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Understanding Business Environment of M&S

University: Harvard University

  • Unit No: 35
  • Level: Post Graduate/University
  • Pages: 14 / Words 3463
  • Paper Type: Assignment
  • Course Code: PE7003
  • Downloads: 125
Organization Selected : Marks & Spencer

INTRODUCTION

Business environment is very important to be considered as it greatly influences the working, operations and decision making of an organisation. Various factors and dimensions of business environment which brings changes in business activities and operations. Influencing factors are political, economic, environmental, social and technological. Marks & Spencer is a large multinational retailer and offers variety of products and services to its customers. Marks & Spencer specialises in home products, luxury food products, clothing and many more items. In the following study report, understanding and background knowledge of various types of business and its wider environment are discussed. Profit, non-profit organisation, micro, SME, transnational and global business organisation's details is explained. The study report also conducts PESTEL model, SWOT and Porter's five forces to analysis about various macro environmental factors.

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MAIN BODY

Section 1

Different types of organisation

Differentiate between Profit making companies Non-profitable organisation Non-governmental organisation(NGO)
Types of organisation Marks & Spencer is a multinational company and aims at making profits and increasing market share and productivity as well. Red Cross company is non-profitable organisation and it is a humanitarian movement aims at protecting human life and health(Chang, 2016). Norwegian Refuge Council works as NGO in UK. It aims at protecting and safeguarding rights of people who are affected by displacement.
Purpose Purpose of Marks & Spencer is to improve experience of customers by providing quality products and also to increase market share and profits. Purpose of Red cross is to provide respect and dignity to people and also to protect life and health. Purpose of Norwegian Refuge Council is to ensure that vulnerable people like refugees, returnees or disaster affected people get to meet essentials needs.
Products and services offered Marks & Spencer offers wide range of products and services to its customers including home products, clothing and luxury food products. Red Cross provides food and shelter to disaster threatens people and also offers health and mental related services. Norwegian Refuge Council provides services of assistance and protection to displacement affected people and it also provides durable solutions to them.

Size and scope of the different types of business organisation

Basis of comparison Micro business Small sized organisation Medium sized organisation Large business enterprises
Company Proviz is a micro business organisation founded by two brothers and offers reflective cycling clothing products(The best micro businesses in the UK, 2018). Ensoft Ltd. operates its business as small sized organisation and operates as a software company(Bell, Bryman and Harley, 2018). Issoria is a medium-sized organisation in UK which provides consulting services to its customers. Marks & Spencer is a large business enterprise and deals in clothing, luxury food products, furniture and home products.
Market share and Profit share It has achieved increased revenue of 93% in last 3 years(Chang, 2016). Micro business organisation aims at covering enough market share so that it can earn profits for further growth. Ensoft Ltd. Has achieved sustainable growth and creates revenue around 5.9 million dollars. Its estimated employees are 27. Issoria has achieved to retain agility and speed and also achieved 178% growth in its revenue in two years. It covers large market share by producing large quantity of products and services to meet needs of its target market. It has achieved generated revenue of 3.7 billions pounds.
Growth and Sustainability It has succeeded to sustain in markets by satisfying its customers and employees. Small sized organisation has achieved rapid growth as it aims at providing satisfaction to its customers and employees. Medium sized business organisation aims at developing and increasing market share which facilitates sustainability in competitive business environment. It aims at developing its business in global markets. Large market share and profits facilitate sustainability and growth as well in international markets.

Organisation structures and functions

Business organisation follows different organisational structures to operates its business activities and operations. Different organisational structure facilitates completion of business objectives and mission in effective way. Organisational structure followed in company defines effectiveness of communication between various levels of management and flexibility of employees communicating with higher authorities(International Organizational Structures (With Diagram), 2018). There are different types of organisational structures explained as below:

  • Transnational organisation structure: Business who operates in international markets adopts transnational organisation structure to bring efficiency. This organisational structure allows global and local integration simultaneously. Transnational organisation structure facilitate integration by maintaining specific type of managers. This structure also facilitate multidimensional and systematic differentiation between business, its functions and different geographical areas(Robbins and Judge, 2014).
  • International organisation structure: International organisation structure is adopted when company grows and develops its foreign operations(Kwasa, Bloebaum and Mesmer, 2015). International structure allows growth opportunities in oversea market. It also ensures cross- geographical co-ordination and cross-product communication so that it can lower down resource duplications. This organisation structure allows business organisation to effectively manage its various functional departments which brings positive outcomes and results.
  • Global organisation structure: Business organisation adopts global organisation structure when overseas operations are necessarily to be integrated. This structure allows integration of different functional, geographical and product divisions so that it can maintain effective centralized control(Goss, 2015). The global organisation structure allows higher global orientation and relatively lean staff of management.

Marks & Spencer adopts to flat organisation structure which facilitate it to achieve overall goals and objectives and also brings effective results. Different functions of Marks & Spencer are explained below which helps in achieving overall goals and objectives of organisation and also allows accomplishing mission and vision.

  • Research and development: this functional department aims at identifying needs and wants of its target customers. Marks & Spencer aims at identifying expectations of customers so that it can effectively manage to accomplish overall goals and objectives by meeting their demands. Flat organisation structure facilitates achievement of mission, vision and objectives of marks & Spencer.
  • Production department: this functional department of Marks & Spencer produces quality products and services so that it can meet needs and expectation of customers and result in achieving their trust and build brand image as well(Bell, Bryman and Harley, 2018). Organisation structure facilitates inter-departmental communication and achievement of goals and objectives.
  • Human resource: every business organisation aims at recruiting and selecting the best employees so that it can lead to bring innovation and creation in business process. Function of human resource department is to select and recruit the best employees so that it can bring effectiveness in operations and also result in achieving its objectives and mission. Flat organisation structure facilitates human resource department to easy transfer of important information which benefits accomplishment of overall goals and objectives.
  • Marketing and sales: this functional department of organisation aims at attracting customers and satisfying them. Various techniques and tools of marketing and distribution are used to attract customers and sell products and services of organisation(Robbins and Judge, 2014). Flat organisational structure adopted by Marks & Spencer allows effective communication between different departments which brings positive outcomes. Effective communication between different departments facilitate transfer of accurate and important information.

Section 2

Analysing of macro environmental factors using PESTEL model

Every business organisation gets affected and influenced by various macro environmental factors. These directly and indirectly affects business and its operations and consist of various factors such as political, economical, social, technological and legal. Marks & Spencer operates its business in retail markets therefore it operations and activities gets influenced by various macro environmental factors(Belás and et.al., 2015). Marks & Spencer uses PESTEL model to analyse influencing factors, which is explained as follows:

Political Factors:

These factors greatly influences business operations and activities. As it is important for every business organisation to follow rules and regulations provided by government. Government sets up various policies and rules which leads to bring changes in business operations. UK government sets various policies for retail firms so that it can properly monitor their working. Rules and regulations regarding foreign trade, tax policies, environmental protection law.

  • Positive impact: UK Government introduced policies of 'Green Tax' for energy use, this leads to make changes in operations of Marks & Spencer. Retails shops of Marks & Spencer has implemented scheme which saves energy around 5%.
  • Negative impact: Government makes foreign trade policies and allow easy entry in new market. This may create problem for Marks & Spencer by increasing number of competition.

Economic Factors:

These factors influence the business activities of Marks & Spencer as it operates its business in global environment and economic conditions of country will affect its business. Economic factors are recession, inflation, labour rate, interest rates, buying behaviour of employees, etc. UK is developed country which have stable economic condition.

  • Positive impact: Developed country have high economic growth, this will benefit marks & Spencer to develop and expand its markets share and also to increase productivity and profits.
  • Negative impact: developed countries have high labour rate and high interest rate. And this will bring negative impacts for Marks & Spencer as it will lead to increase expenses and operation cost. This will also lead to increase cost price for products and services.

Social Factors:

This factors are also known as socio-cultural factor and this directly influences the buying decisions of customers. Social factors include choice and preferences of customers, market trends, education level of people, etc. UK is a developed country in which people wants to adopt recent trends and technologies available around world-wide.

  • Positive impact: Marks & Spencer also deals in clothing products and various social factors bring influences in choice of customers. It keeps update it clothing products with the latest colour and style and meet expectations of customers. This makes Marks & Spencer to achieve overall objectives.
  • Negative impact: UK is developed country which brings new trends every new day, this may create problem for Marks & Spencer to produce according to every-day changing demands of customers and satisfy them.

Technological Factors

These factors greatly influences every business as at present time, technological advancement are happening which brings effective changes in operations. UK adopts to technological advancements and developments present in world-wide which bring influences in retail markets and other businesses.

  • Positive impact: Technological advancements are being adopted by every business organisation such as business websites, online shopping and databases for increasing online customers and sales. Marks & Spencer also attract customers by using online websites and shop.
  • Negative impact: Marks & Spencer fails to effectively maintain its stock and websites for online shopping, this creates inconvenience and problem for customers. Appropriate and effective use of technologies would benefit otherwise it may lead to lose customers.

Environmental Factors

Environmental factors include climatic condition, sustainability of environment, etc. government are focusing to develop sustainability and protection of natural environment and therefore make various protection measurements and policies(Sani, Sambodo and Bambang, 2018). UK focuses on sustainability and protecting environment, therefore provides various guidelines to business.

  • Positive impact: Marks & Spencer aims at adopting environmental friendly supply chain and also focuses on sustaining environment. Marks & Spencer also aims at maintaining CSR policies provided by government to manage environment related concerns. This creates positive outcomes and results for Marks & Spencer.
  • Negative impact: If Marks & Spencer fails to maintain sustainability of environment, this may lead to loss of brand image and trust of customers.

Legal Factors

These factors refer to laws and policies adopted by nation which affects business operations and activities. The legal factors include labour law, employment law, health and safety policies, etc. UK provides various laws so that companies trade business in proper way.

  • Positive impact: Marks & Spencer gets influenced by various legal factors of environment of different countries as it operates in global markets. Marks & Spencer aims to provide safety and security to its employees by following health and safety measurements. This creates and develops brand image of Marks & Spencer(Hair Jr And et.al., 2015).
  • Negative impact: Various changes in macro environmental factors brings changes in business operations and activities of Marks & Spencer. Strategies needs to made by considering above mentioned factors so that it leads to sustain in competitive business environment and also gain profits.

Internal analysis using SWOT and Porter's five forces

There are various internal factors which brings influences in business operation and also affects decision making. Every business organisation aims at identifying various influencing factors which brings changes in business related activities. Marks & Spencer analysis internal business environmental by conducting SWOT which is explained as follows:

Strengths:
  • high quality products and services
  • effective customer services
  • effective management team
  • shopping environment
Weakness:
  • ineffective stock control
  • closing up of shops
Opportunities:
  • internet technology
  • healthy eating(Popa and Soto-Acosta, 2015, April)
  • expanding in new markets
Threats:
  • change in social environment
  • increasing competition

Strength:

  • Marks & Spencer aims at providing high quality products and services to its customers. It offers superior quality of food products such as fruits, vegetables to its customers which makes them satisfy and result in increasing brand image.
  • Marks & Spencer aims at meeting needs and wants of customers and also provides them with effective services(Bargain and et.al., 2015). Marks & Spencer also aims maintaining and developing relationship with customers, this leads to create trust in minds of its customers.
  • This company aims at making customers satisfied and comfortable therefore retail shops of mark and spencer uses modern designs with limited shelves and avoids confusion. This makes customers comfortable and satisfied.
  • Marks & Spencer focuses on maintaining effective team so that it can provide customers with effective services. Therefore, it aims at making effective management team by providing proper training and development to them which creates satisfaction for employees as well.

Weakness:

  • Marks & Spencer fails to maintain its online shopping website, which leads to create inconvenience for its customers.
  • Recently, Marks & Spencer closed down its 14 shops which brings impact on its target markets. Marks & Spencer may lose its customers and leads to decrease in profits.

Opportunities:

  • Technological development has increased online shopping in recent times. This may be treated as an opportunity for Marks & Spencer to grow and develop its business through online and internet shopping.
  • Marks & Spencer provides healthy and fresh food products which may be treated as an opportunity(Hair Jr, And et.al., 2015). As people now-a-days are focused on adopting to healthy eating lifestyle, which may lead to increase demand of its healthy food products.
  • Marks & Spencer has the opportunity to expand its business in new markets and increase its outlets world-wide. Government allows easy entry in new markets which makes Marks & Spencer to gain advantage and increase its profits and productivity.

Threats:

  • Social environment and preferences of customers are changing day by day, which may be treated as threat for Mark & Spencer. Changing demands of customers regarding clothes will affect its clothing business.
  • There are retail multinational companies and branded clothes companies coming up with new varieties and product development. This leads to increase competition for Marks & Spencer as it has to make effective and strategic business strategies.

Marks & Spencer adopts to Porter's five model approach to identify influencing factors in internal business environment. Porter's five model approach considers bargaining power of suppliers and customers, competitive rivalry, threat of new entrants and also substitute of products and services. Porter's five model approach is explained as follows:

  • Bargaining power of suppliers: Marks & Spencer operates its business in global markets in retail supermarkets. Therefore, it allows marks & Spencer to maintain effective relationship with suppliers and also to maintain effective supply chain so that it can gain advantage of it. Effective relationship maintained by Marks & Spencer will lead to lower down the bargaining power of suppliers(Lehmann, Pickel and Arndt, 2018).
  • Bargaining power of buyers: Marks & Spencer aims at meeting needs and wants of customers which leads to create trust and brand image. Marks & Spencer provides quality products and services to its customers which benefits in lower bargaining power of customers and also facilitate in developing brand image and loyalty. Lower bargaining power of customers will benefit Marks & Spencer to increase its price and profits(Scanning the Environment: PESTEL Analysis, 2016).
  • Threat of new entrants: Marks & Spencer aims at providing quality products and also focuses on meeting expectations of customers. It has created its brand image and loyalty of customers, so Marks & Spencer does not have threat of new entrants as it will do not bring many effects to business environment. New entries in retail markets will not affect Marks & Spencer as it has already created brand image and loyalty of customers(Charter, 2017).
  • Threat of substitute products and services: Marks & Spencer offers large variety of products and services to its customers and deals in retail markets as well. It also faces competition as there are various other companies who offer substitute products(Pan, Chen and Zhan, 2018). Therefore, Marks & Spencer aims at providing quality products and services to its customers which benefits in gaining advantage over substitute products.
  • Competitive rivalry- Marks & Spencer offers quality and luxury products and services to its customers. This has lead to create brand image of company in the minds of satisfied customers. It deals in retail markets and clothing which have great competition. Marks & Spencer has created brand image and gained trust and loyalty of its customers, this makes it to face competencies and attain advantage over them.

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CONCLUSION

Different types of business organisation have different objectives, goals and purpose. It also differs in market share, sustainability and growth. Size and scope of different business organisation have different market share and sustainability. Complexities of different organisation structure are given such as, transnational, international and global. Every business organisation gets affected and influenced by different factors of environment such as internal and external. Business organisation aims at identifying these influencing factors and makes effective business strategies so that it can sustain in competitive business environment. SWOT, PESTEL and Porter's five forces model are used to analyse various internal and external factors. Different organisation structure are adopted by business organisation which facilitates effective management of functions and activities. Different factors affects structure of the business organisation such as, technology, size, internal and external environment, business strategies and culture of country.

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