Business Environment Analysis Report: Marks & Spencer (M&S)

This report provides a comprehensive analysis of the business environment, focusing on Marks & Spencer (M&S). It begins with an introduction to the business environment and its significance, followed by an examination of different organizational types, including public limited companies, private companies, and voluntary sectors. The report then delves into the scope and size of various enterprises, using M&S as a case study. It explores the interrelationship between various organizational functions, such as design and production, human resources, finance, marketing, and administration, highlighting their coordination and impact on the business. The report also uses the PESTLE framework to analyze the positive and negative impacts of macro-environmental factors on M&S's business activities. Additionally, the report includes an external and internal analysis of M&S, followed by an examination of the interrelationship between its strengths, weaknesses, and macro-environmental factors. The report concludes by summarizing the key findings and providing references for further study.

Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different purpose and type of organisations.....................................................................1
P2 Scope and size of various enterprises................................................................................4
TASK 2............................................................................................................................................5
P3 Relationship between various organisational functions....................................................5
TASK 3............................................................................................................................................6
P4 Negative and positive impact of macro environment on business activities of M&S......6
TASK 4............................................................................................................................................8
P5 External and internal analysis of Marks & Spencer..........................................................8
P6 Interrelationship of strengths and weakness with macro factors of environment.............9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Basic definition of business environment means all external and internal factors that
affect commercial activities and function of an enterprise including, suppliers, customers,
government rules and many more. Understanding of environment in which a business has to
operate is very necessary to achieve success (Teece, 2012). Various factors which exist in
environment affect its nature, location, prices of its offering and many more. That's why it
become more essential for businesses to learn about various components of business
environment including political framework, socio cultural aspects, technological and legal
framework and many more. Marks & Spencer (M&S) one of the leading retailer in home, luxury
and food products based in United Kingdom is taken under this report for study. Presently firm is
operating in various countries with more then 1443 stores. Different type and purpose of
organisation with their size and scope is taken detailed under this report. Further, what is a
relationship between various functions of an enterprise and impact of macro factors on business
activities is all mentioned under this report.
TASK 1
P1 Different purpose and type of organisations
Make and offer innovative products to large number of customers to satisfy their specific
needs and generate large amount of profit is one of the main objective of every organisation
(Wirtz, Schilke nd Ullrich, 2010). Number of department are there which work in an enterprise
to achieve a common goals and it is very necessary that there must be a coordination among
activities of these departments. Complexity and quality of business activities largely depend on
size of firm. Functions of large company are more complex and lengthy as compare the same
with activities of small business enterprise. Main type of business organisations are stated in
below points: Public limited company: Organisation whose control remain in the hands of government
of a country are simply known as public limited company. Offer quality products and
services to large number of customers for fulfil their requirements is one of thee main
motive of these firms. These type of companies issues shares and invite public to buy the
same to raise funds for business activities. Individuals who but shares of the company got
the ownership and are known as shareholders of firm. These companies keep the word
PLC after firm's name. Every year a meeting called Annual general meeting is held by
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these firms in which company invite all of its shareholders in order to to get their
suggestion and approval regarding main decision of enterprise. TESCO is a an example
of public limited company. Main purpose of TESCO is to built a business with a simple
mission which is to be the champion for customers, offer them quality products and help
them to enjoy a better quality of life. Legal structure of a public firm can be understood
by following:
General government: This is further separated into following:
 Central government: Apex body of government is knows as central government. Power
to handle all issues of a nation relies in the hands of this government (Avramenko, 2012)
. Issues rules regarding the functioning of a business, collect taxes form them and print
money comes under the main responsibility of central government. State government: Government which control and handle the issues related with a
particular state is know as state government. Basically this government focus on the
education activities of a state and encourage higher education of children. Local government: Activities and issues related with a local area and town are handle by
the local government.
Private company: Enterprises which are build and operate by individuals or groups of individual
with the aim of earning profit is know as private organisations (Reinhardt and Stavins, 2010) .
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Main focus of these enterprises is to make and offer innovative products to its clients for satisfy
their need and to capture a larger market share. M&S is an example of private company which
execute various operation with the aim of generate large amount of profit. Main purpose of
Marks & Spencer is to make more profits as much as possible and satisfy needs of its customers
with unique quality products. Concept of private firms is further divided into following points:
 Sole trader: A type of enterprise which is run and owned by a single person is known as
sole proprietorship. That individual become liable for every decision and gain all profits
and loss of business. Partnership: When two or more then two individuals start and run a business enterprise
with the aim of earning profit is knows as partnership (Turban, Sharda and Delen, 2011) .
Before start business activities a written document called partnership deed is signed by all
partners which include information such as name, age, share of profit of every partner
and many more. Main advantage of this is that it remove the ground of rising conflicts
and ensure smooth functioning of business activities. Franchising: This is one of the most popular form of private business in today's business
environment (Al-Swidi and Al-Hosam, 2012). In this a person called franchisee go to the
owner of a popular and positive brand image called franchisor in order to get his approval
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to use brand name for sell products. Franchisor give his permission in exchange of some
considerations called royalty fees.
Voluntary sector: Organisation which manage by some number of individuals with the aim of
social development rather than generate profits is know as voluntary enterprises. OXFAM is an
example of this who do various efforts to remove poverty from the world and fulfil basic needs
of individuals. Purpose of Oxfam is to create lasting and effective solutions to the injustice of
poverty. Firm is a part of global development which empower individuals to create a secure, safe
future free from poverty.
P2 Scope and size of various enterprises
Scope of business activities affect by the size of firm's operation. For example large
business companies have wide scope while small business enterprise have little scope of its
business activities. Scope of various business organisations can be better understood by the
points stated below: Public sector enterprise: Organisations which owned and regulated by government and
whose activities are focused to solve problems of public is knows as public limited
enterprise. TESCO is a public limited company who deals in grocery products. Firm is
offering its services to its clients with more than 6535 stores which generate more than 50
millions profit every year (Bansal and Hoffman, 2012). 455600 employees are working in
stores of company which guide and assist customers during their purchasing process. Due
to its large size activities of firm are spread into many areas. Mission of firm is to be a
quality and leading retailer in grocery sector and for the company make and offer quality
and products to its customers. Private sector enterprise: Marks & Spencer is an example of private limited company
who make and offer good quality products to its customers for satisfy their needs.
Basically firm deals in variety of products but food, home and luxury are the main areas
of this enterprise. Presently this firm has more than 950 stores in UK which offer food
home products to customers. At present more then 80000 workers are working in its store
outlets. Operating income of company is £690 million while profit is £ 115.7 million.
Due to its large amount of profits firm offer its service in many other new and non
covered areas.
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 Voluntary enterprise: Organisation whose main focus remain to do social development
of society and its people is knows as voluntary enterprises. OXFAM is one of the exampl
of this who undertake various efforts to remove poverty form the world. For this firm
provide basic facilities to poor people like food, shelter and cloth (Kulkarni and
Agrawal, 2014). Company conduct various campaigns to remove issues like injustice
form the society.
TASK 2
P3 Relationship between various organisational functions
Number of department work in an enterprise which execute various activities to fulfil
main objective of company. It is very necessary that there must be a proper coordination and
cooperation among activities of these department main reason behind this is that activities
perform by one department affect the activities of another department of organisation (Marino,
2014). That's why it is more important for the managers of M&S to ensure coordination among
various function undertake by enterprise to make effective products for its customers. One of the
main factor which affect the qualities of firm's activities is structure and objective of company.
Organisational structure play an important role in overall success of a company so it is very
necessary that firm should follow a simple and effective structure to execute its operations. Main
function of a company and its relation with other organisational function can be understood by
following points: Design and production: It is very essential that production process of firm should be
effective and easy so firm can maintain the quality of its products and can attract more
number of customers towards it (Boons and Lüdeke-Freund, 2013). Product is the main
and final offering of a company so its is very necessary that firm should follow an
effective process of production. Activities of this process get affected by the size of
company. Large calcimines execute this function on large scale while small enterprise do
the same on small scale. Human resource department: Management of workers and activities related with them
comes under the responsibility of human resource department. This function also affect
by the size of firm's operation for example large company will require more number of
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employees to execute its activities. On the other of this small number of workers will be
needed in a small enterprise to achieve their goals. Finance: Funds are required at every level of enterprise to execute its operations without
this company can achieve its objectives. Identification and allocation of funds to different
department is done by the manager of finance department. Demand of funds require to
execute operation is largely depend on the size of firm. Huge amount of finance is
require by large companies and while small firms can execute the same activities with
small amount of finance. Marketing and sales: This is one of the essential function of every company and is
largely affected by the company's objective (Gharajedaghi, 2011). For example if M&S
want to increase the sale of its product than it will more focus on this function and will do
all the efforts to influence customers to buy its products.
 Administrative function: All supporting activities such as send mail, important messages
to customers and handling their complaints is all come under the function of
administrative department.
Organisation structure of M&S
Presently firm is following an divisional organisational; structure to manage all the
activities of its stores situated at different locations. Main benefit of this structure that actions of
employees are separated into groups and its global hierarchy.
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TASK 3
P4 Negative and positive impact of macro environment on business activities of M&S
Basically business environment is a combination of two factors called internal and
external. Internal elements are those which exist within the enterprise are controllable by
manager (Saleem, 2017). On the opposite of this external factors are those which exist outside
an enterprise and uncontrollable by firm. That's why identification of external factors and its
impact on business activities of a company become more essential for organisation. To identify
positive and negative impact of macro factors a tool called PESTLE can be use by the managers
of M&S.
 Political factors: Government of UK set some rules by cover the elements such health &
safety, risk identification, risk control and many more. M&S did not follow these rules
and neglect the health of its workers and an employee get injury at their warehouse which
hamper the positive image of firm (Olawale and Garwe, 2010). Due to this firms bear lot
of loss that's why it become essential for firm to comply and execute its operation as per
the rules set by government. Economic factor: Rate of inflation, deflation, interest and loan all this come under the
economic elements of a country. Any variation and modification in this affect operation
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of a firm. For example if banks of UK will increase the rate of its loan than this will
create an obstacle in expansion activities as fund will be require for this. Social factors: Trends exist in market, purchase pattern of customers, their needs, habits
and tastes all come under the concept of social element. All this should be well identify
and evaluate by firm so it can make appealing products for its customers. Technological factors: Technology play an essential and vital role in retail market. So it
become essential for companies to manager their brands (Hall, 2011). For this it is very
necessary that position of brand should be communicated with customers on a continuous
basis. For this M&S need to invest more in its advertisement activities. Further to
maintain its market share it is essential for firm use updated technology to communicate
with its customers and to make final products for them. Legal factor: Legislations are changing on continuous basis. Due to this firm do various
efforts to keep update with new legislations. Firm also do modification in its health &
safety to ensure safety of its workers.
 Environmental factor: Now a days consumers of every products are becoming more
sensitive about protection of environment. This fact influence firms to make products
with quality raw material and use standard process for making final products.
Overall various factor exist in business environment affect function of a company so all
these must be identify and evaluate by the managers of so firm can plan its future activities.
TASK 4
P5 External and internal analysis of Marks & Spencer
Internal and external analysis is done by every manager of company to identify strengths
and weakness of firm. This evaluation guide him in further planning of business activities and at
the time of formulation of various policies and strategies regarding activities of organisation
(Smallbone and et. al., 2010). By formulating an effective business plan managers can better
utilise all resources and at the same time can get competitive advantage. Further this help top
authorities to identify opportunities and threats exist in business environment. For internal and
external analysis of firm manages of M&S can use SWOT approach.
Strengths:
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 Presently firm has more than 1300 stores worldwide. Geographical diversification of
firm is very effective which reduce the risk of company to depend on one store and this
increase stability of company's operations.
 Firm has a string and positive brand image as company is operating since 1884 and today
M&S is consider under top ten brands of UK. Further expenditure of company on its
advertisement focus on brand building provide number of advantages to company. Company make a shift in its focus from product based strategy to customers based
strategy and this increase the number of its customers.
Weakness:
 M&S continuous loose its key employees, developers and suppliers. All this increase the
cost of company as now firm has to invest more in process of recruitment, selection and
training of new candidates.
 Introduction of digital transformation strategy give rise to number of hurdles before the
company as company face number of difficulties to offer card and club schemes to its
clients.
 Introduction of various new brand form company attract customers of rivals but at the
same time increase cost of firm's operation and due to this firm face a decline in its
current market share. M&S still follow the old procedure of complete the work which increase both time and
cost of firm.
Opportunities: With the help of market segmentation firm has an opportunity to expand its business
activities in new areas (Teece, 2010). Currently firm has its main focus on mega stores
instead of splitting its customers as per their similar needs and interests. With the
development of small shops firm can reduce maintenance cost and can achieve
efficiency.
Threats:
 Increase number of competitors serve a threat to company as there is chance for firm to
loose its market share. Increase competition is one of the huge threat in retail sector.
TESCO, Sainsbury and ASDA are the main key rivals of M&S (Ullah and Lai, 2011).
Competitors of firm are expanding its activities in many other areas so in this case it is
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recommend to M&S to builds its new branches in uncovered areas for increase its
market share.
P6 Interrelationship of strengths and weakness with macro factors of environment
Strengths and weakness of a firm get affect by various elements exists in business
environment. Interrelationship among macro factors with strength and weakness of a company is
stated below: Political factors: Rules made by government, stability of government in a country and
many more affect the activities of an enterprise in various ways (Gebauer, Paiola and
Edvardsson, 2010). For example if government of United Kingdom increase tax rate of
enterprise than this will directly affect the final cost of company's product and in this
situation it is possible that firm can loose its market share. Economic factors: Identification and evaluation of economic condition of a country is
very essential for a firm to achieve success of its product. Sometimes variation in these
factors affect strengths of a company. For example if inflation rate will increase than this
will decease the sale of company's product. Social elements: Customers are the final target of every company for whom it make
products to satisfy their specific needs. Any change in the needs and requirement of
customers affect the business activities of organisation. Technological factors: As technology play one of the important role in retail sector that's
why it become more essential for firm to make updated products to attract more
customers towards firm's offering. Legal factors: For getting support from government it is very essential for companies to
comply with all rules made by legal authorities.
 Environmental factors: Today government of every country made various rules and
instruction for companies to safeguard environment (Bill Pasmore and CMC, 2010). This
affect the production activity of firms.
CONCLUSION
From the above information it can be summarised that identification of various factors
exist in business environment and its impact on commercial activities is very essential for a firm
like M&S. With the help of this study managers of firm can formulate better plans for business
and can achieve its targets easily. Internal and external analysis of firm can be done by managers
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