Environmental Analysis Change in the Business Environment

Question: Task 1 Mergers and acquisitions (MA) represent two major areas of strategic business planning and decision-making. MA decisions occur within wider business and regulatory environments and each decision to merge or buy carries with it significant opportunities and risks. a) Using relevant examples, evaluate current laws and policy governing Mergers and Acquisitions in the UK.b) Research and analyse the acquisitions of BHS with specific reference to the opportunities and risks associated with this type of business planning. Task 2 A business exists and operates within environments. Each environment consists of different factors of varying type, risk and ability to control. Apply the following environmental analysis tools to the business factors, risks, controls and impacts that you think are relevant to BHS: a) Internal environment: use McKinsey 7S. b) Industry competition: use Porters Five Forces Analysis. Answer: Introduction In this report, environmental analysis for BHS by analyzing the impact of environmental factors on the business strategies and planning of the firm is carried out. The internal environmental analysis, industry competition, and macro environment will be analyzed by using strategic tools, McKinsey 7S model, Porters five forces analysis, and PESTLE analysis representatively. Internal analysis of BHS McKinsey 7S model is an important strategic framework that can be used to analyze the internal environmental impact on the business performances and strategies of BHS. This is an important framework to improve the business performance and decision-making of the firm by examining the likely effects of future changes within the firm. This tool will assist the firm in providing strategic advantage by implementing the best business strategy. This is following discussed as: Staff- BHS is an international retailing firm for the cloths, apparels, and household items that employs skilled, talented, and experienced staff for handling both internal and external business operations of the firm. However, there has been lot of challenges in the operations of BHS. Recent challenges could be attributed the lack of effective leadership from the top management of the company. Skills- BHS is a global retailing brand having good management skills and core competencies to enjoy the strategic competitive advantage. It organizes both formal and specialized training sessions for improving marketing, communication, technical, and interpersonal skills of the employees (Kotler and Keller, 2009). So, the management and support staff of the organisation has skills that could make it successful. Though, recent poor performance of the firm could be linked with some poor skills in the staff as well. Shared Values- It represents the core values, such as ethical values, management competencies and corporate culture of BHS that assist the company to improve its internal business performance, brand image, and decision-making of the company. Style- BHS has democratic leadership style to manage the workforces effectively. The leader of BHS supports the team members by giving them important guidelines for resolving their complaints and issues. He also allows the participation and engagement of the team members in the companys meetings and decisions. Structure- BHS has a hierarchical business structure having centralization, span of control, and hierarchy of authority. The matrix organization structure of BHS organizes the people, processes, functions, and departments interactively(Grozaand Ragland, 2015). Strategy- It uses differentiation and centralized distribution strategy, to establish and maintain competitive advantage in the competitive global retailing industry. Systems- BHS has internal organizational system comprising of formalized procedure for measurement, reward system, quality control system, performance appraisal system, and resource allocation. The senior management has strong control and supervision on the daily activities and performances of the staff members. Industry Competition Porters five forces model will be used as a strategic planning tool to identify the intensity of level of competition for BHS in the retailing fashion industry. This strategic model will analyze the impact of Porters five forces on business performance and strategic positioning of BHS in the competitive marketplace. This tool will involve five forces including Bargaining power of Suppliers, the Bargaining power of Buyers, Threats of new entrants, the threat of substitutes, and Industry rivalry. The impact of Porters five forces on the businesses of BHS is following discussed as:- Supplier power- This is relatively moderate as suppliers of BHS products do not have very differentiated products and also there are number of suppliers. BHS sources the products from the third party suppliers or manufacturers who receive small amount of profits. Buyers power- This is moderate for BHS because the UK retailing fashion industry is highly dynamic and competitive. BHS has low customer retention rate because of no fixed customers for BHS. There is high possibility of switching customers to another retailing fashion brands because of changing needs, aspirations, and fashion preferences of the customers rapidly. Threat of new entrants- This is high for BHS because of entry of new retailing firms in the UK retailing industry at large extent. The UK fashion industry is highly competitive and dynamic that provides a lots of business opportunities for the new retailing firms to operate their businesses with significant initial investments. A range of new retailing firms is creating stiff competition to the established operations of BHS(Guay, 2014). The threat of Substitutes- This is low for BHS because BHS is an established retailing clothing firm which has been running its business operations in the global retailing industry since 1928, its not easy to replace the business operations and products of BHS entirely from the marketplace. Industry Rivalry- This is high for BHS because of high intensity of competition in the UK retailing industry. The major retailing firms, such as Lewis, Marks Spenser, Burberry, and ASDA are creating stiff competition to BHS. Macro Environment PESTLE Analysis PESTLE Analysis is an acronym to analyze the impact of external environmental factors, such as political, economic, socio-cultural, technological, legal, and environmental on the business performances and operations of BHS in the long-term. This tool assists the company to improve the decision-making and strategic performance by exploiting the external business opportunities. The macro environmental analysis for BHS is as following:- Political factors- The political factors, such as political stability/instability, government intervention and attitude, trade union legislations, and changing market conditions may affect the business performance and administration functions of British Home Stores. For ex- the employment legislations, such as Minimum Wages lawwill affect the firmdirectly by forcing it to pay minimum rates for the workers. Economic factors- The UK economy has been facing the fluctuations, such as economic recession or crisis, high labor costs, high cost materials, and economic leadershipfor last times that may affect the business performance of BHS in the marketplace. The economic factors will affect the demand and supply activities of BHS for the retailing household items, fashion wears, and apparels(Botha, Kourie, and Snyman, 2014). For ex- the adverse economic conditions, such as high interest rates, high labor costs, and high exchange rates may affect the customer shopping behavior and spending pattern which in turn will affect the demand for the retailing items of the firm. Socio-cultural factors- The growing demographic differences, working age population, social mobility of labors, seasonal demands, rapidly changing customers preferences and fashion trends and industry dynamics may affect the business performance and strategic planning of BHS. The UK retailing fashion industry is high dynamic and complex because of the changing needs, wants, and aspirations of the customers which will create major challenges to the future operations of BHS. Technological factors- The growing technological awareness and inventions may affect the business operations, gross productivity, and profitability of BHS. British Home Stores is a global retailing company that operates in clothing, household items, convenience groceries and apparels as the growing e-business trends, wide use of mobile apps and social media sites, and enhancing online visibility of the products may affect the business performance of the company at local and international level. For this, BHS can consider technological advancements and innovation to produce the clothing items with latest fashions and high street designsand valued services according to acceptability of the products to the customers. Legal factors- The growing government spending and legislations, taxation policies, and trade union laws and regulations may affect the business expansion, profitability, and productivity of BHS. For ex- Minimum Wages act, Fair employment policies, Customer Protection act, Social Security laws, and fair competition act will pressurize the company to follow the trade legislation policies and ensure fairness and transparency in the competition structure by avoiding the monopolistic conditions(Morrison, 2011). Environmental factors- The growing environmental constraints and conflicting issues may affect the global brand image, customer loyalty, and sustainable product performance of BHS. The environmental constraints, such as wastages of raw materials and effluents, excessive emissions of gases and green-house effect may harm to the society and local people. References Botha, A., Kourie, D., and Snyman, R. (2014) Coping with Continuous Change in the Business Environment: Knowledge Management and Knowledge Management Technology. Paris: Elsevier. Groza, D. M., and Ragland, B. C. (2015) Marketing Challenges in a Turbulent Business Environment: Proceedings of 2014 Academy of Marketing Science (AMS) World Marketing Congress. London: Springer International Publishing. Guay, R. T. (2014) The Business Environment of Europe: Firms, Governments, and Institutions. London: Cambridge University Press. Kotler, P. and Keller, K. L. (2009) Marketing Management: Analysis, Planning, and Control. New York: Prentice-Hall. Morrison, J. (2011) The Global Business Environment: Meeting the Challenges. Canada: Palgrave McMillan.