Business and Business Environment: Organizational Analysis and Impact

This report delves into the intricacies of the business environment, examining various organizational structures and their purposes, including private, public, and volunteer sectors. It explores the interrelation of organizational functions and objectives, emphasizing the impact of both internal and external factors on business operations. The report provides an analysis of the macro-environment, assessing its effects on business decisions and strategies. Furthermore, it includes a SWOT analysis to identify strengths, weaknesses, and their connection with external factors, using Marks and Spencer and the National Health Service as case studies. The report concludes with an overview of the key findings and implications for business development.

Business and Business
Environment.

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Various kind of Organisation and their purpose....................................................................1
P2 Size and scope of various kind of organisation.....................................................................4
TASK 2............................................................................................................................................7
P3 Interrelation of various organisation functions and their link with organisational objectives.
.....................................................................................................................................................7
TASK 3............................................................................................................................................8
P4 Assessment of macro environment impact on business.........................................................8
TASK 4..........................................................................................................................................10
P5 Analysis of internal and external environment to identify strengths and weaknesses.........10
P6Interrelation of strengths and weaknesses with external factors...........................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment comprises of various intrinsic and extrinsic factors around which
an organisation operates its business operations and marketing strategies. It refers to total of
various different forces such as customers, employees, suppliers, owners, government
intervention, innovation in technology, socio-cultural trends, economic conditions and so on.
These factors has capacity to influence decisions and functioning of business enterprise and how
it cope up with same. Collection of these affects overall culture of business and its policies.
Marks and Spencer (M&S) is globally one of leading British Multinational corporation and its
headquarters located in Westminster, London. Company incorporated and specialised in selling
of high quality western clothing, home-ware products as well as eatable items. It has
approximately 900+ outlets around UK in which only 615 stores engaged in selling of food
items. This report contains brief introduction about different forms of organisations, there
purpose, size and scope. This assignment involves interrelationship between different
organisational functions and its connection with objectives. Also, it explains positive and
negative impact of external environment over business operations and decisions. Identification of
internal capabilities such as strengths and weaknesses through SWOT of certain organisations.
TASK 1
P1 Various kind of Organisation and their purpose.
There numerous type of organisation which are running and exists in market under
different sectors. Each sector has their own benefits, drawbacks, aims, motives, guidelines and
laws, policies as well as objectives, legal organisational structure. Each sector consists different
business enterprises who has their own working styles, earning goals, operations and functions.
This can be understood by given classification of sectors (Hamilton and Webster, 2018).
1. Private Sectors are those type of organisations that has main motive of earning high
profits and large market share as compare to other companies. It include sole
proprietorships, partnerships, corporations as well as agencies. Private sector is a that part
of national economy which is not regulated or directed by state control. These sectors are
especially build for earning profit and high revenues for business owners of an
organisation. These private organisation are run and govern by person or group of people
that is generally provide services or products for profit maximisation unless social
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welfare. For Instance, Marks and Spencer is come under this category which carter
requirements of customer through offering merchandise products, home care items under
its own brands and serves its product worldwide (Dahlesand Susilowati, 2015).
PURPOSE : the main aim of this sector is to earn and make higher profits as well as recruit more
skilled employees than public sector. Also, its sole purpose is to increase profits for shareholders
and attract more investors in order to achieve its mission objectives.
Legal Structure of Private sectors.
 Sole Proprietorship: this kind of legal structure comprises of those business enterprises
which are run and regulated by single individual. These organisation is also known as
sole trader or sole entrepreneurship that is an unincorporated business which has only one
owner who is accountable for bear risks alone and has to pay personal tax on revenue or
profits earned from business operations.
 Partnership: this define as an association which is owned and run by two or more than
two individuals who work as a partners. It is a legal structure in which business functions
and operations that include partners who manages entire management system and share
profits equally. In such organisations authority is divided equally in each partners and has
right to participate in decision-making process (Khan and Quaddus, 2015).
 Corporations: these organisations include those large and limited company or group of
organisations that being authorised and consider as separate entity from its owner as well
as recognised under law. It is a type of business enterprise whose operations and
functions are as separate legal entity govern by group of experts known as Board of
Directors. These organisation has their own secured assets and liabilities in addition to
this all uncertain risks are solely accountable by company instead of its owner.
MARKS and SPENCER plc has legal structure of corporation as it has separate legal
entity from its owner and has single purpose of earning higher profits.
2. Public Sectors: These sector encompasses of all those government owned organisations
that are run and govern according to policies and regulations made up by federal
government (Monroe, Rikala and Somervuori, 2015). These organisation are different
form private one as their motive is to serve public better facilities instead of earning
profits. This sectors generally consists of various governmental services such as health
care, educational, military, better infrastructure and transportation facilities so on. For
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instance, National health Services is a public owned organisation. It is a corporate body
of publicly funded health care system of United Kingdom. Company provides various
health care solutions for free including dental treatment and optical care (Eling and
Schaper, 2017).
Purpose: the sole aim of this sector is to provide high quality of products and services
including health facilities, education system, development of socio-economic infrastructure etc.
so that it work as welfare of society and its citizen.
Legal Structure of Public sector.
 Local Government: this type of sector manages and regulates different frameworks,
policies, decisions that pertain at lower stage within local state of country. In other terms,
it is public administration of specific district, cities, counties. Such government includes
county and municipal government structures and has multi-purpose bodies which are
accountable for offering wide range of services (Huang-Horowitz, 2015).
 State Government: this legal structure refers to country subdivision of federal or central
government which is responsible for governing and regulating working as well as
decisions to maintain overall state. This branch of central government is accountable for
formulating and implementing state legislations laws such as budget and tax laws.
 Central Government: this legal structure refers to political authority which regulates
entire nations. It is also known as a federal government that have different powers at
various levels authorised by its federated states. It has supremacy to control and monitor
state and local government working. National Health services categorised under this
sector as it offer its services to entire nation (Gromoff, Bilinkis and Kazantsev, 2017).
3. Volunteer Sectors: these particulars sectors are comprises of those non-profit
organisations which carried out various campaigns and tasks in order to provide healthy
products and services to citizens. In addition to this, these provide solutions to resolve
socio-cultural and environmental issues. For Instance, British heart foundation is well
known charity organisation which is indulged in raising funds for research in order to
compete with heartbreak due to heart and circulatory diseases factors.
Purpose of Volunteer sector business is to run and organise social activities with purpose
of social welfare of society and betterment of future environmental growth.
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Legal Structures of Volunteer Sectors.
 Charitable Trust are refers to those legal structure which run and govern by person or
group of person who carried out different activities and campaigns as well as invest in
such projects. These individuals generally known as trustees who are accountable for
arranging and managing financial resources. British Health Foundation is a charity
organisation and categorised in this section (Fitó-Bertran, Hernández-Lara and López,
2015).
 Unincorporated Organisation: refers to those non-profit organisations that are
established when two or more individuals join hands and come together for common
interest. This includes clubs, societal groups unlike formal structure as company.
BASIS PRIVATE PUBLIC VOLUNTARY
Purpose Main motive is to earn
higher profits and
revenue.
Sole purpose is to
serve proper facilities
to public citizens.
Main motive of these
organisation is
organise activities for
social welfare.
Government
interference
There is a no
interference of
government in
This particular sector
is highly regulate and
control by
government.
Government has a
medium impact over
non-profit
organisation.
P2 Size and scope of various kind of organisation.
Private organisation comprises of those business enterprises which are established to
aggressively attain large market share and earn higher profits as well as revenues. These
particular organisation are free from government intervention and has their own policies and
rules. Marks and Spencer is one of flourish British Multinational organisation which deals and
serves wide variety of product portfolio across world wide. It is a leading British retailer which
provides quality clothing, eatable items, home-ware to its million customers (Zaharia and
Zaharia,2015).
 Background: Marks and Spencer was established in 1884 and founded by Michael
Marks and Thomas Spencer. It has its headquarters in Westminster, United Kingdom.
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Globally, M&S owns approx 1400 stores in around 57 countries in addition to this it
has 50 plus online websites. Company offer wide variety of contemporary wearable
cloths for all classes, fresh quality and innovative food credential, home-ware
appliances etc.
 Vision of M&S is “to set high standard and benchmark on basis of which other
competitors are to be measured”.
 Mission of M&S is “to produce aspirational quality products which are accessible and
affordable by everyone”.
 Objectives of M&S is “to accomplish sustainable business effectively through
continuous and profitable growth and satisfy all requirements shareholders and
customers”.
 Size: M&S is a huge international organisation which serves its product worldwide. It
has workforce of 80000+ employees and presently has 900+ stores in UK and overall
1400+ outlets.
 Structure: M&S make use of functional organisational structure.
Public organisations or sector refer to governmental enterprise which are engaged in
providing social and public facilities to country's citizens and society. These includes various
facilities associated with health, infrastructure, transportation, military etc. National Health
Services is a government owned public organisation which supervise and funded healthcare
system of United Kingdom. This organisation is categorised in four other systems located in
England, Scotland, Wales and Northern Ireland (Chen and Wu, 2015).
 Background: National Health Services was first founded in 1948 considered as one of
social reforms during Second World War. Organisation offers comprehensive range of
health care services to UK citizens which include free medical check-ups, medicines and
vaccines, optical treatment as well as dental treatment at low cost or for free. Also, it
provide treatment associated with different health disease.
 Vision of NHS is “to enable every citizen to live healthy and independent lives by
providing high quality flawless care”.
 Mission of NHS is “to enhance overall health status of country by providing healthcare
solutions in order to prevent illness and promote healthy lifestyles.”(Gebauer,
Haldimann and Saul, 2017)
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 Objectives of NHS is “ to reduce infant and maternal mortality rates and provide
universal accessibility to public health services.”
 Size: NHS is a largest health care service organisation which has four sub health systems
in different locations. It is fifth largest employer in world as it has employed approx 1.7
million staff and attend almost one million patients in every 24 hours.
 Structure: NHS works for entire nation as it come under central government of United
Kingdom.
Voluntary Organisation comprises of those non profit organisations which provides
products and services in social welfare of society instead of maximising profits. It includes
various groups, charitable trust, NGO's who works for society and betterment of environment.
British health foundation is a one of the leading charitable non profit organisation which works
for raising funds heart patients and research to beat with heartbreak causalities occurs due to
heart as well as circulatory diseases (Kasemsap, 2016).
 Background: In 1961, British heart foundation was established by committee of medical
professionals with reason of increasing death rate due to cardiovascular disease. BHS
offers comprehensive range of medical services to heart patients with purpose of reducing
death rates and also organises campaigns and conduct activities to spread awareness
regarding same.
 Vision of BHF is “to make a world where no one die prematurely or suffer from
cardiovascular disease or other heart problems.”
 Mission of BHF is “to beat and win fight against cardiovascular disease.”
 Objectives of BHF is “to act as first mover in research in order to identify deep root
causes of heart disease and enhance techniques of prevention, diagnosis as well as
treatment.”
 Size: BHF has across 950+ healthcare professionals who are accountable for undertaking
large of patients across UK. BHF invest in different centres of Research Excellence and
has various research centres which include Imperial College of London, King's college,
Oxford University etc.
 Structures: British Heart Foundation follow legal structure of Charitable trust.
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TASK 2
P3 Interrelation of various organisation functions and their link with organisational objectives.
Organisational functions encompasses of various course of tasks and actions that are
carried out by every organisation in order to attain its vision and mission objectives effectively
and efficiently. These are necessary activities which needs to be consider by business enterprise
so that it can sustain its competitive edge. It is a proper system which include marketing, human
resource, production, research and development, finance etc. each function has its own strength
and weaknesses that are interlinked with each other (do Rosário Cabrita and et. al., 2016).
 Production and Finance: these two departments are connected with one another for proper
functioning of organisation activities. Production function is associated with
manufacturing of fresh and finished products. It include process of converting raw
material into final goods so that organisation enable to meet out demand of target market.
On contrary, finance function perform activities associated with preparing budgets,
keeping record of cash inflow and outflow so on. These are interlinked as better
production leads to higher profits and this leads to higher funds. In case of M&S,
company main objective is increase its sales volume by 20% then to attain this both
department has to work together as company required to increase its production process
for which it require more funds that will be sanctioned by finance department.
 Marketing and Human resource: marketing function perform various activities to promote
company's products and analyse needs as well as requirements of target market. Whereas,
human resource function contains process of hiring, selecting, providing training so on to
new employees. Although these two are interlinked with each other as for promotional
activities company required high skilled workforce. In case of M&S, company wants to
increase level of customer satisfaction and engagement with its staff for that marketing
department will communicate with HR department so that they can provide training
program to enhance their interpersonal skills and hire fresh talented candidates (Chung
and et. al., 2016).
Organisation Structure comprises of different set of levels and arrangement of numerous
activities which are undertaken by employees who are placed at each and different level of
structural chart. This particular framework provide guidance regarding which employee is
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accountable to whom in addition to this it explains what type of flow of information exits within
company. There are various kind of structures which are followed by companies.
 Functional: this type of structure is based on different functions as this divides entire
organisation into various functional departments. Each department is regulated and
directed by functional manager and employees get their responsibilities accordingly.
Marks and Spencer make use of this organisational structure as it headed by CEO then
board of directors. Then chart exhibits different functional department such as digital and
data, Communication, Finance, Human Resource, Supply chain, Marketing, designing
and production.
Divisional organisational department encompasses of alignment in which employees are
positioned into various different areas. Each section exhibits its own functions, particular
products or services as well as markets. In such structure, each division has some degree of
authority. This is suitable for those organisation which are incorporated in business of chain
stores and subsidiaries (Hamad, Elbeltagi and El‐Gohary, 2018).
TASK 3
P4 Assessment of macro environment impact on business
PESTLE Analysis
Business operations of a company are affected by external factors. Government policies,
inflation rate ,culture, technology, laws and climate are some of the factors that imposed a severe
impact on company growth. Pestle analysis is a tool that assess macro environment of the
country in organisation context. Pestle stands for political, economical, social, technological,
legal and environmental. Pestle analysis of United Kingdom in context with Marks and Spencer
is given below:-
Political Factors: United Kingdom enjoys a stable political system. Fluctuation in
political system is negligible. There is a least intervention of government in function of
businesses. Prime Minister governs the entire country and replaces every five year through fair
election. Country does not have hostile relations with any of the powerful and developed
countries rather it maintains positive relations with United States of America. Liberalisation is a
great catalyst of growth for Marks and Spencer. Free Trade Agreement signed by government
permit Marks and Spencer to smoothly operate its international business. Company can enjoy the
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liberty of importing goods from foreign countries and sell it through stores with high profit
margin. Unfavourable political factor for the firm is Brexit. Britain exit from European Union
can consequent dissolution of free trade polices which will affect the profitability of the
organisation (Khan and Quaddus, 2015)..
Economical Factors: UK is a economically suffice country. Citizens have money to live
a good life. It is a extremely fast growing economy. Inflation rate of the nation is neither very
high nor very low. Time value of money decreases very slowly therefore it is very Marks and
Spencer to reach at financial goal. In recent years evolution of discount store posed a threat for
the company. They are taking away the market share of the retail giant by offering good quality
fashion items at reasonable. Customers are preferring clothes of discount stores than premium
brand like Marks and Spencer. Retail giant is required to deliver differentiated products to
customer to retain market share.
Social factors: United Kingdom is a home of multiple cultures. Citizens are fond of
wearing suit pants in social gatherings. Growth rate of country had been increased in recent years
. Thus market size of the company is rendering huge scope of sales. As Marks and Spencer is a
century old brand therefore perceived added value of the brand in the minds of the company is of
a old fashioned store. Firm need to change launch old is gold campaign to revitalise its brand
image.
Technological factors: United Kingdom is famous for its advanced technology.
Technological infrastructure of the nation is at its peak stage. Internet penetration in the country
digitalized almost everything. 92.6% citizens have access to Internet(United Kingdom Internet
Users). Easy and cheap access to Internet give rise to trend of establishing online business to
consumer commerce. Self checkout system is trending in retail stores. Marks and Spencer can
leverage this technology to save the expense of cashier.
Legal Factors: United Kingdom have a strict and well defined legal landscape which
safeguard citizens from crime. Government had been enforced employees legislation, corporate
law and legal law to limit the freedom of companies to such an extent that it cannot harm society
and workforce. Marks and Spencer must comply with the law and order in order to sustain in the
market. Otherwise legal factors not hampering the growth of organisation (Monroe, Rikala and
Somervuori, 2015)..
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Environmental factors: Government of United Kingdom is encouraging sustainable
development. Issue of global warming put pressure on government to take initiative to save
environment. Though UK is a relatively cold country. Marks and Spencer should invest in
corporate social responsibility directed towards sustainable environment. This will further
improve its corporate image.
TASK 4
P5 Analysis of internal and external environment to identify strengths and weaknesses
SWOT Analysis of Marks and Spencer
Strength: One of the noticeable strength of Marks and Spencer is free cash flow that
render enough financial resources that can be used to extend its projects. Company owns
expertise in streamlined its supply chain system by acquiring complimentary companies (Eling
and Schaper, 2017).
Weaknesses: One of the most significant weakness of Marks and Spencer is its
positioning as an old fashioned brand which retard its growth in profitable youth segment.
Another weakness of the firm is its lack of efficiency of financial planning. Financial resource of
the organisation is underutilized.
Opportunities: Green drive initiative by government render company an opportunity to
sell their products to state and federal government. Government is providing liberty to perform
free trading globally which enable Marks and Spencer to import fashion items in cheap rate and
sell them in stores at premium. Thus profitability of the firm would be positively affected.
Threats: The most serious threats affecting company's profitability is circulation of
counterfeit products in developing countries. It also deteriorate the brand image of Marks and
Spencer. Hike in standard wages in developing such as China can force company to sacrifice its
profit margin in that market.
SWOT Analysis of Tesco
Strengths: The key strength of Tesco is its largest market share in the country. It is the
largest supermarket chain which relish maximum sales and revenue among all grocery retail
firms. Tesco has a superior corporate image because of winning various international awards.
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Weaknesses: Tesco taste failure in two of technologically advanced countries that are
United States of America and Japan. Company have to wind up its business in USA and Japan
after five years and nine years respectively. Tesco is not proficient in expand its business
globally because it does not do proper research on consumer (Huang-Horowitz, 2015).
Opportunities: Tesco can make more sales by increasing its online presence. It is
profitable to expand business in developing economies of Asia such as South Korea, Indonesia
and Turkey.
Threats: Tesco's corporate image face a setback when it post a controversial ad on the
occasion of Christmas. Britain exit from European Union make the trade deals costly and
complex.
P6Interrelation of strengths and weaknesses with external factors
Political factors
Positive: Government liberalised trade by signing free trade agreement with countries to
make trading cheap and less complex. Also the relations with developed countries are good
enough. The step of free trade agreement by the government enable Marks and Spencer to utilize
its strong supply chain to import products in low cost and offer them in stores in high profit. This
practice will the boost the profitability of the business (Fitó-Bertran, Hernández-Lara and López,
2015).
Negative: Brexit is negative element of current political environment. As Britain is
withdrawing its membership from European Union therefore free trade policies with European
suppliers will dissolve and price of products will increase which create financial burden on final
consumer. It is a threat for the company as it can have severe impact on sales.
Recommendations: Marks and Spencer should use its free cash flow in research and
development in order to render higher value to customers.
Economical factors:
Positive: Free cash flow is a great strength of Marks and Spencer. It is capable of
leveraging the opportunity of lucrative investment. As United Kingdom is fast growing economy
therefore there is no dearth of profitable investment opportunities which can enhance the growth
of company.
Negative: Discount stores are fascinating customers by offering products in low price.
Thus market share of company is decreasing.
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Recommendations: Marks should reduce cost of product of producing fashion items
using automation and artificial intelligence for repetitive work.
Social Factors
Positive: Country is highly educated and prefer to wear suit pants in social gatherings.
People purchase suits pants from premium brand and Marks and Spencer supply premium suits
and pants.
Negative: Generation is becoming modern and Marks and Spencer is old brand. They
perceive Marks and Spencer as old fashioned brand. This belief of society repel customers from
stepping into company retail store.
Recommendation: Firm is required to repositioned itself as trendy brand by launching
old is gold campaign.
Technological factors
Positive: Hike in internet access make marketing more effective. Company is taking
benefits of digital marketing in promoting brands. Digital marketing reduce promotional
expenditure. Thus company left with enough cash to invest in lucrative project.
Negative: Technologically also bring competition in the market. Online retail giant like
Walmart and Amazon posed a severe threat for the firm. Businesses are continously improving
technology in order to offer better value than rivals.
Recommendation: Marks and Spencer should innovate new technology.
Legal factors
Positive: Law and order protect company from any kind of fraud and mistreatment.
Negative: Legal landscape of the country is not hampering the growth of Marks and
Spencer.
Environment factors
Positive: Climate of the country is excellent which increases the working capacity leads
to growth. Green drive initiative taken by UK government is a great opportunities for the
company.
Negative: Government is raising concern over the sustainable development that can
increase the cost of the product.
Recommendation: Marks and Spencer is recommended to invest in corporate social
responsibility for nature conservation. It will enhance corporate image.
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CONCLUSION
From above research assignment, it can be summarise that it is necessary for each
organisation to assess its business environmental factors in order to sustain its competitive edge
and attain its objectives effectively. Business environment consists of different internal and
external forces that have ability to influence operations and decisions of business enterprise.
There are various frameworks through which management can examine these factors efficiently
such as Pestle analysis model, SWOT analysis. These enable firm to assess upcoming
opportunities and threats in order to achieve long term success. Although, company required to
maintain coordination between various organisation functions for smooth operations.
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United Kingdom Internet Users. 2020[Online] Available
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