Business Environment Analysis: Marks and Spencer Report for Module

This report provides a comprehensive analysis of the business environment, focusing on Marks and Spencer (M&S). It begins by defining the business environment and outlining the purpose of different organizational types, including private and public entities like Primark and Cancer Research. The report delves into the size and scope of M&S, examining its number of employees, gross annual turnover, and market share, alongside an exploration of the relationships between various functional departments within M&S, such as marketing, customer service, sales, and finance, and how they contribute to achieving the organization's mission and objectives. A significant portion of the report is dedicated to identifying the positive and negative impacts of macro-environmental factors (political, economic, social, technological, legal, and environmental) on M&S. It also includes an internal and external analysis using the SWOT framework, highlighting the company's strengths, weaknesses, opportunities, and threats. The report concludes by exploring how strengths and weaknesses are interrelated with external macro factors, offering a holistic view of M&S's position within its business environment.

Business and Business Environment

Table of Contents
Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Purpose of the organisations.............................................................................................1
Public : Primark......................................................................................................................1
P2 Size and Scope of M&S....................................................................................................2
P3 Relationship between various function within M&S for achieving organisational mission
and objectives.........................................................................................................................3
P4 Identifying negative and positive impact of macro environmental factor upon M&S......4
P 5 Internal and external analysis...........................................................................................5
P6 Explaining the way strength and weakness is interrelate with external Macro factors.....9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business Environment means all the internal and external constituents that have great
impact on all aspects of business. These factors not only have effect on organisation but it
has great effect on employees, customer, management, supply and demands of companies
products and services, and regulation that are framed by enterprise. Macro environmental
factor have great impact on the success and growth of firm. Some of internal business
factors are resources, capital, workforce, management, business process etc. External
business environment factors are Political, social, legal, technological, environmental, and
economic elements. Macro environmental factors have effect on Whole business and they
are uncontrollable in nature. Micro Environment have effect on some particular business-
to-business activity and such variables can be controlled through effective strategy.
The report will conclude the explanation about different types of organisation and their
legal structure. It will have focus on determining the positive and negative impact of macro
business environment factors on business .This can be identified in context of marks and
Spenser company.
TASK 1
P1 Purpose of the organisations
Private : Marks and Spencer
The purpose of Marks and Spencer is to satisfying its customers by providing them an
efficient range of clothing, basic assets and accessories of home, along with a huge range of food
products. The organisation ensures the standard and best quality of these items so that the
customers can feel satisfied enough with the brand (Wilson and Beard, 2014). The organisation
has a flat legal organisation structure which has maximized the individual roles and
responsibilities of the employees and their departments as well.
Public : Primark
Primark is a subsidiary of AB foods. Along with it, the organisation deals with the
clothing, accessories and general home accessories. The purpose of Primark is to satisfy its
customers by providing them an efficient and standard range of the food items and the
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households as well. The legal status of the company got affected when a supplier is being told to
remove the stickers and branding of it from the stores of Primark.
Voluntary : Cancer Research
The purpose of this organisation is to provide support and care to the people suffering
from Cancer. Also, providing efficient services and treatments to the people suffering from
Cancer so that they can be treated well and recover as soon as possible (Faulkner and et.al.,
2014). Although the treatment of Cancer is very cost effective but Cancer Research provides free
treatment to the patients. The legal status of Cancer Research was being standardised with the
secretary of health and state (Grant,2016).
P2 Size and Scope of M&S
The size of Marks and Spencer can be considered as the structural property which
includes some other essential factors as well such as the number of employees, market shares
and the employee turnover etc.
Number of employees
Marks and Spenser is a family of 82,000 employees including the staff, employees, and
authorities. Around 64000 people are working in retail stores of Marks and Spenser.The
organisation also have outlet globally.
Gross annual turnover
Although it is quite tough to get the exact and appropriate turnover rate. The company
faced turnover because of some reasons such as the employees may not be encouraged that much
because motivation plays a very important role as it helps in maintaining the focus towards the
work, thus it can also help the company in achieving higher targets. As analysed, the turnover
rates have been increasing from December 2015. In December 2015, the minimum rate observed
was 1.5 % and now it has increased to 2.9%. It has been observed that the company is facing the
issue of gross turnover from December 2015 (Islam, 2016).
Market Shareholders The market share is also a very essential concept that helps in maintaining
the overall statistics of the company. So, M&S has developed a pricing strategy which the
company uses at the time of any decrements. It can be considered as an essential concept that
when the situation of the market changes, the company starts a new strategy as well. So, the
company cannot face a complex situation for a longer time as the company has already prepared
various strategies according to different situations which can help the organisation in
maintaining the market shares in the market place. The organisation has 1433 retail outlet
worldwide (Van Wormer and Besthorn, 2017).
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P3 Relationship between various function within M&S for achieving organisational mission and
objectives
The mission of Marks and Spenser is to produce inspirational quality of products that are
easily accessible to customers.
The main objective of Marks and Spenser are:
Employee orientation – The organization has higher expectations from Employees. The
enterprise expecting that workers can contributes to business activities. There is a requirement of
succession management. As such developing a career path for employees. It’s part of Mark and
Spencer principle to attract, motivate and retain highly talented workforce to assist the
transformation of the business and deliver improved performance.
Organizational objectives - Mark and Spencer is to retain their leadership in clothing and
specialty food. This is to be achieving by translating their scale and authority into superior
quality, value and appeal.
Sales objectives - Mark and Spencer belief that there is plenty of area for improvement in their
sales.
The various functional departments in organisation are-
Marketing department- This department function is to promote companies brand, product and
services. Their role is to assist business entity in expanding their business and enhancing growth.
This divisional unit helps firm in achieving their marketing objectives such as increasing market
share, enhancing market growth, raising sales etc.
Customer service support-Their function is to interact with customer solving their query,
handling their complains etc. All these activities performed by customer support department
assist organisation in gaining customer loyalty and enhancing brand image in the market .It
allows enterprise to maintain healthy relationship with customer and provide business entity an
opportunity to attract more number of consumers.
Sales department-This functional department plays significant role in success of business.
These departments are responsible for generating revenue. There task is to ensure that sales of
goods and services are resulting into profit. This functional division coordinates with marketing
division in order to assist them in generating brand awareness, introduction of product in market
etc.
Accounting and finance department: They are accountable for conducting various activities
such as maintaining accounts, planning, organising finance for organisation. Their main task is
to produce financial statement for business. Accounting and finance department core function is
to maintain and manage cash outflows and inflows in order to assist firm in fulfilling objective
of increasing profit margin and enhancing growth.
Distribution department-These functional departments is accountable for receiving and
delivering order to customers at the right place, right time.
Research and development department-This functional unit act as catalyst in innovation.
Research and development department is accountable for innovating, designing products. Their
main task is to identify various ways for developing and designing goods according to the
economic, social and technological trends.
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Administrative department-The administrative department is responsible for handling and
managing business activities. They are also involved in various decision making and financial
review process. Administrative department coordinates with other department to ensure smooth
flow of information between different departments. It helps business entity in increasing their
operational efficiency.
Production department-The function of production department is to convert raw material into
finished good through series of production process. They are responsible for ensuring that raw
goods are converted in finished product effectively and in efficient manner. Production
department assists business unit in fulfilling their objective of customer satisfaction by proving
good quality of products to their clients.
Operation department-This department is accountable for managing and controlling
production process and activity. Operation department coordinates with production department
and assist them in designing process.
Purchase department- This functional unit is liable for procurement of raw material, supplies,
equipment and machineries. Their role is to ensure that right quantity resources, raw material
and product that are used by production and operational department are available at the time
when they are required. The purchase department helps organisation in fulfilling their objective
of effective utilisation or resources and cost minimisation (Wheelen and Hunger,2017).
Figure 1: Functional department in an organization
Source: (Business Function chart, 2016)
P4 Identifying negative and positive impact of macro environmental factor upon M&S
Environmental factors are Economic, social, technological, legal and environmental factors.
Examples of macro environmental factor are competitors, changes in interest rate,
PESTLE
Political Factors: Marks and Spencer company has been able to gain favoured from European
Council Free trade agreement and has got an opportunity to reduce sourcing cost. But lack of
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clarity in UK government policies related to energy efficiency scheme has badly affected the
Marks and Spenser initiatives.
Economic factors: The organisation is greatly impacted by discounting pricing strategy of its
competitor. Due to this factor company has to face short term loss as customers were attracted
towards quality with value.
Social factors: These factors have great impact on business strategy. It has become challenging
for organisation to determine the need and demands of consumer. Social factors include various
elements such as Trend, culture, value, belief etc. The positive impact of these factors is that
increase in Population has lead to increase in demand for company products and services.
Technological factors: Online presence and use of social media has allowed organisation
increase its profitability and revenue generation capacity. The negative impact is that increase in
use of mobile commerce Platform has affected the firm profitability.
Legal factors: The legal policies of UK government have allowed company to adopt various
marketing techniques and facilitate promotional activities for introducing their brand in market.
Organisation has to face legal obligation due to its Decision of regarding withdrawing from EU
market.
Environmental factors: The company has to face stiff competition in UK market this has
allowed Business entity to establish their focus on improving the quality of products and
services. The company has to bear pressures due to strict environmental laws (Wilsonand Beard,
2014)
P 5 Internal and external analysis
Swot Analysis -This technique can be used by Marks and Spenser for analysing its strength and
weaknesses. This method will help Marks and Spenser in reducing threats and transforming
weaknesses into strength. It will allow firm to explore and capture various business
opportunities. This method direct organisation in making effective use of its strength and enable
firm to increase its competencies.
Strength: Markers and Spencer is well reputed
brand.
It is offering wide variety of product and
services.
Organisation has large number of stores and
Weaknesses:
Stores are not attractive.
Use of traditional technology and ineffective
method of working.
In proper management system.
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retail outlet.
It is the most popular brand.
Quality of product.
Global expansion to foreign market.
Effective strategy in order to fulfil corporate
social responsibility.
Limited market share.
Opportunities: Expansion of business.
Produce innovative goods and services.
Company has opportunity to enter into global
market.
Marks and Spenser have opportunity to
introduce to new market segment so that it
could generate more profits.
Company can develop its own websites and
can mark it online presence as it will assist
firm in reaching wide range of customer.
It has opportunity to simplify its operational
model.
Organisation can adopt advance technology
for producing goods and services.
Threats:
Increase in competition.
As Marks and Spenser is operating its business
in global market various political, legal and
economic factors may have great impact on its
profits and growth.
Strategies And Policies adopted by competitor
for gaining competitive advantage.
Government policies for retail stores.
Strength: Highly effective strategy adopted by organisation for fulfilling the corporate social
responsibility has helped firm in increasing sustainability and has provided organisation an
opportunity to gain competitive advantage in market. This activity has assisted business entity in
changing customer perception. Effective strategy has positive impact on society and enables
business entity to enhance their brand image. This activity has provided business entity an
opportunity to differentiate their brand from that of competitor.
Newly introduce trend has allowed organisation to communicate their perception and promote
the concept of healthy food among consumers (Faulkner and et.al., 2014)
Global expansion: The global expansion strategy has provided organisation an
opportunity to explore and new market opportunities. It has enabled M&S to take leverage
its expertise in establishing their position in fast growing market. Online presence of
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company will help them in becoming multi channel retailer and it has allowed firm to reac
wide number of customer. This has allowed business entity to identify the needs and
demands of consumers and produce product accordingly. This has enabled firm in increase
their sales and revenue.
Weaknesses:
Poor financial performance-The decline in business growth has great impact on company
financial performance.
Organisation Reliance on UK market –As the M&s company was much dependent on the
UK market for its growth and success the economic crisis in the country has great impact
on the financial performance of organisation. Decrease in stock prices has raise question of
its sustainability due to this the business entity has to suffered big losses. Product recall
has great effect on company brand value. This has great influence on customer as well.
Ineffective marketing strategy-The M&S decision regarding expanding their business in
China has proved wrong as the marketing strategy adopted by firm is ineffective. This is
the reason of low market growth in market of china.
Ineffective expansion strategy and great impact of social factors- The company has made
wrong decision regarding positioning their product in market. M&s has established there
big stores in China market. As the China customer prefer to visit small stores for buying
products and services. This factor has great impact on the firm profitability, growth and
success.
Opportunities
Global expansion in foreign market- The organisation has opportunity to expand their
business in global market. It has potential and advantage to conduct joint venture with
international companies that are dealing in same industries. As this will enable firm obtain
benefit of gaining competitive advantage in international market.
Online Presence- M& Spenser has an opportunity to mark their online presence using
online platform as this will allow firm to reach its customer quickly. It will provide firm
benefit to analyse the demand of consumers in market.
Reshaping their clothing segment-The organisation has opportunity to reposition
products and services in new market segment. The company can also adopt new
promotional strategies for promoting their goods in market. The firm can offer wide ranges
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of stylish clothing. It can introduce various discounts, offers this will help organisation
increasing their sales and profit margin.
Simplifying operational model-The M&s company has potential and opportunity to
restructure its business and operational model. As this will allow business entity benefit to
increase its operational efficiency, profit and raise operational capacity. Restructuring
process will allow firm to reduce its various cost. It will enable firm to establish their focus
on core business activities. The company can reduce the number of launches as it will
assist customer in indentifying the detail of new products and their prices.
Threats :
Threat of new and existing competitors in the market.
There is a volatility of prices of raw products in the market
New and emerging legislations that are related to retail industry .
Economic recession in the country.
Emerging low cost retailers in the industry that are preferred more by consumers.
There is extremely high competition in the industry
PESTLE
This method can be used by organisation for identifying the impact of various macro
environmental factors on its business activities. This model helps company in planning tactics in
order to reduce the effects of various factors on its success.
Legal and Political Factors-The various political factors are laws and code of conduct related
to retail industry. The various laws and regulation framed by UK government has greatly
affected M& A and has caused it to fight hard so as to maintain its position and market share
with innovative and aggressive strategies. The various laws that have effected M&S a lot are the
regulation related to industrial and labour law. It has affected the organisational development
efforts through labour law infringements in both its global initiatives and Domestic business
operations.
Social factors- social factors include Consumer’s tastes, preferences and lifestyle changes have
presented both threats and opportunities for M&S. Consumers in the UK market have the
potential of being loyal to one brand and the quality of products. But the choice, taste and
preference of consumer can change easily with a pricing strategy of organisation.
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Economic factors-The economic recession in the country has badly affected the financiual
performance of the company. But Decrease in foreign exchange rate has provided ttransactional
benefit to organisation.
Technological factors- The retail industry in UK has faced fundamental technological changes.
Changes as such are increase in the use of internet as a basis of online shopping store which
widens the use of ecommerce in the industry. This has great impact on the profitability and
growth of M&S. The company has adopted online technology for promoting their products and
services in market. Adoption of technology has encouraged business unit to produce innovative
product, differentiate their goods from thta of competitor and gain competitive advantage in
market.
Environmental factors-Some of environmental factors include environmental laws,
competition etc this has great effect on business day to day activities. M&S company has opt for
environmental friendly and resources in order to eliminate any legal obligation on them. This has
provided firm an opportunity to increase its market share and enhance brand image.
Figure 2: PESTLE Analysis
P6 Explaining the way strength and weakness is interrelate with external Macro factors
Management of M&S compares strength of the company with prevailing macro environment
factors like economic, political, technology, social and cultural and then formulate strategic and
operational policies. A little change in macro environmental factors have great impact on
organisational success and growth. It has great influence of various decisions and strategy of
organisation.
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