Business Environment: Types of Organizations, M&S Analysis and Factors

This report provides a comprehensive analysis of the business environment, focusing on Marks and Spencer (M&S) as a case study. It begins by presenting different types and purposes of organizations, including public, private, and voluntary sectors, and discusses the scope of micro, small, medium,...Read More

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 Presenting different types and purpose of organization....................................................1
P2 Presenting the size and scope of a range of different types of organization.....................3
P3 Presenting relationship between different organizational functions.................................4
P4 Presenting the negative and positive impact of macro environment.................................7
P5 Describing internal analysis of specific organization.......................................................9
P6 Presenting how strength and weaknesses interrelate with external macro factors.........11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment includes company's internal as well as external environment.
Report’s main aim is to focus on the environment that affect company's overall performance. For
this project, the chosen company is Marks and Spencer (M&S) which is one of the leading retail
company in UK. Quoted company also offered their products such as clothes and home products
in cheap and affordable rates. Currently the company has more than 900 stores which operates at
global level.
Report presents different types of organization with their size and scope such as public,
private and voluntary. Report also describe the relationship between many organizational
functions and how this help to achieve the objectives. By using SWOT analysis of M&S, report
also describe the internal environment of the company and further report describes by using
PESTLE analysis that is used to determine the external environment of the company. Moreover,
study explain interrelation between strength and weaknesses to external macro environment.
P1 Presenting different types and purpose of organization
Every organization have their different purpose but their main aim is to enhance the
economy of the country. There are basically three types of organization and they all have
different purpose It also presents three basic sectors such as private, public and voluntary which
are described below.
Difference between profit, non- profit and non governmental organisation:
Profit non- profit non governmental organisation
This are those type of
company whose main aim is
to generate the profit only.
Non profit organization
generate surplus or profit but
on the other side, the money
is stay within a business and
also used that money for
organization purpose.
This organization have to work on
social welfare projects and their
main aim is to expand the
business and they come with
various shapes and sizes.
Public Sector: This type of sector is usually operated by government and its main aim is
to provide the services for the welfare of public. This sector is the main part of the economy
which composed of both public services and public enterprises. This type of sector contribute the
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biggest part for the growth of the economy and funds are also generated through taxes, fees etc.
It has been analysed that public sector’s main aim is not only to generate profit but to serve for
the welfare of public (Bason, 2018). Hence, this sector is quite different from other sector and
also have no specific requirements in order to meet commercial success.
For example: Atomic Weapons Establishment is Public listed firm that is responsible for
designing and manufacturing the war heads for UK nuclear weapons.
Private Sector: This type of sector is usually run or owned by an individual or groups
who wants to generate profit for their own. This sector are generally free from the government
rules and regulations and many other things (Harding, 2018). On the other side, states are also
legally regulates the private sector and it is quite necessary for the firm to must comply with all
the rules and regulations of government. It has been analysed that more than 80 percent of the
population are engaged in private sectors and help to raise the economy of the country.
For example: Marks and Spencer which is private listed company and provide the best quality
of products to their customers at cheap rate so that it helps to maximize the profit.
Voluntary Sector: This is also referred as community sector and this type of business are
done their work for the welfare of the public. Their main purpose is to benefit or enrich the
society and in return it did not expect anything. They are quite different from private as well as
public sector because to raise money is not a profit and they work to create social wealth rather
than material wealth (Benjamin and Brudney, 2018).
For example: World Vision is the Charity that is actually served for the welfare of the
public. Such that this charity help to improve the lives of most vulnerable children.
Sole trader: It is the business which is run by individual or by his own. They make their
own rules and regulations but on the other side, the trader has unlimited liability and they also
carry all the debts of a business (Everhart, 2018). In this business, there is only one owner and
can take decision by their own and even it does not require any formalities to start a business by
their own. But on the other side, there is no legal formalities as well as no limitations.
For example: Kurt Geiger is the best example of Sole trader and now consider the famous
footwear company in UK.
From the above, it has been analysed that all the types of organization have their own
rules and regulations but it is not necessary for them to follow different rules.
From above,
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P2 Presenting the size and scope of a range of different types of organization
The size and scope also caries from sector to sector and in this task, report present legal
structure, objectives and size of micro, medium and small firm. There are so many types of
organization and they also have size and scope which separated from each other such as micro,
small, medium and large.
Type of
business
Meaning Size Scope Example
Micro This types of
business are
operates at very
small scale
The size of Micro
firm are little in
amount or there is
no market share
in UK.
Covers wide
range of activities
but it requires
less use of
technology such
as manufacturing
and repairing
activities
Spaza Shops
which is a store
that consist of
snack food and
drinks.
Small This type of
business are
independently
owned and operated
company
This type of
business are large
as compared to
micro business.
The scope of
Small business is
also wide
because it
operates in many
activities such as
retailing activities
or financial
activities.
Require fewer
than 50
employees.
Birchbox which
offer different
beauty products.
Medium Medium size
company are
actually responsible
Medium size firm
occupies good
range as
Its scope is also
wide and require
less than 250
Badger mining
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for driving
innovation and
competition in
many sectors
(Hillary, 2017).
compared to
small sector.
enployees (Belás
and et.al., 2015).
Large This type of
organization
operates at global
level and have
brand image in
market.
This type of firm
occupies large
share in the
country and
maximizes profit.
Its scope is also
wide and also
require in
between 300 to
500 employees.
Marks and
Spencer that offer
cloths and
vegetables to their
customers.
Legal Structure of different form of business:
Sole proprietorship: Its legal system is not governed by anyone because the firms are
governed by only single person. This type of firms are easy to set up and also require small
amount for their initial investment. As the company have no legal structure which cause
unlimited accountability and also cause debts which may incurred and they further be settled
through personal finance only (Legal Structure of organization, 2018).
Partnership: This are owned by two or more parties and the entire partnership is also
distributed in profit and sharing ratio which is prescribed by partnership deed. It has been
analysed that not all parties have unlimited liabilities but they have to follow the legal structure
which is mentioned in deed of partnership.
Private companies: This type of firms have limited liability. In private company there
can be 50 stakeholders and there is no minimum capital requirements and as a result, it also
reduces the chances of risk (Devarajan, 2018).
Public Companies: This company have to follow strict legal structure and even their
shares are also free to stock exchange. The company must have two directors and the annual
report should also be filed every year (Kearney, 2018).
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P3 Presenting relationship between different organizational functions
Marks and Spencer have their different function and they all are interrelated with each
other. The objective of the company is to increase the sales and raise the profit and even to
satisfy the needs of their customers and all the functions of the company are trying to achieve
this. Some of them are as mentioned below:
Human resource Management: This are considered the top most department of M&S
and through strategic approach HR of the company easily gain the high competitive advantages.
The plan strategically and with their effective management planning the company also raise the
performance of their employees and also provide different training sessions to staff members.
HR department main purpose is to make sure that the organization is able to achieve the goals of
the company or not (Langston and et.al., 2017). They always make relationship with different
departments and their main role is to recruit the best candidate for the welfare of the company
and assign the job roles of their employees and make strategies to attain all objectives of the
company. Further, to attain the objectives of the company, HR department always make
coordination with different department and to raise the working efficiency of their employees,
provide learning and training opportunity to them.
Research and development department: This department actually analyses the need of
their customers and then inform production department in order to produces the products
accordingly. Research and development department also provide new strategy in order to
improve the existing products or services. When a company is going to produce new product,
then research and development department actually determine all the specifications and
production cost and also evaluates the advantages or disadvantages of that products. If the
products help to maximize the profit then this department tells production department in order to
produce the products. It also checks the quality or products and also innovate different products
to attract wide range of customers towards them so that it help to attain the objective of a
company.
Production department: This department of the company is actually responsible for
converting the raw material into finished goods. This department basically works in order to
improve the efficiency of production and to meet out the target. Production department also
produces those products which research and development department analyses (Ellis, 2015).
Hence, Marks and Spencer determine the quantity of goods which should also be produces in
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defined time and then passes this information to the production department in order to produces
best output. Further if the products are produces in prescribe time then this information is passes
through sales and marketing department so that they will reach to wide range of customers.
Production department also minimizes the cost of products and make sure the quality of the
products are up to date or not.
Sales and Marketing department: Sales and marketing are considered the bridge of the
relationship with market because they satisfy the needs of their customers and this department
develop new promotional tool in order to make the product popular in market. Sales department
set the goals of the company and to achieve that marketing department develop new promotional
tools to reach that product to different or large mass group. Moreover, to maintain the customer
base, this department also takes a responsibility that buyers are happy with the products or not.
To attract wide range of customers, sales and marketing department also contact with customers
through surveys and try to solve problem of many customers and make them satisfy with Marks
and Spencer products and also attain the objectives of a company.
Finance department: This department is directly related with all department and it also
shows the expenses which occurred during the particular time period. Finance department also
assign budgets to all department and provide report of company's financial performance
(Fragouli, 2014). Marks and Spencer also have strong finance department that looks after all the
transaction in such a manner that it helps to lead a business at further level of success in order to
attain the objectives of a company..
From above, all department of the company are trying to achieve the goals of the
company and through this, they attain defined goals in prescribe time.
Organisational Structure: M&S follows flat structure and also have limited level of the
management system such that this structure also follows in order to encourage employees to keep
involve in their decision making.
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P4 Presenting the negative and positive impact of macro environment
In order to determine the macro environment of the company, PESTLE analysis is used
which is the combination of many factors such as political, economical, social, technological,
legal and environment. This factors also creates positive as well as negative impact upon M&S
which is as mentioned below:
Political Factors: This factors are directly related to government rules and regulations.
As if the political condition of the government is stable then it defiantly supports a business to
run in forward direction. As M&S is one of the leading company In world and the fair trade
policy is also implemented by the listed company then it reduces the source of the cost. The
political factor have positive impact upon the company such as if the government provide grants
in order to support the business then it helps to maximize the profit (Bryson, 2018). On the other
side, sudden change in the government as well as taxation policy decreases the sales of M&S and
as a result, the financial performance of the company affected.
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Illustration 1: Organizational Chart of Marks and Spencer

Economic Factors: this factors are deal with the economy of the country and also affect
company's financial position in adverse way. This type of factors are generally includes inflation
rate and employment rate that affect country overall economy. Economic factor also creates
positive as well as negative impact upon M&S such as if the inflation rate is high then it also
affects the purchasing power of the employees. On the other side, there is a conflict between the
retailer and due to impact of Brexit there is rise in the price of the products and this decreases
company's selling power (Zalengera and et.al., 2014).
Social Factors: Social factor such as people's age, shopping habits and attitude of work
also affect the company's selling power in adverse way. Even Marks and Spencer also affected
by social factor in both positive and negative way. As the customer shopping habit are changes
as per the time and trend then Marks and Spencer try to cope this challenge by producing new
and innovative products in order to fulfil the demands of their customers. On the other side, by
opening new unit in different country, the company also minimize the rate of unemployment.
Technological Factors: It is quite necessary for the company to keep using all the
advance technology into their working are so that it helps to maximize the profit. This advance
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Illustration 2: PESTLE Analysis
(Source: PESTLE Analysis, 2018)

technology also create impact upon M&S such as by introducing online shopping which help a
company to raise the profit and save time as well as money for both company and customers too
(Fozer and et.al., 2017). On the other side, it also has negative impact because cybercrime are
also increases and due to this, it creates negative impact upon customers. There are increases
chance of cybercrime and due to this, important data may leaked and thus it makes wrong
impression upon customers and hence, company's overall performance affected.
Legal Factors: regulations are always changes and it is quite necessary for the firm to
keep compliance with all the rules such as employment law, Health and Food safety law etc. this
factors also creates negative as well as positive impact such as if the company follow rules and
employment law then it automatically raises the retention power of their employees. On the other
side, if the laws are not followed by the company then it directly affects the company's brand
image in market.
Environmental Factors: It is quite important for the firm to keep follow sustainability
law and as the current environmental climate are changes. It also affects in negative way such
that if the firm did not comply with all the laws related to environment then it creates negative
impression upon company's brand image and hence, it affects company's brand image in market
(Gheibi and et.al., 2018).
From above, it has been analysed that M&S should comply with all legislation in order to
sustain its brand image and to run in this competitive world. Hence, this factor directly affect the
company's overall financial performance in both positive and negative way.
P5 Describing internal analysis of specific organization
Using SWOT analysis, Marks and Spencer can easily determine the exact internal
environment of the company and this model specify the strength, weaknesses, opportunity and
threats of the company that help to determine the exact performance. This factors are as
mentioned below:
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Strength: The company have brand image in market and also provide the best quality of
products to their customers at cheap and affordable prices. Quoted company also have wide
variety of products such as vegetables, clothes and fruits etc. M&S also have its presence at
global level and operates more than 900 stores at 40 different countries. The products which are
designed in the tore are also unique and different from others. Firm also focus on the relationship
between the customer service and have high effectively corporate social responsibility (Leiber,
Stensaker and Harvey, 2018).
Weaknesses: From last many years the company's financial performance in not up to the
mark and further it has been analysed that the company also have bad publicity because of non-
trendy stores. As the company have wide range of products but it does not have fashionable
products which actually satisfy the needs of the customers. On the other side, manual working is
also considered as a weakness for the store because it takes lot of time and even the firm is also
not focusing on new technologies and to online business as well. As the new techniques help to
raise the efficiency of work but still the firm is only uses manual work only. Even the frequent
products also recall that it loss the customer base because of not offering the products as per
trend and their customer requirements.
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Illustration 3: SWOT Analysis
(Source: SWOT Analysis, 2018)

Opportunities: If Marks and Spencer invest in Indian Market then it will be beneficial
for it to raise the profitability (Lurati and Zamparini, 2018). To start online business is also
considered as another opportunity for M&S because it helps to attract wide range of customer
towards it. To provide trendy clothes and reshape the segment is another opportunity for the
listed firm to use in their working area. As the company have difficult operational department
and to simplify it can be help to produce the best products as per the needs of their customers.
Threats: Strong competition from the rival company is the biggest threat for M&S. The
company also have tough competition and in the retail sector such that Asda, Sainsbury etc. In
the food industry, the quoted company also have some issues because except from retail sector
the company also faces tough competition from food sector. In order to overcome this problem,
there is a need to come with new strategy and hence it helps to raise the company's profitability
as well as maximizes the sales (Kazemi and et.al., 2018).
From above, it has been cleared that the company have brand image in market and it also
faces tough competition from other rivals and in order to sustain its image, Marks and Spencer
needs to increase the stores that further help to maximize the profitability and enhances sales.
P6 Presenting how strength and weaknesses interrelate with external macro factors
Strength as well as weaknesses of Marks and Spencer are also interrelated with external
factors such as company have brand image in market so that it will be beneficial for it to
establish more unit in market. By using SWOT analysis in which strength and weakness are
internal factor and on the other side, opportunities and threats are external factors.
Marks and Spencer have a brand image in market and this can be uses as an opportunity
for a firm such that having a wide range of products and it strongly focuses on enhancing the
customer experience is beneficial for company to operate its operating model. Moreover, the
firm also have global presence and having a brand image will create an opportunity for Marks
and Spencer to invest in Indian Market so that it help to raise company's profitability as well as
increases the sales (Hamilton and Webster, 2018).
As company faces tough competition from the rival and to minimizes such it also attracts
wide range of customers by offering new and innovative products so that it draw attention of
many customers towards it. The company highly engaged in activities related to corporate social
responsibility and it also creates an opportunity for a firm to invest in many countries to raise the
sale of their products. On the other side, the firm also have the weaknesses which also creates an
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option for the future development such as because of poor performance from last many years the
company can minimizes it by using online presence. If Marks and Spencer start doing online
business then it will be more beneficial to attract wide range of customers and maximize the
sales too. It has been further analysed that the company did not offer trendy clothes as per the
needs of their customers and by reshaping the cloth segments can create an opportunity for M&S
to raise the selling power in positive way. Another weakness is to invest in China but there is
another opportunity to invest in Indian Market which help to raise company's overall
performance.
As the company have poor financial performance in many countries and as a result, the
competition also increases and to minimize this, firm has to develop new strategy in order to
attract wide range of customers towards a product (Prajogo, 2016). Firm also adopt different
pricing strategy in order to minimizes the weaknesses and by offering trendy clothes to their
customers will further help to sustain its brand image in market. Moreover, by increases the
number of stores at global level will also help to overcome the problem of weaknesses and by
developing new risk management strategy, the company also raise the financial position of the
company.
From above, it has been analysed that the company have brand image but on the other
side, it also faces some threats which needs to be minimizes such as be introducing online
shopping store that helps to minimize the cost of products and reduces manual work. On the
other side, it also faces tough competition from its rivals and it can be minimise by developing
new strategy.
CONCLUSION
By summing up above report, it has been concluded that business environment affected
internal and external environment of Marks and Spencer. Report concluded that all organization
have their size and scope with legal structure and further it also concluded that organizational
function are also interrelated with each other and they all help to attain the defined goals of a
company in better way. Moreover, report also concluded that strength as well as weaknesses of
the firm are directly related with the external macro factors and also suggest different strategy in
order to overcome the problem.
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