Impact and Influence of Macro Environment on M&S

This report analyzes the impact and influence of macro environment on Marks and Spencer (M&S), including political, economic, social, technological, legal, and environmental factors. It also discusses the internal environment and capabilities of M&S using SWOT and VRIO models, and applies Porter's Five Forces model to analyze the competitive landscape.

Business strategy
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Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
P1 Impact and influence of macro environment on M&S...........................................................3
M1 Analyse macro environment and strategic management decisions.......................................5
P2 Internal environment and capability of M&S.........................................................................5
M2 Strength and weakness and internal capability of M&S.......................................................8
P3 Porter five force model of M&S.............................................................................................8
M3 Strategy to improve competitive edge based on market outcome.........................................9
PART B.........................................................................................................................................10
P4 Theories and concepts for strategic plan of M&S................................................................10
M4 Strategic management plan for M&S..................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14
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INTRODUCTION
Every business requires an effective strategy for its growth and expansion. The strategy
provides a framework that how goals ae to be attained, what tasks is to be done, etc. Also,
development of strategy depends on nature and size of business. Basically, there are 2 types of
strategies that are corporate and tactical. Alongside, on basis of goals strategies are developed. It
is important to successfully implement strategy as entire success and failure of business depends
on it. In addition, there are several factors as well that can impact on strategy. It may be internal
or external. So, they are also considered in strategy formulation (Aldea, and et.al., 2016).
In this report it will be described about impact and influence of macro environment on
organisation. Also, it will be explained about internal environment. Besides that, porter five force
model will be used and along with that concepts, models etc for strategic planning will be
discussed.
PART A
P1 Impact and influence of macro environment on M&S
A business operates in highly competitive environment. Also, there is a specific boundary
in which it operates. There are various factors which highly impact on operations of business.
These factors are macro and are not controlled by organisation. So, it led to affect on decision
making as well. Similarly, Marks and Spencer is MNC that operates at global level. Thus, pestle
model is used to evaluate macro environment factors and its impact on its operations. It is as
defined as below : (Alstete, and Beutell, 2016)
Political – this factor is related to political condition, stability, etc. of nation. Any change in this
highly impact on firm operations. This is because it results in changing trade laws, rules and
regulations, etc. that is followed by business. In present times, politics has helped in creating
strong relations between nations. So, it has led to rise in free trade in it as company is able to
expand their market in various countries. With that they are able to generate hug revenue. But on
contrary due to Brexit UK political condition will change. It will result in forming of new trade
laws with EU countries. Hence, it will be difficult for Marks and Spencer to do trade with other
countries. Thus, their operations will be highly impacted in negative way.
Economic- In this there are various factor such as foreign exchange rate, fiscal policy, inflation
rate, GDP, etc. thus, any change in this result in impacting on operations of firm. It has been
stated that due to lock down there has been negative impact and decline in GDP of major
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economies. Besides that, in UK due to Brexit there will be decline in its economic growth. So,
Marks and Spencer operations and growth will be impacted in negative way. But on other hand,
there is decrease in labour cost so it can benefit organisation in gaining market share and increase
revenue. With that firm can grow and expand in different markets (Chen, and Keung, 2019).
Social- In these the factors are related to change in taste and preference, needs, cultural ethics,
values, etc. So, any change in this highly affect on Marks and Spencer operations and growth.
Furthermore, it has been stated that due to covid 19 there is change in trends and needs of people.
Now, they are more health conscious and prefer organic foods. Thus, it has led to change in their
needs and wants. So, it has highly affected on Marks and Spencer operations and resulted in
decline in sales and profits. Besides that, the company is known for less trendy brand for
consumers. Hence, it requires for business to focus on providing trendy and organic products so
that it can grow and expand in market. In food industry company can grow by providing organic
food items.
Technological factor- It is related to advancement in technology (Davids, and Van Belle, 2017).
There has been many advancement and changes that has occurred in technology in retail sector.
It has highly affected on growth of companies in positive way. They are using technology to
expand in various countries. Here, technology such as AI, IOT, etc is implemented. Besides that,
in Marks and Spencer stores self check out system is installed. It will allow in saving time of
customer to buy and check out from store. In addition, business can focus on online channel as
well to increase sales and profits. With that they can retain customers and gain competitive
advantage in market. Furthermore, Marks and Spencer can develop their own App so it provides
ease to customer in buying of products.
Legal factor – In every nation there are different employment laws and regulations that are
followed. It is imposed by government to protect rights of employees. The laws such as health
and safety, minimum wage, etc. are some factors in it. Any change in this will impact Marks and
Spencer operations. This is because the company is operating in many nations. In UK all laws
and regulations are adhered and comply by organisation (Eker, and Eker, 2019). They ensure
that health and safety of employees is maintained. In addition, they follow equality act in hiring
of staff. There is no discrimination done. Therefore, there is positive impact on Marks and
Spencer operations.
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Environmental factor – There are several environmental laws and regulations which is followed
by retail companies. They need to follow CSR practices, protect ecosystem, maintain
sustainability etc. The change in environment laws affect on Marks and Spencer operations.
However, Marks and Spencer is already engaged in various sustainable practices. They are
working continuously in reducing emission so it has created a positive impact on their brand
reputation. Other than this, if firm fails to adopt CSR practices then it can create negative impact
on its growth.
M1 Analyse macro environment and strategic management decisions
Political – this factor is related to political condition, stability, etc. of nation. The strategic
decision taken is to develop good political relation with all nations.
Economic- In this there are various factor such as foreign exchange rate, fiscal policy, inflation
rate, GDP, etc. here, to deal with Brexit company has taken decision to form new trade policy.
Social- In these the factors are related to change in taste and preference, needs, cultural ethics,
values, etc. Now, decision is taken to provide organic food products (Elias Mota, and et.al.,
2020).
Technological factor- It is related to advancement in technology. The decision of self check out
technology to be installed in stores is taken.
Legal factor – In every nation there are different employment laws and regulations that are
followed. The decision of working with new norms and guidelines is taken.
Environmental factor – There are several environmental laws and regulations which is followed
by retail companies. Marks and Spencer will contribute in climate change.
P2 Internal environment and capability of M&S
Along with macro factors there is also need to analyse micro factors. They exist within
organisation and can be controlled. With that competitive ability is evaluated and on basis of that
strategies are formed. So, there are various models for it. Similarly, Marks and Spencer can use
SWOT and VRIO model that is as follow
Strength - the company has different strength and one is brand image. It has been evaluated that
organization has extremely high brand esteem, they are engaged with offering value to buyers
who are purchasing item from them (Habib, and Hasan, 2019). Organization is engaged with
giving buyers variety of options, they bargain in high number of products. Marks and Spencer is
having the option to give string contributions by dealing with most recent industry patterns. They
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have provided first vegetarian sandwiches and various sort of veggie wraps that is liked by
buyers. The firms have employed many women staff so they can turn out to be best company in
hiring of women. Marks and Spencer is additionally utilizing its ability improvement in e
commerce, they are investing a lot in IT. Besides that, business is additionally performing CSR
and sustainability practices. They ensure that assets used in successfully used so in future there
are sufficient assets. Firm is additionally performing CSR. Moreover, they are having an
effective supply chain network across UK and other countries by which market demand is easily
fulfilled.
Weakness- There are many weaknesses of M&S due to which they are not able to gain market
share. Here, it is found that company is not successfully operating in foreign market in Asia and
Middle east. They are only having presence in US, UK, etc. Besides that, low customer
satisfaction is also weakness of firm (Halpern, and Graham, 2018). This is because of various
issues related to product return and low in store experience of customers. In addition to that,
another weakness is poor scalability of supply chain. they are having a lot of inventory that is left
unsold in stock. Thus, they sell it at end of season with heavy offers and discounts.
Opportunity: There lies vast number of opportunities for firm to expand in new market areas.
Marks and Spencer can invest more in technology which provides them with opportunity to
provide consumers with differentiated products and services. By installing new technology firm
has the option to enter new emerging market that can assist them in boosting up their profits. It
will help organization in developing the market which can allow firm to have competitive
advantage. Making use of differentiated pricing strategy will assist Marks and Spencer in
increasing the profitability and also in gaining market share. It has also been analysed that
decrease in transportation cost can also lower down shipping prices can assist Marks and Spencer
in bringing down the expenses which is an opportunity to organization to boost profitability. This
can also help firm in enhancing sales and revenue that is really essential for growth of firm. They
have the opportunity diversify their product and service so that company can attract large range
of consumers.
Threats – It has been identified from model that there are certain threats as well that can impact
on M&S growth. here, main threat is rise in competition in UK. With increase in new entrants in
UK there may be rise in competition. Along with that, due to Brexit deal as well M&S growth
will be affected (Jasni, and et.al., 2019). This is because it will led to change in trade laws with
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other countries. Another threat that is of covid 19 due to which economic growth of UK is
affected. Also, now there is lock down imposed in UK thus it may impact on growth of firm in
negative way. this can led to decrease in profits and sales.
VRIO-
Valuable Rare Inimitable Organized
High quality of
products and services.
Marks and Spencer
also provide goods at
low price providing
value to consumers.
Company is engaged
in providing high
quality vegan
sandwiches which is
really hard to find and
not sold up by much
of the enterprises
Marks and Spencer
Logo cannot be
copied by any other
organization. It makes
them different form
others (Liu, and et.al,
2020).
Company is also
engaged in providing
training to employees
so that skills of
workers can be
increased and by this
organization culture is
also being improved.
McKinsey’s 7 S model – It is a model which is divided into various elements that are soft and
hard S’. the tool helps in evaluating organisation design. It is defined as
Structure- It shows way in which company is organised and what chain of command is followed.
basically, it shows organisational chart. M&S organisational structure is flat. There are few
middle managements in it.
Strategy – this means plan through which company is able to gain competitive advantage in firm.
It reflects their vision and values. The company follows competitive pricing strategy.
System – this means technical infra by which work flows and decisions are taken. In organisation
most decisions are taken by top management. The command flows from top to bottom.
Skills – they are competency and ability of staff by which goals and objectives are attained. In
M&S qualified and experienced staff is working that allows in attaining of goals. they possess all
types of capability (Pati, and Bandyopadhyay, 2017).
Style- it means attitude of superiors in decision making. Thus, firm superiors take suggestion
from employees and then take decision.
Staff- As name depict it means HR that is working in organisation. Hence, in M&S a systematic
recruitment process is followed. The HR hire right staff for right position.
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Shared value – It consists of mission, values etc of firm that help in creating effective
organisation design. M&S mission is to make inspirational quality available to others.
M2 Strength and weakness and internal capability of M&S
Strength of M&S is brand image. It has been evaluated that organization has extremely high
brand esteem, they are engaged with offering value to buyers.
Weakness- company is not successfully operating in foreign market in Asia and Middle east.
They are only having presence in US, UK, etc. Besides that, low customer satisfaction is also
weakness of firm. This is because of various issues related to product return and low in store
experience of customers (Quenum, and et.al., 2019)
P3 Porter five force model of M&S
Porter Five force is based on the holistic strategy framework that took strategic decision
away from just analysing the current competition level. This type of forces is helping M&S to
build a sustainable competitive advantage in retail business. M&S can use five force analysis
model that help for analysing competitive environment of enterprise (Kim, Bridges and
Srivastava, 2019). Generally, it can be focused on the different areas of threat such as bargaining
power of buyers, threat of substitutes, competitive rivalry and threat of new entrants. Therefore,
it is becoming easy for retailer to find out the current competition level in global marketplace.
Level of competition-
It is extremely very high competition within retail industry. The problem is exacerbated by
facts about M&S which always trying to diversify business into competitive marketplace. M&S
is particularly vulnerable to competition as selling their product in global marketplace. This
organization is not only selling food item but also selling household products. Thus, organization
is faced a lot of completion in marketplace because of different retailers such as Tesco,
Sainsbury’s. Threat of competitive rivalry is higher.
Threat of substitutes-
As per analysis, it has identified that there are no substitutes to food and other clothes
item, which make threat of substitute is low. However, M&S can substitute by item from
different retailers. In this way, it is directly rival in food market which probably expand the
business through high quality of services. in this way, it will increase threat of substitutes and
become higher.
Threat of New entrants-
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Threat of new entrant is becoming low because of takes various capital investment and
setup as successful chain in physical stores. Sometimes, market is mature and entrant that would
need to offer something better radically new (Aldea, and et.al., 2016). In this way, it is very
difficult to produce and apparel retailing. Different top most brand have strong name in
marketplace so that they can easily enjoy client trust or loyalty.
Bargaining power of Buyer-
Basically, bargaining power of buyer is high so that client can either seeking classical
clothing. These are easily available within sensitive price or cost. This will help for M&S to
establish a strong position in global marketplace. in this way, many consumers are attracting
towards product as well as services. M&S is mainly focused on their loyal consumers which took
away its potential client. They have just wanted to lower their price with high quality of product
as well as services. In some situation, UK consumers are not willing to pay premium price for
particular product so that M&S have implemented suitable planning strategy to attract consumers
towards brand.
Bargaining power of Supplier-
There are more than 90 of M&S suppliers expanding their business in global
marketplace. in this way, company bought directly from different UK supplier to maintain their
stock level. Afterwards, M&S can manufacture which has been created a situation where each
and every supplier become reliant. The bargaining power of supplier is quite low due to M&S
can select only few suppliers.
M3 Strategy to improve competitive edge based on market outcome
It is important to develop strategies in order to gain competitive advantage. Thus, Marks and
Spencer will follow strategies that is as below
The company can prevent threat of new entrant by making strict entry and exit barriers. With that
they will be able to sustain in market for long term. Moreover, it will also improve their market
position (Alstete, and Beutell, 2016).
Marks and Spencer can increase number of suppliers in order to decrease bargaining power.
Thus, it will allow them to switch from one supplier to other and fulfilling market demand.
The organisation can acquire small retail firms in UK market so that its presence is increased. By
this firm will be able to attract more customers and gain competitive advantage.
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PART B
P4 Theories and concepts for strategic plan of M&S
It is necessary for company to develop an effective strategic plan so that they can gain
competitive advantage. Besides that, plan provide direction that what is to be done and how.
There are several theory and concept that can be followed in plan. Thus, it is explained as
Mission To make aspirational quality reachable to all.
Vision To become a standard against which others are measured
Objectives To attract more people in UK and other cities.
To increase customer base of loyal customer in the market of
UK.
To expand in untapped market and offer variety of products.
Strategy There are various strategies that can be followed by M&S.
Bowman strategy clock – It provide 8 areas on basis of which
company can position its products in market. they are as
follows
Low price and low added value- in this company follow low
price strategy and also offer product that is having low value.
Low price – here, firm only follows low pricing strategy. This
result in generating less revenue (Chen, and Keung, 2019).
Hybrid – There firm follow low pricing and also product
differentiation. It helps in attracting more people.
Differentiation- It clearly shows that company differentiate its
product from others in the market.
Focused differentiation – Here, products are sold at high price
and is having high quality as well.
Risky high margin – in this product is offered a high price but
having low value. Thus, it is highly risky strategy that can
result in failure.
Monopoly pricing – the company is monopoly in market as
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they sell specific type of product.
Loss of market share- In this organisation is not able to offer
product which create value. hence, it led to loss of market
share.
Tactics In this porter generic strategy can be applied by M&S. It
contains 4 tactics that are defined as
Cost leadership – This is tactic in which company can focus
on providing products at low cost in market. It enables firm to
gain competitive advantage by becoming lowest cost
producer. It targets large number of customers (Davids, and
Van Belle, 2017).
Cost focus – It is similar to cost leadership but here firm focus
on particular market.
Differentiation focus – here, business focus on differentiating
market by differentiating product with other companies. But
this is done in specific market only.
Differentiation leadership – It is same as differentiation focus
but here firm focus on overall market. They differentiate
products from other company by offering unique features in it.
Implementation and control There is need to control the overall strategic plan. For that
there are many ways in which it can be done. The monthly
report will be prepared to control strategy implemented.
Evaluation The plan will be evaluated by measuring outcomes with set
goals and objectives. With that it will be easy to make
changes in strategy (Eker, and Eker, 2019).
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M4 Strategic management plan for M&S
Tactical strategy Cost leadership – This is tactic in which
company can focus on providing products at
low cost in market.
Cost focus – It is similar to cost leadership but
here firm focus on particular market.
Differentiation focus – here, business focus on
differentiating market by differentiating
product with other companies (Elias Mota, and
et.al., 2020).
Differentiation leadership – It is same as
differentiation focus but here firm focus on
overall market
CONCLUSION
From report it has been summarised that business strategy allows firm to achieve goals. The
external factor that is affecting M&S is political, economic, social, etc. Moreover, M&S strength
is brand image, variety of products, and its weakness is low customer satisfaction. There are
certain opportunity like expansion in other markets and threat is rise in competition. Here, M&S
strategic plan is to expand in other markets. They will follow Bowman strategy clock and tactic
used will be porter generic strategy.
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REFERENCES
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