liable personally for the debts of the
firms (Bhui and et.al., 2016). Along with owning, they become the shareholders as the
companies are divided between 2 or 3 shareholders.
Merits: Profits remain between the shareholders rather than giving to public. In case of the
failure of companies, the investors are under the security of the liability rules. The companies
can also raise money by borrowing. The innovations can be brought faster by making quicker
decisions.
Legal Structure: Private Sector companies have diversified their retail hold in much larger
geographical areas which helped them to maximize the sales. This also contributed positively in
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serving more people thereby increasing the profitability along with benefitting the stakeholders
including owners, shareholders, employees, managers etc.
Example: Besides Marks & Spencer, JCB, headquartered in UK is also a British Multinational
Corporation whose main function is manufacturing the equipments for the purpose of
agriculture, construction and many more.
Voluntary Sector
Purpose: Instead of profit making, their main focus is to make a difference by creating a social
influence (Johnston, 2017). These are majorly in the form of charity and community groups or
social enterprises.
Advantages: It helps in gaining cultural and social awareness and also to make a positive
difference in the society by becoming a helping hand for someone.
Legal Structure: The main organizations in voluntary sector are hospitals. It also helps in
holding the entrepreneurship and also expand themselves into numerous clinical trial units,
medicine centres, various training programs and many more.
Example: In British Charity Organizations, the Macmillan Cancer Support charity which is
based in London, UK, due to the kind work of helping the patients medically, socially and
financially, secured first position. It also benefits its shareholders including the local community,
customers, government etc.
Classification of Organizations on the basis of Size and Scope
All the organizations have certain goals or objectives to achieve. All does not focus on
making large profit but try to boost up in the emerging market. They can be small, micro,
medium or large. The main things which differentiate all these with each other are the number of
owners/shareholders, number of employees, legal status and most important market share (de
Moor, Catney and Doherty, 2019). These can also take the help of funding which large business
cannot do. On the basis of size and scope, organizations can be classified as follows:
Small Sized
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These enterprises can include Marks & Spencer which are included in the retail sectors.
Their main aim is to expand their business by increasing the sales and customer base thereby
making partners as other companies and individuals to achieve their objectives.
Merits: These hep in gaining management stronghold and owners control thereby influencing
them to address the changing demands of the customers and to adapt the changes.
Demerits: These business does not have large amount of capital and enough resources because
they start everything from initial level.
Micro enterprises
These companies focus more on increasing their income by making use of all the growth
opportunities (Marx, 2019). The above example of Macmillan Cancer support charity although
requires low costs of investment but their goal belongs to much wider context to work for a
social cause of treating the cancer patients.
Merits: The employees here are free to work and fulfil most of their needs by ensuring that the
demands and needs of the customers are also satisfies. This helps the small sized enterprises to
have a rapid growth.
Demerits: These can face financial risks and also a large number of competitors which hinders
their path of development and progress.
Medium and Large Enterprises
These companies not focus on making money but helping the customers by providing one
or other kind of benefit (Hillary, 2017). The Virgin Money based in UK is a government bank
which is a non-profit organization which has many different channels in order to satisfy the
customers by providing them loans and advances.
Merits: It helps in building strong relationships with the customers making the employees and
business more flexible.
Demerits: It becomes difficult to maintain the loyal customers and also faces problem in
funding.
Table showing the differences between types of Organizations on the basis of Size & Scope
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Basis of
classification
Investment done
(approx.)
Number of
Employees
Turnover Example
Small £1 million < Investment<
£10 million
20-55 £1 million <Turnover<
£10 million
Imaginera
Macro Investment <= £1 million 5-20 Turnover <= £5
million
Issoria
Medium-Sized £10 million
<Investment< £50
million
<=250 £50 million
<Turnover< £250
million
Verdant
Leisure
Source: Different types of organizations, 2019
Therefore, the research above suggests that there are different types of organizations on the basis
of purpose, size and scope having its own pros and cons. But they all have different objectives to
achieve by making use of all the available resources.
LO2
Interrelation between functions of Organizations and their influence on its structure
The organizational structure can be classified as Classic (centralized and relation of itself
with other small business), Functional (in terms of employment of employees in larger business)
and Divisional (units are analysed and classified into further divisions) (Megheirkouni, 2017). It
is linked with other functions of the organization as follows:
Finance function: It works as combined form of equity and debt which can be used in different
operations. Marketing helps in promoting the business which can help in increasing the profit as
well as capital increase. It also needs skilled employees by taking help from HRM.
Human Resource: It focuses on recruiting the employees which needs money i.e., finance and
to attract the skilled individuals, it must do marketing. So, the linkage of the structure with all the
functions in necessary in order to achieve the overall objective.
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Marketing Function: These all functions work according to the structure. Marketing needs
investment which needs good contact with finance department and to target the best employees it
needs to take the advice from HRM.
Marks & Spencer, being a well-known group of retailers uses its organizational structure in such
a way that it gets maximum profit and customer base. It focuses on selling quality products
which much varieties by using the available resources.
Figure 1:Organizational structure of Marks & Spencer
Source: Organizational Chart, 2011
Advantages and Disadvantages of Interrelation
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Merits
 It encourages the employees to work in a team to learn new skills from each other thereby
enhancing the performance.
 Working in a team can make the employees learn much from the experienced leader
which can help in reviewing the members.
 The structure helps the executives to think broadly about developing strategies by
communicating more effectively with everyone.
 It increases employee retention as in a team they work freely and can build much stronger
relations.
Demerits
 It can result in more conflicts because every member is addressed during decision
making, planning about budget, strategies etc.
 It also weakens the main purpose by becoming weak in the common connections.
 It can lead to failing of teams because of lack of coordination and communication
between members of different teams.
So, there are many points which can foster the progress and hinder at the same time as the
marketing sales must communicate with the marketing department which sometimes become an
obstacle, on the other hand, effective communication helps in bringing more innovation and
creativity in the organizations.
LO 3
Impact of macro environment factors on Mark & Spencer
Mark and Spencer is one of leading Retail Company in UK. However, company faces
various challenges from external environment such as political, economical, social,
technological, environmental and legal. These external factors below describe in detail.
Political Factor
United Kingdom is one of politically stable country but after BREXIT 3 consecutive
Prime Minister Changes and hence each time policy and laws related to organizations in UK
changes. After BREXIT, Import raw material from Europe cost increase because of hike in price
of various taxes and custom duty (Perera, 2017). European tourist rate decrease because of visa
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charges by UK and hence it decreases the number for various organizations. It is assuming that
new government policy will favour retail industry and also more jobs will be created for UK
citizens.
Positive Impact:
Mark and Spencer import most of raw material from Asian country and hence company
can offer variety of product with same rate and hence it can become competitive advantage in
hiking price of commodity in other retail company. New jobs and new government policy will
help the organization in gaining large number of customers with variety of product at low cost.
Negative Impact:
There are number of European tourist customer for Mark and Spence and hence after new
visa rule decline its market and hence decrease its revenue. Company also suffer from last 2
PM’s different policy for retail sector and hence its financial capacity highly effected.
Economical factors
There are number of policy changes after BREXIT for supporting new entrepreneurs by
the government such as tax relaxation, electricity free, less interest on loans, financial grants etc.
Government decided to decrease corporate tax for retail industry. COVID decrease store
shopping habit of England’s customer and online store product demand increases. Inflation and
unemployment rate rapidly increasing because of BREXIT and COVID.
Positive Impact:
Decrease in corporate tax by government will help Mark & Spencer to increase financial
capacity and expand business in different places in UK. Mark & Spencer provide large number
of product online with variety of range and hence online store with best supply chain
management. It creates opportunity to attract large number of customer in UK.
Negative Impact:
Government support to new entrepreneurs decrease Mark and Spencer’s market share.
Increasing Inflation and unemployment rate again decrease the number of Mark and Spencer’s
customer and hence it effected on the growth of organization.
Social Factors
UK customers welcome new market and new product this creates opportunity of new
entrepreneurs. One stop shopping habit of British customers gives for large retail company which
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provide variety of product under one store in UK (Thompson and McLarney, 2017). Increase
environment awareness change British consumer mind towards organic product.
Positive Impact:
Mark and Spencer provide variety of product under one store and hence it attracts large
number of customer and on the other side best supply chain management for online and offline
help in gaining competitive advantage. Company started using organic raw material in product
for example in fashion industry it started providing product of organic cotton.
Negative Impact:
UK customers can easily influence by new product and market by various retail
entrepreneurs and hence it decrease market share of Mark and Spencer.
Technological Factors
UK is technological advance country and hence it gives opportunity to expand business
with different technology to retail industry. Training and development programs for changing
technology decrease financial capacity of the organization. Advance technology provides good
connectivity with time on delivery for supply chain management. It becomes difficult to find
talented and skill workforce for advance technology.
Positive Impact:
Advance technology provides opportunity to increase quality, efficiency and productivity
of work of Mark an Spencer. Supply chain management of Mark and Spencer increases with
adoption of new technology and hence increase customer satisfaction level.
Negative Impact:
Continuously adoption of new technology by Mark & Spencer decrease its financial
capacity. Training and development programs become time and cost effective and on the other
hand it becomes difficult to skilled worker for company’s advance technological system.
Environment Factors
There are number of government policy which various organizations have to follow in
order to decrease environmental effect. Eco-friendly product such as organic cotton and other
can be beneficial for sustainable development. Ban of plastic bags in the organization can also
help in protection of environment.
Positive Impact:
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Mark and Spencer provide range of eco- friendly product to customer and hence
contributing in environment protection and sustainable development. Company also ban use of
plastic bags and hence it increase good-will of the organization. Company’s tree plantation to
protect environment with tag and hence it helps in attracting large number of customers.
Negative Impact:
Company provide various funds for CSR policy and hence its financial capacity decrease
for market development.
Legal factors
There are number of litigation company has to adopted in terms of business and
workforce.
Positive Impact:
Mark and Spencer protect employees with various laws and policy framed by government
such as Employment act, Equal wages act, Anti-discrimination policy etc. It helps in gaining
loyalty of employees and create friendly atmosphere in organization.
Negative Impact:
This litigation increases financial burden on M&P and hence decrease its profit.
LO 4
Strength and Weakness interrelation with external Macro factors
Political
Mark and Spencer import most of raw material from Asian country and hence BREXIT
created competitive advantage as other organization import raw material from Europe. New
government policy and procedure for new entrepreneurs and hence continuously decreasing
market share of Mark and Spencer.
Economical
Decreasing corporate is additional strength of the organization because company will
provide product again with low cost and hence able to gain competitive advantage. It is because
law cost of raw material imported from Asian countries. However, various economical policy
favours new entrepreneurs which decrease organization’s market share.
Social
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