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K/508/0574 Business Strategy of Marks and Spencer

University: Kensington College of Business

  • Unit No: 32
  • Level: High school
  • Pages: 16 / Words 3973
  • Paper Type: Case Study
  • Course Code:

    K/508/0574

  • Downloads: 538
Organization Selected : Marks and Spencer
Question :

There are following questions which help in completing this given assessment are given below:

  • Analyse the influence of macro factors on the company and its business strategy.
  • Analyse the internal environment and capabilities of the company.
  • Evaluate and apply the outcome of the analysis using Porter's Five Forces model. Use concepts, theories and models in order to help with the understanding of strategic directions which are available to the company.
Answer :

INTRODUCTION

Business strategy is a set of decision which can benefit a business in attainment of various goals and objectives in business. This is also refereed to as a master plan which can help in achieving a competitive position in market (Taneja, Pryor and Hayek, 2016). This report is based on Marks and Spencer which is a retail company having presence in UK and they are dealing in various items such as home products, clothes, home products. Various tools such as macro environmental factors, PESTLE analysis, SWOT analysis, VRIO analysis are used by companies to make various strategies which can be further implemented and then used in further planning of their operations and functions.

TASK 1

Analyse impact of macro environment on organisation and their business strategies.

Vision: The vision of Marks & Spencer is to expand its operation globally and become the leader in these industry.

Mission: To give an inspirational quality to its customer so that customer loyalty builds. This assist M&S to build large customer base and earn high profits.

Objective: The primary objective of Marks & Spencer is to gain high market position and become the leader in clothing as well as food industry. This makes company to compete with its rivals in the market in an effective manner.

Strategy refers to an action that is taken place by managers of an organisation so that objectives can be achieved with in a time frame

(Amran, 2016). Strategy act as a direction through which operations and activities of an organization carry out by the subordinates. An effective strategy enables companies to perform well and compete with the competitors. With references to Marks & Spencer, effective strategies help them to attain goals with in a specified time period. Execution of different strategies allows organisation to go on right direction and expand its operations at national as well as international market.

Different strategic planning techniques

  • Benchmarking: It refers to the standards set by the organisation in comparing to its competitors. In context to Marks & Spencer, the company builds its market position by analysing the performance of the market leaders. This will lead to make those strategies which is beneficial for the company and helps in gaining high profits.
  • Business analysis: Analysis of business activities in a proper manner assist Marks & Spencer to identify its weaknesses as well as strengths(Anwar and Hasnu, 2016). This will improve the performance level of the company which in turns results in a positive outcome for the organisation.

Various analytical framework to acknowledge macro environment

Stakeholder analysis

A technique that identifies those people who impacts or getting impacted through the performance of an organisation before beginning of any of the project. This will benefit Marks & Spencer in classifying group of stakeholder according to their participation level and interest level. Below are the three steps in order to do stakeholder analysis which are as follows:

Step 1: Making a database of individuals who have the potential to be the stakeholder of a company. In context to Marks & Spencer, the stakeholders can be marketing executives, employees, sales people, suppliers, customers, government, executive staff and so on(Eaton and Kilby, 2015) .

Step 2: After making database, the upper level authorities make a list according to the priorities or according to categories like level of participation, interest, influence etc.

  • High interest , high power : These stakeholder is essential for Marks & Spencer in order to improve its performance and run the activities in proper and smooth manner.
  • High authority, low interest: These stakeholders have little interest in the activities and tasks of business but have impact on the working of M&S.
  • High interest, Low power: It is necessary to inform these stakeholders about the activities and projects of M&S so that no problems can arise.
  • Low interest, Low authority: These stakeholder dis not take active part in projects of company and did not hold any rights and power.

Step 3: At last stage, the managers communicate with stakeholders as per the priority in order to gain support of stakeholders in achieving objectives with in a specified time period.

PESTLE analysis

PESTLE analysis refers to a technique that is adopted by companies to know about the external factors that impacts their effectiveness and performance level(Higgins, Omer and Phillips, 2015). The acronym of PESTLE is political, economical, social, technical, legal and environmental factors. These factors are explained below with considering Marks & Spencer:

  • Political factors: These factors consist of political stability, government interferences, tariff rates and so on that affect the businesses. The political stability of united kingdom is good and the tax rates is low that helps M&S to effectively perform its operations,
  • Economic factors: Factors such as inflation rate, exchange rate, interest rate, consumer buying power and so on. The income of people in UK is high that directly increase the sale of Marks & Spencer as the buying power of people in UK is more as compare to other countries. Marks & Spencer adversely impacted by the inflation rate that takes place after 2018 recession.
  • Social factors: It includes aspects such as customs, beliefs, norms, attitude, values, opinion of the people of society(Linder and Williander, 2017). The people of UK is modern and open minded and prefer to adopt new and advanced products. M&S provide good quality products in the market which us easily accepted by the people of UK which in turns increase revenue of M&S.
  • Technological factors: Advancement in technologies are like by the customers of UK. As they prefer internet as well as digital media in their day to day activities. With reference to Marks & Spencer, the company is required to bring innovative technology in the market so that their customers remains with them.
  • Legal factors: It includes all the legal policies, rules that is followed by every organisation in every country in order to secure their businesses with trademarks, copyrights, patents and so on(Johnson, 2016) . In context to M&S, it is necessary for company to follow all legal rules in order to avoid conflicts and penalties.
  • Environmental factors: These factors affects the environmental conditions of the country such as weather, climate, current trends and so on. M&S follows all the environmental laws which makes its positive image in the market. Which further leads to the sales and profit positively.

Ansoff Matrix

It is also termed as product expansion grid that is adopted by companies to plan & analyse strategies fir development as well as growth. This matrix consist of four strategies which is described in relation to the M & S below:

  • Product development: At this level, the company brings new product in the existing market with an aim to attract large customers and gain profit(Marx, 2015) . In context to Marks & Spencer, new product increase its sales which in turns raise its revenue.
  • Market development: At this stage, the existing or old product of an organisation are offered in the new market or the new customers in order to build large customer base of Marks & Spencer. This will lead to enhancement of profits as well as sales.
  • Market penetration: In this growth strategy, companies make an effort to increase market share with its old products. At this point, organisations decline the price of its product or offering extra benefits to customer so that sales can be increased which automatically increase the market share of company(Teh and Corbitt, 2015)
  • Diversification: At this stage, new and innovative products offers to new customers in the market. The level of risk is high as failure of product will be loss of time as well as efforts of the company and decline in the profitability. If the new product of M & S is like by customers, the companies sales & revenue will increases.

From the above strategies, the manager of M & S should choose market penetration strategy that is giving discounts, extra benefits with the old products (Thompson, Strickland and Gamble, 2015). This will high the revenue and market share of the company.

Strengths

Weaknesses

  • There is a high brand recognition which is experienced by Marks and Spencer because of quality of products which they are offering. The overall brand value is very high of Marks and Spencer.
  • They are offering variety high variety of products which can help their customers in choosing best products according to their requirements.
  • There is lot of manual working which takes place in Marks and Spencer which leads to increase in their cost and decrease in overall margin of profits of company (Whittle and Myrick, 2016).
  • There has been a bad publicity of this store as it has been recognise d by many of its competitors as a store which is having non trendy product which leads to a situation of a very negative impact on brand image of this company.
 

Opportunities

Threats

  • There is a opportunity for Marks and Spencer in which company can nationalise their operations.
  • They can also start exporting of their products which can help them in expansion of their present share of market (Strategy, 2017).
  • Marks and Spencer is loosing its market share because of arising of many new companies in those segments in which they are dealing. Also, various exiting companies such as sainsbury, Tesco is providing huge competition to Marks and Spencer.
  • Marks and Spencer has a threat of loosing its present reputation in market. This has lead to a situation which marks and Spencer has to open more stores so that they are able to improve their reputation in market (Yang, Kueng,. and Hong, , 2015).

TASK 2

Assessment of organisations internal capabilities and environment

Resource based view strategy

This is referred to as a managerial framework in which business have to identify those resources which can be used by a company so that they are having a advantage which can help them in surviving for long term in market. There are mainly two types of Strategy such as tangible resources which are building, capital, equipments etc. and intangible resources are related to competence of employees, latest technology posses by the workforce etc. both tangible and intangible resource play a very important part in overall functioning of company (Rugman and Verbeke, 2017).

VRIO framework :

This is a framework which is used to analyse what is overall valuable resources which are posses by a particular organisation. This is a very popular tool which is analysed to understand various available resources and capabilities of a company. This helps them in achievement of a competitive advantage and also survival for a longer period of time.

Valuable: Four resources such as brand reputation, innovative products, multi-channel retailer and store location are identified all of them are very valuable for Marks and Spencer.

Rareness:In terms of rarity brand reputation, multi channel retailer and location of their store are very rare resources which are not present in other companies like Marks and Spencer.

Imitable: brand reputation and multi channel retailer are two resources which cannot be imitate by any other company in the market.

Organisation: Brand reputation is a resource which will be providing Marks and Spencer a sustained competitive advantage so this is a resource on which maximum focus has to done by Marks and Spencer.

From above discussion it can be said that brand reputation is one factor which will provide a competitive advantage to Marks and Spencer (Paulus-Rohmer, Schatton and Bauernhansl, 2016).

TASK 3

Application of Porter's Five force model

Porter's five force analysis is a framework which is used by organisation is making various strategic decisions for their future results which is helpful in analysing the present available competition. There are five major aspects of this framework as discussed below:

Threat of new entrants: Threat from new entrants is very high for Marks and Spencer which is having their operations at global level. This company is nor having much threat of new entrants as the amount of financial investment which this company has done is not possible to be done by nay other company and provide competition to Marks and Spencer (Oldman and Tomkins, 2018) .

Bargaining power of suppliers: There are many organisations which are operating at large scale and they are dealing in retail sector such as clothing sector, food sector. Bargaining power of suppliers is very high as Marks and Spencer will not be able to provide all the required materials which are necessarily required by company. This leads to a situation in which company has to agree on paying high to their suppliers so that company is bale to retain them for a longer duration of time (Lueg, 2015).

Bargaining power of buyers: In this case there is very high bargaining power then this means that situation is such that there are very large number of options available with their buyers. This builds up a situation for Marks and Spencer which results into of very high competition for them.

Threat of substitutes: It is not possible to substitute food and clothes this is reason that there is very less possibility and very low threat of substitutes which is there for Marks and Spencer. There is a need that this company has to maintain adequate quality standards so that there products are not easily substituted by

Rivalry among existing competitors: There are different retail organisation such as H & M and Zara which are already having wide presence and this is leading to a very high competitive rivalry for Marks and Spencer. This leads to a situation for Marks and Spencer that if they rise their prices by a little percent then it leads to loosing down of many competitors (Lehmann, 2016).

TASK 4

Application of theories, concepts and models to assist in interpretation and understanding of strategic directions in organisation.

Porter's generic strategies

Generic strategies are related with identification of ways which can help company in attainment of competitive advantage in the external market. There are basic three types of strategies which are cost leadership, differentiation and focus. In Marks and Spencer these three strategies are discussed below:

  • Cost leadership: This is related with prices at which products are being offered to customers. Every customer is price sensitive and they want that the prices at which they are paying for a particular product and the benefit which they are getting from that must be greater than what monetary amount they are paying. In Marks and Spencer company is emphasizing on offering their products in accordance with prices which they feel is worthy according to the price paid by them.
  • Differentiation: This is also a strategy in this company is offering something different to their customers which can help them in achieving a competitive advantage with reference to their products and services which they are offering. Marks and Spencer always makes sure that they are able to enhance their overall sales (Hockerts, 2015).
  • Focus: This strategy has two aspects which is differentiation focus and cost focus. Marks and Spencer has to provide products at low prices in cost focus which can help them in maximizing satisfaction level of customers. In differentiation focus there is emphasis on providing something different to their customers.

Bowman's strategic clock

This is a strategic clock model which is helping a business organisation in exploring strategic positioning of company. This is helpful for Marks and Spencer in understanding their position with comparison to other rival companies. Various aspects of this straegy clock is discussed below:

Low price and low value added: This related to a position which is less competitive for Marks and Spencer in this products are not differentiated and consumers perceive less value and prices are also low (Ghemawat, , 2016).

Low price: In Marks and Spencer it can successfully position itself because of their brand name by usage of cost minimization techniques and also there will be low profitability because of high volume of sales overall profitability will be low.

Hybrid: This is the strategy which is concerned with low prices & differentiation in which positioning strategy has to be effective in reference with Marks and Spencer.

Differentiation: In this strategy Marks and Spencer has to focus on providing various innovative products to their customers which can help them in enhancing their sales.

Focused differentiation: In this strategy products have to be placed at high level so that high value is perceived. This strategy is for luxurious brands which are operating at global level.

Risky high margins: There is high risk which has to be faced by companies which is related with failure of business. Marks and Spencer can increase price without providing anything extra to their customers.

Monopoly pricing: In monopoly market there is only one business which is offering their products they are not concern with price or any differentiation feature. If a person needs then they will purchase the product without thinking as they have no options.

Loss of market shares: The overall strategic position is related to disaster in the competitive market. There is a requirement to set standard price for their range of productsChen, , Eshleman, and Soileau, 2016).

In case of Marks and Spencer, There are two models which are related to strategic direction, also there is differentiation strategy which can be adopted by company for having a differentiation advantage so that unique and innovative product are offered to their customers.

Strategic management plan

Strategic planning is very helpful for companies in identifying some activities, resources, functions which can ensure that people are working towards achievement of a common objective. Strategic plan for Marks and Spencer is discussed below: 

Vision: Their overall vision is to become one of very popular brands with concern to industry to which they belong to which is clothing and fashion industry. 

Mission: Overall mission of company is to make themselves market leader with minimum investment.  

Strategies: The strategy is related to what can be followed by Marks and Spencer as they believe that they have sufficient competence to utilise their capabilities and core competencies. It also becomes easy fir them to target their customers as hey are willing to get increased support from government as Marks and Spencer is a company which believes in having a sustainable development (Bentley-Goode, Newton and Thompson, 2017).

Objectives: The main objective of the company is to increase their customer by 20% and for achievement of this objective company has planned to enter into areas where they are not having any stores in the present situation.  

Tactics: Tactics are short term initiatives which can help a company in achievement of their objectives. In case of Marks and Spencer they are having direct distribution channels in which they are distributing their products directly to their customers. Various tools of marketing mix are used by them as mentioned below:

Product

The products which marks and Spencer is dealing into are clothing for all age groups,

Price

They are having strong brand value which help this company in using premium pricing strategy as their predict are unique and also providing increased value to their customers. Which can help them in expansion of their market share with usage of exciting strategy.

Place

This company has their own stores which they use to distribute their products. This will help them in expansion to more stores.

Promotion

Promotion mix will be used by Marks and Spencer to promote their brand they are using tools such as viral marketing techniques, direct marketing which can help them in advertising to their target market.

Implementation: It is necessary for organisation that they rae implementing various plans which can help them in formulation of plans with the available resources with them. Marks and Spencer can also allocate a specific budget which can help them in implementation of pan without nay barriers (Aithal, Shailashree and Kumar, , 2015).  

Evaluation: This is concerned with collection of information which can help in successful completion of planning which will lead to performance taking place without any hurdles. Development of market will help in making a team which can also lead to performance taking place in the required manner (Anwar, , 2019) .

CONCLUSION

According to above report it is concluded that appropriate strategies should be used by business so that appropriate business strategies can be used by business organisations so that desired outcome scan be achieved. Different tools such as SWOT analysis, PESTLE analysis, Ansoff matrix is helping is helping business in their environment in a better manner. Other tools such as VRIO analysis, capabilities of organisation is very helpful for developing capabilities and getting a competitive edge in market. Other models such as Porter's generic strategy, Bowman's strategy are also used by Companies in planning in right direction.

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