Comprehensive Business Environment and Strategic Analysis of M&S

This report provides a detailed analysis of Marks & Spencer (M&S) and its business environment within the UK retail market. It begins by differentiating between profit, non-profit, and non-governmental organizations, then delves into the size and scope of organizations, including SMEs. The repor...Read More

BUSINESS AND BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION.................................................................................................3
P1. Major difference between profit, not for profit and non-governmental organizations (NGOs)
.........................................................................................................................3
P2. Size and scope of the organization........................................................................4
P3.Organizational structure and functions....................................................................5
P4.PESTLE Analysis of Marks & Spencer’s.................................................................7
P5. SWOT Analysis & Porter’s Five Forces Analysis of Marks & Spencer’s.........................8
P6. Strength and weakness interrelate with micro factor................................................11
CONCLUSION..................................................................................................11
REFERENCES…………………………………………………………………………………………
……………………12

INTRODUCTION
The sum of all internal and external factors that affect decision of how a company
functions is called a business environment which includes its employees, customers, and
management, supply & demand and business regulations. M&S is one of the UK's leading
retailers. They are committed to make every moment special through the high quality, own
brand food, clothing and home products. It was founded in 1884 and since then it has grown
from a single market stall to an international, multi-channel retailer. This report gives an
insight about the current retail market scenario in UK. The report gives analysis of M&S
based on various models like Porter’s five forces model etc and explains about the current
position of company and its future prospects.
P1. Major difference between profit, not for profit and non-governmental organizations (NGOs)
An organization which aims to earn profit through commercial or non commercial
operations and always look out for its own interests is termed as profit making organization.
These are unlike not-for-profit organizations can withdraw any profits or dividend during
any time. They work in private sector which aim is to fixes goals for the successful running
of organizations. Almost all are register themselves under profit with the aim of fulfilling
personal interest. For example, Mark & Spencer’s, which is a retail giant of UK.
On the other hand, Not-for-profit organizations are , private or public, from which owners
have no right and cannot withdraw any profits / dividends. These organizations can have
surplus / profits from operations but the money stays with them for company usage and is
not distributed among the owners (Song, Sun, and Jin, 2017). Like profit organizations they
also are business oriented in their structure and operation and are very popular in business
and commercial sectors. The main characteristic of a NPO is answerability, reliability,
honesty, and openness to every individual who has invested his/it’s time, money, and faith
into the organization.
The organizations which are not connected by government are known as Non government
organizations. These organizations are help to make positive effect in the society according to
their objectives. They need funds from government in order to maintain their position in thr

market. They are supposed to work on public/social welfare projects. They come in various
shapes and sizes. NGO's mainly get their funding as a donations, and many of them do not want
any kind of donation and they run their business by themselves.
P2. Size and scope of the organization
The main aim of business firm is to get maximum profit and there are many types of
firms such as large, small and medium -size. Many factors make different it from others such
as number of workers employed there, types of owners or partners and many more. But the
size of medium size business is so wide as compared to others.
Along with above mentioned types of organization, another category comes that is small
medium size enterprises called SMEs . In Europe almost more than 90 percent of the
business are classified under small medium business.
The main affecting factor for small medium business are number of employees and their
annual turnover during a year. In case of micro size business, the number of employees are
less than 10 and their yearly turnover is about UDS 2.5 million. On the other hand in case of
small business the number of employees who worked there are approx 50 but having
turnover less than USD 11.6 million. In the medium sized business of organization, the
number of employees for working are about 200 to 250 and their yearly incomes reaches
around USD58 million. The small enterprises get funds from another but this not so in the
case of large business type.
Every business have their own legal rules and regulations and do their best to increase the
size of business or expand it as how the organization is going to raise finances and how it
will distribute its profits (in case of profit making organization).
Every business type have different types of legal structure such as sole proprietorship,
partnership and private limited (joint stock) companies which are mention below:
Sole Proprietorship is a type business having a very simple structure, where entrepreneur
brings his own capital. He himself act as the organizer, the operator, the controller, the help
in taking decision, the financier and apart from this, shares the responsibility for the growth
and development of business. (Song, Sun, and Jin, 2017). This type of organization is very
common in third world countries. They have a very limited scope and are very difficult to
sustain at larger scale for longer time.

Partnership is a deal where every partner introduces certain investment, management and
labor. For internal management affairs, partners decide among themselves to which partner
can be suitable for take part in affairs of business. Generally, partnership business runs on
small size; its business organization structure is very simple. Partnership firms are relatively
sustainable and promises growth. But they become difficult to manage as they grow in size
and scale and become more vulnerable to various internal and external issues (Pushpa, 2017)
In a Joint Stock firm or private limited form of business, generally working of
organization starts even before its incorporation by the promoters and this work of
organization continues after incorporation. Responsibilities are set up on an organizational
chart and duties of recruits employed are defined, and actions are laid down. The scope of
this type of business is quite wide and complicated. Even though this type of organization has
a complex structure and at small scale is not suitable, they have high sustainability and very
wide scope even at very large scale.
Micro enterprise are almost all over around , it usually operates less than 10people and
start with small amount of capital whereas small business employee small no of employees
almot 550people. They are operated is small in size and revenue is depending upon the
industry. On the other hand medium enterprises are engaged in 250 no of people and earn
more than those two scale firms. Eventually they build a bridge between small business and
big corporation
P3.Organizational structure and functions
Organizations are formed in very particular way to realize different goals established at
the start. The structure of an organization is really helpful in determining its progress toward
achieving these goals. A wrong structure at the same time can hinder its progress. The needs
of an organization if properly matched with the structure then it can operate in achieving
higher sales and other profit. Here the size doesn’t really play an important role, but if the
structure is well set up, any organization, be it large or small, can achieve its goals.
There are three types of organizational structure which are mention below:
 Functional structure
 Divisional structure
 Matrix structure

Functional structure it is one of the most common structure in organization. In this type
of structure, employees have their own set of rules and regulation in specialized field. Every
business have people whose knowledge and skills may be match and they become the
specialist in their field. This type of work allow promotion and development of employees
and specialization can lead to operational efficiency and help to raise in production levels but
on the other side there are lot of management issue and further it make the decision power
slow. The unit coordination in functional structure also plays a vital role but sometimes the
cooperation with each other may be compromised.
Divisional structure typically is used in larger companies that operate in a wide
geographic area or have separate smaller organizations within an umbrella group to cover
different types of products or market areas. The benefit of this structure is that ‘needs’ of
customers and clients can be met more rapidly and specifically, as each division can operate
more or less independently for the other divisions in a company.
Matrix structure in this type of structure, employees have to report the managers about
their work and the authority of different managers flows in downward direction and on the
same time project authority managers will flow in sideways. The flow of these type of
authority in downwards and sideways are known as matrix organizational structure.
Organizations today have grown to render services not only in domestic market but
globally. Based on the strength of global forces for integration and local responsiveness,
organizations can be termed as Global, International or Transnational.
Companies have operations and trading in many countries across globe are Global
Companies. They finances operation through Foreign Direct Investment and generally have
“Centralized” decision making structure. Because they are investment in many other
countries and even they face many challenges in the form of regulatory and legal issues.
On the other hand, International companies involves into trade in foreign countries
through export mode Since they export the domestic product and major threat for them is
the taste of products in some countries which exposes them to risk of failure of product in
respective country.
Lastly, transnational organizations can be considered as mixture of international and
global firms They invest in country and are willing to trade in with decentralization in

decision making. Due to varied organizational structure, they face internal manpower issues
company problems etc.
As many functions are related to organization such as many different function help to
know the function who see the report may higher from the other. To adopting functional
structure has to follow key decision makers who set all the mission and task of the
organization. This structure help to employee keep concentrate on his particular mission. As
this help to achieve the goals of the company with coordination
P4.PESTLE Analysis of Marks & Spencer’s
In this report, we have tried to analyze the impact of various factors on UK retail market,
focusing on one organization Marks & Spencer’s.
Political Factor: Various rules and regulations affect the working of Marks & Spencer’s
being no exception. Strictness in policies may influence business and if not comply with
laws, company(s) might have to face various actions which affect business. One such
incident happened with marks & Spencer’s too where the result of trial is still yet to come.
Economical Factor: Economy of a country and other trading countries directly affect
business of Marks & Spencer’s. Along with that, the increased level of competition,
recession etc. forces an organization to cut prices which ultimately less profit.
Sociological Factor: Marks & Spencer like other competitors appeal to various markets in
terms of social class and other demographics which has a major influence on the way they
respond to current issues. Since customer purchases are influenced by cultural, social,
psychological and personal characteristics, company has to keep itself up to date with latest
trend.
Technological Factor: Technology is vital in the retail market. It is important in today’s era
to keep updated with it. Online shopping is in trend and Marks & Spencer’s has done well
in keeping its website, apps, e commerce platform up to date and appealing. This along with
other factors affects business environment for exposing it more to risk.
Legal Factor: Marks and Spencer also have some legal issues such as the company fail to
achieve the staff and employees from asbestos which contain heavy heat resistant silicate
minerals and many employees also claim that company give half of the amount of their
salary that is why they refuse to do work and leave the company and find new ones.

Environmental Factor: the most affect factor for Marks and Spencer is having
environmental issue but the company launches 'Plan A' even they set 100 promises to achieve
the targets in up coming 5 years. This forced an organization to develop a sense of
responsibility towards environment and nature but at the same time has burdened companies
with various strategies that they need to come up with in order to comply to this
environmental issue.
P5. SWOT Analysis & Porter’s Five Forces Analysis of Marks & Spencer’s
SWOT Analysis shows strengths and weakness of an organization for its internal
evaluation, and opportunities and threats for analyzing external business environment.
This research shows SWOT Analysis of the Marks and Spencer’s.
Strengths:
High recognition of the Brand: Being giant of the UK’s high street, it is known by
everyone in the market for the quality it is providing in the past years. The brand value is
high.
Wide variety of products: They have a variety of products in every store which helps
the customers to choose for best. They are very particular about variety and quality of
anything and everything they are going to offer to their customers.
Large number of stores and outlets: It is a giant in the UK market with about 900
stores all over world with 600 stores in UK and remaining 300 in over 40 countries (Marks
and Spencer, 2010). With an increase in number of stores and outlets, strengths of Marks and
Spencer go higher.
Weaknesses:
Bad publicity as non trendy store: They have a drawback of being out fashioned and
non trendy in the market. Even though, it has a wide variety and range of products and
different brands, a wrong assumption is followed in the market (Ayden, Demirbag, and
Tatoglu, 2018). To overcome this, the management needs a new strategy to attract customers
by creating awareness about their trendy and up to date fashioned products.
Manual working increases costs: Another important weak area for them is manual cost.
Overhead cost along with wastage cost is something that hurts Marks & Spencer’s a lot. For
competitiveness it must come up with lots of plans and strategies to check and control cost.

Opportunities:
Internalization- there is a lot of opportunity available in front of Mark & Spencer’s in
the form of overseas and vast market. It needs to make itself a truly global organization by
customizing products according to taste of local market. It can open its own stores around the
world. Franchise agreement is also a good opportunity which is very much in trend right
now.
Market Segmentation: It is a process of segregating customers into various groups with
similar level of interests. The Organization have introduces new market segments in order to
gain more profit. It also have future opportunities to expands its market in China and India
too to maximizes more profit.
Threats:
Increased competition in all areas of business: The scope of business is under thread
due to increased competition. Many other stores other than Marks and Spencer have threats
because of their discounted prices.

Porter’s Five Forces:
Level of competition: this factor is quite fierce in the field of competition because of
facing competitions with similar product which are offer in low range by the rivals (Ayden,
Demirbag and Tatoglu, 2018).
there are many companies who offer similar kind of products with more designs and add
latest fashion. Marks and Spencer offer many product other than food items that is why it
faces competitions from many other companies. Though Marks and Spencer make it self a
brand who cares less regarding income but it main focus on customer service and provide
them brand new product with good quality.
Threat of Substitutes: Overall, there are no substitutes to food and clothes, which makes
the threat of substitutes low. However, M&S food and apparel can be substituted by products
from other retailers.
Threat of New Entrants: Since this business of supermarket involves enormous capital
investment, the thread of new entrants is low (Abdel-Basset, Mohamed, and Smarandache,
2018). The incumbents are firmly holding their market shares and would utilize all means to
counter any new entrants, including litigation. Importantly, absence of experience and
knowledge of operating in these markets - especially for foreign companies - would be a
barrier to any new entrants.
Bargaining Power of Buyers: Since the concentration of buyers is high, they dictate
their rules/tastes in the market. Alternatives are available in plenty and switching cost too is
very low.
Bargaining Power of Suppliers: Marks and Spencer have low power of suppliers and it
does not depend on the suppliers but it mainly sell their products which completely means
that it only buy raw material on large amount and not finished goods and it helps in
maximizes profit. The supply rate of a company is quite low because it purchase from few
suppliers only.

P6. Strength and weakness interrelate with micro factor
Marks & Spencer’s is a giant in its field. Huge number of outlets and presence in
various countries can be of great help to the organization in the need of the hour. The
economy of UK is not growing at desired pace. Even then, due to its global presence, market
size, and diversification, Marks and Spencer’s can look forward to a strong sustainable
future. All the technical, environmental and other factors favor Marks & Spencer’s
(Sherman, 2018). If a company can move forward keeping itself in pace with external macro
factors, it can outcast its competitors and stand strong in tough competitive situations.
Though huge man power is a big weakness of organization, structural change and
decentralization can help the company overcome this weakness and turn it into strength. As
strength is a positive implication and include more tangible asset like equipment, credit and
establishing loyality in costumers whereas on the other han weakness are the signs of the
product and help to know the weak point related to growth of product.
CONCLUSION
M&S, being one of the largest retailers in UK, has been facing tough time in present
economical scenario. Various models helped us in analyzing strengths and weaknesses of and its
relation with market scenario (economic, environmental, legal, technological etc). The company
has a huge market base and very high number of employee base along with presence all over the
world. Its diversified business model helps it in absorbing business risks and fight competition.
Though, there are lots of areas for improvement where it can work out. The future of this
company is bright with good level of returns. The entire report is based on the business law and
it also help to show the relation between non profit organisation and profit organisation as it
tries to make relation between organizational and functional structure of Marks and Spencer
company.