[PDF] Unit 32 Business Strategy Assignment

32 Business Strategy

INTRODUCTION
Business strategy refers to the organisation's working plan to attain its vision, specific
aims and objectives, competing successfully and analysing financial performance with its
business model. In order to sustain long term in a market, it is required for each firm to develop
and design strategy for the growth and development of the business (Akter and et. al., 2016).
This assignment related to Mark & Spencer which is a major British multinational retailer
company. It was founded in 1884 by Michael Marks and Thomas Spencer and headquartered in
Westminster, London. It deals in selling clothing, luxury food products and home products. This
report will discussed about the impact of macro and internal environment on an organisation and
capabilities. Further will defined about evaluation of outcomes by using Porter's five force model
and the understanding and interpretation of strategic directions available to a company.
PART A
PESTEL and SWOT analysis of the organisation and an analysis of organisation's capabilities
PESTEL Analysis
It is a tool and technique by applying them a firm can analyse the macro environmental
factor that affect the company. PESTEL analysis of M&S is as following:
Political- It refers to the rules, regulations and policies for the government which are
designed by it for the proper running of the business of organisations. This factor includes
foreign trade, government policy, political stability and others. M&S has been highly affected by
the European Commission's free trade agreements which help in making gods and services
imports easier. The global franchise businesses of this organisation in the Middle East, Ukraine
and Russia which suffered significant decline cause of geopolitical instability, local currency
fluctuation and lack in consumer demand.
Economical- It refers to the performance of the economy and consist interest rate,
inflation, foreign exchange and others. Competitors pricing strategy highly affected the
economic condition of M&S. For example, in 2008, during the financial crisis, Aldi Tesco and
Asos followed discount pricing strategy and it negatively affect the business of M&S (Bromiley
and Rau, 2014). But the management department followed the strategy of emphasising higher
quality products for better customer satisfaction. In 2010, this strategy helped the firm maintain
its market share and achieving strong sales.
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Social- This factor refers to the value, beliefs, characteristics and opinion of customers.
Change in consumer needs and demands highly affect the business of organisations. In M&S,
two external social factor affect the business of this firm such as changing values in the
population and generation shift with Baby Boomer generation retiring (Eaton and Kilby, 2015).
Now these days customer prefer organic and green produce which also affect the business sand
strategy of this company. M&S is improving its appeal line according to its customers needs and
demands which positively affect its business.
Technological- This factor refers to technologies which can be used by a company for
sales, distribution of the goods, promotion of products and others. In M&S, the company various
different promotional strategies and channels to provide information and awareness about its
products and services. This organisation has strong presence on social media and online so it is
well placed to capitalize on this avenue. Now these days customers prefer mobile commerce and
online retailing when they are purchasing goods and services from the stores so the company
adopt this technology for fulfilling its customers needs.
Environmental- It includes scarcity of raw materials, pollution targets and others related
to environment. Now these customers prefer high eco-friendly products for their use which
should from sustainable source. In M&S, the management department follow all the
environmental laws and acts such as pollution act, carbon emission and others so that they can
secure the environment. By using recycling process, it help in re43ducuing wastage and manage
inventory.
Legal- This factor consist various different laws and legislations which are framed by the
government such as health & safety law, equality law, discrimination act an several others. For
example, In M&S, the management of the firm following Fair packaging and labelling Act 1996
which help the in providing good quality packaging products to them so that they can protect the
product between being produced and used by the consumer. It also protect goods from wastage
and help in increasing sales.
SWOT Analysis
It is a tool and technique of strategic planning which is used to help a person and a firm
to find out its strengths, weaknesses, opportunities and threats (Klettner, Clarke, and Boersma,
2014). SWOT analysis of M&S is mentioned below:
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Strengths- It is a large British multinational retail organisation which operate its business
more than 57 nations of the world with over 1380 stores in which approximately 979 in UK
including over 220 owned and 350 franchise simply food stores. There are 80,787 employees
who are working under this firm (Kourdi, 2015). M&S has a good brand image and great
reputation in the market because it develop and produces goods and services according to its
customers. By using latest technologies and strategies it provide information to its audience. This
firm manufacture wide variety of products in each product line and has more than 1200 suppliers
with over 400 different varieties and 500 different types of pre prepared fruits, vegetables and
salads.
Weaknesses- There are limited market share due to strong competition from other retail
organisation. There are lack segmentation related to clothing line and present era youngsters
prefer brand labels like Gap, Next, Topshop and others which is a weakness of the company.
This organisation does not offer home delivery and shopping service and sometimes consumers
complain the defect of e-shopping and delivery services. It is famous and well know brand so
they require to defend their brand for misuse of artificial products.
Opportunities- There are number of opportunities with this firm such as it expand and
explore its business in Brazil and Poland. It also have future opportunities inn expanding its
brand in to China & India. Now these days, people prefer to use internet technology so it can
increase the demand for the online products by using e-commerce services. In Food market, the
company can provide vegetarian, low fat and organic food to its customers because present time
people are very health conscious and prefer these kind of food products. By making innovation
in its existing products and producing new products they can introduce new market which offer
more profit.
Threats- It refers to those factors which can harm the company like increasing
competition, high cost for inputs and tight labour supply etc. There are number of competitors
such as Aldi, Asda, Tesco, and others in the market which generate competition of this firm. This
company operate its business in different countries of the nation so the government of those
nations make fluctuation inn their rules and regulation which create threats for the business of
M&S (Leonidou and et. al., 2017). Change of social environment is an another threat which can
be a threat for it such as social environment change any time and the consumers tastes are also
changes according trend, values, culture etc.
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Porter's value Chain Analysis
It is a collection of activities that are performed by an organisation to create value for its
customers. Vale creation generates added value which leads to competitive advantages. The
activities basically divided as either primary or support activities that all business must
undertaken some form. The primary activities are as mentioned below:
Inbound logistic- it refers to the involve relationships with suppliers and include all the
activities required to receive, store and disseminate inputs.
Operations- These are all activities that required to transform inputs into outputs.
Outbound logistics- It consist all the activities that required to gather, store and distribute
the output.
Marketing and sales- These activities inform buyers about products and services, induce
buyers to purchase them and facilitate their purchase.
Service- It includes all the activities that are required to keep the product or service
working effectively and efficiently for the buyer after it is sold and delivered.
Secondary activities are as following:
Procurement- It is the acquisition of inputs or resources for the company.
Human resource management- It include all activities like recruitment, hiring, selecting,
training, developing and firing or laying off personnel.
Technological development- It pertains to the equipment, hardware, software, procedure
and technological knowledge brought to bear in the organisation's transformation of inputs into
outputs.
Infrastructure- It serves the organisation's requirements and ties its several parts with
each other. It include all functions and departments such as marketing, finance, accounting,
government relation, public affair and general management.
Using Porter's Five Force model for the analysis of competitive environment
Porter's Five Force model
This model is developed by Michael porter in 1980 to monitor the competitive intensity
and attractiveness of a sector. The competitive analysis of M&S is as following:
Threats of New entrants- It means when a new firm enter in a market with similar
product. In retail industry, there are number of barriers like there are huge capital investments
require to enter the market and attain cost efficiencies and economies of scale so there are low
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threat (Patel and Chrisman, 2014). M&S provide quality products to its customers so potential
entrants would be discouraged by the strong loyalty of the consumers of this firm. M&S newly
launched a site to gain a foothold in its high street customers who are currently shopping online
with the competitors of M&S. Now with the help of this site they can online shopping from
M&S.
Threats of substitute products- M&S runs its business in a market in which innovation is
the requirement of the business to keep one' brand consistent so that they can fulfil the changing
needs and demands of customers. The clothing business is beset with substitute which require
more innovation so that it can reduce the threat of substitute. There are number of competitor in
the market and they provide various similar products as like M&S. But this company produces
better quality products so there are low threat of substitute products.
Bargaining power of buyers- There are high bargaining power of customers because in
M&S, the company manufacture high quality products and services so it develop pricing
strategies according to those such as high pricing, premium pricing etc. The primarily product
oriented strategy of the company that places a strong emphasis on its M&S brand is not
beneficial at a time when the competitors of this firm are employing a customer oriented
approach.
Bargaining power of suppliers- There are low bargaining power of suppliers because
there are number of suppliers at marketplace. In previous days M&S suppliers were primarily
British but the pressure of competitive environment this company to do outsourcing and reducing
the high bargaining power of suppliers.
Rivalry among existing players- In retail industry, there are high competition rather than
other sectors (Peng, 2017). There are various competitor of M&S in the market such as Tesco,
Asda, Aldi and others which generate competition for the business of M&S by producing same
or substitute products and using low or discount pricing strategy. So M&S required to make
change in its pricing strategies so that it can survive and sustain in competitive market till long
period of time.
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PART B
Evaluation of the different types of strategic directions
To survive and sustain in competitive market, environmental analysis is important for
each company so that it can lead the business in right direction and achieve its set objective in set
period of time (Scholes, 2015). Some of strategic directions available for M&S are mentioned
below through Ansoff Matrix which is as following:
Ansoff Matrix
It is a strategic planning tool which is used by organisations to provide directions in order
top support senior, executives and others for future growth. There are four growth strategies
within this model, they are as following:
Market development- In this strategy, the company can achieve growth by entering in a
new market with its existing products. In M&S, the firm can expand its business in Brazil and
Poland market so that it can provide increase its sales by provide products in that market
according the needs and demands of the customers of that nations. It is risky because the
business expand in new market so it is hard to analyse about the needs and demands of the
customers that the goods and services provide satisfaction to them. This strategy is following in a
number ways in M&S:
 By entering in a new domestic market
 By entering in a foreign market By developing a different customer segment
Market penetration- It is growth strategy that can be applied by the firm to increase the
sales of the company focusing it and make improvement in the economic condition of the
company. In context of M&S, in it , the company sale existing product in existing market so
there are less risk (Sia, Soh and Weill, 2016). In M&S, this strategy can be followed in various
ways:
 By reducing prices to attract potential and new audience
 By using new promotional and distribution challenges
 Increasing existing customers by usage
Product development- In this strategy, the organisation launch new product in existing
market so the risk is higher than market penetration (Spender, 2014). This strategy needs
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development of new competencies and want entity develop new and innovative products fro
existing market. It emphasis on following:
 Doing research and development to produce new products to launch in existing market
 To make development related to products and services By making technological advancement
Diversification- In this strategy, there are high risk because the organization expand its
business in new market with its new products. So it do not confirm and sure that the products are
liked by the customers or not. In this strategy, the company move into an unfamiliar market. This
strategy is beneficial fro M&S because this company has bran value and image so if it expand its
business in new market with its new products than it can be useful for achieving the growth in
terms of sales and profit.
Justifications and recommendations for the growth platform and strategies
After analysing all the strategies of market development, it can be recommended that
Marks & Spencer should follow and apply market development strategy for growth platfrom.
This strategy is mentioned below:
Market development- It is a growth strategy which identifies and develops new market
segments fro existing products. It target those customers who do not buy and purchase in existing
targeted segments. In Marks & Spencer, the company can expand its business in new market
where it does not operate. For example, in Brazil and Poland market it can launch its products
and services by analysing the needs and demands of the targeted audiences.
This growth and market development strategy can be adopted by M&S because it is a
known and reputed brand in the market. According to the state of 2018, the revenue of the
company is £10,698.2million, operating income is £670.6 million and net income is £29.1
million. With the help of its clothing, food and home products it can enter in the market of these
nations. It can be recommended to the firm that by doing proper research and analysing the
desires of the customers, it can develop its business there (Thompson, Strickland and Gamble,
2015). With the help of this strategy, it can attain its objective and increase sales and profit or
influence the economic condition of the organisation.
Strategic management plan with strategies, objectives and tactics
Strategic management plan
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It refers to a written document which can be implement and use by the organisations fro
communicating and it help in setting priorities, focus energy, setting goals and others. It
beneficial fro ensuring that staff are working properly for attaining the aims, objectives and goals
(Veit and et. al., 2014). This plan is useful for the company because with the help of it M&S can
take effective decision fro the purpose of business development and growth. The strategies,
objectives and tactics in context of strategic management plan are as following:
Strategies
It refers to high level plan that are deigned by the management department of the
company for attain the aims and objective of the business of a firm. In M&S, the management
department of the company can also develop these kind of plan by conducting and organising
conference and decision making process in context of market development. When this company
expand its business in new market with its existing products than it should consider some
strategies which are as following:
Market analysis- It is a marketing plan which can be used by the organisations for
effectively and efficiently analysing the needs and demands of the customers. In M&S, the
management department of the company can implement this strategy for analysing the demands
and desires of the customers of Brazil and Poland so that they can provide products according to
them. With help of this strategy, the firm can gather information regarding products and can
offer only those products which meet the needs and demands.
STP- It indicates to a broad framework that simplifies and summarizes the process of
market segmentation. This strategy is helpful for M&S because each factor of STP help the
company in describing the profit measures which can be adopted by M&S.
Segmentation- It refers to divide the market according to the demographics such as
consumers age, gender, income, education, living standards etc., geographic by nation, state and
religion etc. and Psycho graphically like attitude, values, risk and others (Woerner and Wixom,
2015). When the company expand its business in Brazil and Poland then it make segmentation
on the basis of cost conscious group.
Targeting- The company can target upper class and upper middle class people and
customers when it expanding its business in Poland and Brazil (Akter and et. al., 2016). The firm
target these group customer because the pricing strategies which it follow are high and suitable
fro these people.
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Positioning- The firm deals in food, home and clothing products so the company require
to make concentration on its customer neds and choices. M&S already has a good position in the
market but when it enter in to new market by using market development strategy it can establish
a good position in the market of Poland and Brazil.
Objective
When M&S expand its business in new market than it establish SMART objective which
is mentioned below:
To increase the sales of the company by 15% within 2 years by providing clothing
products, home products and luxury food products in Poland and Brazil market.
Tactics
Cash Management- It is important tactics decision that the company require to make fro
new markets. It help in designing proper budget and arrangement of fund when the company
expanding its business in other markets. With the help of it, the management of the company can
manage cash for the promotion, distribution and others when they will operate business new
markets.
Packaging- the company launch it business in new market so it is another important
tactics and with the help of it, the management department can use good packing which is
reliable to attract customers (Bromiley and Rau, 2014). Because packaging is beneficial and play
and essential role in attracting consumers.
CONCLUSION
From the above information, it can be conclude that strategies help and play important
role in the growth and development of the business of the company. To sustain in market till
period of time, the organisation should use SWOT and PESTEL to analyse the strengths and
weakness of internal and external market. To analyse the competition in the market, the
management department of the firm can follow Ansoff matrix. Market development strategy is
explained for launching existing products in new market so that the firm can increase its market
share. A strategic management plan is described in this report for the development and growth of
the company which is based on the market development strategy.
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