Business Environment Factors Impacting Marks and Spencer Operations

This report provides a comprehensive analysis of the business environment, focusing on Marks and Spencer, a multinational retailer. It begins by defining the business environment and its impact on organizational functions. The report then explores different types of organizations, including private, public, and voluntary sectors, and discusses the size and scope of various enterprise types (micro, small, medium, and large). It further examines the relationship between organizational functions, such as marketing and production, and how they link to organizational objectives and structure. The report delves into the positive and negative impacts of the macro-environment, utilizing PESTAL analysis to evaluate political, economic, social, technological, environmental, and legal factors affecting Marks and Spencer. Finally, it assesses internal and external factors to identify strengths and weaknesses, as well as the interrelation between these factors and external macro factors, providing a detailed understanding of the business's operational context and strategic considerations.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
P1 Different types and purpose of organization..........................................................................3
P2 The size and scope of a range of different types of organization..........................................4
P3 Relationship between different organizational functions and how they link to
organizational objectives and structure.......................................................................................5
SECTION 2......................................................................................................................................6
P4 Positive and negative impact of macro environment upon business organization................6
P5 Internal and external analysis of organization to identify strength and weakness ................8
P6 Interrelation of Strength and weakness with external Macro factors....................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment is the term which is used to analyze and examine major effect of
internal and external factors for operating business operations and functions. this is mainly
maintained and manage the business in order to get opportunities for organization. these types of
environment are directly affect on business process and it is mainly affected by organizational
functions (Adeoye and Elegunde, 2012). this report based on Marks and Spencer which is
multinational retailer company and it is situated in United Kingdom. they are mainly deal in
supplying variety of products and services in the large market place for their customers. the main
purpose of this assignment is to analyze various organization and its size and scope. in this, it is
determining micro and macro environmental factors that will directly affect on decision making
procedure within an organization.
MAIN BODY
P1 Different types and purpose of organization
In an organization, every company is divided into three sector that includes private,
public and voluntary (Werbach and Hunter, 2012). this type of sector are operated and regulated
by different government bodies for doing work in attaining specific goals and targets. along with
this, the main difference between them in doing their working and legal structure that are
categirise their vision and mission.
Private sector is that organization which provides their contribution in gaining higher
economy growth and public welfare. in addition to this, public sector is doing work under
government bodies and public authorities for delivering their effective services or facilities to the
people. such organization is owned and regulated by state and financial commercial companies
that are perform work under public ownership and also operate major issues and problems
effectively. for instance, Marks and Spencer is the private firm that are offer variety of products
and services to their potential customers. the main purpose of this organization is to gin and earn
high profitability and create money for future growth and success. on the other hand, in legal
structure, the private sector is operated and controlled by private bodies, individuals and partners

for satisfying their customers demand and needs in order to reach with higher goals and
objectives.
Public sector is that type of organization which provide their own contribution in gaining
higher growth of economy and public welfare. public industry is doing work under the country
authority and government for supplying effective services to their desired customers. such type
of organization is directly operated by state and central government of the nation. in addition to
this, public companies are owned and operated on commercial base (Rossi, Vrontis and
Thrassou, 2012). for example, NHS is the public organization which provide proper care to their
patients and other people who suffer from major disease. the main purpose of this organization is
to provide proper care to their patients who live in the society and community. in legal structure,
public sector is doing work under local and state authority of the country. the audit commission
enhancing their structure with tax policies, financial growth and government finding.
Voluntary sector is the duty of social activities and functions undertaken by organization
which are nonprofit organization and non-government. It is also known as third sector as it
resides neither in public nor in private sector. It is a non-profit organization which plays role in a
free market economy. It prevails in specialized areas such as medical services, religion,
agriculture, disaster relief, etc. For example, 'Save the children' is a NGO which is a part of
voluntary sector. It provides relief and support to children in developing nations. This NGO is
operated in UK which helps in improving lives of children (Bar-Isaac and Shapiro, 2013). They
provide better education, health care and economic opportunities to so many children. The main
objective of this NGO is to help provide all facilities to children instead of making profits.
P2 The size and scope of a range of different types of organization
Every organization is operated in different ways and at different levels. The working and
nature is also different of with each other. In this, there are three types of enterprises such as,
micro, small, medium and large organization. They all are different context of capital, market
share and number of employees working in company. These are enterprises are differentiated
with other and performs their own roles and functions.
Micro enterprises are small businesses which employs nine or fewer than nine
employees. It has a balance sheet and turnover less than a certain amount which is € 2 million or

€ 3 million. It has a positive impact on economy because it enhances skills of individual by
providing them training. This is also beneficial for growth and sustainability of economy. These
are operated mostly by families in UK with having one or two employees. This main objective of
individuals who operates micro business is to earn profits and feeds their families.
Small enterprises are privately owned organization which is operated by an individual.
These are large in size as compared from micro business. In this, there are fewer number of
employees up to 49 which contributes their efforts to achieve company goals and missions. The
small business is set up with a small amount of investment which includes all services and retail
operations (Halbert and Ingulli, 2011). In involves electricians, carpenters, small grocery stores,
bakeries, guest houses, etc. The investment amount in small organization is more than 25 lakhs
but less than 5 crores. It also helps nation in development by providing employment
opportunities to lots of individuals.
Medium enterprises are larger as compared from small and micro businesses. In this,
there are up to 250 employees which are performs their activities and achieve objectives of
company. The annual turnover of this enterprise does not exceed to € 50 million (Vitale,
2011Weiss, 2014). Along with this, the total of annual balance sheet does not exceed to € 40
million. Micro business has a great impact on economy. It helps country in achieving growth and
sustainability. As part from this, it also provides employment opportunities to many individuals
including those who resides in geographical areas.
Large enterprises have an annual turnover greater than €1.5 million and total annual
balance sheet is more than € 2 billion. These businesses employ at least 5000 employees which
helps company in attaining their goals and objectives. In this, large amount of capital is invested
to set up large companies. The main objective of large enterprises is to fulfill customers demand
with aim of maximizing profits. They are operated on a big scale and are larger in size from all
other business categories (Becker, Kugeler and Rosemann, 2013). These provides professional
training and knowledge to their employees which helps them to achieve organizational targets
and enhance their future opportunities. Thus, large enterprises also play significant role in
development and growth of economy.

P3 Relationship between different organizational functions and how they link to organizational
objectives and structure
Organizational structure refers to the tool which describes how activities are directed to
achieve goals of company. It involves rules, roles and responsibilities performed by top level to
lower level of company. It is essential to have flexible, innovative and efficient organizational
structure to gain sustainable competitive advantage (Gharajedaghi, 2011). Along with this,
marketing also plays an important function in attaining goals and missions of company. The
marketing department of organization are interconnected with other functional units which helps
them carry out business objectives in an effective and efficient manner. By organization
structure, company can determine modes in which they perform and operates their business. In
context of TESCO Plc, the company follows hierarchical organizational structure. According to
this structure, the main focus of company is on organization structure. They look after working
and operations of different departments and ensure whether work will be done efficiently or
smoothly. The marketing department of company also plays an important role in achieving
business objectives. The company is operated on a big scale in UK. There are approximately
476000 employees in company who contributes their efforts and reach set targets. The company
serves superior quality products to its buyers at affordable rates which is a good opportunity for
company to retain more customers. The market share of company is around 28.4%.
Transnational organizational structure is helps company to organize business dimension
along with geographical and functional levels. This also lead company to coordinate with all
related business operations simultaneously. This organizational structure assists companies to
carry out their activities but there are also some complexities (revino and Nelson, 2016). The
organization which uses this structure faces complexities and find it difficult to balance the needs
of different functional and geographical stakeholders. In context of Tecso Plc, of company
adopts this then they will also face some issues and also hinder their decision-making process
due to involvement of many people.
International organizational structure involves all companies’ operations. In this, head of
international division directly reports to chief executive officer which coordinates and monitors
all activities of business organization (Wheelen and Hunger, 2011). This structure helps
company to cater all local needs of consumers. It also maintains coordination between all

different departments such as marketing, financing, etc. Along with this, there are also some
complexities which company can faces. In this, company can face issue of existence of
duplication of staff. In addition to this, only local market is concentrated by managers. In context
of Tesco Plc, organization can also face these complexities if they use this structure.
Global organization structure involves business operations which are controlled on the
basis of geographical locations instead of type of products. It helps companies by reducing unit
costs of production and operations are remain the same in domestic and international level.
Along with this, is is also found difficult to align product under this structure which is a major
complexities company can face (Blanchard, Tolbert and Mencken, 2011). There will be no
contribution of efforts in research and development program in this structure.
Marketing functions are considered to be a significant factor for company in achieving
their goals and objectives. In this, production department plays a dominant role attaining mission
of organization. Production section helps company in producing valuable products for customers
according their needs and demands. In context of Tesco Plc, this department also assist business
enterprise in reaching out their targets. By producing producing products company can attract
more customers towards them and can retain for longer period of time (Zott, Amit and Massa,
2011). Thus, in this way production department is essential and helps company to carry out their
functions smoothly.
SECTION 2
P4 Positive and negative impact of macro environment upon business organization
There are various positive and negative factors prevailing in macro environment that impact
upon functions of business organizations. With the help of PESTAL analysis management have
evaluated factors in macro environment that influence functioning of company. There are various
external factors like economic conditions, government rules and regulations, technological
factors and environmental conditions that have to consider by TESCO in order to operate their
functions effectively. PESTAL analysis of TESCO has been examined below:
Political factor: Political factors are those legal rules and regulation that are framed by
government. There are formal and informal laws which are necessary for TESCO to operate

within their company (Yang, Hong and Modi, 2011). Some of these rules and regulations are tax
policies, employment laws, trade restrictions and tariffs, environmental regulations and political
stability. In relation to TESCO which perform their functions international is important for them
to abide all these regulations framed by government. This factor can affect business of this
company by changing the aggregate of corporation tax that is charged on profit of business.
Government has also started minimum wages law which is necessary for every employer to pay,
this will also effect on cost and profits of company.
Positive impact: Political stability in United Kingdom is major advantage of TESCO to
perform their business functions in global market (George and Bock, 2011). This will not
only help company to gain higher stability but also increase their area of functioning in large
market.
Negative impact: Government have implemented employment legislation act which states
that all business sector needs to provide mix job opportunities which include lower, middle
and high pay rates. Thus, company need to make sure that they are accomplishing need to
different segment of employees working under them.
Economic Factor: Economic factors include stage of business cycle, impact of globalization,
economic environment, trade agreements, consumer confidence and labor costs. There are
different types of elements that can affect funds and profitability structure of company (Boons
and Lüdeke-Freund, 2013). TESCO have operating their functions in many developing nations
that are having high economic growth rates and GDP structure. Thus, company is having golden
opportunity to generate more revenue.
Positive impact: Economy of United Kingdom is rapidly increasing which results in increase
in their GDP rates which can benefit TESCO to increase their growth rate.
Negative impact: Changes in Bank rates like loan and interests’ rates can affect TESCO to
operate their functions in smooth way.
Social Factor: Social factor include factors like demographic changes, consumer attitudes,
social influences and population growth rates. Organization provides different kind of products

and services in order to satisfy needs and wants of consumer (Sodeyfi, 2016T). TESCO provide
variety of products and services in large market to fulfill demand of consumers.
Positive impact: In developed countries like United Kingdom people mainly prefer to buy
their products from outlets where all items easily provides under one roof. Buying behavior
of consumer is changing continuously which will benefit TESCO to increase their number of
consumers which automatically enhances their profit base.
Negative impact: Population structure of United Kingdom is decreasing and people are
migrating to different countries this will adversely impact on TESCO to acquire effective
labor force.
Technological Factor: This factor includes research and development activity, impact of
technology transfer and new inventions and development.
Positive impact: TESCO is large organizations which have implemented various
technological components.
Negative Impact: With the advancement in technology is hard for TESCO to adopt various
changes rapidly.
P5 Internal and external analysis of organization to identify strength and weakness
For carry out analysis of internal factors of business, Marks and Spencer required to
conduct swot analysis for examine strength, weakness, opportunity and threat of an organisation.
It will help them in analyzing strength and weakness of an organization in which they try to
overcome with company weaknesses in order to gain high income and revenue.
Strength:
Highly recognition of brand – M&S have strong hold in their products in the United
Kingdom. Every individual required to know about their goods and it is used to buying
desired products and services among large number of people.
Wide range of products – Marks and Spencer offer variety of goods and services among
different customers for satisfy them. It will help buyers for selecting best one as per their
need and demand.

Weaknesses:
Inability to penetrate successfully in international market – Marks and Spencer have a
existence in Europe, UK and United states. For this, they have opened stores and shops in
Asia and Middle East where they are unsuccessful in winning customers loyalty because
most of their design are western and not traditional.
Customer satisfaction – M&S customers are often exhibit lower satisfaction level and there
are various issues which are faced in regard to policies as well as store experience. It is
resultant in poor brand loyalty and enhancement in brand switching.
Opportunities:
New segmentation – It is an evolving business and new segment comes on regular basis. In
Asia, there are high demand for ethnic and traditional wear clothes that are currently not sell
by Marks and Spencer company.
Threat:
Competition – The major rivals of Marks and Spencer are Zara, Uniqlo, Gap and United
Colors of Benetton. Such competitors are creating issues and conflicts in the market place
where they are selling unique type of products and services.
P6 Interrelation of Strength and weakness with external Macro factors
Macro factors that means external business factors plays a crucial role for a business
organization when it comes to manage its operations at international level or while restructuring
the overall business. these are the important factors which mainly affects in both positive and
negative manner on a business organization (Cohen and Kietzmann, 2014). Since Tesco reduced
the number of employees up to 1700 jobs got cut down for restructuring the overall business so
that competitive advantages can be gained it affected negatively on their performance level if it
is seen through a short-term plan but on the basis of long term this good at them in recruiting
staff which is more qualified in nature for the vacancies that are available within the Tesco PLC.
Apart from this, Marks and Spencer have also taken a chance where they closed around 14 shops
and 500 employees came at risk Android filled with fear of not getting any job in their future.
Again the changing approach took Marks and Spencer on the same scenario where Tesco was

already facing. On the other hand, another initiative which was taken by Asda can be seen
through the step which was taken by the seniors where 300 jobs were at risk because of the major
cost-cutting initiative which was taken by top administrative of Asda. This all has happened
because of organisations thought of bringing change amongst their operations so that they may
gain competitive advantages. In respect to this, a few factors like political, economic, social and
technological consists with different strengths and weaknesses. Basically, to understand worth
strengths and weakness of these macro environmental factors a description has been done below:
Political factor:
Strengths: business market of United Kingdom has been strong enough if it is examined on
the basis of political conditions and this can be considered as a strength for business
organisations like Asda, Tesco, Mark and Spencer, and Sainsbury’s. therefore, changes can
easily be made considering strong political conditions.
Weaknesses: Due to Brexit, political parties of United Kingdom have made Apple number of
changes among policies, laws and legislations related to employee’s business doing and leads
and so on this could directly impact upon decision making of top administrators of business
organisations like Tesco, Sainsbury’s and so on.
Economic factor:
Strengths: if it is talked about strength of economical factor, contracts and inflation rate of
UK among other business organisations have been really very low. Therefore, it can be easily
said that consumers main directly get whatever they want as their pockets are allowing them
to do so (Crane and Matten, 2016). With the help of this organisations like Tesco, Marks and
Spencer can easily improve their market share.
Weaknesses: Asda, Tesco, Marks and Spencer decisions taken by company directly impacted
upon unemployment rate and turn their ratio of employee turnover got increased which
moved consumers to shift their demands too much for cheaper items.
Social factor:

Strengths: United kingdom’s business environment consist with cross cutting approach
approach where clients, consumers believe in purchasing products and services is trend that
people prefer to purchase items in bulk and from one shop which benefits Tesco, Marks and
Spencer, Asda and so on to enhance their sales volume.
Weaknesses: business organisations like Tesco and Marks and Spencer offers reasonable
items which result into people mind-set that product may not be of good quality.
Technological factor:
Strengths: In modern business for there are companies like Tesco Asda Marks and
Spencer and Sainsbury’s are providing high- tech experience to its customers where they may
make payments through card which help them to make payment easily.
Weaknesses: E- commerce which is due to evolution of internet that effect on sales and
profit of Tesco and Marks and Spencer.
Porters Five force model: There are five forces which analyze whole market area and company
strength and weaknesses in proper manner. Such forces are described as follows:
Threat of new Entrants – There are various new entry which are create issue for an
organization which enter in new market place. They are reach with cost efficiencies and
economic scale that retailers like Marks and Spencer are achieve with new player.
Threat of substitute – It is required for M&S company is to make innovation in brand which
help them in position their products in the market place. The food business is already
undertaken by big stores such as Tesco, Sainsbury and ASDA that have same type of goods
and services. There is various substitute of products of Tesco.
Bargaining power of buyers – Customers price sensitivity which can force the retailers and
customers has low switching costs and there are various alternatives available. Marks and
Spencer required to build loyalty and they are offer its customers unmatched values.
Bargaining power of suppliers – M&S suppliers are mainly strong but it is creating
competition pressure that has forced to outsource. Company require to contact with large
number of suppliers which can enhance power of suppliers.