Business Environment Analysis: Marks & Spencer - Essay (LO1-LO4)

This essay provides a comprehensive analysis of Marks & Spencer's business environment, examining various aspects of the retail sector. It begins with an introduction to the business environment and the organization, followed by a discussion on different types of organizations including public, private, transnational, international, and voluntary organizations, along with their size and scope. The essay further explores organizational structures and functions, detailing the roles of production, marketing, human resources, and information systems. A case study on the UK supermarket sector is presented, applying the PESTLE model to analyze the macro-environment and then employing SWOT analysis and Porter's Five Forces to evaluate the competitive landscape. The report concludes with a summary of findings and includes a list of references. This analysis provides a thorough understanding of the external factors affecting Marks & Spencer and the broader retail industry, offering valuable insights into strategic management and decision-making.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
Essay (LO1 & LO2).........................................................................................................................1
Different types of organisation...............................................................................................1
Size and scope of the organisations........................................................................................3
Organisation structures and functions....................................................................................4
Case study: ‘The UK Supermarket sector’ (LO3 & LO4)...............................................................5
Application of PESTLE model on the retail sector................................................................5
Application of SWOT Analysis and Porter's five forces to UK supermarket........................7
CONCULSION..............................................................................................................................10
REFERENCES ........................................................................................................................11

INTRODUCTION
Business environment refer to different factors that are surrounded near the organisation.
The business environment is the combination of different forces and institutions that are beyond
the control of company but business has to inter-relate with this forces because this various
forces affect on the performance and sustainability of business. The organisation chosen for this
assignment is Marks & Spencer which is operating its business in the retail sector across all over
the world. The British multinational company Marks & Spencer offer different products to their
customer such as clothes, home decorate items and food (Barkauskas and et. al., 2015). For this
various types of organisation will be discussed to understand better the difference between
public, private and government organisation. As each organisation has different purpose and
strategy to retain their business in the market. So in this report several organisation are divided
according to their size and scope.
Essay (LO1 & LO2)
Different types of organisation
Public organisation are those organisation which provide goods and services to their
customer with under the control of government and official and executive of this government
organisation are appointed by the government itself. For this case the audit commission has been
chooses which provide audit, research and data matching services to their customer. Legal
structure that are follow by public organisation is to conduct several policy and examination that
help government to provide equal right in the society. The basic purpose of public organisation
is to provide more services to society at minimum price. Example- Crown prosecution help
company to fight with criminal case with motive to do justice in every case. CPS decision are
independent that are take by official authorities which for UK police department.
Private organisation are those which are run by different individuals or companies to
earn sufficient amount of profits and they are not controlled with government authorities. Major
goal of private sector is to earn sufficient amount of money. In this assignment Marks & Spencer
is related with private organisation sector which is operating their business all over the globe and
cover major area of private retail sector industry (Carlsen and Andersson 2011). Private sector
has to fulfil several formalities and legislations that are essential to operate their business in the

market. Motive and purpose for this is to earn sufficient amount of profits. Like Marks &
Spencer develop multi channel store to earn sufficient amount of profits all over the globe.
Transnational organisations- Organisation that competing on international basis has to
manage different resources allocation that help to balance authority between central organisation
and different manage units. It is the combination of different strategy between different global
and multi-domestic strategy, organizational structure all over the globe. With in this structure
many different organisation have different issue that raise when company is operating their
business. Like coca-cola provide authority to all units that are operate their business from other
origin country.
International organisations- The international organisation are those which has
international membership, scope and presence. This company operate their business
internationally. In this company operate many stores all over the world. As company grow their
business in oversea market. Different opportunities are developed. Along with this company has
face complexity to control business activity as per country rules and regulation. McDonald is
example for international organisation as they export their products but they did not invest in
other country.
Global organisations- This organisation also operate under different country but decision
are made with company head office. Company which follow this structure has to move expand
their business as per geographical base. Business which are mature and established follow this
work style. In global organisational structure different resources are used to complete company
project so to manage them it is very difficult and complex. Nike is example of global
organisation which manufacture products from developing country like Asia and sell product all
over the world.
Voluntary organisation or NGO is a group of individual which work for a same motive
to serve the society all over the world. The members of the voluntary organisation are not
mandatory as they all combine to reach out for a specific purpose. Action for children is charity
committee that help children and youth all over the UK. Like to help disable children and to
motivate youth so they employed and earn well. As charity organisation are non profit
companies so the rules and tax implication depend on country in which Voluntary members are
helping the society. Voluntary organisation work to serve society in which their more number of

customer are benefited by charging a minimum price from them. Like in Oxfam is there are more
20 independent charitable trust which work to remove poverty from the world.
Size and scope of the organisations
Size and scope of public organisation Government companies provide their services in
whole society that came under their origin base. So in the Audit commission there are large
number of employees that are serving society it includes different operations. Like there are
more than 500 employees that are working in all department of Audit commission including
company all of three departments. As business are expanding by small firms so they government
to audit them activities properly (Commander and Svejnar 2011). The government organisation
is a separate legal identity and its create agreement and contract as per registered their name.
Audit commission has expanding their business size as the chairman and chief executive had
developed many new strategies by which company is satisfying its customer are more satisfied.
There are several clients of Audit commission including other government departments also like
Local government, department of health and other private organisation which include Asda,
iceland sale and shop direct group. As relate to public organisation there are large company or
organisation because more number of people work for government to perform company
activities. In this company focus to make achieve it goals with support of many individuals.
Size and scope of private organisation- Private companies take more risk in order to
increase their profits. So in private sector there is a large scope for starting a new venture. Like
Sole proprietorship in which there is a single entrepreneur who hold and operate business it help
them to make decision quickly. Other is partnership firms in there are minimum two individual
which together start a business with some share of profit and loss. Another type of private
organisation is company- in these case Marks and Spencer is a private company which is
registered in the London stock exchange and operating its business in a international market. As
when a small business convert themselves into company the market area of business is expanded
(Craig and Campbell 2012). So the company has more chances to reach in the range of their
potential customer. There are more than 950 stores that are operate by Marks and Spencer across
the UK. The company start its business in the UK with food market and then predicated that
retail sector is growing so marks & spencer increase it size and started to sell its clothes, food
etc. in their stores. For private organisation company prefer its size on the area that are covered

by them like most of the private institution operate their business as a medium enterprise for
company. They operate their business in a nation and satisfy demand of particular customers.
Size and scope of voluntary organisation- Most of the charity and voluntary
organisation perform different activities to expand their goodwill in the market. Like the role of
voluntary organisation start when there is regular increase in the problems that create a barrier
for the society. Like for action of children focus on different issue that is a problems for the
children and youth in the society (Di Zhang and Swanson 2013). To solve different issue
voluntary organisation raise large amount of funds by performing various Corporate social
responsibility activities. Like the action for children start a campaign which is name as Best start
in life which specifically provide support to the the children who belong to poor backgrounds. So
with these event organisation put pressure on government to take legal and urgent action for the
development of children youth and provide equal opportunities to poor children also. Micro
enterprise are those which work or operate specifically in a small area, it include a city to fulfil
their small needs. Major purpose cover by micro enterprise to sale its products through different
ways to match with small goal of company.
Organisation structures and functions
Organisational functions and their relation with organisation structure- To complete
the operating activities in a business the company has to perform several function that combine
together to achieve the goal of the organisation. Some function are refer as follow:
Production function- The term production refer to the creation of goods and services that
are produced by the companies. Like Marks and Spencer manufacture different items like
clothes, food items etc. with the help of machine, material and money to operate its business
activity in a smooth way.
Marketing function- Marketing is the process of exchanging goods and service between
the company and customer. The marketing function help the company to identify needs and
demand of customer. Marks and Spencer perform this operation regularly as it help company to
innovate their products (Floyd and et. al., 2013).
Human resource function- HR has a major role in managing the human workforce of the
company. The HR department has the duty to increase the effectiveness of their employees. The
HR department of Marks & Spencer reduce the employee turnover so company has to spend less
money in the training and development of new employees.

Information function- Like production and marketing information the information
system is equally important for the company in a modern business. As sometimes the important
information is easily transfer with information function in the different department of the
organisation.
Function relation with organisation and objective- The production function help Marks
& Spencer to collect different type of resources that is required by the company to manufacture
its products. Like Marks and Spencer help company to control its production cost and to match
their product quality with company benchmark. For Marks and Spencer it is beneficial for the
company to improve product quality as it help to increase profits of the company also.
Marketing function is the essential part of the organisation in these case company has to
produce different goods and services that help company to develop it products and services
according to the marketing research and it help company to predict the demand and need of the
customer (Ghazinoory and et. al., 2011). Marks and Spencer use marketing as a major tool
because it help company to find out various alternative that increase value in the company
products. Marketing team decide that where company appear their products in the marketing
team.
HR department improve the productivity of the employees in their section like for them
it is not easy for HR team to control employ turnover. In these case HR team of Marks and
Spencer help company to find ways by which they increase the productivity of employees.
Information system help a company to transfer the important function to their employee's
in a simple way or approach. Like when top management transfer the information to other
department then various rumours are raised that stop company to achieve its goal.
Case study: ‘The UK Supermarket sector’ (LO3 & LO4)
Application of PESTLE model on the retail sector
To analyse the macro environment PESTLE is the most effective method that helps an
organisation to understand the market situation. In this task the analysis of retail sector
specifically for the market of UK is done. This helps an organisation to increase their market
share due to which an organisation identify current situation of their market.
Political- The set of rules and regulation that are follow by the company to operate their
business in different countries. Marks & Spencer has to follow the rules that are formulated by

the ruling government of a country. It undertakes taxation policy, rules and regulations, industrial
and foreign trade policy. It helps retail sector organisation to conduct their business in a country
that helps them to increase their market share. (Hamilton and Webster 2018). Usually retail
sector organisation maintain positive relations with their suppliers because they not produce their
products. In order to fulfil demand of customer they purchase their product from suppliers.
Positive and negative impact is as follow. Like when the Brexit take place in the UK there are
different changes political changes take place due to which there is decline in the sales of retail
sector products. To overcome from this organisation adopt essential changes in their strategy to
re-boost their sale.
Economical- The main agenda of economic factors is to formulate effective policies that
undertakes monetary aspect. Interest rate, inflation, tax rate, foreign exchange etc. are major
aspects that show the economic condition of market. UK is developed country due to which they
has stable economy in market. It results that their company get more business from developed
countries as compare to store that are present in developing countries(Hopkins 2011). In the
recent years company has to close their store because they are not generating enough revenue.
M&S covers the large market area of UK which is a developed economy in determines that
create positive result for organisation because consumers has high capita income.
Social- In present scenario in the retail industry of UK their is tough competition exist in
the market. Therefore to achieve high success organisation in the market prefer the demand of
the consumer. In order to consider management use the tool of market research for identifying
the purchasing behaviour of consumers. Business environment is very dynamic company has to
face different challenges form society. Like now a days consumer has many option to buy their
product from different companies. Marks and Spencer is the first retailer to set up their multi
channel store but in today era company has many competitor like Asda, Sansberry and tesco.
M&S is the large organisation which is operating their business at global level which determines
that their products are socially accepted. So it is essential for them to perform CSR activities that
impacts positively on the organisation.
Legal factors- Before starting an organisation in the industry. Different formalities are
needed to fulfil that relates with the legislation of them. It includes different types of laws such
as labour law, taxation law, employment act etc. to operate their business ethically in the
country. Rules and regulation are the major part of the business to carry out company operating

activities in the market. For context of this retail sector which are operating their business at
global level always try to update their laws in order to make flexible strategy for their business.
An example for the legal acts- is the fair packing and labelling act that is essential for the
company to print it on the product. Each country develop local laws to protect the interest of
their local industries. So it is necessary for M&S to perform their business operation ethically
due to which their retain in industry for longer period.
Technological factor- Retail sector uses several types of technology to perform their
operations. Like in to record sales in cash register, to manage money after sale. Moreover in UK
most of the retail organisation adopting new software and hardware to operate their business.
In present scenario the technology is the major tool for the company to gain a competitive
advantage among its competitors. Technological tools help a company to save money like
through social media most of the retail organisation advertise their products with low cost in all
over the world. Positive and negative impact of the technological factor is as follow. In context
of M&S they provide inferior quality products to its customers so this helps them to gain positive
results which take place due to advancement in technology by bringing essential changes in its
products.
Environmental factor- Most of the business has to bear rule of environment safety in
their business like there are many NGO and rules are developed by the government to protect the
environment. In recent years the awareness about environment factors is increasing day by day.
This opportunity convert by M&S into positive factor through modifying their products.
Example- Like they organise different CSR activities which benefited the society like plating
tress, save water etc. it impact in a positive approach by increasing sale of its products. Marks
and Spencer has developed their goodwill across all the world by creating and performing
different Marks and Spencer increased a plan in which they develop a strategy to control their
carbon gases and other is health promoting business(Orr Bs 2013). Negative impact on the
business is that company's budget has been brought down as it increase the cost to improve their
machine so it produce low waste at time of processing.
Application of SWOT Analysis and Porter's five forces to UK supermarket
Every business has its own strength and weakness in the business. So Marks & Spencer
develop a technique by which they increase their strength and reduce their weakness. For this

case SWOT is applied in organisation. Some of the strength and weakness of the company is as
follow:
Strength Weakness
Marks and Spencer has latest offering as per
the trend moves in the market. Company has a
large variety of their products which help them
to cover a major area of the market. It
determines that they strong technology that
help to predict technology.
As the competition increases in the market the
sale of Marks and Spencer will brought down.
So this reduce the profits of company in which
reduce the financial performance of the
company.
Marks & Spencer has a strong infrastructure
inside as well as outside of the company . In
these case company has to develop a good
communication channel to transfer important
information easily.
Company has develop a efficient supply
channel inside the UK market. So the total sale
of the company has rely on inside UK market.
So in the case of export Marks & Spencer does
not create enough profits.
Opportunity Threat
Marks and Spencer has developed their
goodwill across all the world by creating and
performing different corporate social
responsibility of the company. In these case
Marks and Spencer has create environment
awareness across the world by implementing
technique which generate low waste in their
production system.
The British company Marks and Spencer is
expanding their business across the world in
different countries. So it is not compulsory for
the company that their expanded store are
always generate a successful business. Like the
store that are present in China are not generated
profits due to which company is closing their
stores.
Marks and Spencer was started their business
in the year 1884. So the company has a
experience of century in retail sector business.
This experience help the company to enhance
the customer demand easily.
Most of the profits that are earned by Marks &
Spencer are because of its food business. So in
these the others products are more not so much
profitable for the company. Like the clothes of
Marks and Spencer are not quality wise good.

So customer does not build trust in company
products.
Porter five force model in the context of Marks and Spencer.
Level of competition- Competition in retail sector is increasing day by day. In these case
Marks and Spencer has to face competition from Tesco and Asda which are top player of the
retail sector business. So company explore new strategy which help business to beat their
competitors easily.
Threat of substitutes- Marks and Spencer cannot stop new player to introduce a new
product. So the company create a plan by which they reduce direct rivals to give competition to
different competitors. In these case Tesco and Asda found cheaper alternative to develop their
product.
Threat of new entrants- Companies which has just started their business does not
compete with major player of the retail organisation. Marks and Spencer is a multi national
company which operate their stores in world (Palo and Tähtinen 2011). So new player are not
able to invest such as huge amount.
Bargaining power of Buyers- Marks and Spencer has a large numbers of buyer in
whole world and the competition in retail market is very tough. So in these case buyer create
monopoly as there are various alternative are present in the market with a option of low
switching cost.
Bargaining power of suppliers- Marks & Spencer is a giant listed company which has a
high turnover in their goods. So company buy raw material in bulks or tons to produce goods. in
these case company rule or develop a monopoly market to purchase the raw material from their
supplier.
Strengths and weaknesses interrelate with external factors of an organisation:
Political- Marks & Spencer has a loyal customer base with their customer. The company
has more value in their products by which they appeal and attract a large number of customer. So
it help for company as a strength to earn sufficient amount of funds. If Marks & Spencer has
healthy political relation than company sell their product easily in market. It work as positive
strength for company. While sometime government create rules that impact on business
operation.