Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.
P1 – The two businesses I have selected are Marks and Spencer (M&S) and the National Health Service (NHS).
Marks and Spencer (M&S) M&S is an international company and is part of the tertiary sector. An international business is a business that operates and sells products/services around the world, M&S trades in Europe, the Middle East and Asia. M&S is a public limited company, the public part of it means that shares can be brought by the public and the limited company part means that it has limited liability. Having limited liability has many advantages as it protects a shareholder from being responsible for more than their share of the company so they wouldn’t be accountable for the liabilities resulting from the bankruptcy. Being part of the tertiary sector means that M&S provides services in the form of selling groceries, clothing and home products.
The purpose of M&S is to supply products; M&S also offers services but that isn’t their primary way of doing business. M&S is driven by profit meaning that they make sure that their sales cover all of their running costs and more (in order for them to make a profit). Running costs include anything that the organisation needs to spend money on in order for the company to operate (salaries, utilities and rent). When M&S was founded the main goal was to only sell British made goods that were of a high quality, this started to change in the 1990s but they continue to aim to offer high quality food at a fair price.
M&S is a private company meaning that it is owned by its shareholders, the shareholders do not run the business, instead they have a senior management team. The current chairman of the company is Steve Rowe he became chairman in April 2016, he ensures that all the board meetings run smoothly and helps to achieve a consensus in all the boards decisions. The shareholders put capital into the business by buying shares they then receive a dividend payment depending on how many shares they own.
National Health Service (NHS)
The NHS is a national not-for-profit organisation and is part of the tertiary sector. The NHS is a public company meaning that it is owned by the government, it was set up in 1948 by the labour government. The NHS is a not-for-profit business it is run mainly using money from taxation. The NHS is part of the tertiary sector meaning that it provides a service to the general population.
The purpose of the NHS is to provide high quality care for all. The NHS employs doctors, nurses and other healthcare professionals so even though it is a not-for-profit organisation it is not comprisedout of volunteers. Money from taxation is used to pay for all the running costs – staff wages, medicines, equipment, buildings etc. The NHS is owned by the government, the department of the government that is responsible for the NHS is the Department of Health which is led by the Secretary of State for Health. The NHS is part of the public sector and as it a not-for-profit organisation they try to make the service as efficient as possible.
P2 – Describe the different stakeholders who influence the purpose of these contrasting Organisations. M1 – Explain the points of view of different stakeholders seeking to influence the aims and objectives of two contrasting organisations
A stakeholder is a group of people that have a particular interest in a business, there are eight different types of stakeholders who can influence the purpose of an organisation. A problem that can occur between different stakeholders is that because their interest In the organisation is different to one another so they may end up in conflict with each other over who’s goals are more important for the company. The eight different groups of stakeholders are customers, employees, suppliers, owners, trade unions, employer associations, local and national communities and the government.
Customers want the companies to produce the best products/services at the cheapest price, they will be interested in an organisation that can do this for them. In order for businesses to make a profit they will need to sell their service/product to the customer. Customers can be individuals or other businesses.
M&S need their customers to make money selling their products, this means that all the decisions they make will be made keeping the customers in mind so customers may not have a say in the traditional way but market research will be undertaken to ensure that they are offering the best that they can.
The NHS was created for the customers (UK citizens), again any changes made to the purpose will need to be agreed with by the customers otherwise there can be massive opposition in the form of protests and petitions. Opposition arises because the customers have no choice but to pay their taxes which are what funds the NHS, this means the NHS doesn’t have to please their customers as tax is mandatory but because the NHS rose from a democratic society customer get to choose who to gets to be in power so who changes the purpose.
Customers will in both organisations (M&S and the NHS) want to influence the aims and objectives in their favour, which is offering a good service/product in an efficient and professional manner.
M&S launched their first online website in 2014, this was in response to the growing demand for online shopping (customers want the option to shop online), this site helps to build a bridge between the customers that are unable to shop in M&S shops due to geographical and timing issue. M&S would have undertaken research to see what customers want. The findings of the report could have been that their customers wanted access to the store 24/7 and due to monetary issues they could not keep their stores open the whole time, the next best thing would be an online site where their customers could browse and purchase products to be delivered to their door; the aim was to provide “a 24/7 window to products” and the objective was to create an online store.
The NHS created an aim to reduce waiting times is their A&E departments, this is because the patients (customers) were not happy having to wait a long time to see a doctor. They decided that to decrease wait times they would create a target that everyone should be seen, treated and admitted/discharged in under four hours and that this should occur for 95% of the patients – this was their objective to meet.
Employeesare necessary for almost every business. Businesses need employees to carry out its day-to-day activities. Employees want security in their employment, good wages and opportunity for promotion. Employees need to earn the money from their wages to have a comfortable life.
M&S will want to ensure that their employees are happy. M&S will want to make sure that the employees give a good representation of the business because they are the everyday face of the store, this also means that M&S will consider opinions on changes employees think they should make because the employees have a very good understanding of the day-to-day running’s of the business. M&S will also want to keep the staff turnover low as recruitment costs can be high so this is another reason for them to listen to their employees in terms of the purpose of the business.
Similar reasons arise when talking about the NHS again all the employees are the everyday face of the business so the NHS will want to keep them happy. I think though due to the fact that the NHS is a not-for-profit organisation, the NHS will not have keeping the employees happy as high of a priority as it would be for an organisation that relies on reputation like M&S. A factor for people choosing to work for the NHS is a sense of pride and accomplishment they get from treating patients and working with cutting-edge technology, also if someone wants to become a healthcare professional it is likely they will end up working for the NHS because the NHS is the primary healthcare provider in the UK as it takes up much of the market share.
Employees want to be treated fairly and want to know that their hard work is worthwhile. M&S has an aim that they want their employees to complete the job not just because they have to but because they want to. Over the years they have introduced many schemes to enhance the staff’s motivation, the objectives to achieve their aim was to introduce new schemes that rewarded the staff who deliver exceptional service, this resulted in a scheme called “spotlight” which involved staff getting rewards such as iPods when they performed well.
The NHS also has a similar aim to increase staff motivation and their ability to complete the job, the way they went about this was different to M&S. The NHS wanted to encourage healthy activities so they created cycling to work schemes and a health at work program which filled its objectives and offered a solution to the employees that had an opinion that the work they were doing was too hard as they weren’t physically capable due to poor health.
Suppliersneed to be treated correctly in order for them to continue supplying them, they need to have regular and reliable orders for them to be able to supply the companies and also need to be paid on time to make sure that they trust the business that is being supplied to. If a company has a good relationship with their suppliers then they are more likely to receive good quality resources/products at a fair price.
M&S only use high quality suppliers, which means that M&S picks who they are supplied by. If a supplier was to change the way they produce their products they would have to notify M&S and see if they are happy with the changes, this is because suppliers are in contract with stores; so, a supplier could influence M&S and what they produce but M&S gets a choice. Contracts will be more competitive within the retail sector than other sectors because there are many companies competing with each other to become the business with the most market share but because M&S is one of the main supermarkets in the UK they will get suppliers that want to supply to them.
There are similar points with the NHS suppliers as there are with the NHS employees; the NHS owns the majority of the market share in the UK which means that suppliers that want to supply to the UK will have a very small pool of options and the bigger the organisation the bigger the demand which means that the NHS will not have to look hard to find suppliers, meaning they don’t need to change much to impress the suppliers. The NHS takes applications to find suppliers so they get to pick and negotiate with who they want.
Suppliers want equal opportunities to gain contracts regardless of where they are located. M&S introduced an ethical trading program and now source products from 70 different countries, they work with the suppliers to ensure that workers’ rights are being met; this creates sustainable jobs in developing countries where the workers all get fair wages. The suppliers for the NHS have the same opinion of the M&S suppliers they want a fair income for their products. The NHS made the decision to “introduce labour standards assurance system (LSAS) into [their] procurement process”, this covers all the main issues and ensures that it all falls in line with ethical policy; legally and morally.
Owners will have personal goals for their business and these goals are thought to be important because the owner has spent a lot of their time building up the business, they have also taken risks with their money. Owners need to be valued and they will want to see their share of profit increasing whilst also seeing the value of the business increasing. The roles of owners can vary from business to business.
M&S is a PLC meaning it is owned by its shareholders, the shareholders put forward a representative for them; when the company has board meetings all the shareholder’s representatives will be there to put forward the views of the shareholders. The owner’s (shareholder’s) point of view will be considered depending on how much of the business they own.
The NHS is a publicly owned organisation. Matt Hancock is the appointed health secretary and is the minister responsible for the NHS so big decisions come down to him. The owners are the government and their agenda will be implemented as they appointed the health secretary.
Owners have their own goals for the company and M&S’s goal is for it to become the world’s most sustainable retailer this resulted in the creation of “plan A”. Plan A consists of “five pillars” that are focused on to reach the goal of being the most sustainable retailer, these five pillars are – climate change, waste, natural resources, fair partnership and health and wellbeing. Plan A has its own governance structure and has people working on new strategies constantly. The government put in place the NHS based on the ideal that healthcare should be available to all from then till now the same core principal remains and the current visions is where “Everyone has greater control of their health and their wellbeing, supported to live longer, healthier lives by high quality health and care services that are compassionate, inclusive and constantly-improving”.
Trade unions are there to seek for the fairest wages and there to ensure that the employees have good working conditions. Trade unions can have a lot of influence over the purpose of M&S because they have trained professionals who fully understand the law. They also have a lot of influence because the M&S trade union has over 430,000 members, and more people means more of an influence.
The same can be said for the NHS trade unions as I said for M&S trade unions, this is because trade unions are designed there to support employees of big organisations and make sure that the employees are being treated fairly. Trade unions influence the aims and objectives the same as the employees do, the only difference is that they have more knowledge and as they are bigger than an individual employee they work for the bigger picture more than a single employee does. M&S trade union has previously worked to support parents and carers at work. The NHS trade union has worked collectively to take industrial action when the employees are being treated unfairly.
Employer associations are there to ensure that the interests of the employees are protected. M&S employers’ associations will have a small influence on the purpose of the organisation but not as much as all the other stakeholders that I have mentioned above, this is the same for the NHS.
Local and national communities are affected when businesses start up or invest in the area, whether it is good or bad the local and national communities need to be able to have a say in what businesses are doing in their environment. All UK businesses have to comply with the law, therefore M&S will have to ensure that the way they operate and what they do is legal. M&S will also want to keep a good reputation because a good reputation means that they will get more people going to their stores to spend money so they will listen to the communities they plan to build new shops in and communities that have existing shops because they want to keep their customers happy. The NHS will listen to the different communities to find out whether the hospitals and GP practices are doing their jobs properly and find out what improvements are needed this is because they are there to provide a service to the communities. Local and national communities can have problems when individuals have an issue with big companies wanting to invest in the area because they view it as unnecessary to them. When M&S plans new stores in areas they have to make a proposal and if there is no opposition then they can go ahead with the plans, if not they have to make compromises to appease the local and national communities. The NHS doesn’t have the same issues as M&S because local hospitals are in demand, the influence that local and national communities could have over the NHS would be that they want a new hospital built or that a hospital shouldn’t be built in a particular area, instead it should be built where there is more nee
D1 – Evaluate the influence that different stakeholders exert in one of the organisations
Stakeholders exert varying degrees of influence over organisations.
The main stakeholders for M&S are customers, employees, suppliers and the owners (shareholders), the other stakeholders do have an influence but their influence isn’t as top of a priority as those four because the influence they have is not direct. Customers, suppliers and the government are external stakeholders, the employees and owners are internal stakeholders. Customers are the focus for any business to impress, this is because without customers a business would not have any way of making money and cannot be successful. Customers of M&S want fair priced products and want to be able to get them as conveniently as possible, if this is not an option for the customers they will go elsewhere so employees and the owners need to make sure that they make the transaction easy for the customers. The employees will need to make sure that the transactions are easy for customers but they also need to be able to do the job comfortably without too high of a workload which can make them stressed. The owners need to ensure that they employ enough staff members to ensure there are enough of them to complete the job but also make sure that they don’t employ to many which would cost the business a lot of money and make it less successful than it could be. The way suppliers produce their goods needs to be ethical, suppliers need to be respectable otherwise customers can end up boycotting shops because they don’t want to spend their money supporting a supplier and business that they disagree with. Owners and employees work together for the success of the business, although they both have different responsibilities. Both the owners and employees want M&S to be a continued success, this is because it means the employees are more likely to feel secure in their job and they also get the many benefits of working for a big company (opportunities to progress, pay rises, paid holidays, pension etc.), owners want their business to be successful but it means they get the financial benefits whilst also the pride of owning a large business. Employees will want as many benefits as they can get from the business, whereas owners want to save the business as much money as they can so they can invest it into other areas. This is where problems can arise because if it is not technically necessary and there are already reward schemes then the owners will not want to add to the cost of having the employees. These issues are resolved by compromising when issues arise, if the human resources department do not think that the company is being fair to its employees. The employees have a very big influence on the business because if they do not think they are being appreciated enough then they are not going to put in their full effort which could result in the job not being done properly which would affect the customers, therefore losing. the company money. Also, if employees are not happy in their job they will end up looking for a new job elsewhere which costs the company money as recruitment costs can be high. Suppliers are seeking long-term contracts, they want to get the best deal they can from the business they are supplying to. Their prices can go up between contracts but they have to stay competitive with other suppliers otherwise the business will look elsewhere for a better deal. Suppliers and owners both want to make money from the products that the suppliers produce, so the suppliers want to make high quality goods at low prices and the owner will look for the supplier that best does this. Suppliers and owners can have opposing interest when it comes to using sustainable items. For example, M&S have their “plan A” which outlines their goals to become the most sustainable retailer in the world, and if a supplier isn’t happy to work to do what M&S want them to do then M&S will look for a supplier that is happy to do so. In a way all the stakeholders work together, although mainly all except the customer. All stakeholders excluding the customers work together to provide a service and products to the customers. Many of the employees are also customers, probably some of the suppliers and owners are too. All the interests of the customers will need to become an interest of the suppliers, employees and owners because the customers are the demand for M&S, if there is no demand then a business cannot be successful. Difference between stakeholders can be resolved by deciding what is best for the customer whilst ensuring that the employees are still be valued. I would say the customers are the most influential stakeholders of M&S and then employees because they are the first contact the customers have with the business. Owners get to drive the business in the direction that they want it to be, this is as long as they still have demand from the customers, the suppliers are influential but the owners/employees will get the final say as to whether they are happy with anything the suppliers are proposing and if they are not happy with the suppliers then they will find a supplier that does what they want.
P3 – Describe how each business is organised
P4 – Explain how their style of organisation helps them to fulfil their purposes
Organisational structure is the way in which the internal stakeholders of a business are organised. Both M&S and the NHS organise their structure by functional areas. A functional area is a group of people within a company that have a particular purpose, so each department has its own speciality. Another type of structure is by dividing it up into geographical areas, so if a company operates in the south east and the south west of the UK then the company can be divided up between these two places, or another example is it being divided up into international areas. Product groups is a different way that companies can be structured and can be used by companies if they want to focus on specific products to make them better. The last type of structure is by the type of customer as different customers can have different needs so they can focus and improve the way they handle them, for example an apple grower can have two types of customers these types are a big business or individual customers, the big business will want to buy in bulk whereas the individual customer may only want a few apples.
They are different ways that companies can use the organisational structure, these ways are based on; function, geographical areas, product groups and types of customers. M&S and the NHS are both big organisations and to ensure the success of both businesses the work that needs to be done needs to be divided up. Both M&S and the NHS divide their organisation up in the same way this is; finance, marketing, production, customer service, sales, human resources and are called functional areas. Dividing a business up into financial areas helps business to establish lines of control to help with communication. Dividing up the business also helps as it divides up the work to be done and ensuring the work to be done is possible. The lines of control are useful for employees so they know what they are responsible for and what other employees are responsible for, which helps departments to work smoothly. There are two ways that companies can structure their organisation structure. They can either use a flat structure or a tall structure, there are advantages and disadvantages to both.
|Gets everyone involved.||Decision making can take longer because you have to consult lots of other people|
|Better communication.||The functions of different departments could get confused.|
|Greater team spirit.||The highest person could end up with to big of a job.|
|Very clear reporting lines||People can think that they are stuck in the system|
|Easy to know who is meant to be doing what||Slower decision making|
|Allows for close supervision|
The difference between tall structure and flat structure are shown in M&S uses a flat structure, the structure is divided up into different functional areas. These functional areas are – employee health services, wage/salary administration, recruitment and placement, training and education, employee relations services and benefit services. They are responsible for:
- Employee health service – the wellbeing of all M&S employees
- Wage/salary administration – to ensure that the employees are being paid the right wage
- Recruitment and placement – making sure that the company employs the right people and that all legal documentation is ok
- Training and education – to ensure that new employees and current employees are up to date on the right training that they need to do the job
- Employee relations services – to sort out any issues that employees have
- Benefit services – to ensure that all the employees have the right staff discount cards and any other benefits that they should get from working for M&S.
The NHS’s organisational structure is an example of a tall structure. The structure is divided up into departments; finance, communication, medicine management, primary care, service transformation, quality and safety and corporate affairs.
They are responsible for:
- Finance – to ensure that money coming in matches the money going out
- Communications – develops procedure for effective communication inside the NHS and
- produce content for people outside the organisation to read.
- Medicine management – to ensure that the needed medicine is in the hospital
- Primary care – to ensure that people are getting the correct primary care before they are discharged or referred to another department
- Service transformation – to ensure that the service that is provided is efficient and if possible innovative
- Quality and safety – to ensure that all the employees have the correct qualifications and that the equipment that is used is safe
- Corporate affairs – to plan strategically and ensure press releases are correct and to the right standard
Strategic aims that can be accomplished by the organisational structure of M&S and NHS Both organisations need to use strategic planning to meet their purpose, strategic plans are meeting goals by using SMART targets and PESTLE analysis. SMART targets are targets that are specific, measurable, attainable, relevant and timely. PESTLE analysis is a concept to do with marketing principles. PESTLE stands for political, economic, social, technological, legal and environmental. M&S and the NHS will use SMART targets and PESTLE analysis to set goals for the future and for them to understand how the company is doing in the market and look for improvements. M&S’s mission statement can be found on their website. It is: “Using our strengthened capabilities, our priorities, both in the UK and international, will be to accelerate our Food growth, deliver an end-to-end GM operating model and to drive the experience on M&S.com. We will continue to develop a world class talent pool, further growing our skills in key strategic areas.
The UK food market will remain challenging but we are well positioned with a store format that caters for how shopping habits are changing. We opened 62 Simply Food stores this year, and we have a strong pipeline with the fastest Food store opening programme planned in M&S’s history.
Whilst we expect the Clothing and Home market to remain highly competitive, we will deliver growth through a focus on stylish design, quality and newness, with better availability and more choice. We anticipate that our International business will continue to be impacted by this year’s weakening euro and macroeconomic factors will remain a challenge, particularly in our Middle East region. However, we will focus on delivering relevant ranges to our local customers, improving our like-for-like sales performance across our owned and franchised market and building our international supply chain.”
M&S’s purpose is to continually grow as a company by opening new stores, their organisational structure helps them by allowing for better communication which allows for better and quicker decisions making whilst keeping everyone involved. The NHS has a values statement instead of a mission statement. Their values statement is: “When [the NHS] was launched by the then minister of health, Aneurin Bevan, on July 5.
1948, it was based on three core principles:
- that it meets the needs of everyone
- that it be free at the point of delivery
- that it be based on clinical need, not ability to pay
These three principals have guided the development of the NHS over more than 60 years and remain at its core.” The NHS wants to be able to ensure that they are providing medical services to everyone that needs it. The flat organisational structure that they use helps because everyone knows who they need to report to and that person will then be able to give them guidance and advice, the flat structure also helps the NHS because everyone has a specific set role to do so there is no issue with something not be done because people don’t think that it is their responsibility.
P5 – Describe the influence of two contrasting economic environments on business activities within a selected organisation
M2 – Compare the challenges to selected business activities within a selected
organisation, in two different economic environments
The economic environment is changing constantly. The economic environment is made up of factors. These economic factors are: employment, income, inflation, interest rates, productivity, and wealth. These economic factors can be affected by consumers, suppliers, bankers and lenders, the government, and the monetary policy committee. These people all make decisions that can affect the economic environment, although some affect it more than others. The effects on the economic environment can cause a period of economic growth or a period of recession.
Economic stability is liked by business people because it means that they can forecast what is going to happen. For example, a shop needs to be able to forecast what is going to be bought from the in order for them to keep efficiency; they don’t want to buy too much stock resulting in it going out of date meaning it can’t be sold or they don’t want empty shelves due to them not buying enough stock which could result in them paying employees to run a shop where there is nothing to sell.
M&S is influenced by changing economic environments. When the economy changes M&S have to respond to make sure that they can continue to grow as a company, these changes can include them changing the way they run their stores (cost-cutting), changing their suppliers and/or changing what sort of goods they sell.
What occurs when the economic environment changes?
Economic growth is when more goods are being produced and bought, resulting in rising incomes. Recession is a period of economic decline, and is the opposite of economic growth.
A recession occurs when people become more cautious, customers cut back their spending and manufacturers and sellers reduce their investments so do not produce as many goods or do not buy as many goods. Economic growth and recessions both cause a ripple effect, this is because when a big decision is made it affects everyone else and how they make their decisions.
Inflation is when the average price of goods goes up in the economy. In the UK the average price of goods is calculated using the consumer price index (CPI). CPI considers price changes for consumer goods and services, such as transportation, food, and medical care.
Cost of credit fluctuates constantly. The cost of credit is the rate of interest so when you borrow money the rate of interest is the money that you pay back on top of the money that you borrowed. The cost of credit is set by the Monetary Policy Committee (MPC); they have a very good understanding of the economy. The recession that hit the UK in 2008 resulted in interest rates being decreased down to 0.5%.
Labour is the biggest cost for most businesses. Businesses want to ensure that they employ the right people with the right skills. During an economic crisis it is much easier for employers to acquire labour that has the right skill set. When the economy is growing steadily people end up staying within their jobs for a long time because pay rises resulting in it being harder for employers to acquire labour.
The government has a responsibility to manage the economy. The government manages the economy by ensuring that there is stability and growth, that inflation is low and that there is credit available to people with low interest rates, the government has two policies to ensure that this happens (monetary and fiscal policy). The monetary policy allows the government to change how much money is available in the economy. The fiscal policy is to do with policies that allow the government to change spending and taxation, so in a period of recession the government can decrease taxes on businesses.
Demand is used to describe the amount of something that consumers will want to buy at a particular price. A demand curve can be used to illustrate the relationship between price and demand, Affordability, competition and availability of alternatives, level of income, and needs and aspirations of consumers all effect the demand of a product.
Affordability means that consumers are able to buy the product/service, so buying it is within someone’s financial means.
Competition and availability of alternatives means that if the product that is being offered is better than the competition then they are more likely to buy the product, or if there are no alternatives or a limited range then they will pick the most affordable.
Level of income affects whether people will want to buy a product because if they have a lot of expendable income then price won’t matter to them, if they do not have a lot of expendable income then they will go for the cheapest product to ensure that they make ends meet. Needs and aspirations of consumers is to do with whether people need a particular product such as wheat free food, aspirations are to do with the fact that people want to have the best so they might spend a little extra money on something because they want it.
M&S’s demand for their products will change depending on the economic environment, this is because if people are not earning a lot of money and being careful about what they spend then they are not going to want/be able to spend as much on luxury items as they would if they had some expendable income.
Supply is to do with how much a supplier wants to provide at a certain price. A supply curves is used to show the relationship between price and quantity supplied. Change in supply can depend on availability of raw materials and labour, logistics, ability to produce profitably, competition for raw materials, and support from the government
Availability of raw materials and labour can either make it really easy for a supplier increase supply or it can be really difficult because they don’t have enough raw materials or labour meaning that they won’t be able to increase supply. Logistics which is to do with the movement of goods to where there are required can be a challenge to overcome, suppliers may have to more warehouses to reduce the transport costs of their goods. If it is not viable for suppliers to expand (to sell to more people) then they won’t.
Ability to produce profitably overlaps with logistics, if a supplier will make money from changing something then they will do it if it’s possible. Competition for raw materials/labour can drive prices up, as people will pay more for a product that is useful to ensure that they get it and someone else doesn’t. Suppliers will also want to ensure that prices that they can get the raw materials for stay steady.
Support from the government in the form of a subsidy which can help suppliers buy something that is necessary for production that will make something that the government sees as important.
M&S pride themselves in their ethical nature, this means that the suppliers that they use provide them with ethically sourced goods. During periods of economic growth were people are happy to spend money on luxury goods, M&S can spend time promoting how them goods are ethical whilst being high quality which encourages potential customers to shop they’re over a store that cannot prove how ethical all the items they sell are.
Changes in supply and demand
Supply and demand correlate with each other, the more supplied and the higher the price means the lower the demand. To ensure that the supplier and the consumer is happy the supply and demand graphs can be used to find an equilibrium. Demand can change all the time due to trends, for example if it is trendy to have a particular type of shoe then demand for that particular shoe will go up and demand for other shoes will go down.
The supply curve can also change, for example if technology advances to make a process more efficient then a supplier can produce more goods.
Elasticity of demand is an equation that can be used to look at the relationship between the change in a quantity demanded and a change in its price, the formula is percentage Change in Quantity Demanded divided by the percentage Change in Price. Price sensitivity is to do with how the price of a product affects the consumers purchasing behaviours, it varies from product to product and also consumer to consumer. Branding can have an influence on price sensitivity if a product is “valued” by the consumer then if prices go up then the demand is less likely to go down that a product that is not seen in the same way.
Influence of changing economic environments on M&S
M&S struggled during the recession that began in 2008. M&S is one of the more expensive grocery stores so people stopped shopping there when they started having difficulty with money. At the beginning of the recession M&S was hit hard, their profits went down by 40%, M&S also shut 27 stores in 2009 to reduce costs. In response to the period of economic decline M&S brought out a new range of budget food, this was to try and encourage people to start shopping there again. Although the recession officially ended in 2009 it took a long time for the economy to recover, it took till 2014 for M&S’s profits to rise, which was for the first time in four years. In 2015 they opened 62 new food stores which helps to boost economy in the local areas as it creates jobs. Demand increases for groceries from M&S because consumers now want premium goods, for example M&S’s clothing range is high quality meaning that it should last a long time and even though it is expensive people are now wanting to be able to buy good
quality instead of quantity .M&S set a goal in 2014, which was to open 250 new stores overseas. The countries they wanted to invest in was mainly China as they expected the economic environment over there to be a healthy one to invest in. China’s economy began to “falter”, meaning that it began to lose momentum. China’s economy has begun to create uncertainty in the global market making companies more thoughtful and careful over whether they should invest, therefore, M&S has had to rethink its plan and decided that it should invest in the extremely-heavily populated cities and Hong Kong. M&S also decide that they should close stores in the greater Shanghai area so they could focus on building up the stores they open in the cities.
These economic challenges are, in a way, are completely different and, in another way, are very similar. In the UK the recession caused a dip in sales and China’s unexpected change in economy made M&S decide to change their investment plans. Both the UK’s recession and China’s economy meant that M&S had to come up with new strategic plans to ensure that they could continue to grow as a company by increasing demand.
P6 – describe how describe how political, legal and social factors are impacting upon the business activities of the selected organisations and their stakeholders. M3 – analyse how political, legal and social factors have impacted on the two contrasting organisations. D2 – evaluate how future changes in economic political, legal and social factors, may impact on the strategy of a specified organisation.
Political factors impact business activities. These political factors are – political stability, government support, taxation, direct support, infrastructure provisions, enhancing the skills of the working population, organisations that support businesses, and membership of international trading communities.
Political stability – is good for businesses because it means that they can forecast what agendas are going to be put into place if they know what political party is going to be in power
Government support for different types of organisations – the government will support organisations differently depending on whether they are part of the private, voluntary or public sector. For businesses that are part of the private sector the government will try to ensure that bigger businesses aren’t abusing their position of power, they will also offer grants to smaller businesses. If a business is part of the voluntary sector they will be eligible for tax relief as a way of the government saying that they support what they do. The government are responsible for businesses that are part of the public sector and the government will be paying for the losses.
Taxation – Organisations are taxed by the government for different things. There are five different main taxes; corporation tax, income tax, national insurance tax, value-added tax, and customs duty. Some organisations may be exempt from paying certain taxes. Taxes can help the government to discourage certain activities such as smoking and drinking.
Direct support – The government may want to encourage certain activities such as a new business or for a current business to start a local project that would help surrounding communities so they would grant them some money, the grant does not have to be paid back. The government may also give out loans which do have to be paid back but the interest is a lot smaller than from a bank or private loan company.
Providing infrastructure – The government is responsible for ensuring that transport link are maintained and fully functional. The infrastructure of the UK supports the economy and is responsible for the functioning of it. The infrastructure includes communications links, transport networks and internet and telephone systems, the government isn’t responsible for telephone systems anymore because it has been privatised.
Enhancing skills of the working population – The government has certain schemes to try to ensure that work is accessible to as many people as possible. The government runs an organisation called the job centre plus, this is an organisation that tries to get people back into work by either sending them on training courses or helping them to obtain a job. The government also is responsible to ensure that gaining qualifications is accessible for everyone so they brought in qualifications that differ from traditional exam-based subjects such as BTECS and NVQs.
Organisations to support businesses – The government runs different organisations that are there to support a current business or someone who is trying to start a business. An example of an organisation that the government runs is Business Link (www.businesslink.gov.uk).
Membership of international trading communities – The UK is part of the European Union. Being a part of the European Union is beneficial to UK businesses because of the links it creates for importing and exporting materials. Businesses also benefit from people being able to migrate from other European countries to the UK providing skilled and unskilled labour.
How M&S and the NHS have been influencing by political factors:
M&S and the NHS will be influenced differently by certain political factors. Taxation will influence M&S more than it will influence the NHS because the NHS is a government set up organisation which is non-profit so they won’t have to pay any corporation tax, M&S will have to pay corporation tax. Political stability will influence the NHS more than it will influence M&S. This is because the NHS is run by the government therefore different agendas will be put into place depending on which political party is in power. M&S is less likely to be affected by political stability because of the size of it; they do not rely on government support.
How has M&S and the NHS adapted their activities in response to political factors:
M&S tries to find ways to ensure that they keep their tax bill as low as possible. For example, in 2013 they came ‘under fire’ because they were invoicing the goods they ship to Europe to Irish subsidiary which is at a lower tax rate. In 2015 NHS staff took part in a “NHS change day”, this day was to try to show people what positives have come from the healthcare system since the NHS began. The hope was that politicians would learn from the NHS staff and maybe help to make the NHS more stable, as any political change can affect the NHS. Future political factors that could affect M&S and the NHS In the future there are likely to be legislations that stop M&S from being able to invoice goods to an Irish subsidiary. This means that M&S will have to pay the tax that they are meant which will affect the profit of their shareholders. This means that if shipping goods to Europe is not economically viable then they will stop doing so. This means that M&S may focus on different ways to make money.
The NHS may face issues depending on which political party comes into power in the next general election in 2020. The NHS funding for students is likely to be cut which may reduce the amount of NHS students in the future which would cause issues for the NHS as they may not have enough skilled workers to fill the demand for the services and will have to go abroad to find these skilled workers. Finding skilled workers from abroad has its own problems, this is because generally medical professionals that train abroad do not get the same quality of teaching that they do in the UK and on top of this there are also language barriers that need to be overcome.
Legal factors include laws that companies must abide by. Legal factors include – ensuring that a business has the right framework, protecting consumers and employees, and ensuring fair and honest trading.
Providing framework for business – There are many rules that need to be met if someone wants to start up a company. For example, most companies will want to have public liability insurance to ensure that if something did go wrong they would be able to comply with the law and issue compensation.
Protecting consumers and employees – Businesses have to ensure that they follow the laws regarding consumer protection and employment law. Consumer protection is there to ensure that consumers receive goods of satisfactory quality, that they are fit for purpose and as described. This could translate to services provided by companies also. Employment law is there to ensure that employees are treated fairly, it lays out list of rules the companies need to comply to.
Ensuring fair and honest trading is to do with competition law. These are laws that govern how companies can compete with each other. For example employers have to provide the employees with a contract of employment, so the employee knows and agrees with their amount of pay, hours of work, holiday pay entitlement, etc.
How M&S and the NHS have been influenced by legal factors:
M&S and the NHS both have to ensure that the protect their customers and employees. It will probably influence the both equally because it is a requirement of all businesses, although M&S have to ensure they keep their customers and employees happy more than the NHS has to because of how big the NHS’s market share is. M&S and the NHS will again both have to abide by competition law. The influence may be different for M&S because they have a lot more competition than the NHS does.
How has M&S and the NHS adapted their activities in response to legal factors:
M&S has put into place a particular way to handle complaints to ensure that they protect their customers and also their employees as it sets out a plan that they should follow when a customer has a complaint. The NHS makes sure that they abide by the data protection act, they also outlay a list of responsibilities that employees have to ensure that they protect the customers (patients). Employees that do not comply with these responsibilities will face disciplinary action which deters them from doing so
Future legal factors that could affect M&S and the NHS:
In the future there are going to be new consumer protection laws that M&S will have to abide by. For example, alternative dispute resolution will be made available across the UK as a way of consumers settling issues outside of the courtroom. M&S will have to negotiate with consumers so they both get the best result possible
It is likely that in the future the NHS will have to have higher security measures when it comes to them holding sensitive data on patients and employees. This is because the NHS will start to process all information on computers, instead of paper which can be shredded. Social factors are kept in mind when businesses make decisions so they need to ensure that they stay in touch with them.
These social factors are – demographic issues, changes in structure, households and families, education, attitude to work, religions, attitudes to male and female roles and ethics.
Demographic issues – When a population grows there is a higher demand for goods, services and jobs. Businesses will want to make sure that they get in on this bigger market to ensure that they make the highest profit they can.
Changes in structure – The UK has an aging population, which means that the average age of the population is rising. Businesses will want to make sure that they accommodate for this aging population and offer more services for the elderly that perhaps they wouldn’t of if the average age of the population was lower.
Households and families – There is an increase in the average number of people living alone so housing services may want to ensure that they have enough smaller properties on the market for those people.
Education – Education levels are important for companies to look at. Companies want to ensure that they employ people that are going to help the company become as successful as possible.
Attitude to work – The amount of time that people spend at work in the UK tends to be higher than other European countries. Businesses will want to make sure that the amount their employees work is the same as other employees in other businesses.
Religions – Businesses want to make sure that they can accommodate all types of religions to ensure that they are not seen as discriminatory, which could affect their sales.
Attitudes to male and female roles – There are a lot more females in work in the UK than there used to be. There is also an increase in households were both parents are in work, therefore an increase in the market for ready meals as people have less time to cook homemade meals.
Ethics – These are to do with the personal values and principles that the owners of businesses have. For example, businesses that are concerned with their carbon footprint and how many Fairtrade products they offer to sell
How M&S and the NHS have been influenced by social factors:
Demographic issues influence M&S and the NHS in different ways. Demographic issues influence M&S to open new stores after they have done market research to try and make sure that they can gain as many customers from these new people in the UK to make sure they can maximise their profits. The NHS is influenced in a negative way because their resources are strained, this means they have to come up with ways to ensure that the resources can stretch to ensure they provide a high quality of care to their patients. Changes in structure of the population in the UK effects M&S and the NHS. M&S has been influenced by the demand for different types of products as age groups like different things.
The NHS is affected negatively by the aging population in the UK because as people get older they become more ‘fragile’ and require more healthcare assistance than a younger person. This means that the NHS has to make sure that they have enough resources to cover the greater demand for their services. How has M&S and the NHS adapted their activities in response to social factors:
M&S noticed that the average age of the population in the UK is increasing so they responded by researching to find more out about the older target group. In 2015 M&S launched a range of ready meals that cater for “mature tastes”, this was when M&S noticed that many elderly people can no longer be “bothered” to cook a meal in the evening.
The NHS wants to ensure that everyone who goes do hospital needs to go to hospital due to the growing demand for the NHS services. The NHS introduced a new alternative to 999, this alternative is for people to call 111 in a situation that is not as serious as a 999 call.8 This system was trialled in 2010 and is now in full operation. This change has helped relieve the pressure from the A&E departments.
Future social factors that could affect M&S and the NHS:
The UK has many places that can still be inhabited. In the future more, houses will be built in regions that are classed as rural now, this means that as the population of the UK grows there will be a greater demand for houses and services. M&S will want to get in on any new market areas to ensure that they make as much money as possible. M&S will want to also be a bit conservative about where and when they build stores as it is expensive and they want to make sure that the people in the area will actually buy from M&S.
The NHS is going to face big issues in the future with the ageing population in the UK. They will need to devise an approach that is more proactive than it currently is to ensure that they reduce the amount of elderly people that need to be in hospital. They may need to come up with an alternative to hospitals for the elderly as a different way may be better for the elderly themselves.
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