This unit states that are appointed as Business analyst of M & S an investigation has to be carried out about different types of competitors, their size and scope for understanding current situation at the market.
- Determine purpose, types, size and scope of different kind of organizations.
- Determine relationship between various functions performed in Tesco and understand their link with company’s goals and organizational structure.
- Explain positive and negative influences of external environment on business activities of Tesco.
- Explain connection of Tesco’s strengths and weaknesses with macro environmental factors.
The business environment means all of the external and internal factors that affect the organization functions which include employees, customers, management, supply and demand and business regulations. The success of every business depends upon adapting itself to the environment within which its functions. The business environment helps the company to determine the opportunities and threats, giving direction for growth, image building around the world. The factors which affect the environment of the business are internal and external (Lee, Olson, and Trimi, 2012). The internal factors include plans and policies, human resources, financial resources, etc. whereas the external factors include the customers, competitors, suppliers, political, etc. MARKS AND SPENCER COMPANY which was established in U.K. which deals in manufacturing food products, clothing along with the household needs products is selected for the purpose of this report. This report also includes different scope and size of the organization along with the functions and structure of it. SWOT & PESTLE analysis are used to identify the strengths and weaknesses of the company along with evaluation of different environment in the foreign countries which impact positive and negative impact on the company’s business.
P1: Different types and purpose of organization
Organizations are sets of people who work together to achieve shared goals. Every organization provides quality products and services to the customer according to their needs with a reasonable price. This is an only way for the organization to generate more profits and expand their business around the world. The organization can be various types which consist of public, private, and non- profit organization who operated their business operations in different ways. Such type of organization is explained briefly below:
Private organization: The private organization refers to any individual, partnership, association, corporation which is not public company (Rossi, Vrontis and Thrassou, 2012). The private sector is made up of companies that operate to make a profit. On private sectors the government puts some restrictions that the company cannot issue their shares direct to the public etc. For this M&S is a perfect example in this case. It is a company which is operated their business all around world. The company deals in retail outlets where they sales foods, household items and clothing apparels, etc. for the customer. It has 950 stores in U.K. and also has a turnover 1 billion pound. As a good customer image and also has good qualified employees around the world.
Types of private organizations:-
- Partnership: A legal form of business activities between two or more persons who share management and profits. There is a contractual agreement between the parties are known as partnership deed which contains terms and conditions regarding the partnership. The partners share their profits in the ratio which is decided at the time of agreement and invest their capital in the prescribed ratios.
- Sole proprietorship: It is also known as sole trader, is a type of the enterprise that is owned and run by one person. The owner of the enterprise control all the functions of the business entity and liable for all the debts (Pham, Segers and Gijselaers, 2013). In his business there is no partner to share the profit and loss. He is only liable for all losses and retains the profits with himself.
- Limited companies: In a limited company, the liability of members or subscribers of the company is limited by shares and by guarantee. In case of company limited by shares, shares are held by the shareholder of the company whereas company limited by the guarantee there is no shares, the company having members who acts as a guarantor.
Public organization- A public organization is the organization which is controlled and managed by the government authority of that country where it is establish. The public company can issued securities directly to the public with the help of IPO and raise their funds. Public organizations are publicly traded within the open market with shares being purchased by a variety of investors.
Non-profit organization- A non- profit organization is one which is not driven any profits. It uses its funding to pursue a specific purpose, such as charitable cause, rather than pursuing profits for its own benefit as a for profit business does. It receives funds from outsider of the organization.
P2: Size and scope of several organizations
As discussed above, there are different types of organizations which have their own different scopes and sizes. It includes different types of organization such as private, public and non- profit organizations. Size refers to the different scale of operations conduct by the organizations around the world whereas the scope means the organization capability to achieve their targets and goals all around the world within the time framed. These are discussed below:
Marks and Spencer (M&S):-
Size: It is one of the biggest supermarket chains in the retail industry which deals in variety of the products like foods, household items, clothing, and other useful items which are needed to the customers. It has business operations having 10,500 stores (approx.) around the world and turnover around of 50 billion pounds. The workforce which contributes maximum efforts which helps the company to attaining the goals and objectives. In figures it is 1, 40,000 workers are employed and make its contribution to the company.
Scope: Scope means the company offering products and services which is in the form of wide range includes household products, food and clothing products and stationary items to the customers which are situated all around world. Scope of the company also decides where they want to go and how much they have to earn more profits with their strengths (Gharajedaghi, 2011).
P3: Relationship between different organizational functions and their link to organizational objectives and structure:
Marks & Spencer (M&S) is well known popular retail outlet in the UK which offers variety of different types of product and services to the customers. They offer according to the needs and wants of the customers. The company also offering all around world due to which they earn more and more income from the foreign countries. M&S also earn the good brand image in the foreign countries for this image lot of customers are attract towards their retail outlets (Crane and Matten, 2016).
There are so many departments which supports the company to achieve their goals and objectives on the time. Such departments include marketing, sales, production, human resources, finance, etc. which has performed their roles and responsibilities to achieve the common goals of the company. There are different roles and responsibilities are performed by the various departments with the help of these departments the company can attain their mission. In M&S Company these departments performed their functions jointly to attain common organizational goals and objectives. The functions which are performed by the various departments in the M&S are discussed briefly as below:
- Human resource management department: This department plays a vital role in the company because all the failure and success are depends upon this department. This department performs various roles and responsibilities like selection, recruitment, termination, rewards, performance appraisal, training and development functions, etc. due to which the business activities of M&S cannot be disrupted and interrupted. The employees are the main element for the company through which it can attain their goals and objectives on the time. The sustainable income and growth depends upon the employees skilled and knowledge (Welter and Smallbone, 2011). The employees’ performance can be enhanced by providing proper training to them. The organization should also conduct the training and development programs for the employees on regular basis so that they improve their skills and knowledge. The efficient and skilful employees plays major role in the company because they are people who makes company’s brand image.
- Finance department: Finance department is a backbone and life line for the company because it provides funding to the projects and assists the department when they required funds. M&S can achieve their mission when they have proper funds in the company. The finance manager plays an important role to allocate the funds to the various departments so that the departments can achieve their targets within the prescribed time without any delays.
- Marketing department: The marketing department is responsible to generate the sales in the target market so that the company can makes more and more profit for it. The marketing manager makes a plan with the help of this plan they targeted to the customers and market share. For this the manager applies various tools and techniques of the marketing management like do advertisement on the Television, and also on the newspaper and on the social media to attract more and more customers towards the company. M&S deals in the various kinds of products and it duty of the marketing manager to apply the marketing tools and methods to give information about the products to the customers an also tells about the various schemes to enhance the sales and earn huge profit margins for the company (Elliot, 2011).
- Production department: M&S also deals in the manufacturing the products and services and this manufacturing items they sold around the world. It includes luxurious items, food and grocery items, and also home and clothing products. Therefore this department is responsible to reduces the unwanted expenses and also eliminate the wastages during the production process so that the company achieve the maximum quality product at minimum cost. For this, it is necessary to have a skilled work force who have knowledge that how they utilize the important resources which the product gives maximum outcomes to the customers and achieve their goals in the proper way.
P4: PESTLE model to determine positive and negative impact of macro- environment
Marks & Spencer (M&S) has different operations around the world due to which there is a great chance of getting affected by various factors of external environment or macro- environment like Political, Economical, Social, Technological, etc. Therefore, the management of M&S should necessary to determine all such factors of macro-environment in thoroughly manner and accordingly prepare the policy and strategy which is acceptable by all the countries environment and try to overcome this changes and managers also decreases the negative impact of these factors on company’s planning policies (Cotter and Fritzsche, 2014). Thus, it is necessary for the company’s management to consider PESTLE analysis which is very effective technique of the Strategic Management in order to find out each adverse and favor impact of each factors so as to solve them as quickly as possible. These are further explained below:
Political Factors: This is the very important factors which influence on the regulation of the company’s management like-
- Influence the government policy/ law on your business.
- How stable is the political environment in the country?
- Government’s position on marketing ethics.
- Government’s policy on the country economy.
Positive impact: If the bureaucracy issues like abolition of licensing, freedom to import technology, contraction of public sector is not very rigid and flexible in the country where the company’s want to establish their market assist the management of M&S to establish their retail outlet in that country which helps them to generate more profits.
Negative impact: If the above issues are very rigid and government’s policies so hard in that country for the MNC’s. It create problem to generate the profits in that country and also creates difficult to establish the retail outlet in that country (Zott, Amit and Massa, 2011).
Economical Factors: The economical factors include level of government spending, avenues for capital creation, government outlook towards interest rates, banking finance, exchange rate mechanism, inflation etc. which affects the business activities either in adverse and favourable manner.
Positive impact: If the economy of the specific country where the M&S operated its business operations are favourable to the company, then the customer purchasing power is high due to which they are purchasing more quality product and services to their retail outlets which in results gives more profits and sales is high in that particular country.
Negative impact: Due to inflation in the particular country where M&S operated its business activities goes high, the customer disposable income is low in that country due to which the customer purchasing power goes down and they spend less on buying the products and services which creates adverse effect on the company’s sales.
Social Factors: The social factors include demographics, distribution of income, social mobility, life style changes, consumerism, educational levels which creates huge effect on the decisions and strategy of the company’s.
Positive impact: If the educational level in the particular country is good means that all the people are educated in that country then the company can operates their business easily by providing various online technologies to their customers like online purchasing which increases the sale of the company’s business.
Negative impact: If the educational level is the low in that country, then it creates adverse effect on the company’s sales and profits.
Technological Factors: The technological factors are very vital factors which always brings favourable outcome to the company but it creates huge cost burden on the company and affects the company’s revenue income and their operations.
Positive impact: If the company’s cooperate their business with the latest technology and discovery then it attracts more and more customers to them (Hair, 2015).
Negative impact: If the company’s using the out dated technology then they fail to attract to the customer and obsolete technology increases the production cost of the company’s.
Legal factors: The legal factors include the rules and regulations in the particular country where the retail outlets are establish or want to establish by the company. The rules and regulations effects on the business in the positive and negative manners.
Positive impact: The rules and regulations in not very rigid for the foreign companies then the company can establish their outlets in easily manner and makes the profit and sustainable growth in that country.