Business Environment Analysis of Marks and Spencer

This assignment provides an analysis of the business environment of Marks and Spencer (M&S), including its strengths and weaknesses. The report identifies opportunities for the company to increase market share and improve profitability, such as expanding online sales and targeting younger customers. However, it also highlights threats to the company's success, including competition from other retailers and fluctuating customer demands.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Impact and influence of macro environment on Marks and Spencer and its business
strategies.................................................................................................................................1
TASK 2............................................................................................................................................2
P2 Analysis of internal environment and capabilities of M&S..............................................2
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Business strategy can be defined as working plan made by a company's manager to
achieve vision and objectives in set period of time. Through this plan, strategy builders can
provide proper guidance to employees in what manner they have to perform (Scarborough,
2016). But, there are so many factors present in internal and external environment business
which impact on formulated strategies of business. In this regard, present assignment is going to
reveal a critical explanation on how macro environment influence and impact business strategies
of a firm. For this purpose, Marks and Spencer has been taken which deals in retail sector and
offers home products, food and clothes. An analysis of micro environment and capabilities of
this company is also done in further parts of assignment.
TASK 1
P1 Impact and influence of macro environment on Marks and Spencer and its business strategies
Formulating a business strategy is an important aspect of running a business without
which it becomes difficult for a company to set appropriate goals and objectives. In context with
M&S, it is an international company of UK and has expanded business in almost all countries of
the world. Its managers mainly concern on to gain largest market share from other retailers and
build strategies accordingly (Eaton and Kilby, 2015). But there are various factors of macro
environment which influence strategies of M&S in following manner:-
Political: It includes two main aspects which affect business activities of a company that
are- Political stability and taxation policies. If government increases taxes like VAT on certain
commodities then M&S has to increase price of products. This could impact on retention of loyal
customers as purchasing behaviour of people changes with fluctuation of price. Therefore, any
changes in taxation and political obligation, assist M&S to develop business strategies
accordingly.
Economic: Business strategy of every organization depends on economic factors like
price level, money supply, per capita income, employment generation and more. In context with
retail sector, business of M&S falls down in recessions period. During recessions period, this
company needs to make strategies which help in get back on feet again (De Massis and Kotlar,
2014). As, UK is also known as hub of e-commerce so, it reflects that people are not limited to
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domestic retailers. Therefore, this would have created a diverse retail business and trends which
influence business strategy of M&S as well.
Social: Taste, preference and lifestyle of people, influence strategy of business in both
negative and positive manner. Demand to get trendy clothes has put a threat to business of M&S
in retaining its market share (Spender, 2014). Credit card acceptance is the another social factor
which has increased approximate 10% of trade. Therefore, M&S offers credit card payment
options to customers in order to gain their retention.
Technology: Due to advancement of technology, now every company use to build own
website to provide information about business to customers. Therefore, M&S makes a large
investment on IT to increase sales by online applications. Moreover, this firm also use Electronic
Point of Sale for driving sales, enhancing customer service and improving efficiencies as well.
Thus, it has evaluated that technology also influence business strategies of companies.
TASK 2
P2 Analysis of internal environment and capabilities of M&S
Marks and Spencer and its operations carries high competitive environment and consists
with ample number of factors that have affected outside environment as well. Company is
dealing in a number of segments like food, clothes, home and beauty products. Since, M&S is
doing business in different sub sections thus, possibilities are there that company might face high
competition (M&S Business Environment Analysis, 2018). M&S is very sensitive to
technological, social and economic factors. It has to keep up with ever growing and changing
trends of clothing if they have to compete in the market. Some factors present in its internal
environment like suppliers, distributors, customers and competitors creates a large affect on
business. Effective relationships with suppliers, has brought enormous influence to M&S. This
firm needs to concern on providing best services to customers because it realizes that providing
good quality of products helps in raising loyalty of consumers. In terms of competitors,
Sainsbury, TESCO, Morrisons and more, has put a large impact on business of M&S. Due to
this, it has need to develop business strategies on regular manner (Klettner, Clarke and Boersma,
2014).
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SWOT analysis is considered as most effective business tool which is used for
identifying internal and external factors of organization. In context with M&S, it has gained 90%
of revenues from UK. The major capabilities of this firm can be evaluated in following manner:-
Strengths: The main strongest points of M&S is its number of stores and way of
providing excellent services to customers. It has built effective relationships with employees and
treated them equally in order to run business in ethical manner. In terms of sales, this firm is
considered as largest retailer in UK. It offers a wide range of products like vegetables that
started over 40 years ago and selling number variety in vegetables market for their fascinated
customers. While in other sectors like clothing, this firm has served best quality of products from
more than 100 years. Thus, this part reflects that it adopts effective business strategies in order to
run organisations successfully.
Weaknesses: M&S is much depended on domestic suppliers of UK to supply its
products. While, for low cost products, its competitors like Tesco use foreign suppliers.
Furthermore, this company also fails to adopt effective strategies for marketing its products.
Implementing advertising plans with non trendy store, it create wrong assumption in customer's
eye for instance men's wear are only for aged people not for young generation or kids. Thus, in
this regard, using wrong technique of promotional activities, M&S faces lots of issues. It gives
chance to rivals to take over their business from this company and win competencies.
Opportunities: By entering into market of e-commerce give opportunity to M&S to
trade its products in many countries more adequately (Scholes, 2015). Through focus on cloths
market segment for all age group, it can enhance customer base as well. Global presence of this
company assist in raise market share and creating better image on international level by their
quality products. If this company adopts effective marketing strategies like interact with users
who are active on social sites to understand their desires and offer accordingly. Another
opportunity in front of this firm is to target youth more who used to purchase trendy clothes
accordingly to their lifestyle. It will help in increasing sales performance and give tough
competition to rivals as well.
Threats: Due to presence of many competitors like Zara, Sainsbury, Primark etc.
business of M&S has much affected. Process of shopping online from foreign markets also
adversely affect profitability of M&S. Fluctuation in customers demands may affect business
profitability, so it can be a big threat for Marks and Spencer to cope with certain situations. In
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addition to this, demand of making investment in CSR activities also assist M&S to concern
more on. Therefore, if managers will not focus on this demand then it will impact negatively on
business image.
Therefore, managers of M&S formulate business strategies to gain market share and
acquire a good position at marketplace. But core values of M&S like quality of products,
affordability and services are much influenced by competencies.
CONCLUSION
From this assignment, it has concluded that before operating function and running
business successfully, organisations are required to build proper strategies. Entrepreneurs are
needed to concern on each and every factor present in business environment while developing
policies. It includes political laws, economical conditions, presence of competitors and more
which directly or indirectly influence and impact operational activities of company.
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REFERENCES
Books and Journals
Scholes, M. S., 2015. Taxes and business strategy. Prentice Hall.
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible
business strategy. Journal of Business Ethics. 122(1). pp.145-165.
Spender, J. C., 2014. Business strategy: Managing uncertainty, opportunity, and enterprise.
Oxford University Press.
Eaton, D. and Kilby, G., 2015. Does Your Organizational Culture Support Your Business
Strategy?. The Journal for Quality and Participation. 37(4). p.4.
De Massis, A. and Kotlar, J., 2014. The case study method in family business research:
Guidelines for qualitative scholarship. Journal of Family Business Strategy. 5(1). pp.15-
29.
Scarborough, N. M., 2016. Essentials of entrepreneurship and small business management.
Pearson.
Online
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