Business Environment Analysis: A Case Study of Marks & Spencer

This report provides a comprehensive analysis of the business environment of Marks & Spencer (M&S). It begins with an introduction to the business environment, emphasizing the interplay of internal and external factors. The report then delves into Task 1, which analyzes current environmental influences on M&S using Porter's Five Forces model, detailing the threats of new entrants, substitute products, bargaining power of buyers and suppliers, and the intensity of competitive rivalry. Task 2 focuses on the internal business environment, employing the value chain model to assess primary activities like inbound logistics, operations, outbound logistics, marketing and sales, and service, as well as secondary activities such as procurement, human resource management, technological development, and infrastructure. The report concludes with an analysis of appropriate adaptations M&S could undertake in response to external business environmental forces, highlighting the need for dynamic responses to political, economic, socio-cultural, and technological changes. The analysis provides insights into M&S's strategic positioning and potential challenges and opportunities in the retail market.

Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
1. Analysing current environment influences.........................................................................1
2. Analysing internal business environment using value chain model...................................3
3.Explain appropriate adaptations that firm could undertake in response to the external
business environmental forces................................................................................................6
4. Reflection of Porter's Five force model analysis................................................................7
CONCLUSION................................................................................................................................9
REFRENCES.................................................................................................................................10

INTRODUCTION
Business environment refers to all internal and external factors that influence a particular
organisation function including employees, customers, management, supply and demand of
business. For an effective and successful business business environment components is
necessary because it help in attaining goal and objective in appropriate manner. Generally,
business environment deals with internal and external factors affect a particular organisation in
functioning, performing and decision making process of a firm (Chesbrough, 2010). In this
report the organisation chosen is Mark & Spencer, a British multinational retailer headquarter in
Westminster, London. Products and promotional techniques of respective company help them
in enhancing their business in global market. This assignment is going to analyse porter's five
forces model and value chain model to identify the current environmental influences on Mark &
Spencer. It will also cover appropriate adaption that help respective organisation to response in
external business environment forces. Furthermore, identifying reflection on Porter's five force
model in understanding business environment of an organisation and describing its potential
limitation.
TASK
1. Analysing current environment influences
Business environment consist of individual's , institution and other forces that control of a
business enterprise. It also depend upon the effect of overall performance and sustainability of a
business. The combination of internal and external factors are influencing each other and work
together to affect a business. Herein, Mark & Spencer has implemented Porter's five forces to
identify internal business environment of their organisation (Chow and et. al., 2011). Porter's five
forces model is refers to a technique which is use to identify competitors of a business at a
particular marketplace. By identifying competition an organisation able to develop and create
strategies and plans accordingly. So respective company use this model by which they able to
identify their competitions at a marketplace. Description of respective model in context of
Marks and Spencer is given below:-
Threat of new entrants: By this force an organisation can identify that how easy is to
enter into a particular sector or industry. If a particular industry is profitable and there is very few
barriers at the time of entry, then in this case threat of new entry is high. Their are other various
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reason for high threat of new entry some of them are when low amount of capital required for the
entry, when there is no rules and regulation made by government, customer is low for particular
product and many others (Porter's five forces, 2018). In context of Marks and Spencer threat of
new entry is low, because to establish such a big and successful chain of stores there is
requirement of huge capital. Which is not easy to invest and not ability of everyone. Respective
company create strong brand name and image in customers mind with their quality products and
attractive designs. Which makes their customers loyal and enhance their market share.
Threat of substitute products: This treat is related to how easily a customer can find
substitute of particular products in attractive price and better quality. Which encourage buyers to
switch from particular product to its substitute product. If substitute of a products is available in
market easily then threat of substitute products is high. In respect of Marks and Spencer threat of
substitute product is high because food and apparel which is offer by respective company is also
available at other retail store which is their competitors. Such as Waitrose is direct competitors in
food market, Tesco and Asda is also introducing products alternative which is less expensive.
The respective company management can overcome this by becoming service oriented instead of
product oriented and they can also introduce product which is needed by customers not focus on
what they are purchasing.
Bargaining power of buyers: When customers has strong bargaining power they can ask
for product at low price but at high quality from the producer of products. If a producer
manufacture product at low price they will get low revenue and if they produce product with
high quality production cost will arise. This both case result in low profit for the producer. In
context to Marks and Spencer bargaining power of buyers is high. This is so because customers
are having wide variety of alternatives with different cost in a particular marketplace. To
overcome this issues the respective company manager can use various strategies such as they can
develop products according to customers demand and need (Porter's 5 Forces Analysis of Marks
and Spencer Marketing Essay, 2019). Along with this they can introduce new innovative product
which attract customers and they can also introduce discount and offers at time to time basis.
Bargaining power of suppliers: If bargaining power of suppliers is high they can sell
their products at high rate and with low quality to the buying firm. This will affect business of
buying company because for good quality they have to pay more and if they they buy low quality
product it will affect product process and quality of finish good. In respect of Marks and Spencer
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bargaining power of suppliers is low because they are not mainly depend on suppliers as other
store does, they mainly sell their own brand products. This means they majorly buy raw
materials not finished goods form nay suppliers.
Intensity of competitive rivalry: This force of Porter's five force will determine at what
level respective company is competitive and profitable. Competitive rivalry is high in various
situation such as when there is high competition, barriers of existence is high, growth of industry
is low and many others. In respect of Marks and Spencer intensity of competitive rivalry is high
because they are dealing in various sectors like food, apparels and household due to which they
are facing competition form all sectors. Competitor in supermarket sector is Tesco, Asda,
Sainsbury etc. whereas in clothing market competitors are Next, Zara, John Lewis and many
more (Klapper, Lewin and Delgado, 2011).
The above discussed Porter's five force model help Mark & Spencer to identify and
analyses current environment of their organisation. This force model help to know their
influences that are being effected in competitive edge.
2. Analysing internal business environment using value chain model
Internal business environment is a combination of various elements which is present
within an organisation such as employees, management, organisation culture which indicate
behaviour of employees within an organisation (Osterwalder and Pigneur, 2010). But there are
some factors which affect an organisation as a whole and some only affect manager of a
company. Value chain model is refers to model which is use to identify procedure by which a
company can obtain raw material, conduct several process by which they convert raw materials
into finish goods and then sell it to customers. By adopting value chain method respective
company able to identify appropriate process and procedure by which they attain goal and
objective in effective and proper manner. Value chain model activities is classified into two type
of activities that is primary and secondary, which is explain below in context of Marks and
Spencer:-
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Primary activities-
Inbound logistic: It refers to relationship which is present with suppliers and it consist of
all activities which is necessary for obtain, maintain stock and distribute inputs or products and
services. In context of Marks and Spencer they spread their business on global level, for which
they launch warehouse consolidation programmes. Respective company opened a new
warehouse at Brafford which focused on combing food suppliers form major four centres into a
site. They also develop a new warehouse in East Midlands which is dealing with e commerces
facility (Value Chain Analysis – M&S, 2019).
Operations: This refers to all those activities which is use or required to convert inputs
into outputs in context of products and services in effective and appropriate manner. Marks and
Spencer use various type of technology which is attract customers and protect products from any
damage. Such as respective company use smart packaging technology which enhance quality of
packaging and make food product more safe. Which attract more customers and make them
brand loyal. Along with this Marks and Spencer also enhance environment of their store which
create pleasant atmosphere and encourage customers or shopping.
Outbound logistic: It refers to those activities which is required and essential to collect,
store and to parcel out output or products and services. In respect of Marks and Spencer they are
using variety of operational channel through which they able to provide variety of products and
services ranges. Along with this they able to deliver order in huge market portions.
Marketing and sales: This activities related to informing customer about the products
and serveries which a company is offering and attract them to purchase that particular product
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Illustration 1: Porter's Value Chain
(Source: Porter's Value Chain, 2016)

and service (Poeter's value chain, 2016). Promotional and marketing activities which is
conducted by respective company is very attractive and effective. Some of promotional channel
use by them are Marks and Spencer conduct campaign, sue social media promotion, use digital
technology and many others to attract customers.
Service: This includes all activities that is required to sustenance product or services
working effective manner for customers after product is being sold or delivered. This consider
all aspect of action which would raise or maintain product's value. Mark & Spencer has to realise
that it is important to keep great customer services and it is obsoletely crucial to maintain
customer loyalty. Moreover, they have began a trail scheme to increase size of premium quality
of product and services and managing themselves to remain fashionable in competitive market.
Secondary activities-
Procurement: Procurement refers the process in which a company conduct acquisition
of inputs , or resources of the firm. Herein , the managers of Mark & Spencer need to utilise full
allocation of resources in order to attain a competitive position of their organisation.
Human resource management: Human resource management department of Mark &
Spencer consist of all activities such as recruiting, hiring, training, providing compensation to
employees or laying off personnel (Klapper, Lewin and Delgado, 2011). It is important for them
to select right people at time right for a specific job designation. So that the managers of Mark &
Spencer are able to meet their business objectives and goals as well as remain competitive in
retail industry.
Technological development: The technology department pertains to equipments,
hardware and software, process and technical knowledge brought to bear in company's
transformation of inputs and outputs of products and services. In context of Mark & Spencer
have adopted various technologies that help them to grow their market share such as online
shopping, using advancement of technology in providing better quality of products. Such as
innovative design that attract customer and suits their personality and lifestyle.
Infrastructure: This model of value-chain serves that a company need to ties its various
parts together, it consist of different function of department. Herein, the managers of Mark &
Spencer needs to maintain every department of their organisation. Such as accounting, legal,
rules and regulation of their company and employment law, maintaining public affairs,
government relation and general department of their organisation (Storey and Greene, 2010).
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3.Analysis appropriate adaptations that firm could undertake in response to the external business
environmental forces
Due to external factors of business environment, nature of business is now becoming more
dynamic. It includes instability of political laws, economical crises, socio-cultural demand,
technology advancement and more. In this regard, companies are required to concern on these
factors while operating their business on global scale (Drucker, 2017). This would help in
running business more profitably. In context with Marks & Spencer, as this company has
launched its business in more countries, therefore, its managers are required to concern on these
factors. In order to respond such external factors, it is better to conduct Pestle analysis, which
describes both positive and negative impact of the same on business operations. Therefore, this
analysis can be described in following manner:
Political Factors:
Government had made policies and regulations which companies have to follow. If
company do not follow these rules then organisation will be fined or even it can be closed. M&S
should follow Brexit policies so that there will not have any negative impact on their business,
and no chance of avoidance of rules and regulation of government regarding market.
(Commander and Svejnar, 2011). In this regard, it has seen that due to political stability of UK it
has given chance to M&S to trade products more profitably.
Economical Factors:
Due to discount offered by competitors, M&S gets affected as people are looking for alternative
product which is provided by other organisations and at cheap price. M&S should work in flow
with market to sustain sales. Managers and leaders of M&S are answerable to handle impacts of
economic crisis, they takes decisions in such a way that they are not affected even when
recession occurs. Since economical condition of UK has now developed effectively after brexit
therefore, it has given advantage to M&S to enhance its sales performance more rapidly. The
sales of firm jumped by approx. 12.2 percent after recession period to till now (M&S declares
recession has ‘bottomed out’, 2009).
Social Factors:
Macro environment of M&S is included in this. Demographics and Target customers' are
analysed to know size of market and which age group is looking for what kind of product.
Manager make sure that needs of individual group of people based on age, preferences and
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analysing demands are satisfied. Therefore, this would help M&S in introducing a wide range of
products of branded companies at its stores (Cavusgil and et. al., 2014). Through this process, it
can attract more customers towards its products and satisfy their wants also. It also leads to give
high competition to other companies and gain sustainability in business also.
Technological Factors:
To meet demands of market and meet competitive aspects M&S should use trending
technologies. High authorities of M&S ensure that which technology is required to meet current
needs. They implement that particular technology and then employees are trained so that they
can efficiently work on software. By introducing latest technology within organisation, M&S can
monitor all major operations of business more appropriately. Using new software like cloud
computing, managers can store large amount of business and customers data more appropriately
and can easily access also. This would help in preventing confidential information or data more
securely from theft or damage.
Legal Factors:
Legislation is changing. M&S make sure that they update their system and make re-
training of employees. They should ensure that they are updated with new rules and regulation
related with any issues like safety, health and many more (Carroll and Shabana, 2010). M&S
have made initiative to change their existing policies and strategies and have implemented new
methods to train and develop employees as per new rules.
Environmental Factors:
Raw material used by companies and how it is manufactured and way it is decomposed are
all covered in environmental factors as it leads to adverse affects. M&S has introduced or
designed policies and activities which not harmful for environment as well as human beings.
Such as they can use technology which leads to zero wastage, develop packaging which make
food fresh and preserve for long time, not use such techniques which is harmful for environment
and surroundings.
4. Reflection of Porter's Five force model analysis
Porter's five force model determine an organisation competitive environment which will
directly affect on profitability and company income. So management of every organization must
take care of it and then plan strategies and activities by which they able to gain competitive
advancement. In this, bargaining power of buyers and suppliers directly impact on an
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organisation's in various aspects such as strategies, price of product, manufacturing cost and so
on. In bargaining power of suppliers a company will analysing the customers financial status or
financial ability top purchase a particular products and services. On the other hand, bargaining
power of buyers is useful for business environment because with the help of this, Marks and
Spencer can easily analyse domestic as well as internation customers needs in better manner
(Iskanius and et. al., 2010). The buyers force sellers is to offer variety of products at reasonable
price in the large market place. Along with this, it will assist in gaining attention of large number
of people regarding Marks and Spencer products and services.
In addition to this, Porters five force model is useful for business is to analysing their
current competitors which create major conflicts and disputes in the work place. So company is
ready for dealing and handling with major threats and competitors who are enter in the large
market area. This will assist in gaining and acquiring whole market place where they operate and
regulate their business operations or function in proper manner. For gaining competitive
advantage an organization focus on quality of products and services which they are offering. By
using Porter's five force model company able to identify need and demand of customers and
then design products and services accordingly (Porter’s Five Forces of Competitive Position
Analysis, 2019). There are various factors which can determine how threatening of new entry
will be useful for firm in taking position. Apart from this, it is beneficial for whole business
environment where they have to substitute products and services to another customers in better
manner. This will assist in increasing efficiency, lower the cost and various other reasons
(Cantwell and et. al., 2010). This is useful for company is to adopt this model for analysing
whole business environment where they are gain attention of more customers in proper manner
in the large market place.
In addition to this, substitute products or the service can replace another due to increased
efficiency. This helps the company to identify the different alternatives available in the market
and enhance different market opportunities and becomes strong player in the market. It can
access to new technologies which creates modified products and help company to increasing
sales revenue and profitability. It also reduces customers switching cost and makes the part of
current market share. This also enhances brand image in the market and in the minds of
consumer. It is important for determining and evaluating the major competitors who are taken
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place in the large market place and create issues within an organisation. This will help in identify
major rivals who enter in the market place.
CONCLUSION
From the above decision it has been conclude that, porter's five force model help Mark &
Spencer in identifying and analysing the current environmental influences that are influencing its
business on macro environment factors. Moreover the value-chain model helps them to know
their internal environment factors in order to what are the aspects that are valuing their
organisation in an appropriate manner. As value chain's main objective is to recognise which
activities are most valuable for the firm and which could provide competitive advantage to
respective organisation. Moreover, analysing PESTLE analysis in an appropriate manner that
help Mark & Spencer in adopting and overcome with from the barriers that are face on external
business environment. Furthermore, Porter's five field force analysis helping them to
understanding their business environment and know what is its limitation in implementing this
model in their business.
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