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Sample Assignment Business Environment Report

Introduction

This report elaborates the details about different types of business organizations such as public, voluntary and private enterprises. Their major objectives and operational purpose will be discussed in a brief manner. The assignment will explore the details regarding the legal structure that are followed by these organizations. The impact of external and internal business environment on the operational activities as well as the decision making process of Marks & Spencer will be discussed. The strengths and weaknesses have been discussed in order to develop beneficial strategies for the company. The importance of coordination and interrelationship between the different functional departments of M&S will be explained in a detailed manner.

LO 1

P1 Explain different types and purposes of organizations; public, private and voluntary sectors and legal structures for the chosen organizations

In the present scenario, different types of organization are facing quite tough competition in the marketplace. The market is being saturated day by day and the competition is growing at an exponential rate making it tough for the organizations to sustain in the market. Thus, it is highly significant for an organization to analyze the business environment to sustain in the market full of competition. The different types of organization are public organizations, private organizations, and voluntary organizations. The purposes of these organizations differ from one another that are mentioned below in details.

Public sector:

The public sector comprises of the firms, which are state-owned or government owned. The organizations categorized under public sector owned and directed by the government of the country. The main purpose of the organization associated with the public sector is to provide the people of the city with good quality products and services (Bouckaert et al., 2016). The firms operating in the public sector are focused on meeting the requirements of the people of the country and the profits made by the organizations are taken by government or ploughed back for investment. For example, Network Rail is organization in public sector.

Private sector:

The private sector composes of the firms that are owned and operated by an individual or groups of individual. The main purpose of the firms operating in the private sector is to generate profit for the company and give it to the owner of the firm (Hayter, 2015). The organizations in the private sector are independent of the government of the country but have to follow and obey some legal rules and regulations to run their business in the country. For example, Marks and Spencer is Private Sector Company.

Voluntary sector:

Voluntary sector are quite similar to the public sector. The voluntary sector composes of the organizations looking forward to meet the requirements of the society and its people. The main purpose of organizations operating in voluntary sector is to look after the welfare of the society and enrich the society. The organizations do not aim to make profits and are independent of the government and follows charity-based approach (Ncvo.org.uk, 2018). For example, Amnesty International is an organization in voluntary sector.

Legal structure:

Sole Proprietorship:

Sole proprietorship is the least synchronized form of a firm with minimum legal start-up cost. The firm is owned by one individual and the profits generated are tariff as private income (Managementhelp.org, 2018). The major demerit is “unlimited personal liability” the owner might face like claims, debts, and taxes against business. For example, Moore and Co is under Sole Proprietorship.

Partnership:

Partnership business is simple to form and is able to deliver additional managerial and financial resources. The partners can borrow funds, hire individuals, and operate business. However, the profits made are again excised as personal income and the partners are liable personally for taxes and debts. For example, Social Chain is a partnership company.

Limited Partnership:

It is a special agreement and permits the partners to neglect liability of personal asset. Specialized income tax rules are implemented for Limited Partnership. For example, Gibson Dunn is a partnership firm.

Limited Liability Company:

It comprises of more than one individual that gives the owners privacy of personal assets whilst permitting the owners being taxed. Investment is done based on exchange for ownership interest percentage. Each member is equally liable for any kind of taxes or debts (Managementhelp.org, 2018). For example, Marks and Spencer is a LLC.

P2: Explain the size and scope of a range of different types of organizations chosen for the purpose.

Public sector

Private sector

Voluntary sector

Purpose

The main aim of this type of business organization is to provide enhanced services to the local citizens. For example, Network Rail offers railway transportation benefits to the citizens of UK.

These firms are focused at improving their performance in order to increase their revenue generation process. For example M&S try to analyze the business market an introduce services that will allow them in gaining profit.

These organizations are focused at working for a global cause. For example, Amnesty International works in order to recognize the existing problems in the community and tries to resolve the issues.

Size

Network Rail is a Medium sized based business firm. This organization is credited to provide employment to around 37,000 workers in UK (Network Rail, 2018).

M&S is considered as a large business enterprise. They have around 84,939 dedicated employees working to improve their business (Marksandspencer.com, 2018).

Amnesty International is a global organization and is supported by more than seven million volunteers all across the globe (Amnesty.org, 2018).

Table 1: Difference between Private, Public, and voluntary sectors

(Source: Created by the learner)

Micro

Small

Medium

Large

Definition:

These are small structured organization consisting of nine or less than nine employees. The estimated balance sheet of these firms is les then 2,000,000 Euros, the employees are dedicated towards maintaining the sheet (TheCompanyWarehouse.Co.Uk, 2018).

These are also known as small-scale business enterprises that are owned by partners or individual owner. The employee number of these firms is then 50 and they work to achieve their estimated annual target (theOECD, 2018).

This company is capable of recruiting 50-250 employees in order to achieve their estimated targets and revenue (theOECD, 2018).

These are large business organization that is capable of employing more than 250 employees (theOECD, 2018). They train their employee so that the employees after able to increase their business performance and enhance the market share of the firm.

Objectives

These firms are focused to maintain the equitable distribution of the entire national income. They are dedicated to provide employment to large-scale population at the lowest possible investment.

The employees of these firms are responsible to maintain an equal balance between their profit generation and the expenditure costs of their operational activities.

They are expected to maintain their annual budget. They are focused to increase their productivity and revenue generation within the allocated budget an resources.

The main purpose of these firms is to analyze the present trends and satisfy the requirements of their consumers in order to increase their business and revenue generation.

Table 2: Size and scope of different types of organizations

(Source: Created by the learner)

LO2

P3 Explain the relationship between different organizational functions and the ways they link to organizational objectives and structure chosen for the purpose

The organizational objectives of Marks and Spencers can be enlisted as follows:

  • To provide quality products and services to the customers in minimum time and reasonable price
  • To regain the position of market leaders in the retail sector
  • To earn greater revenues and returns on their investments
  • To hire and retain highly experienced and efficient work force, for the development of the organization

Marks and Spencer’s needs to satisfy the customers immensely as well as train and retain their work force, for meeting all the organizational objectives effectively. The organizational structure is an important factor in maintaining satisfaction of the employees since it defines the ways in which the employees are dealt with and managed, by the management of the organization (Argyris, 2017). The organizational structure of Marks and Spencer’s had been tall initially; hence there were different hierarchies through which the information passed from the employees to the management and vice versa, which elongated the response time and limited the creativity as well as participation of the employees in the executive decisions adopted by the company (Businesscasestudies.co.uk, 2018). Currently, the focus of the management has turned towards employee retention and they have realized the potential as well as the value of the feedbacks given by the employees. Thus, they have changed the organizational structure to flat, in order to lower the response time as well as encourage the employees to play a significant role in the executive decisions of the company (Businesscasestudies.co.uk, 2018). This helps the employees to feel associated with the company and motivates them to stay loyal. Lowering the response time also helps in addressing the grievances of the customers promptly and thus, increases customer satisfaction. Thus, the organizational structure helps Marks and Spencers to meet their organizational objectives successfully.

The interrelationships between the different departments of Marks and Spencer’s:

Human resource- The human resource department is responsible for recruiting and training new employees, as per the requirements of the various departments, for the development of the organization, marks and Spencer’s in this case. The HRM department of M&S requires collaborating with all the other departments of the company, for knowing the specifications regarding the quality and kind of candidates that are to be trained or recruited for the purpose in the company (Colourpoint.co.uk, 2018). The collaboration becomes easier in an organization with a flat organizational structure.

Finance- This is one of the critical departments of M&S, since the allocation of the financial resources to the different departments determines the functionality of the organization. The records of the finances available for the different departments to execute their functions are maintained by this department, which makes planning the processes easier for the company.

Marketing- The marketing department of M&S is responsible for conducting marketing surveys to gather information regarding the demands and requirements for the customers in the market and their effective collaboration with the operations department helps in planning all the steps to be adopted by M&S in order to meet the demands of the customers. The marketing department is also responsible for promoting the products and services among the customers so that the sales of the company can increase. For this, the department needs to collate with the financial department, for gauging the available finances for the purpose of promotion. On the other hand, its effective collaboration with the sales department is necessary, for implementing the promotional offers as advertised by the marketing department as well as prepare the employees for the estimates sales figures (like engage more employees during the rush hours, when discounts are provided on the goods). The flat structure increases the degree of collaboration and interaction among all the departments as well as minimizes the time of transfer of information from one department to another (Colourpoint.co.uk, 2018).

Sales- The effective collaboration between the sales and the finance department at M&S aids in the process of effective record maintenance by the finance department, about the sales figures and the revenues earned by the company. The flat organizational structure allows the department to orient and train their employees as per the notions of the departmental leaders, for dealing with the customers with increased efficacy. For this purpose, interrelationships with HRM and Operations department are also required.

Merits of the interrelationships

The clear differentiation and distribution of specific tasks among the different department makes the functioning of the organization easier and their effective collaboration helps M&S in realizing the organizational goals effectively

The interrelationships increases the efficacy of the processes, like the finance and the sales departments can together devise some discount plans, for luring the customers, after understanding the demands and requirements of the customers through the surveys carried out by the marketing department (Corporate.marksandspencer.com., 2018)

Demerits of the interrelationships

The responsibility of each of the department increases, since the functions of the other departments depends on their functions, like the surveys carried oyt by the marketing department

The process of decision-making slows down as all the departments are dependent on each other for their activities and thus, measuring the outcomes of a change implemented in the systems becomes a tedious process as well

LO3

P4: Identify the positive and negative impact the macro environment has upon the business operations, supported by specific examples for the chosen organization.

Macro environmental analysis will allow the management of M&S to understand the external factors and their impact on their operational activities. They factors may have a positive or a negative influence on their business.

PESTLE analysis of Marks and Spencer

Political: The decision of the government of UK to exit EU may generate certain negative impact on the business activities of M&S. It was evident that the previous trade agreement of the government benefitted huge business hubs such as M&S, Asda, and Tesco as they received free flow of resources as well as labours from all across the globe. After the proposal of BREXIT is implemented, the policies are expected to change that might affect the operations of M&S. Lack of proper direction, vision and coupled with increasing cost of operations, M&S will be facing a negative influence in context of political aspects.

Economical: Stable economy is one of the most beneficial factors for M&S. The prospering economic conditions of UK influence M&S in a positive manner. It is observed that the per capita GDP of UK is increasing that will help the business firm in increasing its sales assisting them in earning enhanced profit. The citizens of UK possess a per capita GDP of around 29000 GBP, thus they have the power to spend increased money n business firm that is providing them with superior quality of products thus, enhancing the sales and income of M&S (ons.gov.uk, 2018). As Marks and Spencer served their consumer with quality services, they can expect an increase in their sales.

Social: Marks and Spencer provides their consumers with a variety of products and services such as clothing, accessoriness, home decors, groceries and more. It is noted that the clothing line of the organization is comparatively less trendy and lack celebrity endorsements. Leading firms such as Zara, H&M and more are making use of celebrity endorsements in order to reach out to potential clients. The food section of the company sources their products from well-known organic farms that allow them in enhancing the health conditions of their consumers. The healthy eating habit of UK people will be beneficial for the company as they will be inclined towards purchasing organic products to maintain their health condition. Thus, social aspect of the external factor is beneficial for M&S.

Technological: UK is a technologically update country consisting of all the latest advancements. The technologies allow the organization in interacting with their consumers. M&S is able to reach out to a wide consumer base with the help of internet and their e-commerce website. Online shopping is increasing in UK, which is beneficial for M&S as they are able to sell their products online. The company makes use of popular platforms such as Twitter, Facebook and more to advertise and promote their products and services and grab the attention s of their consumers.

Legal: There are a number of regulations created by the UK government that are to be followed and implemented by all the business firms that are operating in the country. Similarly, M&S is abides by the legislation and follows the regulations such as health and safety act, work time regulations and more to provide benefits to their employees. The legal aspect has a positive impact on the operations of M&S as it allows them to function as per the law of the country can also help them in reducing the employee turnover rate.

Environmental: Most of the citizens are aware about the damage that is done to the environment due to the operational activities of huge industries. The customers are inclined towards organization that make use of eco-friendly substances and take initiative to protect the environment (Rangan et al., 2015). M&S has a number of sustainable practices that assist them in improving the environment of the country. They have a number of CSR policies that assist them in contributing towards the society and the environment.

LO 4

P5: Conduct an internal and external analysis of specific organizations in order to identify strengths and weaknesses for the chosen organization.

SWOT analysis is the method that allows the management of M&S to gain detailed information regarding the strengths and weaknesses of their firm. They can analyse the results in order to formulate beneficial strategies to enhance their business performance.

SWOT analysis of Marks and Spencer

Strengths

Marks and Spencer is a popular brand having a positive image in the UK retail sector. This helps them in grabbing the attention of their target consumers (Martínez et al., 2017).

The organization performs a number of CSR activities, practices sustainable practices that help them in building a positive image in the local community, and allows the firm in gaining awareness.

Weaknesses

The company makes use of traditional methods of advertisements. They lack celebrity endorsement foe their clothing section.

Rising food prices results in increasing selling price of services of the company.

Opportunities

The management can take initiative of implementing self checkout system in their stores that operate 24 hours

They should try to open new stores in growing economies

They can joint new ventures with new companies that are gaining popularity in the market.

Threats

They face threats from leading retailers such as Morrison’s, Asda, Tesco and more.

Increasing sales and popularity of the discounter is one of the most common and growing threat for retailers such as M&S.

Table 4: SWOT analysis Marks and Spencer

(Source: Created by the learner)

P6: Explain how strengths and weaknesses interrelate with external macro factors for the chosen organization.

The internal and external factor analysis of M&S can be used in order to enhance the decision making process of the management. It is evident that due o the proposal of BREXIT there are high chances that the operational activity of the company will be hampered due to alteration in the present regulation. However, M&S is a popular brand of United Kingdom that has a strong customer base. The management of the company can use the popularity and expand their business firm in new developing economies. This will be beneficial for them as they will be able to attract consumer due to strong brand image and lack of competition. The brand lacks to cope up with the current designs in trend in their clothing section. In order to overcome the problem the management should try to associate with leading designers and conduct business with them. They can incorporate latest technologies in order to increase the efficiency of their work and understand the current trend in a more precise way.

Conclusion

This assignment helps in understanding the business operation of M&S. The various external as well as internal factors and their impact on the business activities of the company have been discussed in this report. The difference between the micro, medium and small business firm has been explained. The details regarding the purpose and objectives of different types of business firms have been explored. The report reveals about the significance of interrelationship between the various functional departments of retailers such as M&S. The learner will be able to gain detailed information and knowledge regarding the factors and aspects that play vital role and have significant impact on the business of the firm.

References

Amnesty.org. (2018). Home. [online] Available at: https://www.amnesty.org/en/ [Accessed 15 Jun. 2018].

Argyris, C., 2017. Integrating the Individual and the Organization. Routledge.

Blog ¦ TheCompanyWarehouse.Co.Uk. (2018). Definitions of Small and Medium Business in the UK. [online] Available at: https://www.thecompanywarehouse.co.uk/blog/what-is-an-sme [Accessed 15 Jun. 2018].

Bouckaert, G., Peters, B.G. and Verhoest, K., 2016. Coordination of Public Sector Organizations. Palgrave Macmillan.

Businesscasestudies.co.uk. (2018). Organisational structure and careers - The role of training and development in career progression - Marks and Spencer | Marks and Spencer case studies and information | Business Case Studies. [online] Available at: https://businesscasestudies.co.uk/marks-and-spencer/the-role-of-training-and-development-in-career-progression/organisational-structure-and-careers.htm l [Accessed 15 Jun. 2018].

Colourpoint.co.uk. (2018). Managing Business Resources. [online] Available at: http://colourpoint.co.uk/sample_files/1298564666.pdf [Accessed 15 Jun. 2018].

Corporate.marksandspencer.com. (2018). Marks & Spencer announces proposed changes to UK Head Office structure. [online] Available at: https://corporate.marksandspencer.com/documents/reports-results-and-publications/press-releases/201617/proposed-changes-to-uk-head-office-structure-.pdf [Accessed 15 Jun. 2018].

Hayter, C.S., 2015. Public or private entrepreneurship. Revisiting motivations and definitions.

Managementhelp.org. (2018). Legal Forms and Traditional Structures of Organizations. [online] Available at: https://managementhelp.org/organizations/structures.htm [Accessed 14 Jun. 2018].

Marksandspencer.com. (2018). Welcome to Marks & Spencer. [online] Available at: https://www.marksandspencer.com/ [Accessed 15 Jun. 2018].

Martínez, A.B., Galván, R.S. and Alam, S., 2017. Financial Analysis of Retail Business Organization: A Case of Wal-Mart Stores, Inc. Nile Journal of Business and Economics, 3(5), pp.67-89.

Ncvo.org.uk. (2018). NCVO - Home. [online] Available at: https://www.ncvo.org.uk/ [Accessed 14 Jun. 2018].

Network Rail. (2018). Home Page. [online] Available at: https://www.networkrail.co.uk/ [Accessed 15 Jun. 2018].

ons.gov.uk (2018). GDP per Head: Table P - Office for National Statistics. Ons.gov.uk. Available at:https://www.ons.gov.uk/economy/grossdomesticproductgdp/datasets/gdpperheadtablep [Accessed 24 Apr. 2018].

Rangan, K., Chase, L. and Karim, S., 2015. The truth about CSR. Harvard Business Review, 93(1/2), pp.40-49.

theOECD. (2018). Entrepreneurship - Enterprises by business size - OECD Data. [online] Available at: https://data.oecd.org/entrepreneur/enterprises-by-business-size.htm [Accessed 15 Jun. 2018].

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