Business Environment of Marks & Spencer: A Detailed Report

This report provides a comprehensive analysis of the business environment, focusing on Marks & Spencer as a case study. It begins with an introduction to the business environment and defines key terms. The report covers different types of organizations, including private, public, and voluntary entities, along with their purposes and legal structures, using Marks & Spencer and other examples like the BBC and the Charity Commission of England and Wales. It then examines organizations based on size (micro, small, medium, and large), detailing their characteristics and scope. The report further explores the interrelation between different organizational functions, such as marketing and R&D, as well as finance and production, and how they contribute to achieving business objectives. It also touches upon organizational structure and its impact on functional implementation. The report incorporates PESTLE, SWOT, and Porter's Five Forces analyses to assess the external factors influencing Marks & Spencer's operations, including the interrelation of strengths and weaknesses of an enterprise with external elements of macro environment, providing insights into its strategic position and market dynamics.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1............................................................................................................................................3
P2:...........................................................................................................................................5
LO2..................................................................................................................................................7
P3............................................................................................................................................7
LO3..................................................................................................................................................8
P4:...........................................................................................................................................8
LO4..................................................................................................................................................9
P5:...........................................................................................................................................9
P6:.........................................................................................................................................12
CONCLUSION..............................................................................................................................13

INTRODUCTION
Business Environment is considered as a mixture of micro as well as macro variables that
effect over operating situation of a firm. This is also known as combination of elements that may
or may not be under the control of an enterprise (Quinlan and et. al., 2019). It includes all those
factors that affect growth and productivity of an organisation like suppliers, consumers,
competitors and so on. Present report give review about Marks & Spencer that is a British based
global retail organisation that deals with clothing, food and home appliances. Further, project
also cover variety of enterprises that operate in business environment and their purposes and
scope and size of these enterprises. Further, explains the relationship between different functions
of organisations and their connection with its objectives and structure. Further it consists,
negative and positive influence of external elements on company’s activities by using PESTLE
analysis. It also summarised analysis of a sector with the help of SWOT analysis and Porter's
five forces model. Interrelation of strengths and weaknesses of an enterprise with external
elements of macro environment are also included in present assignment.
LO1
P1
Organisation can be defined as a sum of organised individuals that has a mutual purposes
and responsibilities for achieving overall objectives of an enterprise. Mainly there are three type
of enterprises which has varied purposes and legal structure which are private, public and
voluntary organisation.
Private Organisation- It can be defined as any individual, partnership, association, corporation
and agency that is not a public enterprise and operates its activities in order to earn profit. The
example of Private Organisation is Mark & Spencer that is a United Kingdom based
multinational entity (About Us, 2019).
Purpose of Mark & Spencer- The basic purpose of Mark & Spencer is to satisfy
customers by providing them best quality products in order to earn profits.
Legal Structure- Some specific legal structure that is followed by different companies
for carrying on its business activities. This organisation follows The UK corporate Governance
Code, 2018 which states that company must complied with all provisions of this code and be
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committed towards high standard of corporate governance. The legal structure of private firm
can be understood by following given points:
Sole Proprietorship- Under this legal structure, a person operates a whole enterprise and
is the single owner of that organisation. The risk is high in such enterprises and owner has
limited freedom over business decisions (Crane and et. al., 2019).
Partnership- It can be determined as an agreement or contract that takes place between
two or more than two individuals that work together for achieving organisational objectives.
Limited Liability Companies- Such firms has various owners and revenue generated from
these organisations are shared among all of them.
Public Organisation- Public sectors are operated and owned by government for the purpose of
providing various services to the individuals living in society. The basic goal of public firm is
not to earn profit instead it works for fulfilling needs of public. Here, an example that can be
taken for public entity is BBC (British Broadcasting Channel).
Purpose of BBC- The basic goal of BBC is to provide important information and news
prevailing all over the world to people.
Legal Structure- Public organisation follows all rules and regulations that are imposed
by government upon them. The royal charter is the constitutional basis for this organisation
which determines its objects, public purposes and mission. It also determines the regulatory
arrangement and governance of company which consists composition & role of Board of BBC.
Legal structure of these firms is here under:
State Government- Under this legal structure, operations of a company is operated and
owned by state government of that state under which that organisation is operating its activities.
Central Government- These enterprises are operated and incorporated by Central
government of United Kingdom.
Local Government- These companies are incorporated under nation or by government
structure of municipality.
Voluntary Organisation- These enterprises are also known as non-profit organisation that carry
out its operations for development of society not for earning profits. An example of voluntary
organisation is the Charity Commission of England and Whales (Gaganis, Pasiouras and
Voulgari, 2019).
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Purpose of Voluntary enterprise- The purpose towards which Charity Commission of
England and Whales works is to offer help to those individuals who are in need which helps in
satisfying their needs and requirements.
Legal Structure- Charity commission of England and Whales is based upon a
commission that started in 2007 which determines effect upon the relationship with regulator and
It can frustrate an intention for achieving a positive result and outcome. Following is the legal
structure of Voluntary Organisation:
Charitable company limited by guarantee: It can be defined as a limited liability
organisation which is incorporated and registered under company house (Deasy and et. al, 2016).
Trust: This firm is operated by trust deed and there is no statutory framework in these
enterprise sectors.
Difference Between not for profit, profit and non-governmental organisations (NGOs)
Profit- It refers to those industries which are managed and owned by independent
companies and not by government (Birru and et. al., 2019). Its purpose is to earn maximum
profits. It deals with various products and services like Mark & Spencer deals with clothing,
food, foot wears, etc.
Non- Profit -These organisations are controlled and owned by government. It serves for
offer various services to society. Example of such organisation is BBC that deals with providing
broadcasting services.
NGOs- Those enterprises which is developed to focus upon a particular social cause are
called non-governmental organisation. It implements its operations for welfare of people not for
earning profits. Charity Commission of England and Whales deals with providing charity to
orphanage, old age home, etc.
P2:
On the base of size, there are various types of organisations which are small, micro, large
and medium. The larger the size is, the more resources are needed to conduct its activities and
vice versa. There are four different kinds of enterprises based upon sizes that are- micro, small,
medium-size and large entities (Definitions of micro, small, medium and large enterprises,
2019). These firms are different from each other on various aspects which is explained in detail
as follows-
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Micro: These enterprises operate its activities in a very small scale. Here, the number of
employees are up to 15 and turnover is up to 180 (dollars). Issoria of United Kingdom can be
taken as an example of Micro enterprise that deals with hospitality services. Issoria covers a very
small share of market which is around 1.2%. Issoria has very low margin of profit share which is
less than £1 million. Growth and Sustainability -The growth and sustainability of Issoria is very
low because of low market and profit share and low availability of funds (Quinlan and et. al.,
2019). Issoria is a growing micro enterprise and its long term goal is to serve half of companies
of the world. It can convert itself into small enterprise as it has 178% revenue growth in two
years.
Small: It includes few number of people that work together to achieve enterprise's
objectives. In this comparison is made between low annual revenue and regular-sized business
(Anolfatto and MacDonald, 2019). Here, the number of employees are between 16- 100 and
turnover is between 181- 1807 (dollars). The market share of Archipelago Hotel is 2.5% approx.
Archipelago Hotel has profit share less than around £2 million. Archipelago Hotel has low
growth and sustainability but more than micro enterprises. Example Archipelago Hotel situated
in London. Archipelago Hotel has wide scope in future and it can convert itself into a medium
scale enterprise by expanding its business all over UK.
Medium: It includes few workers but more than small and micro enterprises and it has
moderate annual revenue. In this number of employees are between 101-250 and turnover is
between 1808-4096 (dollars). Giacom organisation covers around 4% of UK market share. The
profit share of Giacom organisation is £200,000. Giacom organisation has high range of growth
and sustainability rate as compared to micro and small sectors. Giacom organisation of UK deals
with IT services. Giacom organisation has wide scope in future and it can soon convert itself into
large scale enterprise by providing IT services outside UK.
Large: Large enterprises has large number of employees and high annual turnover. In this,
number of employees are 250 or more and turnover is 4097 or more (dollars). The market share
of Marks & Spencer is 7.6%. Marks & Spencer profit share is high as it is a large enterprise. In
UK Market, it shares profit up to £523.2m. There is high amount of growth and sustainability of
Marks & Spencer due to high market share, profit share, and large number of human and
material resources. Marks & Spencer deals with clothing, food, accessories and footwear sector.
Marks & Spencer has very wide scope and it can open up more outlets in countries like China.
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Size and Scope of different organisations
Private company
Size and scope- In Marks & Spencer, there are 80,000 people who make their
contribution in running the business of the company. The company operates its business in
different nations of the world with the help of its numerous stores at 1463 locations. The net
income of the company is £37.3 million, revenue is £10,377.3 million and operating income is
£601 million. Due to operating its business globally and better quality product and services, the
firm has wide scope.
Public enterprise
Size and scope- British Broadband Corporation running its business with the help of
22,401 employees. The firm run internationally and providing its services in number of nations.
The net income of the company is £69million, operating income is 52million and total revenue is
£4.889 million. The organisation provide its broadband services in approx 28 languages so it has
large scope.
Voluntary organisation
Size and scope- There are 350 employees who make their contribution in running the
business of Charity Commission of England and Whales. The company work for welfare of the
society so it has large scope in non governmental sector b y providing help to needy people.
LO2
P3.
Marketing and R&D Department- These departments are interlinked with each other and their
functioning depends upon each other. Marketing department provides innovative idea to
R&D department and it converts this idea into action by developing innovative products
with the help of innovative and latest technology. Both these functions play an important
role in achieving overall objectives of a firm by providing satisfaction to customers through
innovative products. For instance, recently R&D department helped Marks & Spencer to
produce vacuum packing of fresh meat cuts and marketing department promote this new
technique to its customers to attract them (Sewchurran, Dekker and McDonogh, 2019).
These both business function also help in attaining business objectives. For instant,
marketing manager of respective company support R&D function to get information about
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the market and customers needs and preferences so that the firm produce products as per
customers requirements and accomplish is set objective of making increment in profit. For
instant, if the company has the objective of marketing analysis or getting information about
consumers needs and preferences then marketing function help it by offering different
marketing tools and techniques so that company can effectively use them to collect
information or research about needs and demands of consumers needs. This will help in
attaining the objective of marketing analysis in appropriate and adequate manner. Structure
follow by organisation play a role in its success and largely affect implementation of its
functions. For example, Marks& Spencer follow a functional organisational structure which
ensure execution of every business activity in an effective manner.
Finance and Production Department- These functions are closely linked with each other
towards achieving organisational goals and objectives. Finance department provides funds to
production department which helps in producing products that satisfy overall needs and demands
of customers. In Marks & Spencer, financial department and production department both plays a
vital role in producing quality goods that meet customers’ requirements. If both business
function make contribution in performing each other roles and responsibilities then they can
accomplish their aims as well as organisational objectives. For example, if the financial manger
provide fund to production department to buy material on time then the production function can
manufacture goods and services on on time and help in attaining the sales objective of the
respective firm. For instant if the objective of the company is to minimise the cost production
then financial function help in designing and effective budget to purchase new machinery which
help in making effective manufacturing of good by consuming less time and cost which help in
attaining the organisational objective. Further, functional structure of Marks& Spencer ensure
implementation of business operations in an expertise manner.
Types of Organisation Structure based upon its scope and size- Hierarchical Structure- In Hierarchical structure, employees are grouped with each
worker having individual supervisor. This group is categorised on basis of factors like
functions, geography and product. The size of companies that follows such structure is
large like Marks & Spencer and in this, grouping is done as per countries. This
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organisation has large scope as it is a well-known brand and it can expand its business in
countries like China.
 Matrix Structure- In this, reporting relationship can be set up as matrix or group instead
of traditional hierarchy. Here, an individual report to more than one manager or
supervisor. J Sainsbury Plc organisation of UK follows this structure and it is large size
enterprise. It has large scope for future as it can expand its products and services in other
countries.
Therefore, the CEO of the firm connect with president and commercial administrator and
give order to them about the vision and mission in term of accomplish them. The manager
transfer this information to several business functions of the company as per requirement that
assist in accomplishing task in set time duration. The major purpose to maintain this strategy is
smooth flow of work with effective communication in the firm.
LO3
P4:
UK retail industry is getting affected by external environmental forces like political,
cultural, social, economic and so on. Due to which many big retail British enterprises such as
TESCO, Mark & Spencer, SAINDSBURRY and Asda are making plan to restructure their
businesses for the purpose of becoming more competitive (Zhou and Wen, 2019).
PESTLE Analysis
In order to examine impact of external forces upon retail sector of United Kingdom,
PESTLE Analysis is used. It is a framework that is used for making analysation of macro factors
of environment that affect the overall performance and productivity of an enterprise. It includes
political, legal, social, economic technological and economic factors that has both negative &
positive effect on UK retail sector (Pestle analysis, 2019). PESTLE Analysis in context to Marks
and Spencer is as follows:
Political- The retail sector of UK is affected by its political state. As the political state of
this continent is strong and stable which helps in facilitating organisations like Marks & Spencer,
TESCO, etc. to make sure its sustainability for a longer period of time. The British Government
has cut the corporation taxes from approx. 30% to 28% which helps in providing opportunities to
UK retail sector to enhance its revenues. The political uncertainty about intended exit of UK
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from EU have created difficulty among retailers for planning beyond Brexit. It can act as a threat
for UK retail sector as it has reduced revenues of retail industry.
Positive impacts: The political factors that are connected with UK generally provide
wide opportunities to Marks and Spencer to join hands with other companies that impacts
positively on its operations. As by joint ventures, the entity generates more revenues and
achieves market share.
Negative impacts: However, Brexit decision impacted in drastic manner on Marks and
Spencer as it has to shut down its shops and retail stores in European Union that resulted in
decline in sales and limited presence.
Economical- The overall economic condition of United Kingdom is strong and helps in
the growth of UK retail sector that come with latest innovative products and techniques. R&D
department of UK has started a programme of Innovate UK Smart Grants in order to help retail
sector of UK. Brexit on the other hand is affecting retail sector of UK in a negative manner and
in order to prevent from this, retail sector can offer its products at reasonable prices in order to
deal with consumer psyche post inflation that is caused by Brexit (Sousa and Rocha, 2019).
Positive Impacts: Economic situations of UK impacts positively on operations of Marks
and Spencer as the company works in the economy that is strong and this results in working
without any disturbances and offering products to huge market audiences.
Negative impacts: It is seen that changes in economic situations of UK also impacts
negatively on practices and strategies of Marks and Spencer. It is so because when sudden
changes occurs in inflation or exchange rates then company fails to adjust its strategies
accordingly and this shakes its practices.
Social- Customer tastes and preferences are the main factor that can act as an opportunity
for UK retail organisations like TESCO, M&S, etc. that produces such products which meets
customers’ requirements. But increase in number of competitors that produce goods as per
customer's requirements can act as a threat for existing retail companies of United Kingdom.
Positive impacts: Producing and offering commodities as per beliefs and values of social
population impacts positively of Marks and Spencer as it assist the company to meet all needs
and achieve huge success.
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Negative impacts: However, shift of consumers to competitors due to availability of
substitutes generally impacts drastically of Marks and Spencer as the entity has to face severe
changes and this also reduces its customer base to huge level.
Technological- Increase in number of latest technology and innovation, UK retail sector
has ensured its sustainability for a long period of time. Retail sector can take use online shopping
sites which provides home delivery to its customers. This will lead to expansion of market share
and company can make its products available worldwide But this step by organisation can result
in complexity among functions of a company.
Positive Impacts: Working or executing activities through using latest technological
machines impacts positively on practices of marks and Spencer. For example, Artificial
Intelligence at stores of the company reduces burden on employees and this also reduces
absenteeism among them.
Negative Impacts: To adopt the technology or failures in existing techniques requires
huge investments by Marks and Spencer and these impacts negatively on profit margins of the
entity.
Legal- The retail sector of United Kingdom ensures that all the retailers must comply
with the legal laws and norms that are associated with it. If the retail sector fails to follow the
Retail organisations like Marks and Spencer provides health and safety to its customers and
follows the health and safety act.
Positive impacts: When all the governed legislations are executed by managers of marks
and Spencer then it impacts positively on the employees and entity. Along with this, company
also gains recognition because of adhering legalisations in effective manner.
Negative impacts: However, implementation of some legislation, for example,
Advertisements Act restricts the company to divert the minds of customer by making wrong and
hypothetical advertisements impacting negatively on the nature and behaviour of customers.
Environmental- The UK retail sector produces such products that do not have any kind
of harmful impact upon environment. It uses biodegradable stuff for packing to make sure to
provide least harm to environment. As the working of this organisation is not impacting much on
the environment but the contribution made by the company towards the environment will help in
increasing the brand image and goodwill of the company.
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Positive Impacts: Following all environmental provisions and reducing collisions of
carbon footprints impacts positively of the retail entity. For example, Marks and Spencer has
stopped using plastic bags and uses reusable paper bags generally attracts huge population
towards it through the strategy and it increases its goodwill in market that are results of positive
impacts.
Negative impacts: There are some cases in which Marks and Spencer fails to work in
protecting environment and because of this it has to face various critics and penalties that
impacted negatively on it.
LO4
P5:
Internal analysis is known as the process of identify & examine competency of
organisation and its competitive viability on the market. Companies carry out internal analysis in
order to be aware about their strengths, opportunities, weakness and threats. Data gathered
through internal analysis is very essential as this help organisation in formulate strategic
objectives and support in growth of the business.
Porter's Five Forces
It includes five factors and forces that affect profitability, performance and productivity
of a firm. Here, porter's five forces are applied upon Marks & Spencer which is a British based
retail organisation as follows-
Threat of New Entrants- In context of retail sector, this threat is low because of high
requirement of capital that provides various opportunities for existing organisations to make sure
its growth and sustainability with a marketplace.
Threat of Substitute Products- As per the accordance of M&S, there is high level of
threat of substitute products because of availability of various companies that deals with almost
similar products. The competitors of M&S are TESCO, Burberry, etc. which also deals with
similar products like clothing, accessories, fragrances, shoes, and so on. Large organisations like
Marks & Spencer have capability to grab customer’s attention towards its products high quality
and its reasonable price. The products offered by
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Bargaining Power of Buyers- In retail sector of UK, the bargaining power of buyers is
high as per the fact that consumers render opportunities to an enterprise to provide such products
that ensure Marks & Spencer's long term sustainability.
Bargaining Power of Suppliers- The bargaining power of suppliers is low in case of
Marks & Spencer. Marks & Spencer had maintained good contracts and relations with vendors.
Thus, this organisation is capable in negotiating prices with suppliers and switching the vendors
(Shukla and Pattnaik, 2019).
The intensity of Competition Rivalry- There is high level of competition rivalry in retail
sector. The main rivals that can be considered for Marks & Spencer are TESCO, John Lewis,
ASDA, and so on that offers high quality products available at reasonable prices. Retail sector
can adopt strategy of diversification to make sure strategic edge within market over rivals.
SWOT Analysis
It is an approach that is implement to determine organisation's internal elements that are
weaknesses & strengths and external forces that are threats & opportunities. Here, SWOT
analysis has been created on Marks & Spencer to find out its competitive advantage (Cyphert
and et. al., 2019).
Strengths Weaknesses
 Good track record of developing new
and better product (Xu and Koivumäki,
2019).
 Strong and famous brand portfolio.
 Consistency in quality of product
through automation of manufacturing
activities.
 Marks and Spencer had a variety of
products to offer its customers.
 High recognition of brand is another
major strength of Marks and Spencer.
In UK’s market this brand is known as
the one which provide quality products
 Lack of investment in new technology
hindering its performance at global
level.
 Not able to tackle the increasing
challenge of new entrants.
 Major backdrop of company is that it
follows the old techniques rather than
new techniques which increase the cost
of company’s operations and create
unnecessary delays. All this increase
manual work and decrease the work
efficiency.
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to its customers.
 Large number of store outlets in UK
market. There are about 900 stores of
company all around the world from
which 600 stores of company are in
UK.
 A range of popular designer brands is
another strength of company. Variety
of brands help organisation in attract
large number of customers every day in
the store.
 Another drawback of company is that in
market it is known as non-trendy & out
fashioned firm as company offer variety
of clothes but only for young people not
for aged people.
Opportunities Threats
 Reducing cost of transportation because
of lower shipping price helps in
reducing overall cost of product.
 Free trade agreement with governments
providing expansion in target market.
 Company can expand its business
activities in other countries.
Organisation can open its own stores in
various areas of world through
franchise agreements.
 Online platforms can be used by to
improve its position in market and to
enhance the number of its profits.
 Liability laws of many country
providing threat of lawsuits.
 Being a multinational company it has to
face currency fluctuation and high level
of competition (Rofiq and Pramono,
2019).
 Intense competition in all areas of
business is one of the growing threat for
M&S due to this company has a threat
of losing its scope in international
business activities due to increase
competition.
 Further, changing trends in clothing
sector is another biggest threat for M&S
as due to this company has to change
its stock.
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All the strengths, weaknesses, opportunities and threats of M&S has affected the decision
making of an organisation to a large extent. It will enhance the usage of latest technology by
developing its online sites which will enhance its market share.
P6:
Factors Strengths Weakness
Political The United Kingdom's
political condition is strong
and stable which makes sure
sustainability of an
organisation for a long period
of time. It can be considered as
its strength.
The exit of UK from EU has
created problems among
retailers in taking managerial
decisions. which can be
considered as its weakness.
Economical Innovative UK Smart Grants
programmer started by R&D
department of United
Kingdom for helping UK retail
sector which can be considered
as its strength.
Brexit has negative impact
upon retail sector of United
Kingdom which can be
considered as its weakness.
Social After conducting market and
social research, companies
may come to know about
tastes and preferences of
customers which can e
considered as its strength.
The increase in number of
competitors producing
substitute products can act as
its weakness.
Technology Latest technology like online
shopping is can act as a
strength to retail sector.
High amount of investment is
needed in such latest
innovations which can be
considered as a weakness.
Legal If retail sector follows all the Certain laws like taxation laws
15

applications of labour laws
than it can improve its overall
efficiency and productivity.
can act as a weakness to retail
sector as they have to pay high
amount of tax to government.
Environmental UK retail sector produce such
products that are environment
friendly like it utilises
biodegradable stuff for
packing purposes that provide
least harm to environment.
These initiatives requires huge
amount of investment which
act as a weakness.
CONCLUSION
From the above information, it has been summarised that business environment affects
performance and productivity of an enterprise to a large extent. Various types of firms like
private, public and non-profit that serves different purposes. Private sector aims at earning profits
by producing such goods that satisfy needs of customers. Large scale enterprises have large
resources and large profit and market share. Relationship between different departments is also
concluded in this report like marketing function create ideas and finance function provides
resources to convert that idea into action. By analysing the factors via PESTLE and SWOT,
organisations can strengthen their capabilities and make policies to overcome from threats as
well.
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REFERENCES
Books and Journals
Online
About Us. 2019. [Online]. Available through: <https://corporate.marksandspencer.com/aboutus>.
Pestle analysis. 2019. [Online]. Available through: <https://pestleanalysis.com/what-is-pestle
analysis/>.
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Definitions of micro, small, medium and large enterprises . 2019. [Online]. Available through:
<https://www.researchgate.net/figure/NAFIN-Definitions-of-micro-small-medium-and-
large-enterprises_tbl1_237602468>.
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