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The external or business environment of organisations has a significant impact on the internal and external performance of organisations. The purpose of the following report is to apply strategic tools such as PESTLE and SWOT framework on UK-based retail brand 'M&S' To identify the changes in business due to changes in external environment factors. Marks and Spencer (M&S) co. was established in 1884 as a public limited organisation by Michael Marks and Thomas Spencer headquartered in London. M&S Currently working in about 1500 locations worldwide with approximately 78,000 employees with multiple sub-brands. The report will also recommend an appropriate leadership style based on analysis to support the business effectiveness and management of M&S. Finally, the report will demonstrate the corporate social responsibilities and ethical practices of M&S to evaluate its efficiency and find an appropriate conclusion.
The pestle analysis focused on identifying the key factors that influence the retail industry in which M&S operates within the UK. The PESTEL analysis plays a vital role in determining the organisational strategy by evaluating the impacts of macro environment forces including political, economic, environmental, social, legal, and technological. The analysis of macro-environmental aimed to develop appropriate information to overcome the challenges faced by organisation in the current market with current customer’s segment. The role of different environmental factors in shaping the business activities and marketing practices of M&S will be identified to understand the procedures of maintaining long-term customer relationships and healthy associations.
The political environment has significant impacts on the business operations and activities to sell business products in the respective market (Le Thuy and Oe, 2020). The political environment of the UK applies a fair trade policy due to which there is a significant decrease in sourcing the cost that will benefit the M&S to business cost-effectively and achieve better profit margins. However, the continuous changes in government and tax policies will negatively impact the consistency of the organisation and its investment and revenue opportunities. Additionally, Brexit has had significant impacts on the business of M&S in the UK because the brand stopped selling chilled food and have to Go to frozen products in room temperature storage.
The Factors of the economic environment include the inflation and demand and supply practices within the market along with several other elements. The economic factors of the UK include the conflict between a small retailer due to the increase in prices of products sold by M&S due to the negative impact of Brexit. the organisation also gets negatively impacted by Covid-19 and hampered sales of clothing and other consumable products that hit the organisational profitability hardly. The Customer segment also has less purchasing power due to several crisis and it negatively impacts the sales and profitability of M&S products.
Social factors have a significant impact on the buying behavior and purchasing intentions of people that directly influence the sales and profit generation capabilities of an organisation. The Social factors of the UK Business environment include the increase in demands for trendy stores and social attraction for betterment (Zhang et al, 2021). The M&S is facing social challenges because the organisation has nontrendy stores and it also receives flak. The bread also facing negative recalls of social trends and it has to reduce the internal cost for supporting communities that will reduce their profitability.
The technological factors influence business in the environment through strengthening or reducing the security, Compliance, and risk with technology partnership on the basis of their choices. Artificial intelligence and machine learning are the most important technological trends that are booming in different industries and businesses. M&S products of clothing range effectively. The organisation has the opportunity to reduce the chaos faced by customers while buying products from the organisation because artificial intelligence can improve product trial and their experience (Wilshaw et al, 2021). The organisation is not properly appealing to meet the technological trends of the new generation and it is reducing its capabilities to attract and retain customer segments.
The legal factors of the UK business environment play important role in ensuring the appropriate management of products and services along with ethical practices with employees and customers (Le Thuy and Oe, 2020). M&S is responsible towards people within the organisation and treats employees with appropriate dignity and respect and also provides fair wages according to the employment law of the UK. The organisation is facing legal disputes with other supermarket organisations on trademark issues and it is setting an arguable reputation for the company. Although the organisation has a good rating in ethical business procedures researches demonstrates that the organisation has different areas of the supply chain that has incense of oppressive regimes.
The environmental factors of business surroundings include the areas of businesses to reduce unethical practices that can negatively impact the ecological environment and improve the services to lead sustainable development (Taifa, 2020). M&S has different strategy issues to support a sustainable environment including a strong integration with corporate social responsibility and utilising eco-friendly material and providing recycling options for business products. M&S also invested in managing greenhouse effects with science-based targets and projects that will reduce the carbon emission from its supply chain operations. Hence, the organisation is quietly committed to environmental sustainability however it will cost it significantly.
The purpose of conducting a SWOT analysis of an organisation is to identify its internal strength and weaknesses in comparison with external opportunities and business threats from the environment. SWOT analysis improves the knowledge of the organisation to understand there are actual capabilities along uncertain business environment to meet sustainable development of business (Benzaghta et al, 2021). The SWOT analysis is will supporter in developing effective is thread its reason utiliser business is strength in reducing business threat and business opportunities to reduce the business weakness of M&S. The sword analysis will support in identifying the factors that are impacting business functioning of M&S and will provide useful information to conduct strategic planning and sustainable development of the organisation.
The most powerful factor of M&S is the strong value in the UK market because it provides value for money from its products and informs quality with convenience from a wide range of products that aid as the continuous value proposition of the brand (Fouad and Kozlowski, 2019). The organisation also has its own branded labels for products that support ineffective positioning in the target market with large recognition and benefiting promotional services. The working environment of M&S is Highly integrated with ethical and sustainable practices that satisfy the legal and rights of employees and customers associated with the organisation. M&S informs effective CSR practices and focused on providing recyclable materials among targeted consumers. The brand has a strong presence all around the UK benefits better accessibility among consumers.
The major weakness of M&S is poor understanding and response towards customer demands and working typically on classical methods. The organisation does not effectively focus on emerging demands of customers that negatively influence the satisfaction of customers and business financial performance at different locations (Eisenberg et al, 2019). Another weakness of M&S is the most dependency on the markets of the United Kingdom that impact vulnerability towards the local country and market conditions. The company also conducts frequent recalls in product leads that create a reduction in customer confidence and make business development on a toss. M&S Also has is strong competition from large bronze in the UK market that set limitations for achieving a strong market share and being competitive among popular brands.
After COVID-19 and other crises in the business environment of the UK like Brexit, there are significant opportunities that can improve the performance of businesses. For example, to reduce the negative impacts of Covid-19 on businesses the company can develop and utilise the online website to sell and run the business locally in the UK as well as overseas. Also, the organisation can grab the opportunity of introducing products in new segments with an effective response towards customer preferences (Yu et al, 2018). The organisation can utilise trending technology to reshape the clothing segment and simplify the operating model to achieve better sales with better customer satisfaction. The organisation should integrate large trading stores in the UK with core values of the brand including innovation, quality, trust, values, and services in business proposition along with a continuous focus on price-sensitive target segment.
The major threat that will negatively impact the operations and performance of M&S Includes the reduction in sterling post-Brexit. The stiff competition in different business industries of the UK because of the increase in prices of raw materials and other things with the impact of Brexit (Jones and Comfort, 2021). For selling the products after the crisis, the retail organisations and brands of the UK are selling their products at discounted prices that will reduce the profitability and Balance of the cost structure of M&S. the evolving customer expectations and digital disruption will also threaten the business operations of M&S The organisation is not so active towards customer preferences and finding an appropriate technological solution. The frequent changes in taxation policies and sourcing costs will also disrupt the business operations and future goals of M&S.
The changes in the business environment or PESTLE factors have a significant impact on the business opportunities and threats because the changes in the business environment can cause direct or indirect fluctuations in the operations and strategies of organisations. The actual impact of changes in the business environment is subjective because the changes in PESTLE turn opportunities into weaknesses and threats into opportunities to develop business strength. For example, currently, there is risk in technological partnership to efficiently manage the security and compliance in the technological environment of the UK (Nanda et al, 2021). The investment of M&S In artificial intelligence and machine learning will improve the effectiveness of the organisation to grab better sales after the Covid-19 crisis.
The organisation has the opportunity to develop oh online website and the reduction in the cost of artificial intelligence will support M&S To improve business reach and profitability. Similarly, the changes in the legal and political environment of the UK may result in reduced taxation policies that will support the organisation to overcome price-hike issues faced by the organisation post Brexit. The tax reduction will benefit M&S to improve businesses' profitability and maintain financial stability however the increase in tax rates will cause opposite results (Bowne, 2021). The economic environment has impacts on the demand and supply of M&S business products Because there is an increase in prices due to Brexit. The prices go back to their original values, M&S Get the synchronization between demand and supply back and the security of businesses will be done however if the price will go higher then the company has to inform other strategies and cost structure to maintain the maintained supply chain.
Similarly, the organisation can utilise artificial intelligence and other trending technology to simplify the app operating model and grab the opportunity of reshaping the clothing segment beside several challenges. The Changes in the price of raw materials will also improve the profit margins of M&S While selling products on the discount that has the threat of reduced profitability but if the technology does not apply properly there will be more losses. M&S will find better accessibility towards integrated values to achieve effective business proposition with the opportunity of price-sensitive target marketing if there will be changes in social factors of the UK business environment (Davies et al, 2019). For example, the company is currently facing social challenges due to improper attraction and availability of trendy products for customers but with the changes in business structure and marketing practices through technological integration and price-sensitive strategies the company can achieve sustainable development.
However, if social factors become more crucial and frequently emerging then M&S will fail to reduce the chaos faced by target consumers and it will reduce the chances of becoming sustainable (Le Thuy and Oe, 2020). Also, if there will be changes in customer preferences towards the type of products offered by M&S Read the organisation can reduce the frequent recalls and achieve better confidence of customer segment towards business and services that will boost the financial stability of M&S. Although the customers are attracted by different trends and offerings from competitors that create their demands for a similar type of products from M&S, the consequences will be worst for the brand in that case.
Hence, the changes in the external environment of a business are unpredictable because it is a combination of multiple elements working together to shape the business environment for different businesses running move in a country (Wilshaw et al, 2021). The changes in the external environment can significantly harm or can support the businesses in different terms and there are significant possibilities that the impacts of different factors are different on types of industries. The M&S to adopt the changes in the business environment to survive in the market and keep strategic plans up to date for making business sustainable.
The participative leadership style is recommended for are the business operations and management of M&S. The Participative leadership style can be defined as the process of deciding by considering the effective role and perspective of different term members to represent together working spirit (Ganzemiller et al, 2021). It is one of the effective leadership styles for retailing organisations because it includes democratic practices that encourage each individual to participate in business activities thoroughly that benefits businesses in large terms. A participative or democratic style of leadership will support M&S to improve communication with internal and external people that will increase the capabilities of the organisation to utilise information effectively and reduce the negative impacts of external threats.
The democratic leadership will also improve customer relationships of M&S for understanding the requirements of customer preferences and the values delivered by the organisation among different segments. Participative or democratic leadership encourages collaboration between people and departments that support creative outcomes. For example, the involvement of relevant people in the decision-making process of M&S will improve the efficiency of operational practices and support the organisation to sell products and satisfy segments properly. It is an effective leadership style for the retail industry because it improves the flow of ideas and facilitates positive associations between individuals and will decrease the negative impact so offer competition and another crisis is from the external environment.
Participative leadership will be appropriate for M&S because it improves the internal capabilities of organisations by creating collaboration and ethical morale That will increase the value and position of the brand in the target market besides multiple challenges of the external environment. However, while using participative leadership, the leaders and managers of M&S need to consider the balance between providing a sense of value and control among each team member because it can negatively impact their behavior and attitude and their Performance toward Professional and business goals (Pass et al, 2020). The organisation is recommended to also consider the high cost and chances of social pressure because of group domination that can create inefficiency and lack of competency within the business. Hence, participative leadership is the best approach for retail organisations like M&S but Appropriate considerations and contingency strategies are essential.
Corporate social responsibilities are an important area to be considered by Organisations and industries to inform ethical businesses identity and improve societies and environment along with developing profits. M&S is also associated with multiple CSR practices in terms of community and environmental sustainability while investing in business development (Jones and Comfort, 2021). The organisation has ethical business partnerships with different associations and sub-brands and it is always accountable for relevant people of business is including Customers, Partners, Communities, Suppliers, and employees. M&S reflects responsible values of branding towards sustainability including trust, Quality, innovation, and services, etc. The organisation performs donations and charities from local stores in the UK to support the communities and their sustainable development.
The organisation is also committed to several environmental programs and health and safety measures along with the scientific project to reduce the carbon emission from business operations such as manufacturing and transportation to reduce the green gas effect. The M&S also invested in other environmental protection technologies to improve the efficiency of the supply chain for providing better sustainability to the environment (McGrath et al, 2021). In terms of ethical customer practices, M&S has the best ratings on its supply chain practices are because it restricts labour abuses and another type of ethical problems with people in different countries where it operates. The organisation is Show involved with animal welfare association in which it supports supplier engagement with positive animal care and without any harm to any species.
M&S Also pays tax properly however for saving tax it utilised different strategies which are ethically justified for commercial-based business activities of the brand. Although the organisation has a good rating in CSR Film is still there are some critics in different categories of ethics that are not appropriately informed by M&S. For example, the organisation is criticised for irresponsible marketing practices and also faced controversies of anti-social financial practices (Toda and Dawson, 2017). For achieving overall ethical business identity M&S should develop efficiency in each category of ethics to support overall sustainable development with businesses sustainability.
Business organisations are very sensitive to the external factors of the business environment. The environmental analysis of M&S informed that Changes in the external environment directly influences the businesses by triggering the strength and weaknesses to grab opportunities and address challenges. It is identified that the organisation has several opportunities and threats for M&S if there will be other changes in the external environment to of UK. Concluding that for reducing the negative impacts of the external environment on the business opportunities and strength of M&S, Participative or democratic leadership should be applied to achieve better collaboration and efficiency for dealing with crises and uncertainties. M&S has strong integration with corporate social responsibility however it requires more efforts to become overall ethical and support overall sustainability by addressing different categories of ethics.
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