Analyzing Business Environment: PESTEL Analysis of Marks & Spencer

This report provides a comprehensive PESTEL analysis of Marks & Spencer, examining the political, economic, social, technological, environmental, and legal factors impacting the business. It discusses the positive and negative impacts of these factors, major challenges faced by the organization such as trade restrictions due to Brexit and changing consumer preferences, and how the business is responding to these challenges through strategies like employee training, legal compliance, and technological adoption. The report concludes with recommendations for Marks & Spencer, including the adoption of AI-based checkout systems, e-commerce technologies, sustainable product development, and market expansion to enhance competitiveness and profitability.

Business in Context

Table of Contents
Introduction......................................................................................................................................1
Main Body.......................................................................................................................................1
Describe the positive and negative impact of the PESTEL environmental factors................1
Discuss some major challenges faced by the business organisation......................................4
Describe how business is responding to these challenges in context to its business strategy 5
Recommendation....................................................................................................................5
Conclusion.......................................................................................................................................6
References ......................................................................................................................................7

Introduction
Business environment is defined as the sum of all the people, business and various other
factors present in the business environment. Presence all these internal and external factors has
direct impact on the functioning and profitability of the business. Business is an legal entity
involved in the buying and selling of goods and services and enhancing their profitability. For
this report Marks & Spencer company is taken as the base company. Marks & Spencer is one of
the well established retail company offering clothing, home products having more than 959 retail
stores (Biloslavo, Bagnoli and Edgar, 2018). The company was founded in 1884 by Michael
Marks and Thomas Spencer. This report highlights the detailed analysis of various environment
challenges and opportunities faced by the business and the positive and negative impact of the
various environmental factors. In addition to this various challenges faced by the business along
with the various actions considered by the business to respond to these challenges is also
highlighted in this report.
Main Body
Describe the positive and negative impact of the PESTEL environmental factors
Business environment is defined as the various environment factors present outside the
business environment creating direct impact on the functioning and profitability of the business.
These factors can create positive as well as negative impact on the business, positive impact will
lead the business to gain competitive advantage in the marketplace. In context to Marks &
Spencer, to analyse the environmental factors of the business the PESTEL analysis is taken into
consideration (Samantasinghar and Singh, 2019).
PESTEL Analysis: It is one of the essentials strategic framework used by the business
organisation to analyse and monitor the external factors that can create direct influence on an
business organisation. The various factors includes Political, economic, social, technological,
environmental and legal factors (Schaltegger, Hörisch, and Freeman, 2019). In context to Marks
& Spencer, which is currently facing the problem following the decision of Brexit, in order to
analyse the various environmental challenges and opportunities present present for the business
are mentioned below using the PESTEL analysis.
Political factors: It includes all factors like government policies, rules and regulations intervenes
in the functioning and profitability of the business. It includes the extent to which the
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government influence the business. In case of Marks & Spencer, the company is an multinational
company operating in the international market, the policy regarding the free trade has created a
huge political benefit for the company including their around 1500 oversea retail stores. But it is
analysed that with the Brexit these policies will no longer be effective for the company. The
Brexit followed by the specific government orders restricting the exchange of goods, directly
a government order that restricts commerce with a specified country or the exchange of specific
goods. This will directly influence company's brand transferring out of England. Brexit may also
impact the production cost of the company (Metaxas, Chatzoglou, and Koulouriotis, 2019).
Positive impact: Proper analysis of the political factors can help company to deal with the
changes and also company's brand image can help them to deal with this issue.
Negative impact: The Brexit will directly impact the profitability and functioning of the
company creating restriction on the free trade.
Economic factors: The economic factors includes the various determinants which creates long
term as well as short term impact on the performance of the economy as well as on the
functioning of the business. The various factors included are the interest rate, inflation rate,
exchange rate, economic growth and so on. In case of the chosen company, because of the strong
economy of the UK the fiscal and monetary policies of the country are properly managed
allowing the chosen company has managed to offer quality services to their target customer
enhancing their overall profitability and productivity. In addition to this the company is also
operating in many developed market leading to enhance their performance.
Positive impact: Operating in well developed market helps the company to gain
competitive advantage and enhance their overall profitability and productivity.
Negative impact: Recession has directly created direct impact on the functioning of the
business and also affected the company's ability to offer discount.
Social factors: Another factor is the social factor, it includes the factor related to the behaviour
and culture of the customers which creates long lasting impact on the functioning of the business.
In case of Marks & Spencer, the company offers quality product and services to its customers in
order to satisfy their needs and wants. Increasing change in the taste and preference of the
customers has directly influenced the functioning of the business (Chang, Wong, and Chiu,
2019). The company is mainly focusing enhancing their brand image of the company in the
international marketplace, through offering quality product and services.
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Positive impact: Offering quality services will allows the company to gain competitive
advantage.
Negative impact: Any change in the taste and preference of the consumers will directly
create negative impact on the company.
Technological factors: It is defined as any kind of changes in the technology or advancement in
the technology which creates long term impact on the profitability of the business. Adopting
advance technology allows the company to gain competitive advantage in the international
marketplace. In case of Marks & Spencer, the present development of the self checkout based
stores retails allowed company to attract large number of customers and enhance their brand
image in the marketplace. In addition to this the company is planning to use AI based checkouts
in the future.
Positive impact: Adoption of new technology allowed the company to gain competitive
advantage in the marketplace and enhance overall performance of the business.
Negative impact: Any change in the technology will directly influence the functioning of
the business.
Environmental factors: It includes the factors like working towards sustainability of the
environment. It includes the responsibility of the business organisation to work towards the
welfare of the environment, it helps the business to gain competitive advantage in the
marketplace. In case of Marks & Spencer, the company is effectively contributing to the welfare
of the environment. The company is working towards reducing the wastage, also reducing the
usage of packaging and carrier bags. In addition to this company is offering high quality and
sustainable products (Zhu, and et. al., 2018).
Positive impact: Contribution towards the welfare of the environment allows company to
enhance their brand image in the marketplace.
Negative impact: Not contributing to towards their social responsibility will create
negative impact on the company and can also lead them towards failure.
Legal factors: It includes the factors like legal laws, rules and legislation which are implemented
and needs to be followed by each and every business organisation. Not following the legal laws
or implementation of strict legal laws will directly influence the functioning of the business. In
case of Marks & Spencer, current legal changes will directly influence the functioning of the
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business also the current trade laws post Brexit is the another legal factor that can impact brand's
image also.
Positive impact: Company following all the legal laws will create positive impact on the
functioning of the business.
Negative impact: Current changes in the trade policy leading to Brexit will directly create
legal barriers for the chosen company (Kumar, 2018).
Discuss some major challenges faced by the business organisation
Challenges are the number of problems or obstacles faced by a particular business
organisation while carrying out their activity. These challenges directly impacts the success of
the business organisation, not analysing and evaluating these challenges will create barriers for
the company. In context to Marks & Spencer, the various major challenges faced by the company
are mentioned below:
 one of the major challenge faced by the company is the political restriction, the company
is facing challenges in terms of trade restriction due to the Brexit there is restriction on
the free trade policy creating challenge for the marks & Spencer (Ohbuchi, Koike and
Nakamura, 2019).
 Another challenge faced by the company is the terms of changes in the economic
situation due to the recent pandemic and recession, it has impacted the company's ability
to offer discount.
 In addition to this the another challenge faced by the company is in terms of moving
their customers towards more sustainability in order to protect the environment. Also the
company is facing challenges in reducing the wastages.
 Marks & Spencer is also facing challenges from increasing number of competitors
present at the international market, these competitors directly influence competitiveness
of the company.
 Also in case of marks & Spencer, the current trade laws post Brexit is the another legal
challenges faced by the company (Abrantes and et. al., 2018).
 In addition to this, the another challenges faced by the company includes the regular
change in the taste and preference of the customers or various natural risk and disasters
leading to social preference changes for the company.
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Describe how business is responding to these challenges in context to its business strategy
Challenges are the part of business organisation influencing the success factors of the
business. In order to continue to grow and gain competitive advantage in the marketplace
requires proper analysis of the challenges. In order to deal with the challenges the company has
hired skilled and qualified employees and also required training in offered to them so that they
can effectively deal with the changes (Holbeche, 2018). The human resource department has
implemented effective training strategy in order to offer required training to the employees
related to the changes and to effectively deal with the challenges. Also in order to deal with the
political changes the company has analysed the political environment and accordingly
implemented their strategies. In addition to this the company is also following required legal
laws to overcome the legal challenges and ensure the safety and security of their employees. This
allows company to enhance their brand image in the marketplace and gain competitive advantage
also. In order to deal with the social changes the company continuously offering quality goods
and services to satisfy their needs and wants. Marks & Spencer has build strong brand image in
the international marketplace which allows the company to effectively deal with the changes, the
company is also implemented the use of self check out technological process in order to make it
convenient for the customers to carry out their buying process. This changes also allow company
to build loyal customer base and enhance their performance (Liu, Zhu and Zhang, 2018).
Recommendation
With the changing environment and changing taste and preference of the customers it
becomes essentials for the business organisation to regularly analyse their market environment
and also analyse the challenges. In order to continue to grow and develop themselves and
enhance their competitiveness some of the essentials recommendation can be taken into
consideration by the business organisation such as company can use AI based checkout system in
their stores (Lam and et. al., 2018). This will allows company to attract large number of
customers effectively, the company can also use various e-commerce technology in order to offer
online services to their target customers. Another recommendation that can be considered by the
company can be offering quality and differentiated products to their customers in order to satisfy
their needs and wants. In addition to this company can also move towards producing more
sustainable products in order to contribute towards welfare of the environment. Company can
also expand their business into the new market in order to increase their market base and
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customers base effectively. It will also allows company to enhance their profitability and
productivity. Leading them to effectively deal with the new
Conclusion
From the above report it has been concluded that a business entity helps in offering
quality product and services to the target customers with the main aim of enhancing the
profitability. Proper analysis of the market environment helps the business organisation to gain
competitive advantage in the marketplace. This report helps in analysing various positive and
negative impact of the various environmental factors like political, economical, social,
technological, environmental and so on. It also helps in analysing various challenges faced by the
company and also using their business strategy the business can respond to these challenges.
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References
Books and Journals
Abrantes, A. C. M and et. al., 2018. Bringing team improvisation to team adaptation: The
combined role of shared temporal cognitions and team learning behaviors fostering team
performance. Journal of Business Research, 84. pp.59-71.
Biloslavo, R., Bagnoli, C. and Edgar, D., 2018. An eco-critical perspective on business models:
The value triangle as an approach to closing the sustainability gap. Journal of Cleaner
Production, 174. pp.746-762.
Chang, H. H., Wong, K. H. and Chiu, W. S., 2019. The effects of business systems leveraging on
supply chain performance: Process innovation and uncertainty as
moderators. Information & Management, 56(6). p.103140.
Holbeche, L., 2018. The agile organization: How to build an engaged, innovative and resilient
business. Kogan Page Publishers.
Kumar, V., 2018. Transformative marketing: The next 20 years.
Lam, E. J. and et. al., 2018. Assessment of the adaptive capacity of plant species in copper mine
tailings in arid and semiarid environments. Journal of Soils and Sediments, 18(6).
pp.2203-2216.
Liu, J., Zhu, J. and Zhang, J., 2018. A DEA-based approach for competitive environment
analysis in global operations strategies. International Journal of Production
Economics, 203, pp.110-123.
Metaxas, I. N., Chatzoglou, P. D. and Koulouriotis, D. E., 2019. Proposing a new modus
operandi for sustainable business excellence: the case of Greek hospitality
industry. Total Quality Management & Business Excellence, 30(5-6). pp.499-524.
Ohbuchi, A., Koike, Y. and Nakamura, T., 2019. Quantitative phase analysis of fly ash of
municipal solid waste by X-ray powder diffractometry/Rietveld refinement. Journal of
Material Cycles and Waste Management, 21(4). pp.829-837.
Samantasinghar, S. and Singh, S. P., 2019. Fresh and hardened properties of fly ash–slag blended
geopolymer paste and mortar. International Journal of Concrete Structures and
Materials, 13(1). pp.1-12.
Schaltegger, S., Hörisch, J. and Freeman, R.E., 2019. Business cases for sustainability: A
stakeholder theory perspective. Organization & Environment, 32(3). pp.191-212.
Zhu, S., and et. al., 2018. How supply chain analytics enables operational supply chain
transparency: An organizational information processing theory
perspective. International Journal of Physical Distribution & Logistics Management.
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