Business organisation can be defined as a corporation which uses a systematic approach for achievement of goals. For success of business, it is essential for owners to set a proper mission and vision statements. It provides a specific direction to people who are associated with business operations and gains their cooperation for the same (Bansal and Hoffman, 2012). In context with globalisation, in order to move business at international level, a company requires to analyse factors like which impact on operations. This assignment deals with the concept of interrelationship of business organisation and environment at global level. The company here taken is M&S which deals in retail sector and offer a wide range of clothes and cosmetic related items. Currently this organisation is going to launched its stores in Portugal for generating high profitability. Thus, present report highlights different types of analytical approaches like PEST analysis, segmentation and some other tools to understand the business environment in deep manner.
Information of selected business organization- Mark and Spencer
Business refers as a process where product and services are produce or manufacture and that products or services sold to customers. The main motive of business is to earn profit and try to create opportunities to grow or expand their business and when they get opportunities they utilize it fully. Opportunities for a business can be in any form such as expansion of business in same country or extend business in any other country.
The organisation selected for this assignment is Mark and Spencer, is a one of the major multinational retail store, which is founded in 1884 and headquartered in the city of Westminster, London. It is founded by Michael Mark and Thomas Spencer. The respective company is specialises in selling of clothing, home products and luxury food products (Bocken and et. al., 2013). Currently Mark and Spencer has 979 stores across the United Kingdom including 615 stores that sell only food products. It has around 85,000 employees and it serve their product and services worldwide.
Mission:- Mark and Spencer mission statement are to do inspirational quality accessible to others.
Vision:- The respective company vision is to be the criterion against which other are measured- Benchmarking.
Values:- Mark and Spencer values are quality, service, innovation and trust.
Objective:- Mark and Spencer organizational objective is to regain its leadership in clothing and speciality food. This objective is achieved by translating sales and authority into superior values, quality and appeal. Sales Objective of respective company is to improve their sales per foot (Brammer, Jackson and Matten, 2012). They seems return per foot as a key of operational objective going forward. And employees objective is to develop a career path for employees, the respective company attract, motivate and retain effective workforce for transformation of business and performance.
Target Segmentation:- Mark and Spencer core target customers are under 25 to 55 age group men and women, but per una range target customers are women aged between 25 to 35 and size of 8-18. Income and social class target by respective company is not so high, they meet their expectation with providing appreciate practical, good products and value for reasonable priced. Mark and Spencer target their potential audiences by using various channel of promotion and advertising such as social media, TV and so on.
Mark and Spencer is offering most of the places in world and now they are planning to expand their business in Portugal. Portugal is a country which is situated around west and south west side of the Iberian Peninsula in South western Europe. The resepctive country have their own culture which is slit different from other countries culture due to which Mark and Spencer is can face some problems in conducting their operations in effective and efficient manner (Brown and Osborne, 2012). So, Mark and Spencer do their planning and design strategy accordingly to do operations in Portugal in appropriate manner for that they study and analysis culture, tradition and business culture of receptive country. Mark and Spencer is providing quality products and services to its customers all over the world and now try to expand their business in new culture of Portugal and hoping that their new collection according to respective culture is like by customer and they fell connected with Mark and Spencer.
Discuss about allocated business environment of Mark and Spencer
The business which is operating its business in dynamic environment get changed within the time to time and a company design its plans and policies according to the environment. It is important for a company to analysis the market area of new country or place where they going to expand their operations so that they can get good overcome and achieve growth and development in new market which will help business in gain better result in the future.
Mark and Spence is planning to expand their business operation in Portugal, that is famous for its modern and flexible fashion market and other related products like luxury home products, fashionable clothing and so on (Caligiuri and Tarique, 2012). Before expanding in Portugal market Mark and Spencer evaluate and analysis their market by using BCG matrix which is created by Bruce D. Henderson in 1970. BCG matrix is a strategic framework used by the organisations to evaluate the attractiveness of organisational products against market growth rate. It classifies the business portfolios into four categories based on industry attractiveness and competitive position. Following is the description of BCG matrix in consideration with new area of development and growth in respect to the Mark and Spencer in Portugal:-
Star:- It ascertains that company is having a high growth rate and high market share along with this it is ascertained that profit will get maximised in future. Mark and Spencer is a star in product service portfolios. The new website launched by the respective company has shown great potential of growth .
Question Marks:- Mark and Spencer should divest into women wear and beauty products as they both complement which is a cash cow in product portfolio. If two products complement each other, deleting one product can negatively impact the marketing of other product in product portfolio. Men wear and kids wear both generate reasonable revenues for company so it would be good idea to continue investing in them.
Cash cows:- Mark and Spencer has food and lingerie as the products which represents the backbone of the company. Fund generated from these cash cows can be channelled into stars and promising question marks to develop them into cash cows.
Dogs:- Premium priced clothing has been identified in dog category. With low share in mature or declining market, Mark and Spencer should give strong consideration to divest this product line and continue to drain its resources without desired levels of returns (Clark, 2012).
Mark and Spencer main backbone are clothing and food. If it doesn't balances these products well in portfolio the company can be for trouble. Investment in fashionable clothing , tasty and healthy foods supported by increase in advertisement are the strategies that the respective firm should pursue and takes actions.
Application of an appropriate analytical model
In PEST analysis is factor that study about external factors that influence in every sphere in Marks & Spencer and contributes in organisation development and enhancement. Marks & Spencer expand its product and market in Portugal that opens the door for new opportunities.
Political factor is an important factor in mixed economy and it affects working of organisations significantly in development and advancement (Cohen and Kietzmann, 2014). In political environment includes processes, parties and their ideologies, policies and bureaucratic and red tap ism.
In Portugal relation ship with other countries is very strong and assist a lot in effective launch of new product in Portugal. Its tax system is fair and equitable in sharing power and duties in right manner. The employment laws is fair in Portugal that helps in international labour code that helps Marks & Spencer to establish in new market with new products. It has strong environment laws that protect from abolition of environment in safe manner . It works to protect environment that save the e co system.
Economic environment consist of aspect of business includes collection of business through the aspects of’ various facilities and incentives, protecting local marekt to foreign markets from terror of foreign competitors, taking direct role of promoting business organizations, and purchasing from businesses. Government gives to all these in Portugal economic system (Crane, Matten and Spence, 2013). It includes itself in providing various facilities in the form of infrastructure - transport, electricity, banking and finance, telecommunication to communicate markets for Marks & Spencer. Policies related to economics is sound that supports to new entrants. It has sound infrastructure that help in settle new aspects. Economy has stable in nature that protect from fluctuations and interest rates is stable that protect from invaders to grab large market share in Marks & Spencer.
Social and cultural environment is comprehensive in nature due to some reasons it may include social factors within which in firms operates. In fact, the political and legal environment is closely intertwined with social and cultural milieu due to laws are passed as a result of social pressures and troubles (Milne and Gray, 2013) . The socio-cultural environment consist of attitudes, beliefs, desires, needs and wants, education and customs of the society at a given point of time. Thus, social and cultural environment, in its broad sense. The level of social factor influence to the economy of Marks & spencer in effective manner (Ferraro and Briody, 2013). It has sound system that enables to growth and prosperity of economy in suitable manner. It has impacts in policies of organisation. Social beliefs are sound in Portugal that positively impacts on organisation to achieve its goals.
Data and charts to support business in Portugal
ORANGE is considered as one of the biggest telecom company in UK and is doing their operations successfully since many years. They are delivering various kinds of services to their customers which is related to mobiles and internet facilities. The main aim of the company is to provide best network to their customers at reasonable prices so that they do not shift to other network. It has been researched that if companies have to extend their business operation's into another country or within the same company then they will have to work on maintaining the relationship with the clients for long term purpose so that they can get connected with the company for longer time (Wales, 2016).
So, in order to achieve the objectives set by the company within the time limit then they are required to use various concepts like BCG matrix, PEST analysis and many others as all these approaches are having a very strong impact on the business activities.
Economic Conditions :- Through this the state economy in the region and country is identified. If a big company like ORANGE will think of changes their business operations then it will have a high effect on the business activities (Kirton and Trebilcock, 2017). Many times there is a variation in the business cycle because of contraction and expansion of operations conducted by company. It is also said that the economic conditions of the country will have effects of various microeconomics and macroeconomic factors which includes fiscal policy, inflation and exchange rate etc.
Technological environment: Technological environment is essential for business as it influence the type of conversion process that it may occurs for its purpose. The technological environment refers to the sum total of knowledge providing ways to do things. It may include inventions and techniques, which affect the ways of doing things, that is designing, producing, and distributing products. In Portugal has sound technology that supports advance technology in Marks & Spencer in to take technological competitiveness.
Data and charts to support business in Portugal
International trade give advantages to both organisations and country in improving their economical state. It triggers money into local economies and helps in producing more goods and services for local markets. In context with the concept of global economy, it creates an amazing impact on how a company operates its business (Lasserre, 2017). It gives tremendous opportunities for expansion and growth of business into new markets. Therefore, before launching business in Portugal, it is necessary for M&S to analyse the economical condition of this nation.
Interpretation: It has interpreted from this above mentioned graph that from last five years economical condition of Portugal, is increasing at high rate. The population rate is decreasing continuously with increasing GDP rate. Along with this, policy interest and exchange rate versus USD, unemployment etc. also reduces constantly. Furthermore, the main aspects which attract minds of international organisations to conduct business over there, is industrial production rate. It was 0.5% in 2013 but now has raise to 3.9% of total economy. As per statistical analysis, it has estimated that economy of Portugal will grow to near about 1.9% in 2019 (Portugal Economic Outlook, 2018). Therefore, launching business in this country will be beneficial for M&S in raising its profitability.
Reflection: This project is related to understand business environment at international level. I was working on this project and get effective opportunities for learn different kinds of information regarding functions of business environment at national as well as international level. Later, I recognized some issues related to my project. In my project, PESTLE is weak and there are some of the other areas which need to be developed in a better manner. PESTLE analysis was not good and my tutor was to make it better or done in a proper manner. On the other hand, I had not consider information reading analytical tools which are needed to be executed under this report.
After determining all issues, I decided to reduce my all mistakes from project and submit the project. In my whole journey, I leant to do the proper analysis and take care that previous problems should not be arise.
It has been summarised from this assignment that business environment impacts directly on entire operational activities of a company. It affects decision making processes, strategies and policies in adverse manner. Therefore, before expansion of business on global level, a company needs to analyse factors which help in turning negative impact into positive. For this assistance, management need to concern on Pestle analysis, BCG matrix, Porter's model and more. Along with this, by analysing economical condition of those countries where a company wants to expand business is also necessary to analyse. This would help in generating high profitability.
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