Analysis of Marks & Spencer's Business Environment Factors

This report provides a comprehensive analysis of the business environment impacting Marks & Spencer (M&S), a prominent UK-based retailer. The report examines both internal and external factors, including economic policies like Brexit, economic systems, and economic conditions, alongside non-economic factors such as natural resources, demographics, and cultural influences. A literature review explores the impact of these factors on organizational behavior. The analysis incorporates SWOT and PESTEL analyses to identify M&S's strengths, weaknesses, opportunities, and threats, as well as the impact of macro-environmental factors. The report emphasizes the importance of adapting to changes in the business environment and formulating effective strategies for growth and competitive advantage within the retail industry. The findings highlight how M&S adapts to various internal and external factors to achieve its organizational goals and maintain its competitive edge.

Organization and
Business Environment

Abstract
This report provides the analysis of internal and external environment to monitor and
scan the environment and also determine the availability of resources so as to gain competitive
position in different parts of the country. This report is based on Marks and Spencer which is a
renowned company in UK as it deals with wide range of product or services such food products,
home appliances and many more to achieve maximum customer satisfaction. This report also
covers various economic policies and systems and natural resources and culture and
demographics of a respective firm within the confine sector of retailing industry.

Contents
Contents...........................................................................................................................................3
INTRODUCTION...........................................................................................................................4
1.1 Company Background...........................................................................................................5
2. Literature Review........................................................................................................................5
2.1 Economic environment and its impact on Organisation behaviour.......................................5
2.2 Non-Economic Environment and how it shapes the Organizational Behaviour...................7
3. Discussion and Analysis..............................................................................................................9
3.1 SWOT analysis......................................................................................................................9
3.2 PESTEL analysis.................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business Environment can be defined as the collection of both internal as well as external
environment factors such as customers, stakeholders, employees, demand and supply, social
trends, innovation in technology, changes in the economy etc ( Biermann, 2017). The business
environment helps an organization in identifying different opportunities of growth and
expansion. It also helps the management in the process of planning and also, improves the
overall performance, productivity of the company. There are two types of business environments
namely- Micro ad Macro Environment. Business environment is one of the most important
aspects for a company because it helps in adapting to changes and making use of different
opportunities. An organization should carefully scan and analyze all the factors in its business
environment so that as to formulate effective strategies that help it to grow.
The business environment of a company affects its overall levels of productivity as well
as performance in the market significantly. The factors can either be internal like employees,
plans and policies etc. or external like political, economic, environmental, social, technological
factors. Companies that constantly keep a check on their business environment, can gradually
improve their performance in the market and thus gain a competitive edge against competitors.
Organization chosen for this report is Marks and Spencer, which a British multinational retailer
that offers high quality home, clothing, food and beverage products to the customers. The
company has got a wide presence across different countries and thus, has a large customer base.
Marks and Spencer were found by Michael Marks and Thomas Spencer in the year 1884. It is
headquartered in London, United Kingdom.
This report analyses the non-economic environment as well as its impact on the
organizational behaviour. The non-economic environment comprises of natural, demographics as
well as the cultural environment. Economic environment on the other hand, includes economic
policies like Brexit regulations, duties and tariffs as well as consumer laws. There are different
economic conditions that can also impact the organizational behaviour like interest rates, taxes,
economies, foreign exchange etc. SWOT as well as PESTEL analysis of the company have also
been carried out so as to identify the company’s strengths and weaknesses. Various opportunities
and potential threats can also be identified. This will help the company in formulating effective

strategies. The impact and changes in macro environment can be understood through PESTEL
analysis. Lastly, the results of the report are explained with the help of a conclusion at the end of
the report to facilitate a better understanding of the same.
1.1 Company Background
Marks and Spencer are one of the renowned brands in UK that deal with wide range of
goods and services such as clothing, home products and food products and so on so as to fulfil
the requirement of customers across the globe ( Hamilton and Webster, 2018). It also provides
the facility of online services in order to provide a great ease of convenience among the large
group of customers and also provide future growth opportunities at a global level. It has
expanded its operation in different parts of the country in order to boost the sales and increase
the profit margin by opening 959 stores. The number of employees working in a respective firm
is around 80,000 and its net income is approximately 601.0 million within the market. The major
competitors of this firm is Next, John Lewis partnership and many more that posses a big threat
for the company and also created price wars among them which pressurise the manager of
Respective firm to reduce their prices so as to achieve a competitive advantage at a global level.
Organisation behaviour is a broader term that includes various aspects such as people,
technology, and environmental issues by providing new and innovative designs of products to
fulfil the criteria of customers by generating sales and also hire best and efficient staff as it
improves the overall performance within the retailing industry. The vote for Brexit has adversely
affected the company as it results in an increase in tax rates and thus decline the growth of the
company. By looking an awareness towards environmental aspects, the manager of respective
firm ban use of plastic bags and also emphasises on the sustainable development of the country.
2. Literature Review
2.1 Economic environment and its impact on Organisation behaviour
2.1.1 Economic policies
Economic policies are regarded as the major determinant which cover various aspects
such as level of taxation, labour market, money supply and interest rates, fiscal and monetary
policies, demand and supply, level of competition in the market and so on. This also play a major
role in economic growth of the country and also provide vast opportunities to the country. The

exit of European Union from Britain, namely, Brexit has adversely affected the economic
policies of the country (Hazzan and et.al., 2017). It also led to an increase in VAT by 2.5% that
lead to increase in the prices of goods and services across the globe. Due to the reason of Brexit,
the manager of Mark and Spencer has accelerated the prices of goods and services and this
decline the sale and also reduces the profit margin of a company. The hamper the growth
opportunities of a company and also decline the rate of export therefore, this affect the overall
performance of the company.
2.1.2 Economic Systems
This is regarded as a broader term that includes various terms such as money trading,
aggregate demand and supply, level of competition across the globe and so on ( Woods and
Linsley, 2017). This constitute an essential factor that consist of certain rules and regulations
related to an economy and also emphasises on controlling various factors related to the
production such as labour, capital, physical resources and entrepreneurs. In other words, it is a
broader term that provide the basis of allocation of resources, distribution of product or services
in order to achieve a desirable outcome in an economy. This comprises of three major questions
that is what to produce, how to produce and for whom to produce as it also provides the
distinction between the socialism and capitalism in a planned economy. Mark and Spencer are
one of the largest retailing company in UK that has expanded its operations so as to gain large
access of customers across the globe. Through an excellent communication skills and friendly
behaviour of staff, the respective firm provide the best shopping experience to their customers.
2.1.3 Economic Conditions
In order to achieve price stability, it is important to provide full employment by using
monetary and fiscal policies by keeping in mind the economic conditions of the country
(Hutchison, 2018). During the month of recession, a government focus on spending using it
proper and judicious utilisation so as to minimise the wastage. The aim of Marks and Spencer
focus more on younger generation by providing efficient quality of goods or services in order to
boost the sale and thus increases the profit margin within a market. But the changes in taxation
policy by the government affect the prices of merchandise and also affect its demand within the
confine sector of retailing industry. Also, the manager of respective firm claimed that the mixed
economy does not make proper usage of natural resources so as to achieve a significant position
across the globe. Due to the reason of Brexit, it affects the economic condition and created chaos

all over the country. This results in a reduction in employment opportunities and also hamper the
growth of a company. Another reason is that lack of uncertainty and absence of free trade has
cause a serious concern towards the manager of Mark and Spencer because the value of pound is
declined and also create shortage of mobility within the retailing industry. Also, the changes that
takes place at a fast pace become difficult for the respective firm to adapt it has to adopt new
measures and techniques so as to fulfil the requirements of customers across the globe.
From the above information, it can be analysed the above factors mentioned play an
important role to fulfil the requirements and preferences of customers in an economy. This also
play an important role in shaping the organisational behaviour as the manager of Mark and
Spencer provide goods or services in according to their perception and fulfil the criteria of
achieving an organisation goal effectively and efficiently. Also, the firm uses various e
commerce sites to gain large access of customers and thus gain competitive advantage within the
retailing industry.
2.2 Non-Economic Environment and how it shapes the Organizational Behaviour
2.2.1 Natural Environment
Natural environment comprises of living and non-living things that occur on the earth and
there are various resources that occur in the nature some of which are explained below –
Natural Resources - These are the resources that occur naturally in the nature without any
kind of human interference. Gas, air, fuel, sand, sun and minerals are some examples of the
natural resources. Other examples include pollution, diseases, wind, tress etc. If the employees of
the company will not be fit and healthy, they will be more prone to diseases due to pollution as
well as other environmental factors. This can impact their overall levels of productivity as well
as performance.
Geographical Factors - Prices, population, types of customers, weather etc. are some of
the examples of geographical factors (Jin, Miao, and Park, 2018). Different geographical
locations have their own cultures and since Marks and Spencer is a brand that operates
internationally, it has a lot of different employees working from different locations. Thus, this is
one of the factors that can shape the organizational behaviour of the company.
Topographic Factors – Topographic factors include mountain ranges, direction of the
rain, sunlight, seed of the wind. All these factors impact the way in which the company grows
raw materials for manufacturing its food products. Marks and Spencer have its own farms

wherein all the vegetables and fruits are grown. They are taken care off in the most responsible
way.
2.2.2 Demographics
Operating in a lot of countries around the world means that employees belonging to
different cultural backgrounds and education levels work for the company. This also means that
the preference of customers varies as per their lifestyle, levels of disposable income and
occupation. The density of the population within a particular area can also be a factor responsible
for change in the organizational behaviour. The people have different beliefs based on their
culture due to which Marks and Spencer produces products that cater to such needs. This will not
only impact the customers but employees of the company as well. This is because the company
will have to invest in training the employees so that they have a complete understanding of the
products that cater to the different age groups of customers. Also, if the people will have a high
level of disposable income, they will spend more which will lead to an increase in the company’s
overall sales as well as profitability.
2.2.3 Cultural Factors
There are various cultural factors that can also shape the overall organizational behaviour
of the respective company like language barriers, accents, communication, religious beliefs,
dressing attires etc. In other words, Culture is a broader term that includes rules, custom,
traditions and knowledge that provide a set of moral values and ethics to the large group of
individuals living in a society (Luu, 2017). People are increasingly becoming aware and
conscious about the environment which is why companies like Marks and Spencer are also
focusing on producing products that are environment friendly and do not cause any harm to the
same. Respective company has adopted different eco-friendly ways to promote its products so
that more customers are attracted towards the same. Employees of the company also have a deep
knowledge about the material that goes into making of a clothing item. The material is not
harmful to the environment and this concept can be defined as sustainable fashion. This way, the
company will be able to attract more potential customers and thus generate sales. This will
further help the company in gaining a competitive advantage against other brands in the market.
The employees of the company are also motivated from time to time so that their performance as
well as productivity levels are enhanced.

3. Discussion and Analysis
3.1 SWOT analysis
This analysis is conducted to assess the positive and negatives of an industry in order to
gain a competitive position across the globe (Phillips and Moutinho, 2018). In other words, this
analysis helps the firm to grab the opportunities by combatting threats and weaknesses through
an appropriate planning and also assist to make good decisions so as to gain significant position
at a global level. In the context of Mark and Spencer, the same is presented as follows:
Strength
 The concerned firm use new and innovative technology and also provide the facility of
online delivery of goods and services so as to gain large number of customers.
The manager of Mark and Spencer has best and efficient staff to improve the overall
performance and productivity (Prajogo, 2016).
 The respective firm also focus on providing good quality and efficent packaging of
products or services in order to gain significant position within the market.
Weakness
 One of the major weakness is that the respective firm provides goods or services at a
higher price as compared to its competitors and thus reduce the sale.
 One major aspect is that there is lack of communication and training that decline the
further growth of a company and also create confusion and misunderstanding among
them.
Opportunities
 The concerned firm could expand its operations in different parts of the country such as
Hong Kong and Ireland (Wang and et. al., 2016).
 Also, the respective firm could focus more on promotional campaigns so as to cover large
market across the globe.
 Mark and Spencer provide better quality of products and also enjoy the greater economy
of scale in an around the world.
Threats
 There are large number of players such as Next, John Lewis and so on which provide
good quality of products and possess a big threat to the respective firm.

 The number of competitors leads to price wars and thus reduces the profit margin of
Mark and Spencer.
3.2 PESTEL analysis
The PESTEL analysis is conducted to assess the macro environmentalists to monitor and
scan the environment so as to gain a significant position and also determine the availability of
resources in order to achieve maximum customer satisfaction across the globe (Schaltegger and
Wagner, 2017). In the context of Mark and Spencer, the six elements of PESTEL analysis are
presented as follows:
Political factors: this consist of various aspects such as government policy, corruption, trade
restrictions and so on. UK is a multi-party system and has a constant ruling party since a long
time and also it has great political system across the globe (Sminia, 2017). The vote for Brexit
has adversely affected the political conditions and also result an increase in VAT from 17.5% to
20%. Due to this, the Manager of Mark and Spencer increase the prices of products or services
that affect the sale and profitability of a business.
Economic factors: These comprises of various aspects such as economic growth,
exchange rates and inflation rates and so on. UK is considered as the fifth largest economy in the
world in terms of GDP. The vote for Brexit has created an unimaginable chaos and adversely
affected the economy and due to this, the value of pound increases. As a result, there is decline in
rate of corporate tax and also affect the purchasing power of consumers. In the context of Mark
and Spencer, it led to decline in sale of a company and reduces the profit margin and therefore,
minimise the overall productivity of an organisation.
Social factors: These consist of various factors such as population growth, cultural barriers,
safety emphasises, diet conscious and lifestyle attitudes and so on (Spigel, 2017). In today’s era,
customers are more conscious towards their health and also emphasises on good quality of
merchandise or services in order to generate maximum customer satisfaction. With reference to
Mark and Spencer, the manager provides the emphasises on goods or services in order to fulfil
the taste and preferences of large group of customers and thus gain positive reputation at a global
level.
Technological factors: This is one of the most significant factors that includes level of
innovation, research and development, automation and many more. UK is regarded as the most
technologically advanced country in the world that provide future growth opportunities and

ensure greater success across the globe. The manager of Mark and Spencer provide the facility of
online shopping and also use new and innovative technology to provide an ease of convenience
among the customers. Also, the respective firm focuses on advertisement of product or services
which aids in creating awareness among the group of individuals from different parts of the
country.
Environmental Factors: These consist of elements such as climate, weather change and
pressure from NGO’s and so on (Van Wormer and Besthorn, 2017). By looking an awareness
towards the protection of environment, the manager of Mark and Spencer bans plastic bags so as
to provide protection towards environment. Also, it emphasises on minimising the wastage by
adopting the strategy of 3R’s such as reduce, reuse and recycle and thus provide sustainable
development across the globe.
Legal factors: these consist of elements such as antitrust laws, patent and copyright laws,
consumer protection laws and so on (Varley and et.al., 2018). The senior authority of Mark and
Spencer abide all the rules and regulations and maintain proper code of conduct so as to facilitate
the smooth operation of a business. The respective firm also provide legal protection through
cyber laws and copyrights and does not allow its competitors to copy their products.
CONCLUSION
From the above information, it can be summarised that the business environment in which
company carry out its operation is regarded as dynamic and it is essential to manage the changes
by bringing new and innovative technology and providing goods or services so as to fulfil the
requirements of customers. It has been analysed that SWOT and PESTEL analysis by
determining the various resources and provide an edge of competitiveness within the retailing
industry.

REFERENCES
Books and Journals
Biermann, F., 2017. A World Environment Organization: solution or threat for effective
international environmental governance?. Routledge.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hazzan and et.al., 2017. Application of Management Theories for STEM Education: The Case of
SWOT Analysis. Springer.
Hutchison, E.D., 2018. Dimensions of human behavior: Person and environment. Sage
Publications.
Jin, H., Miao, Y. and Park, S.T., 2018. A Case Study of Marks and Spencer lost China. Journal
of Industrial Convergence. 16(2). pp.15-23.
Luu, T.T., 2017. CSR and organizational citizenship behavior for the environment in hotel
industry. International Journal of Contemporary Hospitality Management.
Phillips, P. and Moutinho, L., 2018. Contemporary issues in strategic management. Routledge.
Prajogo, D. I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International journal of production Economics. 171. pp.241-
249.
Schaltegger, S. and Wagner, M. eds., 2017. Managing the business case for sustainability: The
integration of social, environmental and economic performance. Routledge.
Sminia, H., 2017. Institutional theory and organizational culture. In The Strategic Manager (pp.
125-153). Routledge.
Spigel, B., 2017. The relational organization of entrepreneurial ecosystems. Entrepreneurship
Theory and Practice. 41(1). pp.49-72.
Van Wormer, K. and Besthorn, F.H., 2017. Human behavior and the social environment, macro
level: Groups, communities, and organizations. Oxford University Press.
Varley and et.al., 2018. Fashion management: A strategic approach. Macmillan International
Higher Education.
Wang, Y. S. and et. al., 2016. Factors affecting hotels' adoption of mobile reservation systems: A
technology-organization-environment framework. Tourism Management. 53. pp.163-172.
Woods, M. and Linsley, P., 2017. Future research in accounting and risk. The Routledge
Companion to Accounting and Risk, p.296.