Business and Business Environment Report - [University Name]

This report provides a comprehensive analysis of the business environment, focusing on various types of firms, their purposes, sizes, and scopes. It examines the interrelationships between different organizational functions, such as human resources, finance, sales, and marketing, and how these relationships contribute to achieving business objectives. The report further explores the positive and negative effects of the macro environment on businesses, including a PESTLE analysis of Marks and Spencer (M&S). Internal and external factors affecting M&S are assessed through a SWOT analysis, and the interrelation of strengths, weaknesses, and external factors are discussed. The report highlights the importance of understanding the business environment for firms to increase productivity and achieve their goals, with M&S serving as a case study for analysis.

BUSINESS
AND
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types and purpose of firms.................................................................................1
P2. Size and Scope of different range of organisations..........................................................2
M1 structure, size and scope of different firm linked with other business objectives...........3
TASK 2............................................................................................................................................4
P3. Explain the relationship between different organisational functions...............................4
M2 Advantages and disadvantages of interrelationship.........................................................5
TASK 3............................................................................................................................................5
P4. Positive and negative effect of macro environment on business.....................................5
M3. PESTLE analysis of Marks and Spencer........................................................................7
P5. Internal and external analysis of Marks and Spencer.......................................................8
M4 SWOT analysis of M&S..................................................................................................9
P6. Interrelation of strength and weaknesses with external factors......................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business is an organisational and legal entity comprises of group or association of people
who have a common purpose. They work under the legal framework while focusing on various
talents that help to achieve their objectives. Business environment is considered as the
surrounding in which company operates. It comprises of both internal as well as external factors.
This environment has positive as well as negative impact on the performance of the firms
whether they belong to any sector. In order to increase the productivity of the firm it is important
to understand the influence of environment on the operations of the firm at present and in the
coming future. Marks and Spencer plc is a major British multinational company headquartered in
London that is chosen in the present report. Here, various internal and external factors that affect
the business environment are discussed. Different types of organisations, their size and scope are
also explained.
TASK 1
P1 Different types and purpose of firms
There are several types of organisation that are operational in U.K. i.e. public, private,
voluntary. They are categorised under the purpose for which they had set up themselves. These
are operational in different kind of sector namely primary secondary and tertiary. There are
several types of firm like profit, non profit, multinational corporations, franchises etc.
Private sector firms
Private sector company are those which is operating its business for the purpose of
making maximum profit from its activities. These organisations have different kind of legal
structures that follows which depends on the jurisdiction in which they have their legal domicile.
In this individual can conduct their operations without necessarily be part of an firm. There are
three types of private sectors companies like sole traders, partnership, Franchise (very common
in U.K.). Their prime concern is to add more number of stakeholders with them. So they can be
helped at the time of their need apart from this they are also in need of stock. They do not serve
in the public interest and all the profit is shared among very few shareholders. Which makes it
very less liquid and the value of business is harder to get determined. Private sector companies
have highly oriented organisational structure and very few people are responsible for making
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their decisions. This makes the process of decision making comparatively faster and efficient.
Marks and Spencer is one such firm.
Public sector firm
On the other hand there is public limited sector organisations whose primary purpose is to
make profit while ensuring the benefits of out of its operation with the general public. There are
lot of members involved in the process of making decisions which makes the process highly
complicated as well as takes time to reach to a conclusion as they have lot of responsibilities
towards the interest of general public. Although the thing is that public limited companies are
part of private company and public organisation is that which comes under the public sector.
They are supervised by the government or authoritative bodies it legal structure in UK suggests
that three must be more than two people that is required to form such company checking that
they have lawful purpose. and shares its profit with the general public. National Health Service is
the firm that comes under this sector companies.
Voluntary sector firms
There is one another kind of company that is operational in U.K i.e. voluntary
organisations. Their main purpose to operate their business is to do welfare for the society,
individual, animal any community etc. They are generally not owned by particular person but the
group is responsible for the decision making. They are working for the interest of others and are
mainly operational so as to have socio economic development. There legal structure is simpler
and they are generally not funded by any other government bodies. They generally are non profit
making associations. The regulations and tax treatments are relaxed and the way in which law
effects these organisations differs from country to country. Red cross society is one such firm in
this regard.
P2. Size and Scope of different range of organisations
There are organisations that are operational inside the UK and have different size and
scope. There size and scope is interdependent sometimes. The size of the organisation depends
on the assets it has, stakeholders associated with it, customers, suppliers they have as well as the
employees that are working in it. In order to understand the size and scope of different kinds of
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organisations that is operational in different sectors the illustration of two companies have been
made.
BASIS Private sector Public sector voluntary organisation
Size Marks and Spencer is
one of the biggest
retailers of UK. It
comes under the
categorisation of
private sector firms.
This company is
having total revenue
generation of around
10,622 million pounds
with a profit of around
approx 690 million
pounds. Total number
of employees that are
associated with it is
approx 8300. This
company a large
customer base as the
company is
operational in UK for
around 133 years.
Right now company is
operational in UK with
its approx 1200 stores
with around 959 stores
alone in UK.
On the other hand
National Health
Service is the
company that belongs
in the category of
public sector. It is
operational in
England, Wales and
Scotland. This
company is basically
single nation oriented
company working in
the business of
providing many kind
of heath services to
millions of people
inside the company. It
is having around 1.6
million employee as
per the data available
for 2015-16. NHS is
having combined
budget of 136.7 billion
pounds.
voluntary organisation
is those which is
generally made not to
have profit and thus
they are generally
made for the welfare
of society like
(individuals and
different community).
As, size of voluntary
organisation is not so
large and it is being
managed by few
people. Moreover, the
firm is individually
owned and when the
time comes to take
decision, then group of
people come to have
an decision in right
contrast. They are
normally non-profit
organisation. In such
company there is no
tax regulation are there
and they work hard for
humanity.
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Scope It has thousands of
bigger and smaller
shareholders
associated with it.
While talking about
the scope of the
organisation it is a
multinational company
and are operational in
many regions of the
globe. It deals in the
business of clothings
and luxury home
products as well as
food items. This can
be understood by the
fact that out of its 959
stores in UK 615 alone
deals in the business of
selling food products.
It as higher scope in
the bigger markets
such as Russia, India
and other pars of the
sub-continents.
As the purpose of the
organisation is to work
for the public welfare
hence the company do
not charge its staffs for
medical treatments. In
terms of scope it has
higher scope but
higher limitations as it
is monitored by UK's
government so it is
hard for them to
operate outside UK.
They can work in PPP
model so as to expand
in many other parts of
UK after the
settlement of deals
after Brexit.
This type of firm has a
large scope any one
can be a part of such
firm as because it is
non profit company
and this is being made
for development of
society through
welfare and helping
them in any scenario.
It has been that around
1,62,960 voluntary
organisation are there
in UK only.
The size and scope of public and private sector is that which make them to differentiate
among them in better manner. The legislation they follow is quite different and they have to
make their structure in proper way so that they can complete their task on time. Size and scope of
public and private company should be large in customer prospect so that they can get stable in
market and can serve million of people with their product and services in right manner.
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M1 Structure, size and scope of different firm linked with other business objectives
It is important to understand that organisational structure plays a very important role in
making the work process easier that helps in achieving the business objectives efficiently. Private
organisations have lesser complex structure and hence making decisions is simpler which helps it
in tackling various situations that arises in from of its success path. The larger is the size greater
is its capability to generate resources so as to achieve the targets it has set for itself. The size of
the organisation reflects its potential to grow as a firm. Apart from this scope of organisation
helps in making the way of achieving their business objectives. Better scope helps to redefine the
organisational objectives.
TASK 2
P3. Explain the relationship between different organisational functions
In every firm there are many organisational units such as human resource, Finance, sales,
marketing etc. These have interrelationships that helps to achieve its business objectives in a
proper way (Chavis, Klapper and Love, 2011). Relationships helps to have the understanding of
what role actually they have in order to achieve the overall objectives of the firm and hence
defining their individual roles and responsibilities.
Human resources department has the role of recruiting, selecting and training people for
different functional units as per their demand. They are important for the training the employees
on timely basis so that they can increase their productivity. Company such as Mark and Spencer
and NHS as different organisational units as they are dealing in many types of products. Private
firms such as Mark and Spencer selects the best employees only based on the talents they have
and apply almost similar policy throughout the globe.
Finance department works with various other functional units so as to maintain there cash
flows as well as their monetary requirements. Finance department works with others so as to
ensure that maximum profits can be achieved from company's business as well as reducing their
working cost. They have the role of managing the financial accounts of different firms so as to
check out for the cash leakages so that business objectives can be met properly. Their relations
with other functional units becomes important for both public and private sector organisations.
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Sales and marketing are the two departments that very essential for increasing the profit
margin of the company. Marketing department works with production and research department
so as to develop products that are according to the market demand and hence helps company in
achieving their objectives (Cho and Lee, 2011). Sales department on the other hand has role of
increasing the profit margins by increasing the sales. Both this department has greater
responsibilities in the private sector companies as compared to public sector organisations. Mark
and Spencer has to face many kinds of competition from their multinational competitors as well
as local markets around the globe.
Production departments works all other functional units especially research unit so as to
develop innovative projects as per the requirement of the market. This department works with
marketing and sales department so as to ensure that demand and supply chain is maintained
which is important for achieving organisational objective especially in the private sector
organisations this helps in meeting the market demands and achieving their purpose of making
maximum profit out of it.
This relationship is directly associated with the organisational structure they have. Better
their relationship better is the organisational structure and hence all the units can easily achieve
what they have been assigned.
M2 Advantages and disadvantages of interrelationship
There are many kinds of advantages and dis advantages associated with the
interrelationship this is as follows:
Advantages:
 It helps to provide clear line of control for each unit and hence less interventions in each
other works.
 It helps to make the organisational structure simpler and hence authenticating the whole
mechanism (Chow and et al., 2011).
 It is useful for achieving the set objectives on time
Disadvantages
 It sometimes takes the autonomy of each functional units as they cannot take their
decisions own their own.
 It makes the organisational structure in a way that every department has to depend on
others so as to ensure its own success.
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TASK 3
P4. Positive and negative effect of macro environment on business
There are various factor that are associated with the macro environment. All this macro
environment effects the operational activity of the firm. It is important for the company like
Marks and Spencer to understand their macro environment as well as positive and negative
impact each factor have on their operations (Commander and Svejnar, 2011). This analysis can
help Marks and Spencer in combating with the competition it is facing. Some of the factors in
this regard is as follows:
 Political: The political decisions taken by the government of UK has serious impact on
the operations of the firms. Government policies helps in making the business objective
as well as achieving it. Some of the decisions like Tax slabs for products can determine
the profit of the organisation. Political decision like Brexit will have serious impact on
the generation of revenue for the company.
 Economy: UK is a stable economy that has helped company like Marks and Spencer in
its growth. The economic hiccups like in the year 2009 reduces the profit margin of the
company. There is a comparative slowdown in the UK economy from past few years
which is matter of concern for the company which has impacted negatively for the
company
 Social: Changing society and its demands have always pushed the companies like Marks
and Spencer to add new product ranges to the market. This change in the demand effects
positively as it opens new markets for the company which can be utilised for making
profits (Craig and Campbell, 2012). On the other hand lagging in innovative ideas can
effect the profit margins of the company in a negative sense.
 Technological: Mark and Spencer needs to introduce the best technological development
in the society so as to increase its effectiveness as well as increasing the productivity of
the firm. This technological developments helps Marks and Spencer in reducing the cost
of their operations. This is very important in present global competitive environment.
 Legal: There are several laws that are associated with the business activities. It has
positive impact on safeguarding the interest of stakeholders while it effects negatively on
the firms operation as the Marks and Spencer has to deal with various legal clauses while
formulating their strategic plan.
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 Environmental: In the modern time it has become important for the company to become
environment friendly. It has positive impact on the working environment of the staffs as
well as the stakeholders health associated with Marks and Spencer. One of the negative
impact is that their growth of profit margins slows down since they cannot opt for the
methodologies that reduces their costing (Cuervo‐Cazurra, 2011).
M3. PESTLE analysis of Marks and Spencer
It is one of the best methods to understand the macro environment. PESTLE analysis for
Marks ans Spencer is as follows:
 Political: They have to face many kinds of political decisions that could create many
issues. Imposed taxation is different all around the world and hence Marks and Spencer
needs to change its strategies so as top ensure its business growth.
 Economical: Marks and Spencer's has to face many kind of economic slow down in
many parts of the world. Globalisation has increased the threat of large failures even due
to slowdown in any market.
 Social: People are opting for buying various goods under one roof hence the scope for its
growth is also higher.
 Technology: Marks and Spencer is using best technology in the market so as to compete
with its competitors while making the work process easier as well as reducing the cost of
working process (Dima, Grabara and Modrak, 2014).
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source 1: Business environment, 2017

 Legal: Many implications needs to taken care of as the rules of employment and tax
leverages are changing all around the world hence they have to continuously monitor
these laws.
 Environment: The governments around the world is pressurising companies like Marks
and Spencer to go natural which can help it in making global reputation.
P5. Internal and external analysis of Marks and Spencer
In order to understand external analysis of Marks ans Spencer PESTLE model is useful.
 Political: Many political decisions such as Brexit have impacted the strategy of Marks
and Spencer. They are forced by governments to create new job opportunities as well as
investing more in UK rather than going out.
 Economical: The economic hiccups such as recession of 2009-10 as well as Greece
being bankrupt has decreased the profit of the company. It has to find new markets for its
products so as to stabilise its economic growth.
 Social: Marks and Spencer needs to consider the changes that are present in the cultural,
demographic of the market so as to make products as per their demand which helps it in
increasing its market share (SWOT Example (Strengths, Weaknesses, Opportunities,
Threats). 2017).
 Technology: Mark and Spencer is known for its use high technological means for their
activities. They are also selling their products using online portals.
 Legal: There are many Laws that have come up in past few years that are related to the
employments as well as protecting customers interest (Drucker, 2017). These all laws
increases the complexity of the firm.
 Environmental: Since Marks and Spencer is dealing in the business of so many products
it is important for the firm to check all the regulations that are associated with the
environment. They need to implement ways to reduce waste and can incorporate circular
economy in their working mechanism.
In order to understand internal environment SWOT analysis can be helpful:'
Strengths
 It is having higher brand name as it is operational for so many years in UK.
 It has a talent strength of around 83000 individuals that makes the working process easier
(Herbst and Merz, 2011).
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