The Business Environment

Contents
Part 1:......................................................................................................................... 1
1.1 Brief Introduction of the Two Businesses...........................................................1
1.2: Different Stakeholders who Influence the Purpose of the Two Different
Organizations.......................................................................................................... 4
1.3 Organizational Structure................................................................................... 7
Part 2........................................................................................................................ 11
1.4: Comparison with Organization from India......................................................11
1.5 General Business Environment........................................................................14
References............................................................................................................ 18

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Part 1:
1.1 Brief Introduction of the Two Businesses

For this part of the study we consider two organizations in the UK. These two are a profit
oriented retail trading company - Marks & Spencer and an all girls school situated in reading,
Berkshire the Abbey School.
Marks & Spencer has over 1,330 stores worldwide and is one of the UK's leading retailers.
The company is a public limited company or PLC. The company claims to have a customer base
of 33 million through the 852 UK stores and the e-commerce platform. There are two divisions
of the company Food division that accounts for 57% of the overall turnover of the company
and the General Merchandise section that contributes 43% of the revenues. The company claims
to be leaders in the Womenswear, Lingerie and Menswear (Corporate.marksandspencer.com,
2015).
The company is profit driven with total revenue of 10.3 billion for the entire group and with an
average number of employees numbering 83,069 working in its 852 UK stores and 480
international stores. The profit drive of the company is evident from the 661million group PBT
that it managed to achieve in 2014 (Corporate.marksandspencer.com, 2015).
Ownership and Structure
The company is a PLC and also operates in the franchise format of business. The company began
its journey in 1884 as a sole trader with Michael Marks who opened up a market stall in Kirkgate
Market in Leeds.

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Being a PLC means that the company has a large number of owners through the buying of shares
of the company by the general public and other organizations at the stock exchange. While this
has allowed the company to make greater capital generation through contributions of
shareholders, it has also reduced family control over the company. The shareholders are
responsible for all debts and liabilities of the company limited by the value of the shares that are
owned by them. While this allows for a greater risk taking ability by the company, it also opens
up gates for greater risk of being taken over as the company shares are readily available to be
purchased by anyone and everyone with money and intent.
Objectives of the Company
The objectives of the company are defined by the vision and missions of the company.
The Vision: To be a uniquely inspirational 21st century retail organization in the regions we
choose to operate.
The Mission: To provide a retail experience which exceeds our customers' expectations in
terms of customer service, product range, quality and value - To adequately reward our staff and
to generate a satisfactory return for our shareholders (Marksandspencer.com.sg, 2015).
The Abbey School, Reading, Berkshire
Founded in 1887, the initial name of the school was Reading High School which essentially was
a replacement of the privately owned Blenheim House Ladies' School. The school was founded
by a not for profit organization called the Church Schools Company. Providing of high quality
education with a Christian ethos at an affordable price was the aim of the school.

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The school is limited by guarantee and is an independent school. The charitable companys
memorandum and the articles of association are the guiding principles of the school. For the
purposes of the company law however, the trustees of the Abbey Scholl are also the directors of
the charitable company. The charitable company is known as The Abbey School (Faversham).
The liabilities of the school lies with each member of the charitable company who undertake to
contribute to the assets of the charitable company in the event that the company is wound up.
Objectives of the School
The objectives of the school is evident from the vision and mission statements of the school
The Vision: Our vision is of a school where all students reach their full academic and
vocational potential and develop into considerate young adults who are in a position to pursue
their aspirations and interests as responsible members of society(Values, 2013).
Be the best you can be is the mission statement of the school.
The aims of the school states that everyone at the school is expected to take responsibility,
everyone should be treated as equal with opportunities of education for all and achieve results
through partnerships and exploitation of the full potential in everything that is done at the school.

1.2: Different Stakeholders who Influence the Purpose of the

Two Different Organizations

The stakeholders of Marks & Spenser in order of Importance:

1 - The major stakeholders for Marks & Spencer are the customers. Being a profit driven
company, the revenue and the profits for the company depends on the purchase made by the

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customers. Therefore for the Marks & Spencer, the customers are the primary and the single
most important stakeholders. All the efforts of the company, its business process and the aims
and objectives that are set by the company are aimed and targeted to appease and cater to the
needs of the customers.
2 - The other important stakeholders of the company who can influence the objectives of the
company are the shareholders of the company. The shareholders of the company invest money in
the company to the company can function properly. In return the shareholders want good returns
of the money invested. For this the company has to function efficiently and earn profits so that it
can be distributed among the shareholders. Hence one of the objectives of the company is to
make profits from its operations and hence the objectives of the company can be influenced by
the wishes and the demands of the shareholders.
3 - The regulators and the governments also exert an influence in the objectives of the company
as the company has to abide by the laws and regulations of the land while it does business. Any
change in the laws and regulations would affect the functioning of the company. Hence the
objectives of the company are also influenced by the regulators.
4 - The employees of the company are critical for the proper and efficient functioning of the
company. This is the reason that the company takes several measures to take care of the
employees by providing them not only salaries and perks but also other benefits such as medical
allowance and trainings to develop the skills of the employees and help in betterment of their
career. Therefore one of the objectives of the company is to take adequate care of the employees
and hence the employees can also affect the objectives of the company.

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5 - The suppliers of the company are also important as stakeholders of the company. The
company depends of the supply of good and fresh ingredients for the company products from the
suppliers. To keep the suppliers in good humour so that they continue with their association with
the company in the way that the company wants them to, the company has drawn up suppliers
policy through the suppliers code of conduct. The primary objectiveof the company is to make
profits which can be achieved by providing the best of the products to the consumer at the most
affordable costs. The company would be able to do so if it provides good products from the
suppliers. Hence the objectives of the company are influenced by the suppliers as well(Knell,
2006).
The Abbey School, Reading, Berkshire
1 -The students are the most important stakeholders of the company. The primary objective of
the company is to help all students reach their full academic and vocational potential and
develop into considerate young adults. Thisobjective of the company is directly influenced by
the students. The success of the school would be evaluated by the success of the students and the
resultant outcome of the education that the students receive. Again, the outcome depends on how
the students react to and respond to the education that is imparted at the school. Hence the
ultimate objective of the school is significantly dependent on the students who exert considerable
influence on the objectives.
2 - The teachers and the support staff at the school are also very important stakeholders.
Imparting proper and efficient education enabling effective learning for by the students is
dependent completely on the teachers and the support staff. In this context the ultimate aim of the
school is also significantly dependent on them. Since the objectives of the company are

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influenced by the teachers and the support staff, the school draws up policies and programs that
are directed to their betterment.
3 - The board of trustees and the donating company also influence the objectives as the
objectives of the donating company and the trustees and the aims as enshrined in the charitable
companys memorandum ad articles of association need to be the same as those of the school.
Therefore the charitable company exerts considerable influence on the ultimate objective of the
school.
4 - Despite being an independent entity, the school still has to function within the laws and
regulations of the land and the rules that govern the functioning of the schools in the UK. Hence
the objectives of the school also need to be designed in such a manner that the rules and
regulations are adhered to. The objectives of the school also have to be aligned to the overall
educational objectives of the country. Hence the regulators are another set of stakeholders that
exert influence on the school and the objectives of the school (Erica K. Yamamura, Melissa A.
Martinez and Victor B. Saenz, 2010).

1.3 Organizational Structure

Organizational structure of Marks & Spenser

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Marks & Spencer is helped in achieving its objectives by its style of organization:
The Mission of the company: To provide a retail experience which exceeds our customers'
expectations in terms of customer service, product range, quality and value - To adequately
reward

our

staff

and

to

generate

satisfactory

return

for

our

shareholders

(Marksandspencer.com.sg, 2015).
Since the money that the financers give to the company help the company to function, therefore
the objectives of the company is driven by the drive of the company to make profits for the
shareholders.
Therefore the primary strategic aim and objective of the company is set by the needs of the
shareholders. This objective profitability of the company, can be achieved if the customers are
satisfied. Therefore the customers are the ones for which the company policies are formed. The
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directors of the company set the direction of the company and formulate the policy that helps in
the day to day running of the company. The company directives are enforced by the management
of the company and hence the management plays a critical role in the company attaining its
objectives. The employees are the stakeholders who actually conduct the daily activities and
efficient completion of these day to day activities help in the company achieve the ultimate goal
of the company to be sustainably profitable. Therefore the structure of the company that begins
with the shareholders and ends with the employees helps in strategic planning in both the long
term and the short term to attain the objectives of the company.
SMART objectives of the company:
S
M
A
R
T

To satisfy as many customers as possible

To achieve sustainability through increased revenue and profit generation
To increase consumer number by 20%
To reach the goal with the same infrastructure & costs
To reach the goal in the next 5 years

Organizational structure of The Abbey School

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The structure of the school is such that the objectives and the purpose of the school are driven by
the directions of the memorandum of association of the Charitable Company. The mission of the
school is to impart education through distribution of responsibility on everyone concerned so that
the full potential of the resources of the school are realised. Development of the students into
considerate individuals through them reaching their full potential in terms of their academic and
vocational potentials is the mission of the school. The school tries to achieve this through
providing equal opportunities (Salaman, 2001).
The structure of the school is driven by the aims and objectives of the charitable company and
the trustees of the school. Therefore the entire objectives of the school including the curriculum
and the other requirements for sustainable and effective learning are aligned with the objectives

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set out in the memorandum of association of the charitable company and the those developed by
the board of trustees over time.

The strategic aim of the school is to impart quality education to as many students as possible
through equitable distribution of resources and opportunity in order to make them responsible
citizens of the future and considerate adults.
SMART objectives of the school:
S
M

To educate as many students as possible

To achieve quality education through equitable distribution of resources and

A
R
T

opportunities
To increase number by students by 20%
To reach the goal with the same infrastructure & costs
To reach the goal in the next 5 years

Part 2
1.4: Comparison with Organization from India

For this part of the study we consider another company from India and compare the business
environment for the two business organizations in the two countries Marks & Spencer from the
UK and Tata Steel from India.
Economic Data for the Countries:
Gross Domestic Product:

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In 2014, the Gross Domestic Product (GDP) in the United Kingdom was worth 2941.89 billion
US dollars. It is 4.74 % of the world GDP. The average GDP for UK between 1960 and 2014
was 1045.83 USD Billion. The GDP reached an all-time high in 2007 to clock 2963.10 USD
Billion as reported by the World Bank Group (Tradingeconomics.com, 2015).
In 2014, the Gross Domestic Product (GDP) of India was worth 2066.90 billion US dollars. In
terms of the global economy, this represents 3.33 percent. The average GDP for Indian between
1970 and 2014 was 550.27 USD Billion. The GDP reached an all-time high in 2014 to clock
2066.90 USD Billion as reported by the World Bank Group.
Inflation:
In the month of September 2015, the consumer prices in the United Kingdom decreased 0.1
percent year-on-year basis. Between the years 1989 and 2015, the average rate of inflation in the
UK was 2.67 % and reached an all-time high of 8.50% in April 1991.
In October 2015, the consumer prices in India grew 5 percent year-on year basis. Between the
years 2012 and 2015, the average rate of inflation in India was 8.05 % while the highest rate was
of 11.16 % was reached in November of 2013 (Tradingeconomics.com, 2015).
Interest Rates:
The bank rate in UK was retained at 0.5 % as in November 2015. Due to the forecast of a weak
global growth, there is every possibility that the interest rates would not be raised very soon by
the central bank. The average interest rate in the UK between 1971 and 2015 was 7.90 % which
touched 17% in 1979. The Bank of England fixes the bank rates in UK (Bianchi, Mumtaz and
Surico, n.d.).

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The repo rate was cut by 50 bps to 6.75 percent by the Reserve Bank of India, the countrys
central bank, on September 29, 2015. This step brought down the bank rates to its lowest since
April of 2011 and is being viewed as an effort by the central bank to boost the economy. The
average interest rate in the UK between 2000 until 20151971 and 2015 was 6.71 percent which
touched an all-time high of 14.50 percent in August of 2000.

The GDP of UK which is quite good and is ranked among the first few in the world indicates that
there is enough flow of finances in the economy. As such companies like Marks & Spencer,
which are public limited companies and collect money from the market through shares and other
tools is able to get good finance from their business and the daily day to day activities of the
company as well as for long term expansion and strategic plans.
The Indian economy is also quite large and robust and is among the emerging economies of the
world. This also means that companies like Tata Steel which is also a public limited company has
the advantage of garnering finances form the market to support is strategic plans for expansion
and upscaling.
The rate of inflation in the UK is low. This means that year after year, the consumer prices have
not increased. This is a problem for companies like Marks & Spenser who operate in a relatively
competitive market and have to keep their prices competitive and are unable to increase their
prices helped naturally by inflation. Conversely this also means that consumers are able to make
more purchases year on year as the prices of commodities do not increase significantly to hamper
larger purchases.

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On the other hand, the inflation rate in India is much higher than in the UK and hence companies
like Tata Steel do not have problems with higher pricing of their products. However since prices
of commodities keep increasingly significantly year after year, the purchasing powers of the
consumers become somewhat limited hampering the overall sale.
The bank rate of interest in the UK is near zero. This has a dual advantage for marks & Spenser
as they can avail bank loans at very low rates of interests for projects of expansion or for other
purposes. However the company would not gain much from the substantial amounts of cash that
it keeps in the current accounts with banks for it business purposes.
In India the rates of interest are many fold higher than those compared with UK. For companies
like Tata Steel, it means that the cost of borrowing from the market is quite high and hence it is a
handicap for the company when planning to augment its capital through bank borrowings.
However for a large company like Tata Steel that regularly transacts huge amounts of cash
through banks, keeping the money even in the current accounts of the banks is quite profitable
given the high rates of interest.

1.5 General Business Environment

Political (UK):
UK is politically stable and thus Marks & Spenser can make long term plans
It influences the supply chain of Marks & Spenser
It also influences the strategy which is made keeping in mind the political condition of a time.

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Political (India)
Politically India is stable and hence long term plans can be made by Tata Steel
The supply chain of Marks & Spencer is impacted by political instability
Tata Steel is able to create long term strategies due to political stability
Legal (UK):
Environment regulations affect the sourcing and packaging at Marks & Spenser
New regulations need policy changes and adaptation by the company
Political stability means legal stability and hence it is a conducive environment for Marks &
Spenser to function
Legal (India) :
Environment regulations have affected the sourcing of raw materials for Tata Steel
Legal changes made by the government with respect to coal in recent years has affected the
sourcing of fuel of Tata Steel plants
New regulations need policy changes and adaptation by the company
Social (UK):
Changes in the taste of consumers directly affect Marks & Spenser
Social demands dictate the CSR activities of Marks & Spencer
Socially consumers are moving towards ethically sourced products and hence Marks & Spenser
has to adjust accordingly
Social (India):
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Rising social awareness about pollution has made Tata Steel adopt environment friendly ways of
production
Social awareness about pollution dictates the CSR activities of Tata Steel
Sourcing of products is affected by social awareness especially in the mining of iron ore.
Change in Business Activities:
Political stability has helped make long term strategies in UK
Stricter rules on red meat has forced Marks & Spenser to be more careful in sourcing of raw
meat
More ethically sourced products are marked in Marks & Spenser products (Worthington and
Britton, 2006)
Aims and Objectives of Marks & Spenser:
To provide a retail experience which exceeds our customers' expectations in terms of customer
service, product range, quality and value - To adequately reward our staff and to generate a
satisfactory return for our shareholders (Marksandspencer.com.sg, 2015).
Recommendations
Economic inflation is expected to remain more or less the same in UK over the next few years
and hence Marks & Spenser needs to increase sale in order to increase profits
Political changes in government is expected not to bring in drastic changes in monetary, fiscal
or business regulatory policies and hence the present strategy can continue

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Legal new laws would affect the company and hence future strategies made should be flexible
enough to incorporate the new laws and regulations
Social population growth would directly affect the sale as a higher population would mean
higher consumption

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