Report: Business Environment Analysis of Marks and Spencer (College)

This report provides a comprehensive analysis of the business environment of Marks and Spencer (M&S), a leading UK retailer. It begins by examining the purposes and legal structures of private, public, and voluntary organizations, using M&S, the Department of Transport, and Cancer Research UK as examples. The report then explores the size and scope of these organizations, including their financial performance, employee numbers, and areas of operation. A key section delves into the interrelationships between various functional departments within M&S, such as operations, marketing, human resources, and finance, highlighting how these functions contribute to achieving the company's mission and objectives. The report also identifies the positive and negative impacts of the macro environment on M&S, considering political, economic, social, and technological factors. Furthermore, it includes a PESTLE and SWOT analysis of M&S, identifying its strengths, weaknesses, opportunities, and threats, and explaining how these factors interrelate with the external macro environment. The report concludes by summarizing the key findings and providing insights into M&S's strategic position within the UK retail market.

Business environment of Marks and Spencer
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Table of Contents
Introduction......................................................................................................................................5
P1 Purpose of private, public and voluntary organization as well as their legal.............................5
P2 The size and scope of M&S, Cancer Research UK and Department of transport in United
Kingdom..........................................................................................................................................6
P3 Relationship between the various functions within M&S for attainment of its mission and
objectives.........................................................................................................................................8
P4 identify the impacts (positive and negative) of the macro environment upon the business.....10
P5 Conduct pestle and SWOT analysis of Marks and Spencer to identify strengths and
weaknesses.....................................................................................................................................11
P6 By using M&S as an example, explain how strengths and weaknesses interrelate with
external macro factors....................................................................................................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15
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Figure 1 Types of organisations......................................................................................................8
Figure 2 Marks and Spencer logo..................................................................................................10
Figure 3 Department of Transport logo.........................................................................................11
Figure 4 Cancer research UK........................................................................................................11
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Introduction
Business environment is inclusive of the external factors that are beyond any control of
enterprise and affects its overall functioning in a positive or negative manner. It is very essential
for the firms to analyze the business environment so as to react towards the uncertainties and
threats in a positive manner (Gupta, 2013). The present study has thus made an attempt to study
business environment of Marks and Spencer which is one of the leading retailers of UK and sells
its products by using the principals of innovation, quality and varied choices. The company has
further committed itself to make every moment special for its consumers by selling its own food
brand, clothes and home products (Drucker, 2017). The study will lay emphasis on
understanding the wider environments in which Marks and Spencer operate. Also the report has
been prepared for students of a local college to make them get awareness about purpose,
structure and size of organization followed by the departmental functions.
P1 Purpose of private, public and voluntary organization as well as their legal structure.
Figure 1 Types of organisations
Private organizations are the ones that are run by a single individual or company rather
than the government. There is a presence of restricted ownership and hence they have a specific
set of objectives that help in running of the business. In this regard, profit maximization for
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Public
organisations
Private
organisations
Voluntary
organisations

shareholders is the major goal for private sector firms followed by transparency in financial
reporting (Quinn and Kristandl, 2014). The examples of such firms are Marks and Spencer, Mc
Donald’s, Starbucks etc which have a well-known presence in UK and entire world. In terms of
legal structure, Marks and Spencer is a public limited company that offers shares to the general
public through stock exchange (Gray, 2015). It can further raise capital from general public and
minimum requirement in this case is £50,000. The company is also required to publish a detailed
account which is far more mandatory than private limited firms.
Public sector firms are the ones that are owned as well as managed by the government.
Such firms are owned either partially or fully by the center or state and also come under separate
ministry. Some of them are further set by special act of Parliament. They have the major
objective of maximizing the shareholder value by generating maximum amount of profit
(Margea, Hurbean and Artene, 2014). However some firms have started to balance this primary
objective with other social as well as environmental goals that help to pacify shareholders and
profit can also be attained. Examples of such firms in UK include Department of Transport,
NHS, Child Support Agency among others.
The working of voluntary firm is based on the objective to improve as well as enrich the
society and aid in creation of social rather than material wealth. The example of voluntary firms
within United Kingdom is inclusive of Cancer research UK, Wellcome trust, Oxfam etc. In terms
of structure, Cancer research UK is a nonprofit firm that was formed in the year 2002 in
cooperation with Cancer Research Campaign and Imperial Cancer Research Fund (Cancer
research UK, annual report, 2017).
P2 The size and scope of M&S, Cancer Research UK and Department of transport in
United Kingdom
Figure 2 Marks and Spencer logo
Source: M & S today, 2017
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Marks and Spencer is a global and multichannel retailer that has its own brand which is
of high quality and provides great value in the areas of food, clothing and home products. There
is a presence of more than 1433 stores of M & S out of which 979 stores are in UK while the rest
are spread all around the world and it employs around 83000 people ((Drucker, 2017). The
company has covered around 55 international territories. The retail firm has been named as
biggest clothing retailer of UK in terms of value and is also a market leader in the area of
Womenswear, Lingerie and Menswear (M & S today, 2017). Its group revenue for the year 2017
has been 10.6 billion pounds. The turnover in UK is split as 60% on Food and 40% on Clothing
and Home products where clothing revenue has been 3.8 billion pounds has been and food
revenue is 5.6 billion pounds (Key facts, 2017). The year 2017 further reported 32 million
consumers out of which 8.3 million have visited the website on a weekly basis.
Figure 3 Department of Transport logo
Source: Department for transport, 2017
Department for Transport UK is a governmental department which is responsible for
transport network all over UK. It has recorded the highest volume of passenger traffic for the
year 2016 by volume which stands out to be 793 billion. 5 billion passengers have also been
found to travel on local bus and 25 million use light rail systems which is also the highest by
volume for the year 2016. 20.5 million commuters have been using domestic flights which shows
a 3 percent increase from the year 2014 (Department for transport, 2017). This department along
with its agencies employ around 18245 staff and 354 non pay roll staff that work in various
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locations all over the nation (About us, 2017). The public expenditure of UK in the area of
transport has been 15 billion pounds on railways for the year 2015 and 2016 while on roads it has
been 5 billion pounds.
Figure 4 Cancer research UK
Source: Cancer research UK, 2017
Cancer research UK is a cancer research and awareness charity firm of UK which aims to
reduce the number of deaths caused due to the deadly disease. It has been regarded as the largest
independent cancer research charity firm of world and the work is funded entirely by public.
40000 people usually act as regular volunteers for this company. Cancer Research UK has been
regarded as the top firm in the annual Third Sector Charity Brand Index which analyses the
public awareness of charity brands (Birkwood, 2015). The company has further supported a
research of 386 million pounds for the year 2016-2017 and also funds 4000 plus scientists,
doctors as well as nurses all over UK. It also has a network of 90 institutions that are spread in
more than 40 towns and cities all around UK (Cancer research UK, 2017). The company earned
the income of 647 million pounds in the year 2016-2017 which was 2 percent more than the
previous year (Cancer research UK, annual report, 2017).
P3 Relationship between the various functions within M&S for attainment of its mission
and objectives
Varied functional activities are carried out inside M & S such as operations, marketing,
human resource and finance. All of them play a key role in attainment of business objectives and
mission. In this respect, the mission of the company is to provide product offerings of good
quality which is accessible to all (Drucker, 2017). The objectives are retention of high caliber
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work force that delivers improved performance; regaining leadership in the area of clothing and
food.
In this respect if human resource team selects good and dedicated employees to work for
the organization then the objective of employee retention that delivers high performance can be
attained. Here the HR team will have to carefully screen the candidates and select the ones who
are willing to work in the company by giving their sincere as well as dedicated efforts
(Brinkman, Navarro and Harper, 2014). Other than this it should also focus on adopting
strategies by which employee turnover can be reduced and their skill set can be improved. This
will aid in creating a loyal employee who can maintain future sustainability which is also a long
term objective of the company.
In the same way, the operations manager is required to train their employees so that they
are able to work in the best possible manner. Staff members must also be kept motivated so that
they work with increased morale and help the company in regaining its position in clothing and
food market (Bocken and Bocken, 2017). This will also ensure that quality products are
delivered to all the consumers in a timely manner.
Finance department should function in such a manner so as to interpret the right
information about performance of M & S stores that further puts an influence on the overall
business decision. They should also focus on maintain transparency with respect to accounting
and financial statements. This will aid in ensuring that products can be delivered to the
consumers at reasonable costs if the profit figures are achieved (Hamilton and Webster, 2015).
Overall if the finance department of the company is efficient then clever and timely decision can
be taken with respect to resource allocations to operations team, profit planning, raising funds
etc. Then only the business objective of becoming the leading retail chain in UK can be
achieved.
In the same lines, marketing department of Marks and Spencer is the one that manages
and defines the brand followed by promoting the products of the company. Hence if the
marketing activities of Marks and Spencer are done in a proper manner then quality products can
be made accessible to all the consumers and strong industry position can be gained against the
competitors (Islam, 2016).
P4 identify the impacts (positive and negative) of the macro environment upon the business
operations of M&S.
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The macro environment factors put varied kinds of impact on the overall business operations
of Marks and Spencer and they can be categorised as positive and negative.
 Political factors- the voting of Britain from EU caused a political and economic
uncertainty in entire UK. This negatively affected the operations of Marks and Spencer in
UK and elsewhere. But with the final quarter of 2016 consumer spending took a surge
which positively affected the sales of M & S (Scott and Walker, 2017). The free trade
agreements have further favored the growth of Marks and Spencer which has also
resulted in decreased sourcing cost. Other than this, the company has also begun its CSR
initiative but there has been lack of clarity from UK government which negatively
impacts the initiatives of company.
 Economic - UK in present times is surging towards inflation which has also seen a shrink
in real wages. This may negatively affect the operations of Marks and Spencer
(Partington, 2017). But it is also true that UK is a hub of electronic commerce in Europe
and hence the retail firm may get sales from external tourists as well thereby impacting
its operations in a positive manner.
 Social - The UK consumers generally show loyalty towards brands and hence this
ideology can be advantageous for Marks and Spencer even during times of turmoil. But it
is also true that UK consumers prefer trendy styles as compared to classic ones which
may pose as a threat for M & S (Bocken and Bocken, 2017).
 Technology – The retail sector of UK has been witnessing radical changes in terms of
technology such as online shopping, paperless operations etc. M & S has provided online
shopping options to its consumers which is a positive sign for the company. Reports
further suggest that online sales have increased by 15.1 percent that approximates to 16
percent of all the retail spending (Partington, 2017). This data also shows good source of
opportunity for Marks and Spencer in terms of sales.
 Environmental - Marks & Spencer by being in tune with environmental friendly and
renewable resources approach has put a lot of focus on the use of ecofriendly fabric and
raw materials. This strategy is likely to put a positive impact on the overall operations of
company.
 Legal – There has been enactment of various laws in UK to regulate the retail industry
which deals with rights of consumers, use of renewable and natural resources in
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production among others. As of now M & S has been adhering to all the legalities which
is thus positively impacting the firm (Margea, Hurbean and Artene, 2014).
P5 Conduct pestle and SWOT analysis of Marks and Spencer to identify strengths and
weaknesses
Internal analysis of Marks and Spencer through SWOT
Strength
 It has a widespread presence all over the globe with its 1433 stores.
 The company has expanded on an international level through franchise agreements which
has rendered it a strong competitive advantage.
 It is operating in around 55 nations all over Europe, Asia as well as Middle East.
 Its food business has seen a huge growth in Hong Kong and Europe.
 It is regarded as an iconic brand in UK and has been trading since the year 1884 (Bocken
and Bocken, 2017).
 It has attained a successful brand positioning through innovations, brand building ads and
offering of high quality as well as value for money products.
 It has adopted a consumer focused rather than product focused strategy that has been
highly beneficial for the company.
Weakness
 The company has been losing key employees to the competitors that include product
developers, food technologists as well as team members of General Merchandise design.
This is making the company to invest heavily in recruitment, hiring, training and
development activities for its employees (Scott and Walker, 2017).
 The company has recently experienced privacy breaches as well as technical difficulties
on its website that led to temporary shutdown.
 It has shown a huge reliance on UK market which has made it vulnerable to domestic
market fluctuations.
 Frequent product recalls in 2015 affected its brand value (Rodger, 2017).
Opportunities
 Marks and Spencer has a huge grip on the food business that has led to an increased sale.
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 The company can expand its network of convenience stores, simply food so as to garner
more sales and consumer base (Margea, Hurbean and Artene, 2014).
 It should put more investment on the website so as to reach, engage as well as convert the
consumers into buyers. This will also aid the firm in getting an edge over the competitors.
Threats
 Iconic factors like recession and inflation rate put a huge impact on the spending power
of consumer which thus acts as a source of threat for the company.
 The weakening of Euro has still been seen as a threat by the management of Marks and
Spencer which is beyond the control of the company.
 The presence of competitors in clothing segment like Primark and Asda are acting as a
major source of threat for the company (Bocken and Bocken, 2017).
 There is a presence of unstable political as well as economic conditions in international
markets such as Middle East, Russia and Ukraine are acting as a source of disadvantage
for the company.
 Increased terrorist attacks in London are impacting the flow of consumers thereby
making retail spending a low one.
 The uncertain economic condition prior to and after the Brexit issue has posed a threat for
Mars and Spencer (Scott and Walker, 2017).
External analysis of company through Pestle
 Political - As of now there exists stable political environment of UK which has favored
the growth of Marks and Spencer.
 Economic - Changes in inflation rates, unemployment, recession, tax and interest rates
impacts the overall stability of economy. It further effects the operations of retail
business. For example, increase in tax rates may require the firm to enhance the prices of
goods hence the sales of products may decrease.
 Social – changes in needs, taste and consumer preference puts an impact on overall
operations of the company. The impact is more as Marks and Spencer focuses more on
consumers as compared to products.
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 Technological – Changes in technology impacts the success of Marks and Spencer hence
the managers is required to be up to date with latest trends so as to keep the company
updated.
 Environmental: With the presence of strict environmental regulations M and S has to
adapt itself accordingly which has been done through adoption of plan A that aids the
firm in being environmentally responsible as well as reduce waste.
 Legal: As Marks and Spencer has a multinational presence hence it has to adhere with
regulations related to health and safety, antitrust, consumer rights among others.
P6 By using M&S as an example, explain how strengths and weaknesses interrelate
with external macro factors
The strength of Marks and Spencer is its good international expansion in all the major
countries of the globe which makes it beneficial in terms of political and legal factors. This is as
government of other nations where M and S has expanded itself is aware of its reputation hence
the firm does not face issue in terms of licensing, establishment etc. The recognition of M & S as
an iconic brand in UK has led to consumer satisfaction thereby favoring the social factors where
consumers have shown loyalty to the brand (Margea, Hurbean and Artene, 2014). The
investment of M & S in innovation is linked to technological factors as the firm is able to use
advanced technology in its operations.
The weakness being huge reliance on UK market has a link with economic factor as if the
country is affected by recession or high inflation rates then consumer spending may decrease.
This may not be beneficial for the overall sustainability of M & S hence it should start investing
more in foreign markets as well. The privacy breaches as well as frequent product recalls has a
link with legal factors as penalties may be imposed on the company which may further tarnish
the image thereby affecting consumer confidence and loyalty which comes under the segment of
social factors (Scott and Walker, 2017). Hence the need on part of Marks and Spencer
management is to work on its weakness so that company can maintain its position in UK market
as well as overseas nation. It should further try to maintain its brand value so as to get a loyal
consumer base.
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Conclusion
From the above report it can be concluded that there is a presence of various internal as
well as environmental factors that impact the operations of business. These have got positive and
negative impacts on the working of Marks and Spencer. Hence the need for organization is to
develop a thorough understanding about SWOT and PESTLE factors so as to ensue towards
fruitful decision making for the company.
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References
Journals and Books
Bocken, N. and Bocken, N., 2017. Business-led sustainable consumption initiatives: impacts and
lessons learned. Journal of Management Development. 36(1). pp.81-96.
Brinkman, J., Navarro, I. and Harper, D., 2014. Unlocking the business environment. Routledge.
Drucker, P.F., 2017. The Theory of the Business. Harvard Business Press.
Gray, J.A., 2015. Business, the Environment and the Consumer 1968-1992: The Case of Marks
and Spencer (Doctoral dissertation, University of Leeds).
Gupta, J.L. 2013. Economic and Business Environment. Vision: The Journal of Business
Perspective. 17(1). pp. 83-85.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Islam, K., 2016. Can Ethical Business Strategy Influence Consumers’ Buying Behavior and
Loyalty: Marks and Spencer PLC?. Case Studies in Business and Management. 3(1).
p.38.
Islam, K., 2016. Can Ethical Business Strategy Influence Consumers’ Buying Behavior and
Loyalty: Marks and Spencer PLC?. Case Studies in Business and Management. 3(1).
p.38.
Margea, C., Hurbean, L. and Artene, A.S. 2014. Electronic Services for Business Environment.
Procedia - Social and Behavioral Sciences. 124. pp. 351-360.
Quinn, M. and Kristandl, G., 2014. Business information systems for accounting students.
Pearson Education Ltd.
Scott, P. and Walker, J.T., 2017. Barriers to ‘industrialisation’for interwar British retailing? The
case of Marks & Spencer Ltd. Business History. 59(2). pp.179-201.
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Online
About us. 2017. [Online]. Available through:
<https://www.gov.uk/government/organisations/department-for-transport/about>
[Accessed on 13th November 2017].
Birkwood, 2015. Cancer Research UK retains top position in Charity Brand Index. [Online].
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Partington, R., 2017. Rising inflation leads to sales falls in all UK retail sectors apart
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<https://www.theguardian.com/business/2017/aug/17/uk-retail-sales-growth-forecasts-
food-june-ons> [Accessed on 13th November 2017].
Cancer research UK, annual report. 2017. [Online]. Available through:
<http://www.cancerresearchuk.org/sites/default/files/cruk_annual_report_2016-17.pdf>
[Accessed on 13th November 2017].
M&S Today. 2017. [Online]. Available through:
<https://corporate.marksandspencer.com/aboutus/mands-today> [Accessed on 13th
November 2017].
Rodger, J., 2017. Marks & Spencer urgently recall soup amid contamination fears. [Online]. Available
through: <http://www.birminghammail.co.uk/whats-on/shopping/marks--spencer-urgently-recall-
12807102> [Accessed on 13th November 2017].
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