Factors affecting Business Environment
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The business is referred as an organisation, a enterprise or a company which deals in providing a services or selling goods and commodities to the consumers in the market for some consideration or not. The business can be owned privately or can be owned by the government authorities. The business is generally done for some of the monetary benefits of the organisation in the terms of profits regarding services provided by them. The some of the business runs for non profit terms these business generally provide social service without any consideration. The ownership of the business can be sole owner or in partnership(Al-Debei and Avison, 2010). The management of the business depends upon the ownership of the business. The business environment is referred as the internal and external factors which directly or indirectly affect the working of the business structure, its management, employees, its customers and the supply and demand. The total of factors which can influence the functioning of the business can be termed as the business environment. The factors include the micro and macro environment which influence the business. The business can be survived in the business world if these factors are eliminated with the help of strategies and measures to escape from negative impacts. In these report we will study the factors which effect the working of the businesses.
Positive and negative impacts of the macro environment upon business operation.
In the business world there are many factors which may influence the operation of the business. The factors can be internal or external. The external environment consists of two environment i.e. micro environment and macro environment. The macro environment have certain factors which may have have positive or negative impact on the business. These macro environment factors can be beneficial for the organisation in starting the business in the different country or it may be harmful for the organisation. Some of the factors such as political, economical, social, technical includes under the macro environment(Becker,2017). The impacts of these factors of micro environment are as follows.
Political factor:- The political factor of the country directly affect the working and functioning of the business organisation. The political factors include the rules and regulation of the country regarding start up of the business in that particular country. The political environment varies in different countries. Some countries have strict rules and regulations and some has good policy regarding emergence of the new business. Before expanding the business in the new country the political environment must be analysed as the environment can create some benefits and on other hand it can cause harm in the functioning of the business. The country china have strong political environment with the cut throat for the emergence of new business. The political environment of the China will influence the functioning of Marks Spencer. The environment will make the negative impact on the marketing policy of the business(Boons and et.al., 2013). The environment will create negative impact in expansion of the business within the country. The stronger rules and regulation will make difficulty in establishing the business.
Economical environment:- The establishment of the business by Marks Spencer will lead in China can be affected by the economical environment. The environment can impact positively or negatively on the functioning of the business. The economic environment of the China is too strong which have positive impacts on the business. The strong economic condition will help to grow the business easily as the purchasing power of the individuals and group of individuals is good which will help to increase the demand and supply. As China is fastest country in consumer market it will help the business to develop the brand in the market which will help to increase the profitability of the organisation.
Social environment:- The social environment of the country is related to the values and belief of the society. The choices, tastes and preferences of the every individual comes under the social environment. The social environment basically so not effect the functioning of the business in any terms because to establish the business in China it is important for the firm to works as per the social belief, values, tastes and preferences of the individuals of the country. The functioning of the business against the social environment will lead to the negative effect on the organisation. The Chinese like the hot drinks like teas and coffee so the Mark Spencer must focus on the selling of hot drinks in the store than the soft drinks which will help to increase the sale of the Marks Spencer store.
Technological environment:- The technological trends of the economy helps in the success of the company(Brinckmann and Kapsa, 2010). The china is one of the country who uses the high end techniques in the country. The use of these techniques will help the business to grow faster with the help of modern techniques. The up gradation of technology will positively effect the functioning of the business.
Internal and external analysis to identify strength and weakness of the organisation.
The internal analysis is done within the organisation and determined which factors can affect the functioning of the organisation these analysis is also done to determine the strength and weakness. The internal analysis can be done through the SWOT determination. The external analysis of the environment is the process which helps to determine the external factors which affects the working of the organisation. The external analysis can be done through PESTEL method. Both the internal and external environment have some positive and negative effects on the environment. These analysis helps to determine the strength and weakness of the organisation(Bryman and Bell, 2015). The company can can use the tool SWOT for analysing its internal strengths and weakness. It is a tool which determines the strength, weakness, opportunities and threats of the organisation. The internal environment of within the organisation that are the plans and policies, employees working, finance, culture of the organisation, structure of the organisation. The strengths can be determined by analysing the organisations vision and mission, goals and objectives, strategies applied by the organisation. The resources of the organisation must be analysed which will help to determine in which resources the organisation lacks behind. The internal sources of the company directly affects the functioning of the organisation. The internal resources of the company are assets of the company, financial resource, human resource and all. The analysis will help to know which resources are the strength of the company and which one are the weaknesses. For analysing the external factor company can follow the PESTEL method which will help to get the knowledge of external factors.
Political factors:- The political factor directly effect the working of the organisation. The political factor include taxation policy, import and export policy, rules and regulation for trading, labour laws. These can make positive impact on the business. The good labour law will help the organisation to get the manpower easily. The laws regarding trading of business effects the functioning of the business(Cantwell, Dunning and Lundan, 2010). The good trading law will help the organisation in increasing the trade within the country.
Economic factors:- The economic factor is related to the growth of the country, development of the country, change in the rate of currency, etc. The economic factor is the only term which influences the demand among the country. The increase in demand directly benefits the organisation in producing more which helps in increasing the profits of the organisation. It also determines the strengths and weakness of the organisation.
Social factor:-The analysis of social factor is an important topic for the organisation. The social factor includes the values and beliefs of the individuals, the income of individual, the size of the population. These factors can increase the demand for the goods and services or they may lead to the decline in the demand. The increase and decrease of the demand is directly related to the profits of the organisation(Carroll and Shabana, 2010).
Technological factors:- The technological factor is the key factor to determine the strengths and weaknesses of the organisation. The organisation must analysis the factor of technology whether the organisation is up to date in the means of technology or not. The use of upgraded technology is the strength for the organisation and the use of the outdated technology is the weakness of the organisation.
Legal factors:- The legal factor creates the impact on the working of the organisation. The high legal formalities in the working of the organisation will lead to slower down the working of the organisation which will have negative effect on the profitability of the organisation.
Interrelation of strengths and weaknesses with external macro factors.
The external macro factor are directly related with the growth and profitability of the organisation. The external macro factor can became the strength and weaknesses of he organisation. The external macro factor consist of the Political, Economical, Social, Technological, Environmental and Legal environment of the country. These are the factors which influences the strength and weakness of the organisation.
Political environment:- The political environment is linked with the rules and regulations implied by the government bodies on the functioning of the business environment. These rules and regulations can be beneficial for the organisation or it can be harmful for the organisation in the terms of working of the organisation(Cavusgil and et.al., 2014). The good policies will help the organisation in strengthening the working of the organisation. The cut throat policy of the will lead to the contraction in the functioning of the organisation which is the weakness of the organisation.
Economical environment:- The economic environment is related to the size of the population, purchasing power of the individuals, wealth distribution in the country, etc. These components of the economical environment directly affects the working of the organisation. The high purchasing power of the individual in the society is the strength for the organisation. As the high purchasing power increase the demand in the market for the goods and commodities which is the benefit for the organisation on other hand the low purchasing power lead to decline in the demand which is weak point(Elliot, 2011).
Social environment:- The social environment is related to the beliefs, values, tastes, preferences and choices of the individual in the society. The organisation must always consider these social points in functioning of the organisation these helps the business to survive for long term. The working of the organisation as per the social beliefs of the individual is the strength of the organisation whereas the working of the business against the values and beliefs will affect the brand image of the organisation and will lead to decline in the profitability which is weak point for the organisation.
Technological environment:- The technological environment is linked with the new technologies available in the market for the business organisations. The technologies have direct impact on the organisation. The impacts of the technologies can be positive or negative. The use of the upgraded technology will help the organisation to achieve its goals at objectives easily whereas if company cannot adopt the technology it will have negative effects in the achievement of the goals and objectives(Jahangirian and et.al, 2010).
Legal environment:- The legal environment is related to the laws formed by the government for the functioning of the organisation. The laws such as human rights, consumer safety laws, labour laws, etc. These laws directly affect the working of the organisation. The organisation has to follow all the rules and laws mentioned by the government authorities. The labour law has some benefit on other hand it has some negative points. The good labour law will help to generate more labour for the organisation which is beneficial for the organisation in maintaining the human resource.
PESTEL analysis of macro environment within the organisation.
Marks and Spencer plc is the retail business in the united kingdom(Kolk and Van 2010). The provides high quality of the products such as home products, food , clothing, and groceries to its consumer in the market. The M&S earns good earning by its quality services and products. The M&S have done PESTEL analysis of the macro environment within the organisation to improve its sales and consumer satisfaction. The best method of determining the external environment is thee using PESTEL method which will help the organisation to determine its opportunities and threats. The PESTEL analysis of the M&S is as follows.
Political factor analysis:- The political environment is totally concerned with the policies framed and implemented by the government authorities. These polices are framed regarding the taxes, labours, environment protection, investment policies, and other polices framed by the government. These polices framed by the government bodies are to be followed by the businesses(Kotler, 2011). The Marks and Spencer plc as a retailer has followed the polices framed by the government for the protection of the environment. As per the polices implemented by the UK government on the food and edible products M&S have taken certain steps in reducing the fat contents from the food products also he trying to reduce the volume of the salt from the edible products which is good for the health of the consumer. Certain initiatives are taken by the retailer in regard to the safety of the environment and animals.
Economic factor analysis:- The economic environment is related to the factors such as income and wealth distribution in the society, the purchasing power of the individuals, the cost of getting raw material and inflation others(Note on Business Environment. 2017). These all factors directly effect the effect the growth of the organisation. The revenue of the Marks and Spencer is declined due to the effect of the economic environment of the United Kingdom. The revenue earned by the organisation is not as per the objective of the company. For increasing the growth rate and the revenue the business have taken certain necessary steps.
Social factor analysis:- The social factor is related to the trends in the market, the beliefs, the values of the individuals. The organisation to increase its growth and revenue with the stable long term survival it is necessary to work as per the needs and wants of the consumer in the market, which will have positive impact on the functioning of the business. The market of the United Kingdom is dynamic in nature the wants and the needs of the individual changes as per the market fashion and trends(Kuckertz and Wagner, 2010). As Marks and Spencer is the retailing business it have worked as per the changes in the market by creating certain strategies of pricing policy and enabling new products in the market.
Technological factor analysis:- The technological factor is related to the new technologies and machineries available in the market which helps to increase the quality of the services and products. The new technologies helps in the advancement of the businesses. The Mark and Spencer as the retailer have adopted the e-commerce for the advancement of his business. The M&S provides his goods and services to the consumer through the online ordering from any place, any time. These have helped to increase the consumer and the selling.
Legal factors analysis:- There are many legal factor framed and implemented by the government of United Kingdom. The legal factors are the bonding for the organisation to work as per the legal norms(Lankes, 2011). These are generally framed to protect the environment and the safety of the consumers. M&S have taken necessary steps to cope up with these legal norms for the safety of the consumers and environment.
Environment factor analysis:- Environment factor relates to the waste management, pollution control and recycling of the waste goods and commodities. The working of the business as per the environmental factor will help in reduction of the wastes and pollution which will help in generating the raw material at low cost. The M&S have taken initiatives for becoming the most sustainable retailer in the United Kingdom
SWOT analysis and influence on decision making.
The SWOT analysis is the key factor of the organisation in attaining the goals and objectives of the organisation. The analysis is the helping hand for the business to determine its strengths, weaknesses, opportunities and threats. These helps in making the better decision for the functioning of the business organisation. As the Marks and Spencer is the retailer he has to analysis its SWOT. Effect of SWOT analysis in the decision making of the M&S is as follows:-
Strengths:- The strengths of the organisations are the factors which determines the success of the business enterprise. The analysis of the strengths will help the organisation to develop the plans and polices as per its core strengths(Meskendahl, 2010). The strengths of the firm can be in the tangible nature or intangible nature. The intangible factors includes the goodwill of the M&S plc in the market. The tangible factors are its good employees, available finance, assets of the organisation. The analysis of the strengths will directly effect the decision making of the organisation. The analysis will help to make the decision of the organisation as per the strengths of the organisation. The decisions as per the strength will help the business in maintaining its strengths for the long term.
Weaknesses:- The weakness of the organisation are the factor which effect the working of the organisation. The weakness of the firm decreases the productivity in the functioning. These weak points of the organisation declines the effectiveness and efficiency of the organisation. The weak points such as the bad management of the organisation will negatively affect the decision making of the business organisation. The decision made by the bad managers will be of no use for the Marks and Spencer Plc. The analysis of the weakness of the organisation will help the business to make good decision and helps in eliminating the weaknesses of the organisation.
Opportunities:- The organisation have many opportunities in the business world. The business can only achieve these opportunities if they are analysed before the time. The analysis of the opportunities will affect the decision making of the organisation. The analysis will help the management to make the decision as per the opportunities available for the organisation in the business world(Osterwalder and Pigneur, 2010). These will help to make decision for grabbing of the opportunities within the time frame by the Marks and Spencer.
Threats:- Threats of the organisations are the negative factors which affect and influence the functioning of the organisation. Threats are the external factor which as the effects on the businesses. The competitors running same business, obstacles in the organisation, changes in the technology are the some common threats faced by the business. The analysing will help Marks and Spencer to determine its threats(Overview of the Business Environment Working Group. 2017). These determination will have direct affect on the decision making by the organisation. The decision have to be changed after threats analysis. The decisions of the organisation has to be formed in such a manner that it will help to eliminate these threats of the organisation.
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Evaluating impacts of micro and macro factors on the business objective and decision making.
The business are directly affected by the micro and macro environment. The objectives and the decisions of the business are directly influenced by these micro and macro factors. These factor can have positive or negative impacts on the Marks and Spencer Plc. Some of the impacts of the micro and macro factor on the objective of the Marks and Spencer are as follows:-
Micro factors:- Those factors which can be controlled by the management of the business lies under the micro environment(Schaltegger and Hansen, 2012). The micro environment generally consist of competitors , suppliers, customers, public and unions. These factors have direct impact on the business.
Competitor:- The competitor in the market providing same services and products in the same market directly have positive and negative impact on objectives and decision making of the company. The worst competitor will help the Marks and Spencer to achieve is objectives in the market easily whereas the cut throat competitor will affect in the achieving of the objective of the business and it will also lead to the change in decision making.
Suppliers:- The suppliers in the market supplying the goods and commodities to the business have impact on the objectives of the business. The late delivery by the suppliers will negatively effect in the achieving the goals and objectives of the business and vice versa(Sharma and Krishnan, 2010). These also have impact on decision making of the organisation. The decisions need to be changed as per the suppliers.
Macro factors:- The macro factors can be divided into different segments. The segments are demographic forces, physical forces, political and legal forces, social and cultural forces, economic forces(Pro-Business Environment. 2017). The macro factors are those which cannot be controlled by the management of the business but necessary steps can be taken to eliminate the negative effects of these forces on business and steps can be taken to grab the opportunities generated through these forces.
Demographic factor:- The demographic factors of the country where the business is established directly have impact on the objectives of the organisation. The demographic factors such as size of the population, tastes and preferences affects the both the objective and decision of the Marks and Spencer. The objectives of the M&S has to be framed by considering the demographic forces of the country and the decisions have to be made as per that.
Physical forces:- The physical forces are the main key component of the country which help to achieve the objectives of the business. The good availability of the natural resources and human resources help the business in functioning. The continuous supply of these resources will help to achieve the objective of the firm within the time frame without any obstacles. The decisions are also made as per the availability of these resources.
Political and legal factors:- The rules and regulation in the country regarding the functioning of the business have impact on the business objectives and decision making of the organisation. The cut throat laws and norms will make difficulty and obstacle in the business to achieve objectives by the business(Sorescu and et.al, 2011). The decision has to be framed as per the laws and norms of the country. The liberal policy will help the organisation to achieve the objective easily in the business world.
Social and cultural factors:- The social and cultural forces have direct impact on the business. The business working as per the values and beliefs of the individuals in the market will help the Marks and Spencer plc to achieve the objectives of the business easily whereas the working against the values will become obstacle for the business to achieve the objective and will have impact on the decision making(Trkman, 2010).
From the above report it is being concluded that the Marks and Spencer Plc is the multinational retailer working in the United Kingdom. The M&S plc operates business in consumers house products and food items. For the success of the business M&S has made micro and macro analysis by using SWOT and PESTEL method.
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