The impact of pestle factors

1. Executive Summary

The report critically analyses the impact of PESTLE factors which includes the political, economical, social, technological, legal and environmental. The purpose of this report is to evaluate the PESTLE factors evaluating recent agenda and economy worldwide. It also includes some of the articles posted in the news papers and on the web.

The objective of the report is to know how these factors affect the various business units. It contains the introductory of M&S, the technology, size, formalization etc. And the current condition in the market. Moreover, it shows how the external environment affects M&S and undermining that how to make its marketing plans and investigates strengthen.

The PESTLE analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction. A PESTLE analysis is a business measurement tool. PESTLE is an acronym for Political, Economic, Social, Technological, Legal and Environmental factors, which are used to assess the market for a business or organizational unit.

(Source: http://www.businessballs.com/pestanalysisfreetemplate.htm)

Let us see some of the articles to know how these factors affect the business unit.

“Asian economies prepare to lead world out of recession”

The article was posted in London Evening Standard dated on 8th December 2009 (Page no. 43), regarding the emerging economies in Asia were tipped to rebound from recession faster. The world is increasingly looking to Asia to drive the global recovery as the Asian Development Bank has forecasted that the growth in East Asia’s emerging economies, 10 South-East Asian countries benefits China, Hong Kong, South Korea and Taiwan. Thus, this may leads to improve in an economy and boosts the various industries.

“We’ve got to come up with new schemes to get British firms moving”

Mervyn Davis, chairman of Standard Chartered, wants to talk about the London Export Awards, the government is launching. He said that “The nature of the Government’s relationship with business has changed since the crisis”. The government is coming with new schemes to get the business moving forward.

The London Export Awards 2010 will be held on 10 February 2010. The awards will celebrate the achievements of London’s premier international businesses, underlining the importance of exporting for London’s economy.

(Source: London Evening Standard, 9th December 2009, Page no. 37)

“Recession Effect: No Buzz in Shopping Malls”

Amallnot only offers agreatshoppingexperiencebut is also a mine of business opportunities. But the pangs of recession are clearly visible on this mine of opportunities also. About ayear back, malls were sprouting up in 2007-08. A quick look in 2009 showcases a different scenario. Blame it on the economic meltdown, the festive spirit has not made shopaholics to flock malls and retailoutlets.

(Source: http://www.theindiapost.com/2009/03/14/recession-effect-no-buzz-in-shopping-malls/)

“Asda opens ‘green’ store”

To heat the store and water, a new Asda opened in Liverpool, uses a biomass boiler and geothermal pumps. The Bootle store has been claimed that it is the greenest supermarket in the UK, and has also features doors on all refrigerated units.

These were just the articles related to some of the factors among the PESTLE, which shows how the business gets downturn and can be able to boost or can survive in the market. Now, let us take a business unit to understand it more clearly.

It is a legal issue, where Dell gone through the busy week in New York and New Orleans. In New York, Dell was fined $4 million for deceptive and misleading advertising around PCs sold to consumers. In New Orleans, two companies claim Dell conspired with city officials to sell a supervision camera system they developed. Dell reportedly said it already had settled many of the cases in New York and has denied the assertion in New Orleans.

(Source: http://www.eweek.com/c/a/Desktops-and-Notebooks/Busy-Week-for-Dell-with-Legal-Issues-in-New-York-New-Orleans-530902/)

So, this was the law, how it affects the business accidentally or might be intention to mislead. Thus, PESTLE examines the business, whether certain steps would be beneficial or not.

2. Introduction

The grocery industry in the United Kingdom has been dominated in the last ten years by large chain Supermarkets. There has been a struggle for dominance between the likes of Marks and Spencer, Tesco, Asda, J. Sainsbury, and Waitrose etc.

The Marks and Spencer is one of the UK’s leading retailers, with over 21 million customers visiting the stores each week. It offers high quality, stylish, great value clothing and home products, quality food sourced from 2,000 suppliers globally.

2.1 Size: The issue of organization size is important for an internationally dispersed business unit with the huge number of employees, customers and the stakeholders. Marks and Spencer is one of the UK’s leading retailers and it has over 600 UK stores with 2000 suppliers. It has employed over 75000 people in UK and abroad.

(Source: http://corporate.marksandspencer.com/aboutus/where/uk_stores)

2.2 Formalization:

Marks & Spencer developed its business abroad was through building up franchises. In 1997, Marks & Spencer had a total of eighty-five franchise (shops) in twenty countries worldwide. The aim of the franchise was to establish important new markets without any capital investment and to work more closely with existing customers to maintain the company’s standards. According to Marks & Spencer, franchising is formalization of what the customers are doing, creating an internationally acceptable look and a management structure and style of operation reflecting the best in the UK.

2.3 Culture and Management System:

A system of shared meaning held by members that distinguishes the organization from other organization. This is a set of characteristics that the organization value, defined by Robbins. It is a pattern of beliefs and expectations shared by the organization members. M&S has very strong corporate identity; Well-known retail brand name, protective corporate principles and culture. In the past, M&S has invested heavily in a state of the art management system. Here “System” in the sense of not only in the computer field but a comprehensive socio-technical system, including strong management skills and culture.

(Source:http://books.google.co.uk/books?id=HFDS6ZqfWpUC&pg=PA115&lpg=PA115&dq=Marks+%26+Spencer+formalization&source=bl&ots=8wKKWh4SIN&sig=0GiD4drxAhA8SHAQFn6wiXCNHXk&hl=en&ei=v6wpS6KbIsaC4Qa5of2YCQ&sa=X&oi=book_result&ct=result&resnum=1&ved=0CAgQ6AEwAA#v=onepage&q=Marks%20%26%20Spencer%20formalization&f=false)(http://www.veryard.com/companies/mks.htm)

2.4 Hierarchy

Its vertical, horizontal, or geographical organization determines complexity. Vertical hierarchies are defined by how many levels deep an organization is. A complex organization has many levels of successive power and expertise; where as a simple organization will only have a few. Horizontal complexity is defined by the way in which tasks are subdivided. Highly trained individuals can be given a wide range of tasks to perform, or the tasks can be subdivided down to many short duration tasks that can be performed by non-skilled workers. Activities and personnel can be arranged geographically by vertical or horizontal hierarchies. The breadth of geographical disbursement dictates the complexity of the organization in this regard.

2.5 Technology:

Technology is a major macro-environmental variable which has influenced the development of many of the Tesco products. The new technologies benefit both customers and the company: customer satisfaction rises because goods are readily available, services can become more personalized and shopping more convenient. Today companies act in an increasingly dynamic and complex environment, giving more difficulties making forecasts and adapting themselves to the continuous changes. In order to be able to compete in this kind of world, it is necessary to innovate at an extraordinary speed, continuously improving the products, services and processes.

Marks and Spencer has made an agreement of a £19 million IT managed services contract, which will help to maintain the retailer’s tactical business objectives and growth while distributing year on year cost savings. The agreement of five year with Computacenter Services provides a service featuring end-to-end accountability for more than 4,000 head office users across six UK sites. M&S is also expanding its use of a customer and staff feedback system. To submit feedback on any issue, the Fizzback system allows the retailer’s customers and staff via text message or the internet. Comments are automatically analyzed to identify trends and allow tailored responses to be created and sent.

Thus, the Fizzback system helps M&S to know their customers mindset, it also allows to study from them and build stronger relationships.

2.6 Environment:

Marks and Spencer has a Business Continuity Policy which makes sure them prepared and equipped to continue business in the event of a crisis or disaster at any time as committed to the principle of any M&S location at any time. Each area has a Business Recovery Plan which sets out the processes to be followed locally to recover and restart the business after a crises or disaster affecting offices, systems and business process. The responsibilities and authorities are assigned properly in order to survive or continue the business.

2.7 Goals and Plans:

Marks and Spencer has spent the last five years putting in place strong foundations in line with the long-term plan. By introducing new products and services in the core business of General Merchandise (GM) and Food, widen the multi-channel offer, the expanded international presence, and also has improved the property portfolio, and put Plan A at the heart of the business.

Throughout the year Marks and Spencer has wisely managed costs and continued the investment in the systems and supply chain in order to improve efficiency across the business. It also responded to the changing needs of the customers by improving the values without compromising on quality; something like short-term pain for long-term gain.

As well as helping through these tough conditions, these steps will enable Marks and Spencer to take advantage of the opportunities that lie ahead and maximize value for the shareholders.

With a strong brand, the right products and an experienced management team, Marks and Spencer are now:

• Increasing the pace of change and operational execution in the business;
• Leveraging M&S Direct by building more channels to market;
• Building our international portfolio to grow our global customer base; and
• Reinvigorating our brand communications.

2.8 Legislative:

Various government legislations and policies have a direct impact on the performance of M&S. For instance, the Food Retailing Commission (FRC) suggested an enforceable Code of Practice should be set up banning many of the current practices, such as demanding payments from suppliers and changing agreed prices retrospectively or without notice (Mintel Report, 2004). The presence of powerful competitors with established brands creates a threat of intense price wars and strong requirements for product differentiation. The government’s policies for monopoly controls and reduction of buyers’ power can limit entry to this sector with such controls as license requirements and limits on access to raw materials (Mintel Report, 2004; Myers, 2004). In order to implement politically correct pricing policies, M&S offers consumers a price reduction on fuel purchases based on the amount spent on groceries at its stores. While prices are lowered on promoted goods, prices elsewhere in the store are raised to compensate.

3. Conclusion

M&S was able to identify their core business in clothing and food. Although, the group includes financial services and home wares, over the years M&S have suffered tremendous setback in their expected market shares while focusing on women wears of ages 35-55. Note that all companies including M&S can only apply any or all of the three generic strategies, that is, cost leadership, differentiation and focus.

(Source: http://www.oppapers.com/essays/Individual-Analysis-Of-Marks-Spencers/215781)

3. Bibliography

WWW:

• http://www.businessballs.com/pestanalysisfreetemplate.htm
• http://www.theindiapost.com/2009/03/14/recession-effect-no-buzz-in-shopping-malls
• http://www.eweek.com/c/a/Desktops-and-Notebooks/Busy-Week-for-Dell-with-Legal-Issues-in-New-York-New-Orleans-530902/
• http://corporate.marksandspencer.com/aboutus/where/uk_stores
• http://books.google.co.uk/books?id=HFDS6ZqfWpUC&pg=PA115&lpg=PA115&dq=Marks+%26+Spencer+formalization&source=bl&ots=8wKKWh4SIN&sig=0GiD4drxAhA8SHAQFn6wiXCNHXk&hl=en&ei=v6wpS6KbIsaC4Qa5of2YCQ&sa=X&oi=book_result&ct=result&resnum=1&ved=0CAgQ6AEwAA#v=onepage&q=Marks%20%26%20Spencer%20formalization&f=false)(http://www.veryard.com/companies/mks.htm
• http://www.oppapers.com