Business environment can be simply defined as an atmosphere where each and every company used to run their businesses. Such place consist different kinds of elements named as macro and micro factors. Macro one includes external factors like government, society, economic condition of nation, environs, technological modifications and so on. On the other hand, micro one involves other factors like suppliers, consumers, common public, rivals, etc. These would influence on decision making of corporation. This is to be noted that these components give great impact on the working as well as whole performance of a venture. It could be positive or negative depending on the condition of those factors (Agarwal, Grassl and Pahl, 2012). The current report is designed on the basis of a popular airline firm known as Marks and Spencer. As a business analyst of M&S, I am responsible to carry out analysis of both internal and external environment and formulate better policies so firm can better respond to all the changes that take place in environment. In this way, company can sustain in market for long run and at the same time can generate more number of profits. In order to understand the impact of internal and external factors SWOT and PESTLE analysis is conducted which will assist in finding out the effects of each and how they interrelate on wider context.
P1 Purpose of private, public and voluntary organization and legal system
There are several types of business organization that is operating in the corporate world. It has been classified into public, private, voluntary that have diverse laws and regulations governing these sectors. The legal Structure of these institutions are described below:
Public sector: This type of organization is under the control of government and have different set of rules as compared to other institutions. They have the policy to raise their capital through issue of shares and can have unlimited number of shareholders for their company. Their basic aim is to serve services for the society and do not exist for earning profits and revenues (Drucker, 2017). The other characteristic associated with this sector is that they have limited liability of the extent of their expenditure.
Private Sector: These type of business organization is under the control of some individuals and their prime motive is to earn high financial gains and competitive image in business environment. This can be formed with minimum of 2 staff members and directors. The maximum number of stakeholders is 50 only. The partner that can be formed comprises of maximum of 200 members that is defined in the law.
Voluntary organization: This type of institution is established to deliver voluntary services to the society in order to increase their living standards and quality of life. All NGO’s are included in this type of sector. They do not exist for earning huge financial gains. They are governed under section 21 and there is trust which governs this type of business entity. They are known as nonprofit organization system that involve work in solving several issues that get arise in the society in which they are living. Therefore, their important objective to face such issues and raise the society of peace and free of challenges.
From the above discussion it has been concluded that each and every business entity is different from each other in terms of rules, regulations that govern these separate business firms. All of them have certain specific norms and system which is concerned about number of members. Capital required as well as laws control the working of this system. Government also has to frame various rules and regulations that guide the actions of this organization system and perform overall work process according to it (Iskanius, Page and Anbuudayasankar, 2010). Therefore, every entity has to work while adhering to the set of rules so that they do not have to face problem in regarding to it. Non- adherence may lead to generation of so many problems and difficulties in front of them.
P2 Size and scope of a range of different types of organizations
M&S enjoy large scope and size that deliver large number of voluntary services of people that are living in UK. It operates in around 1000 stores that is basically present in UK and around 500 stores in international level. The employees that are working there is also huge in number. The scope of this company is high as it uses advanced and modern technology system n to their business operations so that final aims and objectives could be achieved. M&S always concentrates on producing such products and services that will yield them high profits and good image in the market place. M&S have different outlets and deals in number of sections and hence enable them to create sustainable image in the customer’s mind for longer period of time. There is different size of business which are operating at distinct size and scope such as:
Sole trader – It is an option of carrying out business activity for an entrepreneur where he is the only head of the whole business. All the decisions are taken by him and is responsible for the work done. Funds are invested in less amount as sourcing of raising finance is not much for a sole trader and also risk involve is high. Scope of this business type is limited as it is restricted to only those operations where less resources are required and degree of risk of failure is also not much high for instance opening a small retail store, parlor etc.
Partnership – This is another Varity of carrying out the business activity in which the ownership is shared among more than one person. There need to have minimum two person and maximum can be 50. They together take the important decisions and share the risk involved in business. Major source of finance for them is the savings of different partners. Their scope is comparatively high as degree of risk is less and liabilities are shared among different partners,
The public company which include NHS that deliver its services in England. It is regarded as top four nation’s health service provider organization system. The feature associated with this business entity is that they do not charge anything for their patients and supply free of cost services to them. They are formulated to deliver social services to the people that are living in the society.
Voluntary business organizations system is distinctive individual entity from public and private sector. They are incorporated for the good motive to be served by themselves. The type of organizations that are included in this are trade unions. Associations and professional associations that are formed for some purpose and aims that has to be full filled by them. These motives have to be completed by them (Cantwell, Dunning and Lundan, 2010). For instance, labor unions are formed to protect the interests of individuals and labors that are present in the company. There are some conditions that lead to the generation of problems and difficulties in front of them and therefore the labor unison helps them to face these challenges and overcome them in effective manner.
P3 Relationship between different function of M&S achieve objectives mission
Every firm is required to have a better relation among the different functions of entity. The entity M&S is having a finest relation with various department within firm. Moreover, if the company is not having a proper relation among different division of entity then enterprise cannot earn higher profit and even does not be able to attain its goals and objectives too. The different functions of firm are as follows:
Production department: This department is having a responsibility to perform their functioning in better manner so that effective and quality product and commodities for the customer can be manufactured. Using different method help to produce quality product for customer to satisfy them in effective manner (Carroll and Shabana, 2010). M&S is that company whose management has created a proper relation with this department and having a better relation with the company as whole.
Marketing Department: This department who is responsible for attracting the large population towards the commodities and product of M&S so that they can increase their sales and earn higher profit. Basically, marketing is the medium to communicate with the large market and firm introduce their new product and services with the help of various ways included in marketing i.e. advertisement, personal selling and public relation. Marketing department is that which create various opportunities for organization to earn good amount.
Human resource department: Human resource department is considered as base of company, employees are those who work for organization which make firm to get stable in market, even though company cannot work in efficient manner without the proper human resource in right context. Management should motivate employees time to time so that they can work in great extent. Right direction is required to be provided to employee’s every time do that they can work in right direction for the longer time and company can earn higher income.
Research and development: It is that department which has a responsibility to research in market in great manner so that needed information can be achieved and with the help of such proper decision and strategy can be made (Chavis, Klapper and Love, 2011). This department should have a great connection with every department so that according to requirement research can be conducted by company.
Finance department: This department is considered as the most important thing in every organization as this particular criterion is responsible for making stable in market too. Finance is such which help company to buy the important raw materials and equipment which does help firm to complete their work on time and even can manufacture the quality product and services in better way although too. Finance is such which is being required by every department to organize their working in smoother manner as well.
P4 Positive and negative impact macro environment in M&S.
Each and every organization faces various positive and negative impacts on macro environment, macro environment is such which somewhere always affect the company performance in great way and it is being there in right context too. Macro environment is included as the biggest concepts which take time to understand in better manner (Osterwalder and Pigneur, 2010). Basically, macro environment is such which do include the PESTLE analysis which do affect the company in great manner as well. The positive and negative impact of the environment is as follows:
Political: The positive impact of political environment is there on the company is EC’s free trade agreement is such which led to decrease the source cost in better manner. Even though the firm is also having a CSR which is having a good impact on the firm. The negative impact of entity is that it is having a higher cost structure disadvantage in the international market which is affected as lack in UK energy efficiency scheme.
Economical: Positive Side of this thing is that it focuses on the quality product and services which has a great value of it. Consumers are somewhere rationale in nature which does create an satisfaction level in product for the amount they are paying. Negative side is that competitors of firm is such which does also lead down the prizes in comparison of enterprises that does attract the consumers of M&S. Moreover, in today’s scenario the customers do purchase the product on the basis of offline thing.
Social: Positive impact is considered as M&S is having a perfect image in the eyes of customers in the criteria of goods and services. Even though the customer has the belief that quality product and services will be available with the company at the reasonable prices as well. Company does perform various things which make them to feel the special and surprising too (Welford, 2013). Negative impact is that in which the various people are from the various culture and has an unusual preferences and wants, which has a forward which is fulfilled by companies. Generally, if the demand is not met then the customer does shift in with to other products in better manner. Company is that which also changes the thing according to the market as well.
Technological: Enterprises is such which is there on the social media with the online presence as well. Consumers are those who have more and more technological focus which somewhere also prefer different thing too. Positive side is CRM is success and also work in effective manner that satisfy customer demand. Negative side is technology does changes with time so the entity is not be able to adapt it in proper manner.
Environmental: Positive impact is that having a regulation on environment which also has an increased pressure in with green and M&S is company who looked for advantage (Wild, Wild and Han, 2014). Negative impact is competitive firms which are also going with advantage with the regulations that will create an rivalry in between the M&S with other company.
Legal: The M&S is such which provide the home delivery with the channel of distribution i.e. OMNI channel. Decision is that which company to exit with EU having an along with UK in retail or having an legal action place to place.
P5 Strength and weakness
Marks and Spencer belong to the retail sector where there is a close competition and maximum external interference. It is important that it keeps close monitoring on its internal surroundings also so that all the changes that are required to have for more effective management is can be made on time. In order to understand how the referred enterprise gets affected though various inside factors a SWOT analysis of same is done through which it can be evaluated that what are the key strong and weaknesses of the firm.
Strength – It is found that the refereed enterprise has got an effective foundation which makes is a strong brand among the industry. It is known for the quality of services it provides to the market as they are competitive and hence can be used as a medium of differentiation. It is known for the quality of services at economic prices and range of products it is offering in the market. The employees of the refereed enterprise are efficient enough and provide good customer services to its users and solve their grievances on time. It reflects that the organizations customer support service team is skilled and is performing its duties with higher efficiency (Burns and Winter, 2011). It has its stores at global level which assist it in achieving the competitive advantage. The production team of Mark and Spencer is efficient enough which helps in controlling the overall cost of the business. The marketing team of the refereed enterprise is efficient enough which has helped it in reaching to maximum market share. The rate of employment provided by the organization is high which again become a strength of this organization as this way it has developed goodwill in market.
Weaknesses – Due to the presence of close competition the capacity of the firm to grow and expand its total market share is highly effected. In the emerging economies this organization is not present which fuhrer restricts its total number of customers. Another weakness which is found in this enterprise is that sometimes it is found to be ineffective in giving the justification for the wrong work done by them. Marks and Spencer’s had a backdrop of following old techniques rather than following the new techniques which increase the different aspects such as money, time etc. But in general the big organizations are keeping a focus on the new technologies for the efficiency of the work done. (Boons and Lüdeke-Freund, 2013).
Opportunity – By developing its present technology department it can raise its operation efficiency level. When work is done with the assistance of high developed application it is more accurate and is done in less time duration. It can start expanding by exploring the areas where it is not present in the current time period. The total volume of sales can be raised using the differentiation of products and by working continuously on launching distinct products as it assists in maintain customers interest. With the help of new marketing techniques organization can do good business as to experience change in the present volume of sales it is important to develop marketing strategies like segmentation, targeting etc. through which people can be influenced to adopt his particular brand over other present in the same field.
Threats: Due to increase competition in all business areas, M&S has a threat to lose its market share. Increased competition in retail sector is a big threat for firm. Various rivals of firm such as TESCO, ASDA and Sainsbury are expanding their business activities in new areas and with this there is a risk for enterprise to lose its market share and reputation. In this situation, management require to come up with a new scenario so that risk can be managed. Manager require to come up with an effective strategy to deal with all issues.
P6 Interrelation of Strength and weakness with external Macro factors
This has analyses that business environment having direct impact on Marks and Spencer activities and functions. They have some strength and weaknesses that are play crucial role in management that is very famous. They are earning large amount of income or revenue from UK and they are maintaining strong relation in international marketplace. They are facing different issues and problems while expanding their business operations and functions in other locations. Such type of external factors are developing new alterations for company as they have spent more amount and time period for satisfying different types of roles and responsibilities (Chow and et. al., 2011).
The interrelation among the two can be better understood in a way that in case of expansion which is possible for the given enterprise as it has a great amount of men power is restricted due to the strict political conditions of different areas. Change in the present applications effect the capacity of firm to produce as the manufacturing section has to go through training which is a time consuming process.
Figure 1Interrelation between pestle and Swot
According to the above mentioned report it can be analyses that Business environment can be simply defined as an atmosphere where each and every company used to run their businesses. Such place consist different kinds of elements named as macro and micro factors. In this project, different types of organization which are discussed who are operating business along with this, evaluate the size, scope and legal structure that is very important. There are various factors which are available within business environment and it also have strong impact on business operations and their activities of an organization which can control the external factors. Marks and Spencer is a part of retail sector in which it is necessary to remain updated with the external and internal surroundings so that balance in operations can be maintained. It is also required that the planning is done which is flexible so that in case of change in the outside factor does not affect the profit margins of the firm and expected returns are achieved.
- Teece, D.J., 2010. Business models, business strategy and innovation.Long range planning,43(2), pp.172-194.
- Drucker, P.F., 2017.The Theory of the Business (Harvard Business Review Classics). Harvard Business Press.
- Iskanius, P., Page, T. and Anbuudayasankar, S.P., 2010. The traditional industry sector in the changing business environment–a case study of the Finnish steel product industry.International Journal of Electronic Customer Relationship Management,4(4). pp.395-414.
- Cantwell, J., Dunning, J.H. and Lundan, S.M., 2010. An evolutionary approach to understanding international business activity: The co-evolution of MNEs and the institutional environment.Journal of International Business Studies.41(4). pp.567-586.