Application of External Frameworks and Analysis on Marks & Spencer

This report analyzes the external frameworks and their influence on Marks & Spencer, a British multinational retailer. It includes a PESTLE analysis of political, economic, social, technological, legal, and environmental factors. It also applies Porter's five forces model to analyze the competitive forces in the market.

BUSINESS
STRATEGY

Table of Contents

INTRODUCTION
Business strategy advert to the course of action or decisions which is helpful for
entrepreneurs in attaining the goals and objectives of an organisation. It is defined as the master
plan which is useful in securing the competitive position in market. In addition to this, business
strategy has three levels such as corporate, business and functional level and in business there is
always a need for various strategies at different levels because single strategy is not only worthy
but improper too (Johnson, 2016). It is the combination of proactive actions for the aim of
enhancing the market area and position of company. To achieve business objective without
strategy is only a dream and by considering the increased competition, business strategy is plays
an important role for success of company. This report is based on the frameworks analysis which
impacts the macro environment and also analyse the internal capabilities. Afterwards, porter's
five force is applied to determine the competitive forces and also develop strategic plan for
Marks & Spencer which is the British multinational retailer store deals in clothing, food, home
and other related products and situated in Westminster, London, UK.
TASK 1
P1. Application of suitable external frameworks and analyse their influence on Marks & Spencer
Marks and Spencer is the British retailer which deals in food, clothing and other home
products, they want to expand their business and enhance more market area. For this, company
conduct environmental analysis to determine various external factors to get better understanding
for their current and future market conditions (Chen, Eshleman and Soileau, 2017). This analysis
is useful in analysing the various environmental threats and opportunities which is helpful for
company in eliminating the risk factor and its components are as follows: Political: This factor include interference of government within the business activities
and also describe the stability of government in its policies and plans including foreign
trade policy, tax policies, restrictions and so on. For this, free trade positively influences
trading facilities of Marks and Spencer as company operates in UK and free trade allows
it to import its products for sale in their stores at low prices while maintaining profit
margin (Marks and Spencer PESTLE Analysis, 2019). But free trade is beneficial for
some period particularly for European brands and after that UK decide to leave the EU
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which is Brexit will negatively impacts the trade regulations and tariffs as it results in
loss of various free trade policies which are unfavourable for Marks & Spencer. Economical: This factor majorly influences the organisation and its profitability in
market as it include economic growth, interest rates, inflation, exchange rates and so on.
In terms of Marks & Spencer, discount factors put negative impact on the success of
company because from last few decades many retailers came existence in the market
sector of UK and price become the major competitive factor among themselves as they
provide discount on their products. By considering the fund wearable to supermarkets,
fresh rivals steal the industry stock from Marks & Spencer and local retailers encourage
customers to enjoy same products at low prices which negatively impacts the success rate
of company. Social: This factor includes the population growth, age distribution, health conscious and
so on. This factors defines the trends and fashion which company follow in its products
and services. By considering the current trend of company, it is analysed that company
has name and fame in market but currently it become non-trendy in serving its products
and services which put negative impact on the market area of company (Marks and
Spencer PESTLE Analysis, 2019). In addition to this, the reputation of company has
unfortunate consequence because new and trendy fashion chains arises every year and
they offer excellent quality products at cheap prices. Because of this, Marks & Spencer
become less trendy in market especially in youth. Technological: It includes the changes in technological landscape and their impact on
market and related products. It influences the market in producing and distributing goods
and also consider new ways in communicating new ways in target market. As company
deals in many sector and opting self checkout put positive impact on company especially
in food sector (Woerner and Wixom, 2015). For this, Marks & Spencer already
implemented self-checkout service in its stores which put positive impact on company as
because of this, wastage of time in being queue gets save and consumers are satisfied. In
addition to this, online presence of company in clothing, food and home products put
positive impact on company. Legal: This factor include healthy and safety, consumer rights, ethical and advertising
standards and many more. By considering the frequent changing rules and legislations,
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Marks & Spencer, adopt many business changes such as tax and product changes among
many other things. Marks & Spencer also invite objective methods which put positive
impact on adopting change and also develop training and development standards for
achieving competitive advantage for company.
 Environmental: This factor include the environmental related things like increase in
scarcity of raw materials, targeted population, climate and so on (Thompson, Strickland
and Gamble, 2015). By considering the environmental standards on company, they
pledged to become more sustainable. It is concerned with the emission of carbon from the
manufacturing process and deforestation from farming land. For this, Marks & Spencer
develop green policy which they termed as “Plan A” that is related with reduction of
carbon emission in environment and also states that its name is plan A because there is no
“Plan B” which put positive impact on the reputation of company. For this, their aim is
zero waste of landfill, ethical trading, sustainable sourcing and promotion of healthy
business.
TASK 2
P2. Analyse the internal environment and its capabilities by using suitable frameworks
 SWOT Analysis:
This framework is used to determine the internal environment which include internal
factors of company and also useful in determining the strengths, weaknesses, opportunities and
threats which are discussed as under: Strengths: This factor specifies the range of operations which can become threat for
company and it include clear brand reputation as company put itself on the high end
value in product and always target premium market area. In with with this, brand image
of products which is sold by retailer are stylish and sophisticated which results in making
sure about the expectations of customers from company (SWOT analysis of Marks &
Spencer, 2019). Additionally, company is in the race in environment because of its
innovative spirit as innovation bring creativity and also encourage people to suggest
something new which is important for company as it become the biggest strength of
Marks & Spencer. Moreover, company inspires diversity and also have people from all
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the ethnicities, religions and also provide equal opportunity to employers and assure that
there is no favouritism in organisation. Weaknesses: This factor is used to define the area in which company is weak and need
improvement. For this, company is not able to penetrate its successfully in foreign
market. The current presence of Marks & Spencer is in Europe, United Kingdom and
United States and also opened their stores in Asia and Middle East but only get
disappointed in winning the attention of consumers because fewest of their designs are
belong to western and customers want traditional. In addition to this, low satisfaction
among customers have also become the biggest issue in relation to their return policy as it
results in poor brand name faithfulness and enhanced brand switching (Higgins, Omer
and Phillips, 2015). Opportunities: It defines those approaches of environment which surrounds the
enterprise from which it is capitalise to increase their returns. For this, new segment
become the biggest opportunity for company as fashion evolves in business and new
market area come up on continuous basis (SWOT analysis of Marks & Spencer, 2019).
By considering the market area of Asia, there is huge amount of demand for traditional
and ethnic clothes which is not currently produced by Marks & Spencer and it is an area
in which they make lot of promises to their customers for development of new products
according to their needs and requirements. Threats: These are the factors in which company determine the growth of other business
factors and it majorly include their competitors such as Uniqlo, Gap, Tommy Hilfiger,
Zara and so on. Due to increased in competition in business area, Marks & Spencer face
threat of losing their scope in business. In addition to this, losing their brand image
among their respective customers because of increased competition can become threat for
company as to eliminate this factor, it is recommended that company need to increase
their stores to earn more profit in business environment (Peng, 2017).
 VRIO Analysis:
Resources Valuable Rare Imitable Organised
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Distribution
Channels
✓ ✗ ✗ ✗
Human
resources
✓ ✓ ✗ ✗
Organizational
culture
✓ ✓ ✓ ✗
Financial
resources
✓ ✓ ✓ ✓
 Valuable: These resources describe that they are more important and worthy for
company and in relation with Marks & Spencer it is analysed that the ways of
distribution, human resources, culture and financial resources are more precious for
company. As these factors define the worth and regulations of company towards its
manpower as how they threat them. Overall, it describe the valuable resources of
company which make worth and important for success of company (Linder and
Williander, 2017). Rare: It define those resources which are rare and should be valued by company and it
include culture of organisation, financial resources and human resources which are rare
for company and will not easily available in market. For this, company need to take care
of those products which are rare for them. Imitable: It define those factors which are not copied and it include culture of
organisation and financial resources as organisational culture is unique of company
which is useful in attracting more and more customer base and also financial resources
are also not imitate because each and every company has different amount of financial
requirements (Martinez-Simarro, Devece and Llopis-Albert, 2015).
 Organised: It define those resources which need to be kept organised at workplace to fill
the basic requirement of employees. Here, financial resources needed to be organised
which is useful for company in achieving its goals and objectives.
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TASK 3
P3. Application of Porter's five force model to analyse the competitive forces of market
Porter's five force model is used to determine the competitive forces which takes place
within the environment and each force is helpful in strategical planning and understanding the
inbuilt profit possible in the industry. These strengths varies according to industry which depicts
that every industry is different in terms of profitableness and attraction. These forces are
discussed as under: Threat of new entrants: It describe those threats which company face because of
entrance of new businesses. It include the economics of scale which is quite difficult to
achieve as Marks & Spencer operates in clothing industry and in this industry it is more
easy to produce products according to the needs and demands of customers but in terms
of company, they have advantage of their brand name which develops the danger of new
entries weak in force. In addition to this, product differentiation which is adopted by
company and make their products different in terms selling their product in market. For
this, customers also look for different products to look different in fashion world (Marks
Spencer Porter Five Forces Analysis, 2018). In addition to this, requirement of capital in
this industry is high which become threat for new entrants and all discussed factors
become threat for new entrants within the industry. Bargaining power of suppliers: It describe that ion this industry number of suppliers are
present and have little power over their costs and this factor make negotiation ability of
providers a weak unit (Amran and et. al., 2016). Products which providers provide
reasonably similar, not so distinguished and also have low change cost makes Marks &
Spencer to easily switch from other suppliers. For this, Marks & Spencer can purchase
their products from other suppliers at low cost and if the prices and goods are not
appropriate then company can easily switch from one to another. Bargaining power of buyers: In clothing sector, there are number of suppliers instead of
other firms or organisations which means that the purchasers have few options to opt
from and also does not have more power over costs. It sort the negotiation ability weak
and additionally, product differentiation is high which means that customers have no
other option to find another alternative (Marks Spencer Porter Five Forces Analysis,
2018). Furthermore, the quality of product is important and buyers make frequent
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purchase which means that they are less price sensitive and have weak bargaining power
in the industry. For this, company need to build more and more customer base because
the negotiation quality of cusromers is weak. Threat from substitute: By considering the substitutes of products it is high in nature but
in term of Marks & Spencer they offer high quality products and services. There are few
substitutes which are available in market and also produce low profit as there is no upper
surface on the maximal earnings which firm earns in industry. Marks & Spencer sell its
products at low prices rather than its substitutes with suitable quality which means that
threat from substitute is weak and for this, company put emphasis on supplying great
quality in their products. In addition to this, company also focus on differentiating its
product by ensuring that customers see its merchandises more unique and does not easily
shift to alternate products.
 Competitive rivalry: It describe that the amount of rivals present in sector which are also
big in sized and it means that companies will not make alter without being disregarded
and it sort the competitor firms weak in force. This industry has few rivals and also have
big marketplace share which easily involve in competitors act to acquire competitive
place and become leader of market (Grayson and Hodges, 2017). For this, sector in which
company operates is growing each and every year and also expected to go on to do this as
it increases the positive growth of company and less engaged in competitors act because
they does not need to acquire market share and it makes rivals among existing firms more
weak.
TASK 4
P4. Application of theories and concepts to develop strategic plan
To develop strategic plans, Ansoff matrix is used because it is useful in determining the
growth and success of company. This framework has four quadrants and each of them are
concerned with risk factor and success criteria for this is to develop suitable selling schemes for
company. For this, it has two horizons which depicts the new and existent merchandise and these
quadrants are as follows: Market Penetration: It is concerned with capturing existent activity with extant
commodity as two of the factors are older and for this organization need to develop
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suitable plans and policies to sell their products within the market by offering discounts
and vouchers. For this, excellent pricing strategy is opted such as elimination in cost to
grasp more and more market and also choose better promotional and advertisement
techniques (Soltanizadeh and et. al., 2016). Here, risk factor is low because existent
commodity is familiarise in present marketplace. Market Development: It is related with launching of old product in new market and for
this, organisation come in fresh industry with its old product and their aim is to spread
out its enterprise and also take over fresh marketplace segment such as demographic,
behavioural, customers' preferences and so on. For this, different strategies are developed
which are concerned with high risk factor and to eliminate risk, marketplace investigation
is conducted. Due to this, company analyse the taste of customers and their behaviour to
develop products and also useful in accepting changes. Product Development: It is concerned with introducing of fresh merchandise in existing
market and for this, development of strategy is important to understand market as it is
helpful in analysing the basic needs of consumers which is useful in increase of enterprise
(Welford, 2016). This strategy is useful only when company is well-known with market
and customers and also develop its products according to them to meet their needs and
requirements. Here, risk is concerned with this component is high in nature and to
overcome it market research is essential.
 Diversification: It is concerned with high risk factor because here, fresh commodity is
introduced in fresh industry and it is almost costly scheme because before launching of
product it require lot of research and development of suitable strategies and plans which
helps in achieving goals and objectives (Anwar and Hasnu, 2016). As it depicts that the
more quantity of risk is involved helps in earning more amount of profit.
Marks & Spencer is presently using market development strategy to regulate in business
environment and develop suitable plans to expand its same products. Advantage of using this
strategy is that it increases the customer base and also achieve competitive environment.
Company Overview: Marks & Spencer is the British multinational retailer deals in high
quality, clothing, food and home products. Company is listed in London Stock Exchange and
founded in 1884 by Michael Marks and Thomas Spencer and currently has around 959 stores
across UK which include around 615 food stores.
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Vision and Mission: Its vision statement is to attain the sense of future and also guides in
decision making strategies which create a platform and also inspire the emotions of people and
their standard is against the measured benchmarking. Mission of company is to provide
qualitative products and services in the section of cloths, food and home and also bring social
revolution among the environment.
Strategic Objectives:
 The target of Marks & Spencer is to provide innovative and qualitative products
according to their potential customers which is useful in becoming the leader of market
by providing good quality products and services.
 The focus of company is to provide excellent manpower and skilled employees to attain
long term sustainability and also increase sales which is useful in becoming stable in
dynamic business situations.
CONCLUSION
From the preceding discussion, it is concluded that business strategy plays an important
role for the achievement of goals and strategies. It is a kind of master plan which is important at
each and every level of organisation. For this, maximum part of current strategy of company
results in initiation of business actions and approaches but when the conditions of market take an
unanticipated turn then company need strategic actions to cope up with situations. Here,
environmental analysis is done to determine the current market conditions and also determine the
internal capabilities by using suitable frameworks. Afterwards, porter's five force is used to
determine the competitive forces in market and also develop strategic plan by using suitable
approaches.
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Online
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<https://pestleanalysis.com/marks-and-spencer-pestle-analysis/>./
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<https://www.essay48.com/term-paper/13854-Marks-Spencer-Porter-Five-Forces>./
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<https://www.marketing91.com/swot-analysis-of-marks-spencer/>./
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