Business and Business Environment Analysis Report - M&S Case Study

This report provides a comprehensive analysis of the business environment, focusing on Marks & Spencer (M&S) as a case study. It begins by defining the business environment and its significance, then proceeds to examine different types of organizations, including profit, non-profit, and public entities, with examples like M&S and the National Healthcare Services. The report then delves into organizational structures and functions within M&S, highlighting the interrelation of departments such as Marketing and Sales, Finance and Marketing, and HR and Marketing. Section 2 focuses on environmental analysis, employing the PESTEL model to assess the impact of macro-environmental factors on the UK retail sector, including political, economic, social, technological, legal, and environmental aspects. Furthermore, the report utilizes SWOT and Porter's Five Forces analyses to determine their influence on supermarket decision-making. The analysis considers the impact of macro and micro environmental factors on business objectives and decision-making processes, providing a detailed evaluation of M&S's position within the dynamic business landscape.

Business and
business
environment

Contents
INTRODUCTION...........................................................................................................................3
Section 1...........................................................................................................................................3
P1 Different types of organisations........................................................................................3
P2 Size and scope of the organisations...................................................................................4
P3 Organisation structures and functions...............................................................................5
Section 2...........................................................................................................................................6
P4 PESTEL model of the sector for analysing impact of macro environment on UK retail
sector.......................................................................................................................................6
P5 SWOT analysis and PESTLE analysis for determining the influence on decision of the
supermarket............................................................................................................................9
P6 Impact of macro and micro environmental factors on business objectives and decision
making..................................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment is the term which is used in business firms for describing the
interrelationship among the different aspects of an organisation such as employees, customers,
processes etc. The business organisations need to continuously monitor the business environment
in order to ensure their success in the market. Marks and Spencer is the taken firm for this
assessment which is a retail firm based in UK. This report assessment will cover the different
type of organisations in terms of size, scope, purpose. This report assessment will also cover the
different types of interrelation among the department of the organisations. This report will cover
the pestle analysis for determining the effectiveness of the retail sector of the UK. This report
will also cover the SWOT and Porter five forces analysis for determining how they influence
decision of the supermarket.
Section 1
P1 Different types of organisations
Business organisations are formed for providing better services and products to the customers so
that they can earn money in return of it. Several organisations are present in marketplace whose
business terms and objectives are differ with each other these businesses are mainly formed into
three kinds i.e. profit, not for profit and public organisations whose purposes are also differ with
other organisations. In which, public organisations are the firms that are operated or regulated by
governmental authorities and its owners are not liable for earning loss or profits whereas, loss is
beard by government. Main purpose of these firms is to providing products or services to
customers at reasonable prices so that they can take services in affordable prices so as to raising
their standard of living. Taken organisation for this kind is National Healthcare Services which is
a UK based public body Healthcare firm which provides health care services across the UK,
wales, Scotland in reasonable prices. Purpose behind establishment of this organisation is to
provide medical treatment in affordable prices so that well-beingness of societal individuals can
be maintained across the nation(Charter, 2017).

Profit organisations are those who provide offerings to their customers for making
profitability or increasing market share. Purpose of these kind of firms is to achieve high market
share and profitability for themselves in it owneers are solely liable for losses. Example for this
kind of company is M&S that is also a UK based private retailer and performs its duties at global
level (Deasy and et. al., 2016). Company’s offering includes daily usage home products, fashion
accessories etc. Purpose of this organisation is to take leadership in retail sector in across the
world along with covering high market share and customer base.
Non-profit organisation are those which are formed by some members with an aim of fulfilling
the crucial needs of societal individuals. Purpose of these organisations is to improving life
standard of individuals who are not capable in arranging their livelihood things. In these kinds of
organisations, people come forward as a volunteer for improving the society (Evans and et. al.,
2017). Example taken for this type is Save the Children which is a UK based organisation and
whose main purpose is to improving life of those children who are working in small age so as to
living their life easily. Company mainly rescuing these children who are exploited or harassed by
people for working.
P2 Size and scope of the organisations
Various organisations are present in marketplace who performs their functions and operations for
serving the needs of customers. Size and scope of these organisations are also differing because
their offering as well as market share and revenue are differ from each other. These organisations
are mainly divided in three kinds on the basis of size and scope that can be further said as Micro,
Small, and Medium- sized and large. In which, Micro are the organisation that are incorporated
with an amount of less than € 1million and 7 to 8 members are required for setting up these firms
(Georgescu and Popescul, 2015). Scope of these firms are narrow because they are serving the
needs of people of a particular region or locality. Example of these firms are Grocery shops,
ration store etc.
Small organisations are those that are formed with less than 50 employees and an
amount of €2 million. The size and scope of these organisations are narrow as they performing
their duties at small scale and provides offering in niche market. Such organisations are formed
through partnership and sole proprietorship. These organisations usually have lower market share
and profit due to operating in small market. However, these organisations have ability to gain
quick growth if innovative ideas are generated by them. These ideas not only build their

sustainability in market but also increase their market share in a particular region. In order to
incorporation of these firms an amount of 1 million pound is required (Hair Jr and et. al., 2015).
Appropriate example for this kind of organisation is Electrotech limited, Clarasys ltd. that are
operating in private sector. Medium firms are the organisations that are formed with an
amount of approx. 10 million to 50 million pound along with 50 to 250 members are required for
setting up of these kind of firms. Scope and size of these organisations are wide because they
operates their functions in more than one location. Best example for these kind are Travelodge
and Dwell which are operating their functions in private sector of UK. These firms take a vast
amount of time in gaining growth (Hamilton and Webster, 2018). However these firms can take
sustainability in market for a longer time period through providing innovative products and
services. Such firms are performing their duties at large level due to which growth rate of these
firms are low as compare to others. Market share and profit of these firms usually varies on the
basis of market and industry in which they are performing their functions and operations.
Large organisation are those firms in which more than 1000 employees are working their duties
along with over 1 million revenue is earned by company on yearly basis. Size and Scope of these
firms are wide because they operates their business functions in more than one nation and offers
a large number of products and services to the customers so that their market share as well
revenue can be maintained in market (Hillary, 2017). Examples of these firms are Marks and
Spencer, Volkswagen, Porsche etc. that are operating their functions in more than one location or
nation. A huge amount along with time period is required from these firms as they cover more
market share and profit that is also consumed in operating functions at global level.
P3 Organisation structures and functions
Several departments are formed by management of M&S in their workplace so that goals
and objectives can be achieved in a specific time-frame. These divisions and their interrelation
are given as below:

Marketing and Sales: Marketing and sales are the divisions whose coordination are
important for growth and success of organisation. As marketing conducts market research and
identify which product is demanding more in market and these information are provided by them
to sales department so that customers can easily get their desired products and services.
However, all these activities and functions are monitored or controlled by managers for
eliminating challenges of working together (Ji-fan Ren and et. al., 2017). This interrelation not
only supports the organisational structure but also it provides contribution in growth and success
of organisation.
Finance and Marketing: Marketing division of Marks and Spencer is responsible for
promoting the brand image and offerings of firm. These all activities are performed by the
marketing department with the help of finance department because without help of it they can’t
perform any activity in systematic manner. Through this coordination, both division can perform
their work effectively as marketing department will also support the finance department in
identifying the sources of funds from where funds can be arranged from different sources (Kolk,
2016). Hence, it can also said that without coordination between each other these divisions of
M&S can’t perform their activities effectively. Therefore, coordination is essential between these
divisions are beneficial as they not only supports organisational structure but also assist the firm
in maintaining good workplace.
HR and Marketing: These divisions are coordinating with each other as HR division of
M&S have responsibility to fill the vacant position of departments. Whereas, marketing
department have responsibility to publish these vacancies on several job portals so that large
number of applicants can be attracted for organisation (Pearson, 2017). However, coordination
among these departments supports the organisation in providing eligible candidates whose
support will be taken for achieving future organisational goals. These kind of coordination not
only supports the firm in improving organisational structure but also assist the managers in hiring
capable and experienced candidates for the functions of firm.
Section 2
P4 PESTEL model of the sector for analysing impact of macro environment on UK retail sector
PESTLE analysis is a model which is famous among the organisations for identifying the
different external factors of macro environment so that the organisations can reduce their impact

on the business operations of the company (Brown, 2018). This model provides the information
regarding the impact done by the external factors of business environment. These factors are
discussed below:
Illustration 1: Pestle analysis
Source: PESTLE ANALYSIS, 2016
Political: Such factors includes the policies of the government, stability in government,
political conditions etc. of the place where the business operations are performed. The policies
and strategies developed by the government directly impact the retail sector in terms of consumer
buying habits, and international trade laws etc. which should be considered by the management
of company in order to reduce their impact. For example: Tesco is a retail firm which has seen a
sharp decline in their profit due to the rise cost of importing which is a result of Brexit. However,
Tesco is offering the products at affordable prices due to which the impact was less (Tesco says
price rises are last resort as UK growth hits seven-year high, 2017).
Economical: Such factors include interest rate, inflation etc. which are considered by the
company in setting the prices of their products. By considering these factors, retail companies
can set their prices accordingly for improving their sales. This is because, customers does not
prefer the products with high prices when their economic conditions are not favourable. For
example: M&S is a retail firm of UK also which has faced issues of reduced sales and profit
because the company is having multiple stores and for satisfying the needs of these stores,

company is offering the products at high prices then the competitors. These high prices leads to
customer dissatisfaction due to which sales of the company dropped drastically (Reason why
M&S is in trouble, 2018).
Social: Such factors include taste, attitude, and preferences of the consumers which can
influence the operations of retail sector if not considered in decision making process. Retail
industry offers products and services to the customers based on the expectations of the customers
in order to ensure their satisfaction. Without considering the needs can negatively impact the
performance of organisations in terms of reduced productivity and profit. For example: M&S
face the issue of reduced sales and profit due to not considering the needs and demand of their
customers. This resulted in setting up of higher prices of products due to which customers
become dissatisfied and company has to shut down its 22 stores as well as 14 to be planned for
closing (Marks & Spencer to close 100-plus stores by 2022, 2018).
Technological: Such factors include the latest innovations, inventions, etc. which are
essentially implemented in the business functions so that retail firms can achieve high success
and performance. If such technological advancements are not implemented in business
operations then firm can face issues in improving the sales and profit. For example: Aldi is a
retail firm which struggled a lot in the UK market. For overcoming the challenges, company
implemented latest technological equipment such as bar code readers, quick checkout and online
delivery etc. in order to give ease to customers during the shopping, This change positively
impact the firm and company has seen improved performance and productivity in the
marketplace (The untold truth of Aldi, 2018).
Environmental: Such factors consist of conservation of natural resources, environmental
waste, conserving the environment etc. which are essential function of the firm in order to
improve the brand image and reputation of the company. Customers do not feel satisfied with the
products which are developed by exploiting the natural resources which will impact the retail
sector also. Retail firms should implement proper measure for protecting the environment. For
example: For example: M&S wants to improve their brand image in market due to which
company started money on the use of plastic bag so that customers take their own bag for
shopping. Due to this, the use of plastic in the M&S stores becomes less which positively
impacted the brand image of company (Marks & Spencer green chief attacks government's
'uncertain' policy, 2012).

Legal: Such factors include various laws and acts developed by the government in order
to protect the customers and employees from private firms. The laws developed by the
government should be followed by the retail sector so that customers and employees satisfaction
can be ensured. For example: Morrison was involved in a data leak scandal in which an internal
auditor of the company leaked the information of the customers. As a result, company has to pay
huge fine as the laws are violated by the company (Morrisons faces ‘vast’ payout after losing
data leak legal challenge, 2018).
P5 SWOT analysis and PESTLE analysis for determining the influence on decision of the
supermarket
SWOT analysis is a model which is famous among the firms for identifying their internal
weakness and outside opportunities and threats (Prajogo, 2016). This toll is used by the M&S for
determining their internal capabilities through which firm can sustain in the market.
Source: SWOT analysis, 2017
Strengths Weakness
 Company is having good customer base
along with good brand value.
 The quality of products of the company
is good due to having skilled workers.
 The company is having high prices of
their products due to which sales of
company is depleting.
 Due to Brexit, company has to reduce
the prices of their products which
Illustration 2: swot analysis

impacted the profit (Bocken, Rana and
Short, 2015).
Threats Opportunities
 Firms such as Tesco, Morrisons, Aldi
are giving stiff competition to M&S.
 Due to the Brexit, UK’s government is
changing the policies and strategies
which is impacting the company.
 Countries such as India, Sri Lanka have
low trade barriers due to which
company has huge opportunities for
expansion.
 Company is also having opportunities
in Fashion segment as company has
strong customer base which prefer the
fashion accessories.
Porter’s five forces analysis
Porter five forces model is used by the organisations such as M&S for determining the
forces through which firm can accomplish their goals of becoming major player in their industry
which are discussed below:

Source: Porter five forces model, 2013
Threats of New Entrants: New firms in retail industry bring innovation and higher
techniques which can affect the M&S operations. Those innovations can be in form of decrease
pricing approach, decreasing expenses, etc. which should be taken into consideration via the
management of M&S. The danger from new entrants in retail industry is comparatively low as
huge amount of cash and investment is needed alongside the time for ensuring the success.
however, M&S is taking appropriate measures for resolving such threats such as building
economies of scale in order to enhance the income, innovation in offerings etc. so as to retain
their customers from going somewhere else (M&S scales back ambitions in turnround effort,
2017).
Bargaining Power of Suppliers: This force exists while there are few or dominant
suppliers in marketplace which can lower the profit margins of M&S. This pressure is excessive
in retail sector because of less availability of providers and high number of corporations. M&S is
coping with this through constructing a group of providers. If any supplier enhances their costs
then M&S switches to some other for casting off the impact. M&S is developing transparent and
Illustration 3: Porter five forces model

effective supply chain with multiple providers (M&S: supply chain champions of sustainable
business, 2013).
Bargaining Power of Buyers: Bargaining power of the consumers is very excessive
within the retail market of UK as there are a big variety of organisations offering the identical
products to clients compared to M&S. This is impacting the profitability of M&S due to which
company is focused on development of innovative products which can provide additional value
to the customers. This is reducing the bargaining power of customers in terms of M&S and
company is retaining them in an effective manner (Marks & Spencer Selects True To Drive
Digital Innovation Agenda, 2018)
Threats of Substitute Products or Services: Threats of substitute’s products is also
comparatively high in the UK retail industry as competitors of M&S are doing new innovation in
their existing products in order to attract the customers from competitor firms. In order to
eliminate this threat, M&S is becoming service oriented rather than just product oriented through
which they identify the expectation of customers in order to provide the products in proper
manner. M&S has ties with TCS in order to improve their products for eliminating the threat
from substitute products (Marks and Spencer aims to become a 'digital first retailer' with TCS
tie-up, 2018).
Rivalry among the Existing Competitors: Rivalry among the retail sector is high as a
large number of organisations are operating their business in this sector. These organisations are
giving tough competition to each other for earning more market share. In order to eliminate this
threat, M&S is developing sustainable differentiation and economies of scale so that company
can easily compete with the rivals for achieving higher market share and profit (Schaltegger,
Hansen and Lüdeke-Freund, 2016).
P6 Impact of macro and micro environmental factors on business objectives and decision making
M&S is huge firm due to which it is highly essential for the management to interrelate
their strengths, weakness, threats and opportunities with the external environment factors for
determining their weak areas (Andersson, Forsgren and Holm, 2015). By interrelating the
weakness and threat to social and economic factors, it is evident that company failed in
determining the demand and expectation of the customers due to which company can face issues
from the rivals. By interrelating the strengths and opportunities with technological and
environmental factors, it is evident that company has adopted suitable measures for adapting to