Analyzing Internal and External Factors Affecting Marks & Spencer

This report provides a detailed analysis of the internal and external factors impacting Marks & Spencer (M&S), a multinational retail brand. It explores how factors such as physical assets, human resources, financial resources, intangible assets, brand image, and plans/policies influence M&S's operations. The report also utilizes a PESTEL analysis to examine the impact of political, economic, social, technological, environmental, and legal factors on the company. Furthermore, the report outlines approaches M&S can use to mitigate the negative effects of these external factors, including adapting to changing consumer trends, optimizing supply chains, and promoting environmentally friendly practices. The conclusion highlights the significant impact of both internal and external environments on M&S's performance and profitability, emphasizing the importance of strategic measures to gain a competitive advantage. The report includes references to relevant academic sources.

INTERNAL AND EXTERNAL FACTORS

INTRODUCTION
Business environment comprises of internal and external factors which can create an
impact on the managerial activities of the business. Such internal and external
environment factors can create an impact on the performance and profitability of the
organisation (del Carmen Xotlanihua-Gervacio and et.al, 2019). Marks and Spencer is
multinational retail brand which offers wide variety of products such as clothing, food,
and home decor products. The company was founded in 1884 by Michael Marks and
Thomas Spencer and is currently offering worldwide services. There are several other
brands which are introduced by Marks and Spencer. This poster depicts the impact of
internal and external factors of business environment.
IMPACT OF EXTERNAL AND INTERNAL FACTORS
There are several factors such as internal and external which can influence the
operations and function of management, the impact of internal and external factors on
business environment of M&S is explained below:
Internal
There are several internal business environment actors which are within an
organisation, such factors can create an impact on operations of M&S, some of the
internal environmental factors are discussed below:
Physical Assets- M&S have 375 stores in UK and several other stores in different
countries and location which depicts the strength of the company. All the stores of M&S
ae identical as they have same layout, designing, image and procedure which results in
limitation to changes, as some changes ca be based on lifestyle, environment and
geographical locations.
Human Resource- M&S have s hardworking, dedicated, experienced and loyal staff.
Such team members help the company in handling all work and performing all activities
from top to down management structure which will be helpful in meeting the
organisational objectives (Fernández-Olmos and Ramírez-Alesón, 2017). Due to bureaucratic

culture in M&S, the company lacks effective communication and lack of outsourcing
which affects the performance and ability to meet the requirements of the customers.
Financial Resources- The profit margin of the company started declining from 1998
until 2000 which depicts financial instability and lack of cash availability which lead to
end expansion program in America and Europe. Whereas, the financial resource sf the
company are stable and the company have strong and good financial resources.
Intangible- due to change in market fashion, customer trends, low product cost, this
made M&S face decline in customer loyalty The high quality and premium brands were
undervalued by the market and due to lack of knowledge management system, the
company was not able to connect with customer and supplier’s data base (Gleim, Smith
and Cronin Jr, 2019). By maintaining the data base, this heled M&S to maintain a long-term
relationship with their suppliers.
Brand image- This internal factor is one of the most crucial factor which can affect the
functioning of the brand. Such internal factor can affect the sales, revenues, profitability
and sustainability of the business. M&S focus on maintaining their brand image through
which they can generate higher revenues and more customers can be retained.
Plans and policies- Formation of plans and policies is one of the responsibility of top
management which can affect the performance and interest of employees and
customers in the organisation. M&S focus on forming effective plans and policies
through which they can maintain the goodwill, positive working scenario and more
customer engagement trough which they can maintain the profitability of the business.
External
For analyzing the impact of external environment on M&S, PESTEL analysis is used
which is discussed below:
Political factors- Political factors such as flow of trade and foreign trade regulation
have created an impact on the business. M&S can import and export their products to
different countries easily with the help of foreign trade policy which will help in
generating higher profits. Due to higher pricing strategy and cost structure, this have

created a huge impact on the company as competitors ginned more benefit and
maximized their market share by offering products at reasonable prices (Kim and Jang,
2016).
Economic factors- The competitors of M&S are consumer centric and specialized in
niche market through which they can offer more customer satisfaction by offering
products at reasonable prices (Kim and Jang, 2016). The competitor companies focus on
importing their products through which they can save cost and M&S face challenge and
cost disadvantages as the company focuses on delivering high and premium quality
products and services to their customers.
Social factors- Due to change in consumer concept in the industry and high quality of
products, a shift in demand of clothing and product can be seen which have affected the
sale and revenues of M&S. By rapid incline in price sensitivity, the competitive position
of M&S has decreased.
Technological factors- Media and technology plays a crucial role in performing
activities in the organisation as this also helps in interacting with consumers and sharing
new fashion trends which will be helpful in attracting more customers. Such
technological advancements have helped company in interacting with different
members of the staff through which they can set performance standards and meet the
desired outcomes by sharing all necessary information with the hero f technological
advancements. Transportation speed is also major factor which can be racked and
monitored with the help of technology and thus, these factors can affect the managerial
operations of the company.
Environmental factors- The company, M&S focuses on evaluating these products and
identifying how these factors and products are used and disposed through which they
can maintain the sustainability of the business. Many retailers use high range of
material for manufacturing the products and manage all operations and functions
effectively through which they can safeguard natural habitats and bio-diversity can be
promoted (Lim and Yazdanifard, 2015).

Legal factors- legal factors are such factors which majorly defines and limits the
boundaries of the organisation though defining their rules and laws which must be
followed by all organisation while operating and running a business. Legal factors such
as customer high standards of quality products must be manufactured by the company
through which they can meet the demands of the customers and get attain maximum
customer’s satisfaction. Such factors help the organisation in delivering world class
quality products through which resources can be effectively utilized and maximum
customer satisfaction can be accomplished.
APPROACHES BY WHICH ORGANSIATION CAN INFLUENCE
EXTERNAL ENVIRONMENT
There are several approaches which have been opted by Marks and Spencer
through which they can minimize the negative impact of external environment on the
functioning of the business, some of these ways are defined below:
Political factors- Marks and Spencer focused on changing customer trends through
which they can offer products which can offer optimum customer satisfaction and make
the business more profitable. By following all foreign trade policies and reviewing the
cost structure will help Marks and spencer to meet the competition through which higher
competitive advantage can be gained (Liyu, Wan and Qian, 2020). By meeting and following
all governmental interventions and policies the flow of goods and services imported and
exported by M&S can be timely delivered with smooth supply chain management and
will also be helpful for increasing the market share.
Economic factors- The cost disadvantage which was faced by M&S can be minimized
through channelizing all logistics services and through using more suppliers and
distributors will be helpful in reducing such cost. By reviewing the cost and maintaining
the same high quality of products will be helpful for the company in attracting more
customers and delivering quality products through which maximum customer
satisfaction can be attained.
Social factors- M&S can minimize the negative impact of social factors on the business
through forming effective and efficient campaigns through which they can bring

sustainable change in the society and the vision and mission of their corporate social
responsibilities must be on providing benefits to as many people as they can. The
company must ensure that their products and services are consumer centric and will
offer maximum satisfaction which will help them in building a strong goodwill and better
position in the market (Ramli, Muljono and Afendi, 2018).
Technological factors- By using social media platforms and other mediums through
which digital transactions can be made will help M&S in attracting and retaining more
customers. With the sue of technology, M&S can help in identifying the current changing
demand of their customers through which thy can meet the competitive business
environment.
Environmental factors- By creating more awareness and promoting environment
friendly products will be helpful in meeting the desired change in the society. M&S must
promote cruelty free and environmental friendly material though which they can save
the environment and sustain such resources for longer span of time (Susanty and et.al,
2021).
Legal factors- By meeting all legal requirements and laws, it will help M&S to maintain
the standard of the products and services through which maximum customer
satisfaction can be met. By following all procedures ethically and following the ethical
code of the conduct will be helpful for M&S to maintain their brand image in the market
and more market share can be covered.
CONCLUSION
From the poster, it can be concluded that several internal and external environment
factors of business create a huge impact on the operations, performance, productivity
and profitability of the company. M&S use several measures through which the
company can identify the impact of such factors and take necessary measures which
will help the company in gaining competitive advantage.

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