Business and the Business Environment: H&M Company Analysis Report

This report provides a comprehensive analysis of H&M's business environment. It begins with an introduction to the business environment and its impact on company performance. The report then delves into the different types of organizations, including private, public, and voluntary organizations, using H&M, Crown Prosecution Service, and Oxfam as examples, respectively. The report covers the size and scope of these organizations and analyzes the relationships between various organizational functions such as human resources, research and development, marketing, and sales within H&M. Furthermore, it explores the positive and negative impacts of the macro environment on business operations, providing a SWOT analysis of H&M. Finally, the report examines the interrelation between H&M's internal strengths and weaknesses and external macro factors, concluding with a summary of the findings and a list of references.

BUSINESS AND THE
BUSINESS
ENVIRONMENT

INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................4
P1 Different Purpose and Types of Organisation........................................................................4
P2 Size and scope of different organisation................................................................................6
P3 Relationship Between Organisational functions....................................................................7
P4 Positive and Negative Impact of macro environment on business operations.......................9
P5 Internal and external analysis of H&M................................................................................11
P6 Strength and weakness inter-relate with company environment..........................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business environment is a combination of different types of internal and external factors that
impact on company performance (Business environment. 2018). There are different types of factors
included in business environment these factors effect company to perform its functions. Some of
these factors included clients,’ owners, lawyers, competitors, government activities legislations
and so on. In simple terms business environment is a combination of different types of internal
and external forces which directly or indirectly affect company daily basis business functions.
Present report has been conducted on H&M which is a multinational company headquartered in
Stockholm. Company was founded in the year 1947 by Erling Persson. This report includes
various types of formative discussions on the topic size and scope of different organisation along
with their purpose and negative and positive aspects of different types of macro environmental
factors that somehow affect company functions. In addition to this SWOT analysis covered in

this report that will help in evaluating different types of strength weaknesses opportunities and
threats of a company. Lastly this report covers forms of strength and weaknesses which is
internally related with business external macro factors.
TASK 1
P1 Different Purpose and Types of Organisation
Private organisations:
Companies performing their functions in private sector conduct the functions with the
purpose and aim to earn more and more profit. These industries run buy a person, cooperation,
Association and agency. For partnership companies in private sector issue the shares to
shareholders who are also known as owners of the company. There are minimum 2 and
maximum 50 numbers of employees within a private organisation. H&M is a largest clothing
retailer company engage in the functions of offering fast fashion clothes for children teenagers,
men and women. Company headquartered in Stockholm and their main products are clothing and
accessories.
Purpose:
H&M is a fast fashion retailing organisations conduct their functions with the specific
purpose which is to satisfy their customers by offering them products in which they feel better.
Company offer best quality products to customers with a aim to create value to their customers
and gain their loyalty towards company. As per the core purpose of company they always engage
in the functions to serve better quality of products to their customers at affordable prices.
Legal structure:
As per the legal structure of H&M Company effectively follow radical structure in their
workplace which help them to take business decisions in better way. Along with this in the in the
middle level roles and authorities are distributed to employees in order to manage managerial
activities and in lower level effective implementations of Pre determined plans is done. Thus
with the help of this legal structure company maintains best effective efficiency of their
employees.
Stakeholders

Individuals those who come under the category of stakeholders also known as owners of an
organisation as they are those individuals who own shares of a company (Prins and Cybercrime,
2011). Individuals included in stakeholders, customers, shareholders, employees etc.
Public organisations
Companies perform their function in the sector mainly run their operations with the aim to
serve customers rather than to earn more profits. Companies within public sector are mainly
operated by government. In context with this, Crown prosecution service is a principal
prosecuting company engage in the function of providing legal Advisors to police and other
investigated agencies in England and Wales. CPS was founded in the year 1980 with the core
purpose to provide fair advices.
Purpose:
Crown prosecution services perform their functions with a core purpose to provide fair
decisions to police and investigative agencies in England and Wales. CPS go through the
criminal cases that has already been scanned by police in order to provide effective and fair legal
Advises to them in order to bring out real culprit.
Legal structure:
Legal structure of CPS include less top level managers which effectively stimulate best form
of communication and sharing of ideas in a collaborative manner. This will result in best
effective efficiencies of result in regarding to criminal cases.
Stakeholders:
Individual included in stakeholders criteria are those persons that get affected by policies
and actions of a company. In relation with Crown prosecution service there stakeholders mainly
include Financial Institutions, Government, employees, and shareholders of government owned
firms.
Voluntary organisations:
Companies conduct their functions within this sector perform their operations in order to
provide welfare to the society (Vitale, 2011). In context with this, Oxfam which is a combination
of 20 different charitable organisations effectively perform their functions towards total
eradication of poverty from all around the world. Oxfam is mainly a non-profit administration
which was founded in the year 1942 with a motive to provide humanitarian services.
Purpose:

The core purpose of Oxfam is to provide best effective humanitarian welfare services to
needy people and eradicate poverty mainly in drought and famine prone areas. This organisation
effectively performs their functions in order to increase standard of living two persons and make
them responsible. One of the core visions of company is to make every individual treated in a
right and equal manner.
Legal structure:
Legal structure of Companies performing their functions in voluntary sector mainly includes
trust, unincorporated Association, community interest and more.
Unincorporated associations
It includes a formative collection of persons. In this form of legal structure there are not
legal existences which letter words taking legal discussions on the basis of groups.
Trust
It is a form of structure falls under the criteria of voluntary organisations which include
those individuals who come together to manage property and fun of an owner. Trust performs
their functions with the purpose to provide welfare to the community in addition to this a trustee
holds responsibility to make contracts.
Stakeholders:
Stakeholders within voluntary sector are mainly those individuals who are effectively
influenced by voluntary organisation. It mainly includes donors, beneficiaries, staff founders’
boards and volunteers. There are mainly five time of different stakeholders that include
functional management project manager customers sponsors and projecting.
P2 Size and scope of different organisation.
There are different types of organisation in the business that are mention as below:
Public organisation- The public companies or organisation are those which are run by the
government. So it provide more value in their product or service with a charging minimum
amount of price from their domestic customer. The company chosen for public organisation is
Crown prosecution. The company offer legal advice service to their customer. Major customer of
Crown prosecution are police department and small agency or firms that need legal advice to
operate their activities smoothly.
The CPS tackle more than eight lakh cases with the help of 600 staff members that give efficient
service to their customer. The main motive of the company is to generate the faith in their

customer to perform and operate their activities in a ethical way. As employees of the CPS
support company to improve their goodwill by giving excellent advice to their clients.
Voluntary organisation- The goal of this company is to serve the society. The organisation
chosen for this case is Oxfam. The main target of the company is to reduce the poverty from
theworld. The other motive for the company is to improve the life style of the individuals (Berg
and Siebel Systems, 2014). Oxfam do several charity to raise more funds that help to reduce the
poverty from their business. The vision of the company is to provide attractive clothes and
affordable quality food with smallest price that can bear by everyone. Along with these more
than twenty charity trust work under Oxfam which are always ready to do activities that welfare
the society and individuals. The value, belief and mission that follow by the company is to
maintain peace across all the world and to remove inequalities between rich and poor people.
Private organisation- Companies that take risk to convert an opportunity into a potential market
by which they earn profits from different person and corporation. Companies that run their
business under private sector issue share, bonds and raise loans from banks to start their venture.
Most of the private organisation companies offer their own products and services to customer
for covering the cost of their product. The highest risk that has to face by private companies or
organisation is that there are dynamic changes in the demand of the customer. in short intervals.
H&M is chosen for this topic which came under the private organisation. The H&M is a Swedish
multi-national company which operate its business in the clothing sector. Company produce
fashionable clothes for women as well as for men. H&M is operating their business in more than
60 countries which help company to create global presence of its product in all over the world.
The target market of H&M is increasing day by day across the globe as company is operating
their business in fashion market which is a growing industry across all the world. The major
reason of H&M success is the man power that is around more than 1,00,000 employees which
help company to operate its stores in all globe.
P3 Relationship Between Organisational functions
A business unit is made up of different departments that function together for achieving
the goals and objectives of the company (Janita and Miranda, 2013). There are different
departments in H&M. All these departments have different roles and responsibilities that
employees have to perform. There are different departments which work together in this

organisation for accomplishing tasks and activities of the company. The interrelation among
these is listed below-
Human resource Department:
Human resource department focuses on the process of hiring and recruiting candidates
that can best fit in the company. The human resource department is the main department that is
responsible for hiring new and talented candidates that can function well in the company. They
maintain formative form of communication in each and every department and provide them
effective labours by recruiting skilled and experienced candidates. The HR managers of H&M
provides different effective training and development secessions. These trainings help in
increasing productivity for departments like marketing, IT and Manufacturing. In H&M this
department considers issues like market oriented compensation and other development
programmes. The Finance department allocate effective budget to HR department so that it can
make effective recruitment process so that good candidates will be hired. ,
Research and Development department:
R& D department in a business organisation is involved in research of a marketplace and
grab customer needs and demnads in order to make good products and services. Research and
development department in H&M perform activities like developing new ideas and create more
innovate strategic ideas which benefits production department to produce effective and
qualitative products. The R&D helps the marketing team by giving them informations of those
effective areas where will get positive outcomes from promotion and branding of H&M
products and services.
Marketing Department:
Marketing department of the company helps in finding new possible market and giving
new and innovative products to people. Marketing department in H&M perform their work with
finance team and it sets an amount of volume of designing good quality products. The marketing
department in H&M help human resource department to find them the source of effective
candidates for the organisation. The human resource department helps marketing unit by
providing them skilled and qualified labour force. This helps company in increasing profitability
and productivity of the company (Avramenko, 2012).
Sales Department:

Sales department in an organisation is involved in increasing consumer base for a
company by selling their products and services directly and indirectly to customers. Sales unit in
H&M engage in maximising revenue of company and help them to gain more competitive
advantages in a marketplace. For this, marketing department provides strategies and sector to
sales unit in which they can attract customers and increase their sales base. While on the other
hand, by selling company goods and services sales unit aid finance department to increase end
results.
All these departmental units in H&M work together so to maximise overall productivity
of company and aid them to gain more advantages in market against their competitors. It is
certain that there will be a situation of conflicts that may arise in this course. So H&M managers
need to adopt strategies and policies in order to decrease impact of these situations on company
and employee performance. This will benefit H&M to enhance effectiveness of their workforce
and increase profitability of company simultaneously.
P4 Positive and Negative Impact of macro environment on business operations
There are some factors which affects the business operations and decision making. These
factors are demographics factors, legal and political factor, technological factor, economic and
natural factors. These macro factors are described below-
Political Factor: There are defined as various laws and regulations that are essential in
functioning and operating of any company. The Government of United Kingdom has initiated
some rules and regulations like Union Directives, Subsidies, free-trade zone Industrial revolution
and UK corporate Governance code that have to be followed in H&M to function properly.
Positive Impact:
If the company follows rules and regulations in the company then the company will
perform their functions in ethical and legal way. H&M should run its business effectively by
adopting ethical rules and regulations.
Negative Impact:
The rules and regulations of the company keep chaining with time. Various rules like
Import quotas, currency control and export financing affects the operations of H&M. It stops this
company to borrow funds form international banks (Vitale, 2011).

Economic Factor: Economic factor of United Kingdom include availability of lending
rates , prices of overseas buyers and taxation policies. All these factors directly or indirectly
affect operations of H&M.
Positive Impact:
Relaxations provided by government of United Kingdom benefit H&M to sell their
products and services in suitable affordable manner which will aid them to increase their overall
probability and productivity.
Negative Impact:
Economic situations like rise in in interest and tax rates impact adversely on business
functions of H&M. This will make company to loose their market stability and shares. Rise in
interest rates will impact H&M finance department to lend funds and money form different
financial institutions and utilize them for their organisational functions.
Social Factor: Social factors means cultural beliefs of society in a particular
geographical location. It is important for H&M to analyse taste and preferences of customers
before selling their products and services. They are required to evaluate cultural beliefs of
society and ensure that their goods and services are acceptable in that reign.
Positive Impact:
Social factor can benefit a company in many ways. H&M can increase their sales
outcomes in magnificent way by following CSR activities and taking care of society beliefs and
values.
Negative Impact:
It is necessary for H&M to follow CSR activities as if it is not abided by them then it may
result in decreasing their goodwill and reduction in demand of their product and services.
Technological Factor: Technological factor includes change in style, trend and fashion
preferences of world. As technology is dynamically changing it is essential for an organisation
to make themselves adaptable and implement effective strategies to make their employees accept
these technological changes.
Positive Impact:
H&M can maximise its strength by innovating the products. This manufactures wide
range of goods and services that includes, clothing for men and women, cosmetics, apparel and

accessories. By the use of Technology Company, H&M can bring innovative modifications in
their products and increase their sales.
Negative Impact:
Modifications in the product require a huge investment. Innovation also needs talented
employees and training for workers (Ballard, 2012). H&M should change the the internal
structure for becoming competitive in the marketplace. This will help in increasing cost of input
of H&M and for conducting a continuous research.
P5 Internal and external analysis of H&M.
In present scenario H&M is known as one of the best fashion icon company in all over
the world. Company has expanded its business all over the world to provide it product. There is
the SWOT analysis of an organization to find out its strength and weakness is as follow:
Strength:
Wide range of products- The H&M is offering different types of products for their customer such
as cosmetic, shoes and accessories etc. with inferior quality at reasonable price. So its customer
are more satisfy with its products.
Unique identify of all its products- H&M sell its products from different portfolio which help
H&M to generate more sale for their products. So its product offering are easily available in
market that help the company to connect with their customer easily.
Global presence- Company has operating its business in six different continent with in more than
60 countries. This global presence help the company to create more potential customer for their
business.
Weakness
Supply chain- The products of H&M are reach towards end consumer with the third party
presence. So it increase the cost and vendors are not generated enough sales for their product.
Affordable pricing- Company has make its presence in all over the world. In these case company
has to bear heavy cost to transport its products in different store all over the globe,.So sometimes
company has to increase the price for its products that are not with match with the quality of the
product.
Opportunities

Expansion-.H&M is focusing on increase the number of its stores so that company reduce
the number of its mediator. This expansion help the company too improve their bottom and top
line to sell its products.
E-commerce as a platform- The company sell their products in different market through
its stores. In present scenario many companies are selling their products with online platform
(Bharadwaj, 2013). So the E-commerce platform is also a good option for the company to
increase the revenue and sale of its products.
Lifestyle- In most of the developing countries purchasing power of the consumer is
increasing all over the world. Customer are more brand-conscious. So it can help H&M to open
their store in those countries.
Threats
New Entrants- As the companies are growing and expanding their business in different
countries they are creating barrier for each other. In these case companies which are operating
their business in local origin have to compete with many new companies which are already
updated with customer demand. So it also easy for new companies to connect with their potential
customer.
Strong competition- H&M is operating their business in fashion industry which is very
dynamic. The demand of the customer change with the change of trend. So it is difficult for
company to manage with all the needs of the customer. H&M has not face competition not only
from their global companies but the local companies are also creating barrier to run smooth
operation of the business.
P6 Strength and weakness inter-relate with company environment.
Every company has its strength and weakness which help the business to achieve their
goals and objective with in a particular time period. There are different types of external factors
that impact on the company to operate their business. In the context of H&M, company strength
and weakness are given below which help company to achieve its goals.
Political factor- H&M is operating their business in more than 60 countries which Asia, US etc.
across the world. So it is not easy for the company to maintain all of its resources with a
particular time period. The political factor include different types of policy, rules and regulation
that impact on business. So if H&M maintain healthy business relation with government and