Porter's Value Chain Model: Analysis of Marks & Spencer's Business Environment

This essay explains about Porter's Value Chain model and its application in analyzing the internal environment of Marks & Spencer. It discusses the primary and support activities of the company and suggests strategies for competitive advantage.

Business Environment

INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
This easy explains about Porter's Value chain model, which is a business management
concept. That includes process to convert raw material into finished goods, and activities
followed by a company for value creation. Mark and Spencer is taken as an organisation, which
is British multinational retailer in UK. This essay explains about value chain model and about the
company's background. Also, it includes analysis of the internal environment of the company
with the help of value chain model and also, involves the reflection on usefulness of the model.
MAIN BODY
Differentiation is very important in today's saturated market, Value chain Explain that
how an organization differentiate their product by analysing the chain event which occur within
their company. The value chain model also known as Porter's value chain analysis, the concept
developed by Michael Porter in 1985. Value chain model is a collection of activities that are
performed by a company to create value for its customers. Value Creation create added value
which leads to competitive advantage (Niebuhr, 2016). This includes the process from start to
finish. Thus, it is a system that is used by company to make profits. Porter's chain has numerous
activities such as primary and secondary activities. The activities which provide strength,
sustainability to the company called primary activities, and the activities used by the company
for differentiation and maintenance called as secondary activities. Both activities Primary and
Secondary are important for the company.
Primary actives, these activities, have impact the production, maintenance and sales of
product and services. These activities include, Inbound Logistics which involve receiving,
storing and distribution of raw material and it also include relationship with supplier.
Operations, these include those activities which convert input into output which means it
converts raw material into finish good or semi-finished goods (Liao, Hu and Ding, 2017).
Outbound Logistics these related to delivering the finished goods and services to customers,
also storage and transportation and distribution. Marketing and sales, it includes advertising,

promotion, and pricing of product and services. Also, selling product and process of
communication, deliver and offers that make customer to buy that product. Services, include
services which are providing after sales of product to customers, such as customer service,
maintenance, repair, refund and exchange.
Secondary Activities also called supportive activities that support the primary activities.
Company can improve their primary activities with secondary activities. It plays an important
role in primary activities. This makes primary activities more effective for the company. These
activities include, Infrastructure, an infrastructure is most important for primary activities, it
makes the company to do their daily activities and maintain their operations, this includes all
legal, administrative, financial management etc. Human Resource management, managing
employee is useful for all primary activities (He and et.al., 2016). It includes following activities
such as recruiting, hiring, training, and retaining staff. Procurement, it means acquisition of
goods from external source for the firm and decision-making of purchase. It includes negotiation
of price with the supplier. Technology development, it includes equipment, hardware, software
for research and development.
MARKS and SPENCER
Marks & Spencer is a British multinational retailer company founded in 1884, 135years
ago by Michael Marks and Thomas Spencer in Leeds. It deals in various segment such as
clothing, home products and food products. It provide good quality product at lower cost. The
firm has 615 stores that only deals in food products and currently there are 1043 stores across
U.K.. The company operate worldwide and its headquarter is situated in Westminster, London
and has employed 80,787 people , among them 71% are females.
Marks Spencer provide various options to its customer as its deals in various categories,
which includes clothing, cosmetic, household items, luxury goods (Marks & Spencer PLC,
2019). There have been growth in the worldwide revenue of the company and more than half of
its revenue generate from food segment. It has experienced tremendously growth in online
platform but the company has suffered a losses which has resulted in the closure of many stores
across the world.
Marks & Spencer includes various brands such as Per Una, Autograph, Limited, Rosie,
Blue Harbour, M&S Collection and M&S Energy. It ranks highest in term of customer
perception as compared to other UK brands. Based on Buzz Scoring rating the company is rated

as eighth leading brand across all industries (Sabanoglu, 2019). It had been seen that in recent
year the sales of cloth have reduced but on the other side the sales of food has increased. In
November 2008, the organisation started selling branded goods such as Kellogg s Corn Flakes.
Since 2012, the customers are not satisfied with the company and it was confirmed that 100
stores will be closed by 2020 due to “radical plan. It is not yet sure that more stores will be
closed down or not.
Porter's value chain model involves reviewing both primary and support activities of an
organization to grab competitive advantage in order to achieve greater value. Support activities
do not add value but helps in efficiently delivering of primary activities.
The primary activities are directly related to production and selling of products to the
customers. First, inbound logistics, M&S has been recognized for its sustainability program for
creating changes in its global supply chain. Thus, it has a strong foothold in global supply chain
which has a major advantage over its competitors. Apart from this, other differentiating factor is
procurement of high quality inputs and reducing input handling damage. Second is operations, it
includes both manufacturing and service operations. Analysis of these activities is important for
improving productivity and ensuring success which includes producing, packaging, assembling
and testing. Also M&S is working on upgrading its IT system which can help M&S to achieve
profitability, growth and smooth supply chain (Nyame-Asiamah, and Ghulam, 2019). Third is
outbound logistics, delivering products to its final consumers through different intermediaries.
For M&S, the greatest value lies in its outbound logistics. Its every warehouse is linked to its
stores, supported by IT systems which helps in effective handling and shipping of the products,
reduces product damage, timely delivery of product, smooth order processing etc. Fourth is
marketing and sales, M&S team works with the latest technologies to highlight benefits and
differentiating factors of their products over its competitors. It uses number of activities such as
sales force, advertising, promotional activities, multi channel experience improves shopping
experience, customer loyalty and engagement and increasing brand awareness. For long term
benefit, it should maintain a good relationship with suppliers and customers, offering the latest
business insights to the customers and proper co-ordination between departments. Last is
services, M&S knows that customer satisfaction is the key to customer loyalty for which it has
come up with certain offers like free delivery above certain amount, easy and free return within

the time frame. Nowadays, customer considers post sales services very important. So company
must analyse its services and use it to spread positive words about the company.
Figure 1Value Chain Model
(Source: Value Chain Analysis, 2017)
The support activities assist primary activities in coordinating and facilitating their
activities. It includes 4 activities, first is procurement, it involves acquiring the inputs such as
raw material, supplies, machinery, equipment etc. M&S should carefully analyse its procurement
activities to optimize its inbound, operational and outbound activities (Śmigielska and
Oczkowska, 2017). Also, it should highlight areas of value addition, differentiation and cost
reduction. Major differentiating factor can be reliable transportation, fast delivery, procurement
of high quality raw material and inputs. Second is human resource management, effective
implementation on HRM, evaluating its different aspects such as recruiting, selecting, training,
rewarding, performance management etc., increasing responsibility and accountability of
employees will be of great importance to the value chain, attractive rewards encourages
creativity and increases productivity. Third is infrastructure, it denotes varied activities such as
planning, organizing, financing, quality management, legal matters etc. M&S can optimize its
value chain by effective infrastructure management which helps in controlling overhead cost,
advanced IT system helps in getting deeper consumer insights and wide database for effective

marketing (Knight and Ellson, 2017). Last is technological development, in these advances
technological era, every activity is integrated to a technological driven support system. Some of
them are — customer services, automated system, product design, research, data-analytics etc.
and M&S has classified its department on the basis of this. Apart from these, it can set
differentiation through new product development, innovative product features and design.
Porter's value chain model has helped me in better understanding of Marks & Spencer's
internal business environment. By using it, M&S can procure and source high quality raw
material and inputs and increase customer loyalty on its basis. The company can build a strong
brand image and can take competitive advantage through aggressive marketing and product
development tools. M&S can also achieve competitive differentiation by speeding up the
delivery of its products to end consumers, reducing the rate of damage products or defected
products. It can improve its human resource practices by analysing its human resource activities,
emphasizing more on its activities, investing more on employees training and development
which enhances confidence among its employees (Mudambi and Puck, 2016). M&S should
analyse its support activities in order to provide premium customer support services. As per my
understanding, it should work more on analysing its operational activities to grab the first mover
advantage, by tapping on those areas which is untouched even by its competitors. Along with
that company should try to use backward integration tool by purchasing or merging its suppliers
in order to ensure timely availability of materials and meeting up with the demand and sales
forecasts, which in turn will provide more control over inbound logistics and reduces the risk of
shortages. One of the most important reason for conducting value chain analysis is to maximize
operational efficiency, reducing waste and integrating sustainability in its business which not
only helps in waste reduction but also building a positive public image (Hertati and Sumantri,
2016). M&S can grab the benefit of cost reduction but for which it requires to map all the
activities and the cost associated with that. It needs to consider all the relevant points that would
be useful in making necessary adjustments. There are other number of factors or drivers that can
add value, set differentiation and productivity such as integration and interrelationship, which
can help the company take the benefit of coordination, timing, optimum capacity utilization,
continuous learning and development, adopting the latest technology and organizational policies
and procedures. But it should be kept in mind that cost can be reduced to some extent. M&S
should take customer preferences and perceived value because sometimes lower price means low

quality goods and higher price means luxury goods serving different sections of society. As per
my analysis, company should carry out this analysis on a different time intervals to know about
the changes, preferences and loop holes and modify the practices and strategy at the right time, to
procure unique and valuable inputs that are not even available to is competitors. Apart from the
benefits, there are certain challenges associated with the analysis (Maon and Sen, 2016). M&S
might lose its vision, high level of complexity might make it difficult to separate primary and
support activities, division process can be time-consuming and difficulty in finding relevant
information if information system is not properly structured. To look after all these things,
employees with relevant industry expertise will be very helpful as they know how to deal with
these factors.
CONCLUSION
From the above analysis it can be concluded that Marks & Spencer can be benefited from
conducting Porter's Value Chain Model. It will help in knowing leakages in the internal system
so that proper action can be taken before it is too late and take competitive advantage. Every
activity is assigned different weightage based on its application so that individual assessment can
be done. M&S has fully structured management system which reduces time and helps in smooth
implication of new strategies which will add value to the business, bypassing the competitors and
overcome with the challenges.

REFERENCES
Books and Journals
He, Q and et.al., 2016. Towards conceptualizing reverse service supply chains.Supply Chain
Management: An International Journal. 21(2). pp.166-179.
Hertati, L. and Sumantri, R., 2016. Just In Time, Value Chain, Total Quality Management, Part
Of Technical Strategic Management Accounting. International Journal of Scientific &
Technology Research.5(4). pp.180-191.
Knight, H. H. and Ellson, T., 2017. Value drivers of Corporate Social Responsibility: The role of
explicit value and back value. Social Business.7(1). pp.27-47.
Liao, S. H., Hu, D. C. and Ding, L. W., 2017. Assessing the influence of supply chain
collaboration value innovation, supply chain capability and competitive advantage in
Taiwan's networking communication industry. International Journal of Production
Economics. 191. pp.143-153.
Maon, F. and Sen, S., 2016. Sustainable value chain management: a research anthology.
Routledge.
Mudambi, R. and Puck, J., 2016. A global value chain analysis of the ‘regional
strategy’perspective. Journal of Management Studies.53(6). pp.1076-1093.
Nyame-Asiamah, F. and Ghulam, S., 2019. The relationship between CSR activity and sales
growth in the UK retailing sector. Social Responsibility Journal.
Śmigielska, G. and Oczkowska, R., 2017. Retailers’ competitiveness on global
markets. International Entrepreneurship|Przedsiębiorczość Międzynarodowa. 3(1).
pp.175-196.
Online
Marks & Spencer PLC. 2019. [Online]. Available Through:
<https://www.britannica.com/topic/dress-clothing/Europe-1500-1800>.
Sabanoglu, T., 2019. Marks and Spencer - Statistics & Facts. [Online]. Available Through:
<https://www.statista.com/topics/3707/marks-and-spencer/>.
Value Chain. 2017. [Online]. Available Through: <https://iedunote.com/value-chain-analysis>.
Niebuhr, D., 2016. Making Global Value Chains. Springer Fachmedien. Weisbaden.