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Business Environment of Marks & Spencer

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INTRODUCTION

Business environment consist of all the external and internal forces that influence operations and activities of an organisation. It is a collection of all entities, individuals and other components which may or may not be in control of firm. Various factors are involved in business surroundings such as customers, management, supply & demand, employees and business regulations (Asif, Garvare and Ahmad, 2011). Consideration of all these forces helps businesses in meeting challenges successfully and provides directions for growth. In the present report, chosen organisation is Marks & Spencer which is a renowned multinational retailer of United Kingdom. This assignment discusses about types, purposes, size, scope and legal structure of different organisation. Relationship of different functions and their link with business objectives as well as positive & negative impact of macro environment is defined. Apart from this, SWOT is conducted to determine strengths and weaknesses & their link with external macro factors is discussed in this project.

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TASK 1

P1 Different purposes & types of organisations and their legal structure

There are different kinds of organization that exist in market place such as public, voluntary and private that have their own distinct legal structure and purpose. Each and every organization is bound to follow these structure and act accordingly. There are some businesses who run with an aim of earning profits while others run with the purpose of providing benefit to society and its members.

Public:

Organisation under this sector are mainly government owned i.e. control, run and managed by government body of respective country. They provide services to everyone and do not make profit out of it (Bhaduri and Ha-Brookshire, 2011). These are usually funded by government which is collected through fees and taxes pays by all citizens. For example: National Health Care Services

Company Overview: It is a publically funded national health care system of England. It provide healthcare services to all English residents among which most of them are mainly free. It is funded by general taxation system and administer by Health Department.

Purpose: The main purpose of NHS is to improve the well-being and health of people of all communities, patients and its staff via innovation, professionalism and quality in care.

Legal Structure:

Firms under this sector are bound to carry out their business practices and operation as per the rules and regulation formulated by Government Authority of respective country (Chetwood and et. al, 2014). Structure of public sector are characterize below:

Private:

Such organizations are not controlled and managed by government rather these are mainly handled by private players only. They generate profits out of sales they make. Private companies generate revenue by competing against their rivals by ensuring that their goods and services create value for their target customer (Crane and Matten, 2013). This further assist them in attracting more customers which means profitability ratio of such companies automatically increases. For example: Marks and Spencer

Company Overview: M&S is a leading British multinational retailer, located in the City of Westminster. It mainly deals in offering home products, clothes and luxury food products. The company practice their business operation in more than 40 countries with over 900 stores.

Purpose: Their main purpose is to generate higher sales lead and increase profitability ratio by delivering high quality products at economical cost.

Legal Structure:

Its legal structure include the following:

  • Sole Trader
  • Partnership
  • Limited Companies (Gharajedaghi, 2011).
  • Co-operatives 

Voluntary:

These are also known as community sector as they laid stress on helping and benefiting the local residents without thinking of generating higher profits (Kian Chong, Shafaghi and Leing Tan, 2011). They usually provide services with an aim of providing benefit to all citizen without having any personal interest in it. Some people prefer to work as a volunteer with some charities that give them no money in return. The money that volunteers raise goes directly towards their selected charity organization. For example: Maytree

Company Overview: Maytree is a charitable based organization that help people in suicidal crisis to restore hope and to re-engage with life. Their services run 24 hours a day. They have vast team of volunteers who nearly spend 77 hours with each guest so to provide them best services (Li, and et. al., 2011).

Purpose: Their main promote is to improve systematic solution to eradicate poverty and strengthening civic communities. Our key areas include housing, strong cities, poverty and human rights and renewing our social contracts.

P2 Size and scope of different types of organisations

Size and Scope of each type of organization varies from one another depending upon its nature and business activities. Discussed below are the size and scope of public, private and voluntary enterprise:-

Public:

  • Vision: “To deliver better care, better value and better health to all legal English Residents”
  • Mission: “To render quality of care to every person on daily basis”
  • Size: NHS was established within various countries of UK through different legislation. Presently, there are four health services running in United Kingdom including NHS Wales, NHS England, HSC Northern Ireland and NHS Scotland.
  • Scope: Plenty of services related with health and medical care is given by NHS to all UK residents with an aim of making country a better place to live such as children's physiotherapy, cardiac rehabilitation, diabetes services, paediatric, autism assessment etc.

Private:

  • Vision: “To become sustainably leading international and domestic retailer with the primary interest of earning high profits and revenues”.
  • Mission: “To provide high quality products at economical cost in the areas of food, cloths, financial services and home”.
  • Size: Presently, the company is operating in more than 40 countries with over 900 stores among which 600 stores are located in United Kingdom and remaining 300 are situated all across the globe (López-Gamero, Molina-Azorín and Claver-Cortés, 2011).
  • Scope: Mark and Spencer specialize in offering clothes, luxury food products and home products. Among all its stores in UK, majority of them only sells food products which implies that company is having high market and demand for its food items (Meiners, Ringleb and Edwards, 2014).

Voluntary:

  • Vision: “To safeguard the social and economic rights of every individual”.
  • Mission: “To advance action that leads to promote the interest and welfare of society and its members”.
  • Size: It is a autonomous charitable trust who runs with an aim of eradicating poverty, promote educational rights and human rights. Their services are available 24*7 with an aim of providing services to people when they needed (Sekaran and Bougie, 2016).
  • Scope: It was founded in the year of 1982 with an objective of creating solution for removing poverty and provide guidance to individual who tries to attempt suicide.

Stakeholder Analysis:

The framework is used by organization so as to evaluate various key stakeholders associated with business. With the help of this, needs and contribution of stakeholder can be determined in an appropriate manner.

  • High power: Fascinated people.
  • High power: Less fascinated people
  • Low power: Fascinated people
  • Low power: Less fascinated people

TASK 2

P3 Relationship between different functions of an organisation and its link with objectives

In an organisation, various functions are performed which assists in attaining objectives of company (Türetken and et. al., 2011, June). For meeting requirements of customers and providing high quality goods to them, Marks & Spencer performs several functions that helps in attaining its predetermined business objectives. Such functions and their link with objectives are defined below:

Human resource department: This department of firm performs role of recruiting, selecting and hiring skilled candidates for right position. Different activities are associated with this department such as performance appraisal, employee compensation, salary and wages, training & development etc. These all activities assists human resource manager of Marks & Spencer in increasing employee motivation and attaining set objective and targets of company.

Production & Operations department: In this function, raw material is converted into final goods. Operations manager apply various techniques or approaches that assists in controlling production cost and ensures optimum use of resources in an effective and efficient manner. In Marks & Spencer, this department assists in manufacturing clothes of high quality in order to meet customer's needs. It helps firm in achieving its set targets and objectives in an effective way.

Finance department: This function of an organisation plays crucial role in running its activities and operations smoothly and effectively (Vaiman, Sigurjonsson and Davidsson, 2011). Financial manager of Marks & Spencer has the responsibility to assign budget as well as allocate proper funds to all departments. They are also responsible to maintaining appropriate amount of finance within firm. All this assists in performing activities and operations on time which in turn results in attaining objectives of company.

Types of organisational structure:

Divisional: In this, functions are grouped into division which in turn helps in bringing flexibility in operations of company. Geography or product line of firm is supported by needed functions and resources that are included in particular division.

Functional: On the basis of specialized areas, functions of firm are divided into small groups. This structure is commonly used in organisations as it assists in bringing efficiency in operations because shared skills are grouped by function (Wack, 2017).

Matrix: In this structure, people are grouped simultaneously by 2 distinct operational perspectives. It is complex structure and used in large organisations which operates in several countries. In M&S, matrix structure is used as it is inherently versatile that makes it beneficial for firm (Yu and Ramanathan, 2013).  

P4 Positive and negative impact of macro environment on business operations

Marks & Spencer is a well known British multinational retailer of United Kingdom which operates its business activities all over the world. There are various factors exist in market place which affects functioning of an organisation in either positive or negative way. These involves political, legal, technological, environmental, economical and social forces which are defined below:

Political:

This factor involves trade restrictions, political stability, labor law, trade policy and tariffs. All these forces are made and changed by government and influence operations of business negatively or positively (Zsambok and Klein, 2014).

Positive: The company has been favoured by European Commission's free trade agreement that made imports of products much easier and led to decline in sourcing cost.

Negative: In international market, higher cost structure becomes disadvantage for company due to which it suffered losses of market share when they entering new market. Lack of clarity regarding energy efficiency scheme influence initiatives of M&S negatively.

Economical:

Foreign exchange rates, inflation rate, economic growth pattern, interest rates etc. are the variables that are included in economic factors. These elements are determinants of performance of economy and influence firm directly.

Positive: During financial crisis, M&S emphasize on better consumer satisfaction by providing them higher quality products. It assists them in increasing confidence of customers and maintaining their market shares.

Negative: Falling prices of oil affects performance of their UAE and Middle Eastern countries store in negative manner (Bhaduri and Ha-Brookshire, 2011) .

Social:

It involves cultural aspects, buying behaviour of consumers, age distribution etc. which affects business and its marketing strategies. Generation shift and changing values in population are the factors that affects business of M&S.

Positive: In modern scenario eating healthy food is the first preference of consumers, M&S have introduced new range of organic and natural products.

Negative: Frequent changes in likes and dislikes of customers makes is difficult for company to alter their product line constantly.

Technological:

Evolution in technology on constant basis has helped M&S to efficiently and effectively in competitive market.

Positive: Strong online and social media presence of M&S helps firm to aware consumers about their brand and assists in maintaining good position in market.

Negative: High cost is involved in embedding new technology in business operations and practices.

Legal:

It involves all the laws and regulations made by legal authority of respective country. Non-compliance of those affects business functioning in negative manner (Asif, Garvare and Ahmad, 2011).

Positive: Application of some laws such as health and safety, environmental, anti discrimination, consumer rights etc. affects functioning of firm in positive manner.

Negative: Following decision of UK to exit EU leads the company to face various legal issues due to which firm loose its access to common market.

Environmental:

In current scenario, people of society as well as business enterprises are concerned about environment. In this regard, M&S formulate various strategies and plans in order to promote environmental awareness among public.

Positive: Establishment of “Green Policy” helps firm in becoming carbon neutral and assists in sustainable sourcing, ethical trading, zero waste to landfill and health promoting business (Kian Chong, Shafaghi and Leing Tan, 2011).

Negative: Non compliance of environmental policy results in bad image of company in eyes of people of society.

TASK 4

P5 External and internal analysis of organisation to determine strengths & weaknesses

SWOT ANALYSIS:

Thisframework represents the internal business in terms of strength and weakness of a company, threats and opportunities of the external business. Basically this analysis is done by M&S with an aim of examine current situation and implement strategies in order to gain high competitive edge in the market place.

Strength:

High Recognition of brand: The company has gained popularity for delivering high quality products. Their brand value is high as the consumer who go to high street for shopping must visit M&S as they can finish their whole shopping under one roof only.

Large number of outlets and store: In UK high street, M&S is the giant with over 900 stores all across the globe within which 600 is in UK and remaining 300 spread worldwide. Sales of Marks and Spencer is increasing tremendously because of their wide range of quality products available at reasonable cost

Weakness:

Bad publicity as non-trendy stores: One of the main drawback of M&S is non-trendy and out-fashioned. Even though the company is offering wide range of products but people do have wrong assumption about it like they only offer clothes for aged people not for young people or teenagers. Not only this, even their management failed to attract customers of all age group. As a result, it adversely affects its sales and profitability ratio.

Manual working increases the cost: Another backdrop that M&S has in terms of following old technology instead of practising high end technology that leads to save their overall cost, time and energy. Now a days every organization prefer to become effective and efficient by following latest and advance technology. This is where M&S lacks.

Opportunities:

Internet technology: Over the past few years, internet technology has developed fast which mainly provides an opportunity to M&S in terms of promoting its product on vast level such as using social networking sites like facebook, instagram, you-tube. Now a days buying online is becoming the another trend. With advance technology, M&S can launch its own mobile application and website that allow customers to buy their product either through their mobile application or via its own website.

Healthy Eating: Today, eating and living a healthy life is the main preference of almost all people. Taking the benefit of this, the company has decided to launch low fat or organic food.

Threats:

Increased Competition: The major of threat of M&S is the availability of strong competitors in the market place. For instance: In its food market they are facing tough competition from other giant firms such as TESCO, ASDA, SAINSBURY. In its cloth market, their key competitors include NEXT, TOPSHOP, GAP etc.

P6 Interlink of strengths and weaknesses with external macro factors

Weaknesses and Strengths of a business enterprise is highly interrelated with macro forces. So, managers of M&S are require to determine this interlink in order to exploit opportunities & gaining competitive advantage in marketplace (Li and et. al., 2011).

Political:

All regulations and laws are needed to implement by firm so that effective teams can be developed and enables to perform operations in better manner.

Strength: By considering all political factors of respective country, firm is able to run its operations in smooth and better manner.

Weaknesses: Non-compliance of political variables hampers functioning of Marks & Spencer as laws of each country is different.

Economic:

Business functioning is highly influenced by economic variables such as interest rates, deflation, inflation, exchange rates etc.

Strengths: If economy of respective country is strong then it assists in its development and long term growth as well as also supports in generating more profits.

Weaknesses: Product demand in market is highly influenced during inflation as purchasing power of customers becomes low (Meiners, Ringleb and Edwards, 2014).

Social:

It involves cultural aspects of people of society as well as age distribution. Firms are require to fulfil needs of society so that their living standard can be enhanced.

Strength: Marks & Spencer is engaged in various social activities which facilitates in building its strong image in society.

Weaknesses: Production of those products which are of low quality declines sales of goods as well as revenues of firm.

Technological:

Firm is require to keep updating themselves about any change that takes place in technology. It helps them in getting high competitive edge in market.

Strength: Use of latest technology in manufacturing of goods assists in satisfying customers in more better way and attaining competitive advantage in market.

Weakness: Use of traditional processes of production may results in declining growth of company (Wilson, 2015).

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CONCLUSION

According to the above mentioned report it can be concluded for smooth running of any business it is important to analyse both external and internal factors that affect overall operation and activities of company directly or indirectly. Different tools are such as PESTLE, SWOT with the help of which impact of these forces on business can be determined easily and also relationship between external and internal forces can also be figured out in a proper manner. Further different type of organizations has also been discussed such as public, private and voluntary has also been discussed along with its distinctive size, scope, purpose and legal structure. Lastly it also ascertained how different departments of a company such as human resource, marketing assist in achieving organizational goals and objectives in a cost-effective and timely manner.

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REFERENCES

  • Asif, M., Searcy, C., Garvare, R. and Ahmad, N., 2011. Including sustainability in business excellence models. Total Quality Management & Business Excellence. 22(7). pp.773-786.
  • Bhaduri, G. and Ha-Brookshire, J. E., 2011. Do transparent business practices pay? Exploration of transparency and consumer purchase intention. Clothing and Textiles Research Journal. 29(2). pp.135-149.
  • Chetwood, M. K.,and et. Al, 2014. Transforming a legacy IT infrastructure into an on-demand operating environment. U.S. Patent 8,775,232.
  • Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
  • Gharajedaghi, J., 2011. Systems thinking: Managing chaos and complexity: A platform for designing business architecture. Elsevier.
  • Kian Chong, W., Shafaghi, M. and Leing Tan, B., 2011. Development of a business-to-business critical success factors (B2B CSFs) framework for Chinese SMEs. Marketing Intelligence & Planning. 29(5). pp.517-533.
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