Business Environment Analysis Report - M&S, UK Business

This report provides a detailed analysis of the business environment, focusing on Marks & Spencer (M&S). It begins with an introduction to the business environment, differentiating between internal and external factors. The report then explores various types and purposes of organizations, including private, public, and non-profit sectors, and their respective sizes and scopes. It examines the relationship between organizational functions, such as marketing, finance, and human resources, and how they link with the overall structure and objectives of M&S. Strategic management tools, including SWOT and PESTLE analyses, are applied to assess the macro-environment and the company's strengths and weaknesses. The PESTLE model is used to determine the positive and negative impacts of political, economic, social, technological, legal, and environmental factors. Finally, the report analyzes the internal and external factors affecting M&S, concluding with an overview of the company's strategic position and recommendations.

Business &Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Different types and purpose of organization....................................................................1
P2: Size and scope of various types of organization..............................................................3
TASK 2............................................................................................................................................4
P3: Relationship between various organizational functions and their linking with the structure
and objectives.........................................................................................................................4
TASK 3............................................................................................................................................5
P4: PESTLE model to determine positive and negative impact of macro- environment.......5
TASK 4............................................................................................................................................6
P5: Internal and external analysis of M&S company with other similar organization..........6
P6: Interrelation of strengths and weaknesses with external macro factors...........................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment is a kind of link between organisation’s actions and its
environment. Environment is the atmospheres of a company by which firm influenced directly or
indirect manner. Where the political, economic, social, and technological factors shopping a
business environment that are evaluated by a business for making forthcoming strategy. The
company’s business environment also includes the suppliers and customers who play an
important role in the business. There are two types of environment faces by the company such as
internal and external. In Internal environment it considers internal factors like value system,
mission and objectives, quality of human resources, organizational structure etc. whereas
external environment includes external factors which are two types like micro and macro
(Avramenko, 2012).
In micro external environment includes suppliers of input, customers, marketing
intermediaries, competitors, etc. and macro external environment includes economic, legal,
global, natural, and ecological. While preparing this report, Marks and Spencer, UK based
company which manufacturer’s apparels, food products, and other household items are selected
for this report. This report also summarized different size, kind, and scope of organization and
also includes its important functions and structure. The strategic management tools and
techniques are used in this report like SWOT and PESTLE to analyse the business environment
factors. This report also summarized the strengths and weaknesses of the Marks & Spencer
Company.
TASK 1
P1: Different types and purpose of organization
Following there are different types of organizations which are summarized below:
Private Sector Organization: A private sector organization is that organization which is
owned, managed and controlled by private individuals or institutions. Maximization of profit is
main priority of private sector (Karagiorgos, Drogalas and Giovanis, 2011). A private sector
does not undertake risky ventures or those having low- profit margin. Private enterprises are run
by businesses men; capital is collected from the private partners. For example, M&S is the
private sector organization in UK which has operated its own business operations in so many
countries. It has 1000 (approx.) outlets in UK itself.
Characteristics:
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 Private ownership
 Profit motive
 Independent management
 Private accountability
 Private management
Types of private organizations
 Partnership organization: A partnership organization is a type of business organization
where there are two or more individuals or persons pool money, skills, and other
resources, and share profit and loss in accordance with terms and conditions of the
partnership agreement. For example, FAB.
 Limited liability organization: A limited liability organization is a corporate structure
where the members of the company cannot be held personally liable for the company’s
debts or liabilities. It has combination characteristics of a corporation and a partnership or
sole proprietorship. For example, Associated British Foods, PLC. This organization can
be classified into two types i.e. in the form of guarantee and shares.
 Sole proprietorship: A sole proprietorship is the ownership of a business by one person,
who receives all of the profit, but is responsible for all debts and obligations as well. The
individual who owns and runs the firm is called as ‘a sole proprietor’ or ‘sole trader’. For
example, Restaurants, beauty salons, etc (Kolk, 2016).
Public Sector Organization: A public sector organization is the organization controlled
by and accountable to central or state government. Such type of organization is established to
provide services for its citizens. For example, the public sector organization includes education,
electricity, emergency services, healthcare, etc.
NHS is an organization which is provides medical services at reasonable prices to the
people of the country. This organization is basically focuses on the low income group who are
not afford the expensive medical services. The organization has a main function by providing
medical facilities to the society and its betterment in the UK.
Objectives of NHS
 To keep the lifestyle of every individual in healthy manner.
 Providing free check-ups to the low income group.
 Providing betterment of healthy life to the society.
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 Providing more and more contribution in the society development.
Non- profit organization: A non- profit organizations, are privately held entities that
don’t provide financial benefits for their members or stakeholders. In other words, they are
privately incorporated groups with a charitable purpose of not profiting from the activities they
carry (Nishitani and et. al., 2012).
For example, Oxfam-Wereldwinkles is a democratic volunteer movement that strives for
fair world trade and fights for everyone’s right to a dignified existence. It is the main fair trade
organization. The organization gives public awareness about unfair trade practices.
P2: Size and scope of various types of organization
There are various types of different organization which works on different fields and also
in different sizes and scopes which makes the organization different from others. Organization
may be public, private and non-profit. Size means organizations have business operations in
different countries around the world and scope means organizations have capability to achieve
their targets and winner in future period of time.
Following are the organizations which have different scope and size are discussed below:
Marks & Spencer (M&S):
Size: - Marks & Spencer is a leading multinational retailer based in the United Kingdom.
The company has a long history within the UK market, with its first store in 1884. As of 2016,
there are 914 M&S stores located in the UK, and 468 other store locations situated around the
world. 306 of these stores were primarily focused on food. M&S has been increased worldwide
revenue growth year on year since 2010, with 2016 revenue figures showing 10.5 billion British
Pounds (Osterwalder and Pigneur, 2010).
Scope: - The Company focuses on many forms of retailing. It sells products such as
clothing, home products and luxury goods, as well as food and drinks across the world which
helps them to attain the more customer satisfaction and also helps them to increases their
revenue.
British Foods Plc.:
Size: - Associated British Foods is a diversified international food, ingredients and retail
group with sales £ 15.4bn, 133,000 employees and operations in 50 countries across Europe,
Southern Africa, Asia, America and Australia.
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Scope: - ABF is a diversified group of businesses which enjoy a high degree of autonomy
in the running of their operations. They are ground into five business segments: sugar,
agriculture, retail, grocery and ingredients. Their scope of work is to serve different type of foods
and beverages items to the national and international customers and earn a huge profit from them
(Pikka, Iskanius and Page, 2011).
TASK 2
P3: Relationship between various organizational functions and their linking with the structure
and objectives
Marks & Spencer (M&S) is well known retail outlet in the UK which provides different
useful services around the world. The company provides variety of the products to the customer
who helps them to earn more profits and also help the company to achieve strong brand image in
the global market. To attain the success and growth in the world market, there are several
departments which give support the company and provide quality products and services. Such
departments are marketing, production, human resources and finance department works with the
management of the company to attain the targets on the time. In M&S such departments are
work together to attain the common organizational goals and objectives.
The functions of various departments in M&S are explained below:
Marketing Department: - This department is accountable to provide important
information about the company’s product and services to the main targeted customer by applying
the marketing management tools and various techniques. The marketing manager is responsible
to generate the sales for the company (Reed and et. al., 2013). By doing the advertisement on TV
and also on the social media helps the company to tell about the products and services to their
aimed or targeted customers. M&S deals in the various types of the products which is necessary
for the product to adopt various marketing management tools and techniques in order to provide
information about the price, quality and features of it so as to attract more and more customers to
buy the product of the company.
Finance Department: - This department is the lifeline of the company which gives
necessary finance to the company in their business operations. Funds are the main factor for the
company because all the business operations are depending upon this. M&S can attain the pre
decided goals and objectives on the time by proper utilizing the funds in their business
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operations. This is duty of the finance manager to allocate the funds in each department
according to their needs and support them when they are in the problems. With the help of this
departments can contribute maximum in organizational goals and objectives.
Human resources management department: - This department plays an important role in
the company by performing various responsibilities and roles. Roles which are played by the HR
manager are recruitment, selection, training and development, performance appraisal, and
compensations and rewards etc. through which the business activities of M&S cannot be
disrupted (Reinhardt and Stavins, 2010). Employees are an important element for the company’s
success and growth. Employees’ efforts and contribution helps the company to achieve their
objectives in efficient and effective manner. M&S can achieve the sustainability in their own
business by providing proper training and development to their employees.
TASK 3
P4: PESTLE model to determine positive and negative impact of macro- environment
Marks and Spencer (M&S) company do their business operations in various countries due
to which the probability of getting effected from several different factors of external environment
which includes political, economic, social, technological, legal, etc. Therefore, it is the duty of
the manager of the company to gathers the important factors through which they can prepare the
policies and plans for the company to reduces the negative impact and accept the changes which
the favourable to the company. Thus, it is necessary to the company’s management to adopt the
PESTLE technique to analysis the external environment to the other countries. If the manager
wants to open the new retail outlet in other country, he has to analysis the environment with the
help of PESTLE technique and evaluates each and every factors of this technique (Shigang,
2010). This technique gives valuable information to the manager where the problems and where
is opportunity to make the profits in the country.
These are briefly discussed below: Political factors: This is the factor which helps the manager to find out the impact of
political conditions which have existence in the various countries. M&S trade in various
counties and their outlets are affected by the political conditions in that country where
they are situated.
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 Economic factors: This factor includes economic growth, employment rates, and
inflation rates, consumer confidence, etc. which have negative and positive aspects on
the M&S business operations in various countries. Social factors: This factor includes income distribution, lifestyle factors, demographic
influences, etc. which affects the pre- decided plans and policies of the company for that
country where the company wants to establish their outlets. Technological factors: This factor includes international influences, changes in
information technology, etc. and have an impact on the company. The company has to
do work according to the technology which is adopted by today’s world. Technology
advancement plays major role in market and affects the business operations. Legal factors: This factor includes taxation policies, employment laws, industry
regulations, health and safety norms, etc. which have different impacts. If the company
wants to establish the retail business in the foreign market they have to survey this in
appropriate manner.
 Environmental factors: These factors comprise all those which influence or are
determined by the surrounding environment. The factors of a business environmental
analysis include climate, weather, geographical location, etc. It relates to the
environmental and ecological aspects that will affect the demand for a company’s product
and it also includes environmental and ecological regulations, sustainability, etc.
Pestle analysis is used by the M&S for their business and strategic planning, marketing
planning, product development and research report. By understanding these external
environments, organizations can maximize the opportunities and minimize the threats to the
organization.
TASK 4
P5: Internal and external analysis of M&S company with other similar organization
An organization can endure in the competitive market when the management of it find
out in an appropriate manner their real weaknesses and strengths so that they defeat their revival
in the market. SWOT analysis is used to find out the overall company’s internal strengths and
weaknesses whereas the PORTER five force model are used to analyses the externally.
SWOT ANALYSIS:
Strengths Weaknesses
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 With the newly established company,
the strong offering given to the
customers.
 Involved in various number of
corporate social responsibilities by
which the company has achieved strong
goodwill and brand image in the
competitive market.
 Powerfully focuses on developing the
customer experience on the company’s
product and services.
 Financial position of company is weak.
 Less market capture in the china due to
rigid market policy of the government.
 Depends upon the UK outlets which
affect the profit margin of the company.
 The company product prices are much
higher in the developing countries so
that low income people cannot afford it
(Karagiorgos, Drogalas and Giovanis,
2011).
Opportunities Threats
 Expand business in the developing
countries by providing reasonable
product countries like in South Asia,
Africa, etc.
 Engaged the business in the food
product by providing them in
reasonable prices.
 Providing discount and prizes to the
customer to attract to their outlets.
 Due to change in taste and preferences
of the customers affect the company’s
profit margin.
 High competition with other retail
outlets brings threats to the company.
 Prices increases in products due to
change in taxation policies will lead to
less sending by the customers.
Porter's Five Forces Model:
In the case of M&S the five forces that influence the industry are as follows:
 Threat of new entrants: - The new entrants in the retail introduce new way of doing things
and innovation that put the pressure on M&S. to overcome to this problem the company
lower the price, reducing the costs, and providing new value propositions to the
consumers.
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 Bargaining power of suppliers: - All most all the retail organisation purchases raw
material from the several suppliers. Supplier plays an important role in it. If the supplier
decreases the margin, then the M&S can earn more in the market. Whole impact of more
supplier bargaining power is that it lowers the overall profitability of retail.
 Bargaining power of buyers: - Buyer is king of the market. They want to buy the best
offerings available by paying the minimum price as possible. This put the pressure on the
M&S profitability margin. The smaller and more powerful the customer base is of M&S
the higher the bargaining power of the customers.
 Threats of substitute products or services: - When a new product meets the customer
needs in various ways it affects the profit margin of the company. The threat of substitute
product is high if it offers a value proposal that is uniquely dissimilar from present
offering of the company.
 Rivalry among the existing competitors: If the rivalry in between the existing players in
an industry plays a distinctive function then it will low down the prices and affects the
profit margin of the industry. M&S operates in a very competitive retail industry.
P6: Interrelation of strengths and weaknesses with external macro factors
Macro- factors like political, social, economic, social, etc. which have a negative or
positive effects on the business operations. Therefore, it is necessary for the company to deeply
analysis these factors and which are discussed below:
 Political: - It includes all rules and regulations which are framed by the government of
the countries. The strength for the M&S is favourable taxation policies which influence
the profitability and weakness is high rate of taxation effects the sales and profits.
 Economical: - GDP, inflation rates, etc. are some factors that affect the business activities
of the company. Strength for the M&S is good economy of the country raises the income
power of the people so that they purchase more and spending more and more to the
product and weakness is inflation, this affect the buying behaviour of the customer and
adverse effect on the sales of the product (Hamilton and Webster, 2015).
 Social: It is related to the culture, behaviour, and attitude of the people towards the
product. Strength for the M&S is if the people buy the quality products it improves the
living standards and it enhances the brand image of the company in that country where it
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is operated whereas the weakness is the providing the old and outdated product which
attract less customer to it and affected the brand image.
CONCLUSION
From the above mentioned report, this can be rightly said that the inner assessment of the
cited organisation renders the opportunities of the manager of the cited organisation in order to
assess their strengths and weaknesses. This assist in order to implement their profitability and
contributes few of the valuable steps that can be used for overcome the weaknesses. This simply
said that there is a vast connection between whole divisions that renders assistance to each other
for attaining their individual and firm’s objectives. Adopting of the macro environmental
components assist in forming of efficient strategies which in turn proved as the strength of the
company for performing in an effective manner. via this huge number of benefits are collected
by cited organisation such as the more sales, effective brand image, more market share, higher
profits and so on.
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REFERENCES
Books and Journals:
Online:
Business Environment. 2018.[Online]. Available
through:<https://www.slideshare.net/NikhilSoares/business-environment-self-
importance-porters-model>
What SWOT Analysis is in simple words. 2016.[Online]. Available through:
<http://pestleanalysis.com/swot-analysis-examples/>.
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