Internal And External Analysis Of Marks And Spencer

University: Mont Rose College

  • Unit No: 5
  • Level: Undergraduate/College
  • Pages 14 / Words 3500
  • Paper Type: Assignment
  • Course Code: EC4F05
  • Downloads: 3
Question :

Business operations is defined as an activity of running business operations smoothly by reducing business cost. It can be done through using advanced technology, equipment’s etc. It is important for the management to formulate an effective plans and strategies to deal with complexities occur during production process. Marks and Spencer is a multinational organization having headquartered in UK and operating number of stores across worldwide. It offers wide range of products such as clothing, home and food products. You are asked to understand the importance of business operations to achieve organization goals and objectives. For this, following questions must require to attempt:

  • Analyse the positive and negative impact of macr-envrionmental factors on business operations of Marks and Spencer.
  • Conduct internal and external analysis of Marks and Spencer
  • How strength and weaknesses of Marks and Spencer relates with macro envrionmental factors.
Answer :
Organization Selected : Marks and Spencer

INTRODUCTION

In order to sustain in the market for long time, organisation required adopting effective strategies and practices. There is huge competition in the market so it is very important for corporation to make distinctive tactics and implement it in smooth manner (Adar and et.al., 2016). For compete with rivals in the market, business entity should conduct business analysis and assess impact of several factors. As business environment consists with various macro and micro elements that affects business activities and functions in large manner.

The current report defines an impact of macro environment that includes several components such as political, social, legal, technological, environmental etc. In addition to this, strengths and weaknesses related to external macro factors with respect to Marks and Spencer will also be discussed here. The main purpose of this study is to understand the impact of macro environment factors on company's activities, position, functions and practices.

Main Body

P4 Identification about the positive and negative impacts the macro environment has upon business operations

The term business environment refers to internal and external forces that are beyond the control of the business and they affect the functioning of business enterprise. It is dynamic in nature and keeps on changing. The changes in this aspect are unpredictable and uncontrollable. It is very difficult to predict the exact nature of future happening. By analysing business environment and its associated forces, corporation can easily understand impact and importance of macro and micro elements in business functioning (Amran, Ooi and Devi, 2015). It helps company in designing strategies, practices and takes effective decisions for business.

A macro environment is a condition that exists in the economy as a whole, rather than in a particular sector or region. The factors included in macro environment are uncontrollable in nature that influences an organisation's decision-making and performance. It is great responsibility of management of company to analyse and assess business environment and its associated elements in effective manner where it can sustain in the market for longer time and compete with rivals.


Marks and Spencer is a major British multinational retailer that situated in the city of Westminster London. It serves high quality of clothes, home products and luxury food to customers. In 1884, company founded and started its business with customer goods.

Currently, Marks and Spencer have 979 stores across UK. It has a main objective to produce high quality of goods and services and earn maximum profitability in retail industry. It desires to become number one brand in the retail industry by delivering effective customer satisfaction.

For achieving this aim, it must analyse and assess the conditions of business environment. Management required to focus on the various factors of macro environment and its impact upon business decision making (Anton, 2015). At the time of taking decisions regarding business, several factors should consider so right strategy that can be implemented at right time. There are several positive and negative impact of macro business environment that can influence Marks and Spencer business operations.

The positive and negative impact of macro environment that are outlined in below manner-

  • Political and legal Factor- This is a major factor of macro environment that involves laws, government agencies, regulation, rules, governmental policies, practices, legislations etc. This factor influences and restricts organisation and individual in a society. At the time of developing strategy, policy and practice of business, management of Marks and Spencer should consider this element to organise, conduct business activities, and functions in a secure and safe manner (Bahadir, Bharadwaj and Srivastava, 2015). The positive impact of this factor on corporation is that business can safely and securely carry out its activities and programs.

On the other hand, if government makes changes in regulations, rules, policies and legislations then it directly affects company’s program and practices because business entity must modify its current rules and norms. Furthermore, various business decisions related to marketing, finance, accounting, human resources and administration can be influenced by changing governmental regulations and rules (Bull and et.al., 2016). However, several acts and legislations like competition act, occupational health and safety, national gambling act, new credit act, lotteries act helped to company in keep secure business, employees as well as customers.

  • Economical factor- It is a factor that influences customer buying power and patterns. The economic environment can influence both organisation's production and customer’s decision-making process. This includes GDP growth rate, inflation, recession, increase in fuel prices etc. When organisation operates its business and develops strategies like pricing strategy then it is very important to consider economic environment of business. It is significant to analyse environment of a country where it is operating business. The general economic situation in the region and condition in resource market like money material, services, supply markets, raw material components affect the supply of inputs to company, its cost, quality, availability and reliability of supply of goods and services.
  • Social - cultural & Demographic factor-This factor is related to the people and human populations. This includes size, density, age, gender, occupation and other statistics. When organisation produce and deliver goods and services in the market then it is very important to consider demographics of customers so as it can meet customer expectations and requirement (Doeksen, A. and Symes, 2015). Negative impact of this social and cultural factor is that company have to make changes in the quality and features of product and services according to customer demand. As regular changing demand and choice of customer can affect production, features, quality and price of product and services. Due to regular changing demand and requirement of customers, company have to make changes its business operation, activities and functions.
  • Technological- This is another one of the factors that can affect the operation of the Marks and Spencer. There are various functional department in the corporation such as marketing, human resource, administration, information technology, finance etc., that required technology for operate and carry out business activities and functions. Thus, it can be said that technology helps to business unit in large manner through which speed and business transaction can improve (Gonzalez-Padron, Hult and Ferrell, 2016). In order to operate business and take business decisions, corporation should focus on the technological environment of business because various activities are largely depending upon technological business environment. The positive impact of this factor is that company ca improve quality and productivity of business, product and services by use advanced and high quality technology. It helps in developing competitive advantage of business and deliver high quality of goods and services. If country have excellent technological environment then it helps organisation in producing high quality of goods and perform in excellent manner (Grünig and Kühn, 2015). On the other hand, negative impact of this technological environment is that Marks and Spencer have to invest large amount of capital to purchase technology and equipment. In addition to this, corporation have to update technology and equipment according to the changes. However, technology provides opportunities to customer for online shopping and organisation to promote its business in the fastest manner. Technology factor helps to Mark and Spencer in bringing innovation and creativity with its product and services. By use of high and advanced technology, it can create some innovative product and service and make happy its customers.
  • Ecology and physical Environment-Ecological and natural forces are also significant part in the macro business environment. It is a natural resource which are needed as inputs by marketers or which are affected by their marketing activities. In this includes all natural things such as air, water, weather, pollution, climate etc., that directly affect business operation and production. As per the research it has been found that Marks and Spencer have established their own Green policy which they call 'plan A ' By use natural resources, organisation can easily improve its position in the market and develop competitive advantage. On the other hand, negative impact of this factor is that due to changing weather, climate, air, pollution rate company have to make changes in business operation and activities.

P5 Internal and external analysis of Marks and Spencer for identify strength and weakness

As per the discussion it has been analysed that there are various kinds of factors in the Macro business environment that can affect business activities and function in large manner. The macro environmental components directly and indirectly affect business enterprise (Houdet, Trommetter and Weber, 2012). Cited venture have aim is to become number one retail outlet in the retail industry and earn maximum profitability by deliver high quality of goods and services. For achieve this objective, Marks and Spencer must have to conduct internal and external analysis. Following are internal analysis of Marks and Spencer-

Strength

The major strength of the Marks and Spencer is related to its brand value and customer loyalty. It delivers high quality of product and services to its customers through which its brand loyalty is high as compare to other competitors in the market. It serves wide range of products and it has different outlets which aid to grow the business. Another strength of Marks and Spencer is its popular designer brand because it serves the high quality and colourful items to its customers. Its brand includes autograph, Bigandtall, blue harbour, collezione, North coast etc that creates distinctive image in the market as compare to other rivals. It also contributes in the corporate social responsibility and follow various business ethics through which it positions is strong in market. Its plan A is aimed at building sustainable future by being a business that enables its customers to have a positive impact on well-being, communities the planet through all that it does. Strong partnership communities, council, charities, NGOs and businesses have been forged over the years (Jaber and et.al., 2015). Cited venture strongly focused on the customer experience and strong e-commerce infrastructure through which it delivers high quality of product and services in the market. Marks and Spencer always relied on the farmers with good relationship from where they are able to increase the variety of products. It uses highly advanced technology and infrastructure in its business operation through which it can able to deliver high quality of product and services in the market. To use the high advanced technology is one of the major strength of Marks and Spencer. In addition to this, company have high skilled employees and workers that is another major strength of company. It organises employee’s welfare program and training program for its workforce through which they can motivate and their skill is significantly improved.

Weakness

Its major weakness is its poor promotion and advertisement activity due to which many customers are not well aware about its product and services. The Marks and Spencer has a wide range of product and different brands but general people assumes that Men's wear and women wear are only for the aged people not for teenagers so this is major weakness for Marks and Spencer as many of the customers are not well aware about its product and services. It's another weakness is related to its poor financial performance in the market (Kernbach, Eppler and Bresciani, 2015). It should focus on the strategies and practices through which it can improve profitability and productivity in the market. It's another weakness is related to too much reliance on UK markets make it vulnerable to market conditions in the local country.

External analysis

For survive in the competitive business environment for long time it is very important to focus on the external business environment. As it consists with various external forces and elements such as social, cultural, political, legal, environmental, technological etc. For analyse and assess the external environment of Marks and Spencer, Porter five force model can also implement. The description of Porter five force model is discussed below-

Bargaining power of suppliers- There is more than 90% of Marks and Spencer suppliers were British. The bargaining power of supplier is low because there are large numbers of suppliers available in the market that serves the raw material, semi-finished goods to organisation. The market and Spencer is very large brand and its name is enough to sell its product in the market. Cited venture concentrated purchase from few suppliers only.

Bargaining power of customers- This is the major factors that can influence the Marks and Spencer position and business activities in large manner. As per the research it has been found that there are large numbers of competitors in the market of Marks and Spencer so customers have lost of option to purchase product and services (Leitner, Meissner and Martyna-David, 2015). If company makes minor changes in the features and prices of product and services, then customer can easily with their brand and purchase same commodity from other organisation. In addition to this, customer are very price sensitive so they always prefer to purchase the product in lower prices. Marks and Spencer had misread its target market because UK consumer were not willing to pay a premium price for shopping British products they just want a lower price with high quality products. Thus, it can be said that bargaining power of buyers is high in the Marks and Spencer company.

Threats from new entrants-As Marks and Spencer have large numbers of competitors in the market so customer have option to purchase the commodity from other organisation which serve the same commodity and services. Thus threat from new entrants in high in the Marks and Spencer company.

Threat from substitute- Substitution of product always reduce customer demand for a particular class of products because customers have ability to switch their brand if company makes any changes in its current price, features, distribution etc., (Mathur, Mathur and Kenyon, 2012). As Marks and Spencer have large numbers of competitors in the market so customer have option to purchase the commodity from other organisation which serve the same commodity and services. Thus threat from substitute is high in the Marks and Spencer company.

Rivalry- As per the researcher it has been found that Marks and Spencer have large numbers of rivalry in the business market. Competitive rivalry is likely high because there is the threat of substitute products and suppliers and buyers in the market attempt to control. Marks and Spencer was faced the threat of competitive rivalry because it deals with customers clothing, home ware items, luxury food product etc.

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P6 How strength and weakness interrelates

As per the above discussion it has been analysed that Marks and Spencer have strength is related to its high level of technological infrastructure due to which quality of product and services increase. It uses advanced technology and equipment in its business operation so this thing is related to the technological environment of country. In addition to this another strength of Marks and Spencer is its brand image and customer loyalty because it delivers high quality of goods and services in the market (Liu, 2015). It has large numbers of outlets and stores in the different country that helps to company in developing its distinctive image in the market. As per the research it has been found that it has about 900 stores all over the world with 600 stores in the UK and above 300 in over 400 countries. This strength is linked with environmental factor of business environment (Mitchell, and et.al., 2016). It also engaged with corporate social responsibility and organise various charity event for society. This strength is also linked with environmental factor. However, it has weakness related to the poor promotion and advertisement due to which customer are not well aware about its product.

CONCLUSION

From this entire report it has been concluded that organisation should conduct business analysis for analyse its internal and external condition. In order to sustain in the market for long time, company have to focus on effective strategies, practices and policies. There are various factors of macro environment such as political, social cultural, legal, environmental etc., that affect company activities in direct and indirect manner. It has been also concluded from this report that Marks and Spencer have highly skilled employees and workers through which its performance is strong in the competitive market. Cited venture services high quality of product and services that is its competitive advantage in the market.

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