This report analyzes the macro and internal environment of Marks and Spencer, including a suitable framework to analyze the macro environment, evaluation of internal environment and capabilities of the company, Porter's Five Force model, and a range of concepts to develop a strategic plan.
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Table of Contents INTRODUCTION..........................................................................................................................3 TASK..............................................................................................................................................3 P1 Suitable framework that analyse macro environment............................................................3 P2 Evaluate internal environment and capabilities of company by help of appropriate model.7 P3 Porter's Five force model......................................................................................................9 P4 Range of concepts to develop strategic plan.......................................................................10 CONCLUSION.............................................................................................................................12 REFERENCES..............................................................................................................................14
INTRODUCTION The business strategy effective combination of actions and decision making that need to be perform by business in achieving objectives of organisation. It is most important for the company as it provides opportunity (competitive advantage, market expansion) for business growth in strategic way. It is the suitable set of actions plans which provides suitable direction to the business in minimising risk and maximum utilisation of resources. The business strategy consist of emergent market, competitors, strengths and weakness that will help in developing flexible environment of the company(Acuña-Carvajal and et.al., 2019). The proper planning and development of business strategy needs effective skills of planning and business analysis on that companycanunderstanditsfunctionsofmarketing,salesanddistribution.Thechosen organisation for this report is Marks and Spencer that provide specialised services and products (clothing, home appliances). It is founded in 1884 by the Michael Marks, Thomas Spencer and deliver varieties of goods like clothing, beauty, home, furniture and so on. The reports highlights analysis of macro environment that impact performance of company. It also evaluate internal environment and capabilities of company by help the of appropriate model to examine strengths and weakness of company. Through Porter's Five force model, company can examine its competitive position in the market and develop strategic plan for company growth. TASK 1 P1 Suitable framework that analyse macro environment In context of Marks and Spencer, there are various environmental factors that impact company performance. Marks and Spencer deals in dynamic environment of retail that keep on changing on regular basis that is why company need to analyse the impact of macro environment (Bernhardt, 2017). This will enhance company performance and efficiency level to fulfil company objectives. Stakeholders' matrix The stakeholder is consider as several parties that is involved in the activities of business organisation that is why any party that impact performance of Marks and Spencer is refers as stakeholder. While analysing the stakeholder matrix, various dimensions are need to be arranged and manage appropriately. In Marks and Spencer, most of the stakeholder are key players in the
form of company dimensions that are government, customers, employees, investors, competitors and so on. In the above figure, it has been seen hat level of importance and level of influence is examine among stakeholders of Marks and Spencer. Customers has high interest and high influence towards company products and services(Blackwell, 2017). Because they have multiple substitute product which satisfies their specific demand so Switching interest of customer impact company sales ratio. The government has low importance and high influence because they can imposedlawsandregulationliketrade,taxwhichimpactMarksand Spencercompany performance level as company need to follow these regulation in its operations. The employees of Marks and Spencer are generating low influence but high importance because they are very essential for company productivity(Cosenz, 2017). Employees directly deals with the customers and become company important value but they do not have influencing level as power is not in the hands of employee. Employees are regulated by the higher authority. The suppliers of the marks and Spencer have low influence and low importance in Marks and Spencer. There is no interest of suppliers in company profits and they are very loyal towards
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company and make sure availability of products to the target customer, that is why the do not influence company revenue in negative terms. ThePestleanalysishelpMarksandSpencertounderstandtheimpactofmacro environmentinitsbusinessperformance.Thismodelprovidedetailanalysisofvarious perspective (political, economic, social, technological, legal and environmental) that may impact company profitability. Political- The political factors are highly associated with the impact of government actions like tax, tariffs, fiscal and monetary policies(Dobesh, 2018). Marks and Spencer is gaining maximum advantages (Cost reduction) from free trade agreements by the government of UK. It will decrease operating cost and enhance revenue level of company. In international trade of Marks and Spencer, company is facing highest cost structure which is not good sign for company profitability. Economic- The economic factor directly influenced economic level of country such as foreign exchange rate, inflation, economic growth and so on. The competitors are implementing discounted pricing, which impact company profitability. Marks and Spencer concentrate on high qualitative value of its products and services that causes heavy losses for company profitability for short period(England, 2019). The financial crisesimpact price sensitivity of customers so company need to evaluate and modify business strategy ( pricing strategy) to maintain balance among sustainable sales and flow of market. Social- The social factors includes cultural trends, perception, analytics of population and so on. The Marks and Spencer have to deals with the perception and believes of the customers. In starting phase company is not considered as youth fashionable brands provider but company change this perception of mass audience with the help of marketing strategy (social media campaign). They involve green practices (using environment friendly raw materials) in its operation so that environment friendly user prefers to purchase company products. The positive impact of using environment friendly raw materials has been shown in increased sales revenue of company but negative impact also generated in its increasing operation cost. Technological-The technological factor is associated with the innovation and technology that is used by company in its operation process. The great technology advancement has been seen by the Marks and Spencer is social media and online presence. Company take advantage of online retailing by the help of mobile commerce and websites. They develop strong position in
online presence with the digital technology(social media and websites) and generate more sales and revenue. As a results positive impact has been seen in its increasing sales volume because company is targeting online user. Legal-Lots of disputes has been faced by the Marks and Spencer in which recent one is Frascati landlord disputes (financial) as change in trade of UK impact brand performance and image. This will impact financial operations of company and influence its commercial activities (trade of retailing).The company regulates laws ofhealth and safety, discriminatory, Anti- trust, employability law and so on because it will improve performance of employee and maintain satisfied customers. Environmental- The environmental factor is consider as organisation surroundings that isassociatedwithcompanyexternalenvironment.TheMarksandSpencerisknown as recognised brand so it is there responsibility to support sustainable retailing business practices. They need to be very careful about its production process as they must involve sustainable and green practices in business(Göbl, 2019). By utilising environment friendly resources company can enhance its brand value in front of mass audience. Company take initiative of using environment friendly raw materials to improve its revenue level. The company realised positive impact on sales as customers start purchasing environment friendly products of entity. P2 Evaluate internal environment and capabilities of company by help of appropriate model For proper understanding of internal environment and capabilities of Marks and Spencer, company examine its internal analysis. This will determine factors of company competency and improve profitability ratio by involving viability, cost position and competitive market position. The internal analysis of Marks and Spencer can be done by examining its strengths, opportunity, weakness and threats. Strengths- The Marks and Spencer is the recognised and well experience brand that is established in past years. This is one of leading business of UK in retail and create partnership with other brands around the world(Gonzalez, 2017). The company is well established brand that deliver qualitative products to their potential customer in competitive market. It is the multinational chain that deals in both online and offline channels. Both the channels of company helps in expanding profits of company. Marks and Spencer offers variety of goods and services to their mass audience so that they can fulfil different customer demands. The company is good at maintaining healthy relation with farmers and dealers that will provides fresh products and
servebetter experience of customers. The company provide latest design with innovative features in retailing segments so that they can target mass customers. Opportunity-The Marks and Spencer has great opportunity for going global expansion as it is a well recognised brand which can easily expand its business market to other countries such as India, Indonesia, Brazil and so on. The company should operates its business activities in unexplored markets of company. Marks and Spencer has great opportunity to enhance their sales ratio with the help of online platforms(Hawkey, 2017). They should explore more effective features of online presence like social media and websites that will target appropriate target audience from online platform. Company can enhance volume of sales and profits by the help of market segmentation. It is the most useful process through which company can divide customer base into several groups as needs and specification. With the help of customer segmentation they can provide actual products and services on the basis of the needs of customers. Weakness- Sales ratio of Marks and Spencer are facing declines on regular basis because ineffective supply chain management because they fail to manage availability of all the products. The company fail to accomplish actual requirement of customers demands and starts facing decline in sales ratio. The perception of customers are not very impressive towards products of Marks and Spencer(Jonson, 2019). Customers believes that company only provides clothes of younger people but this is not true because company serves all categories of customers. The Marks and Spencer some times operate its business activities on manual basis that consume lots of time and money. So company still need to adopt latest technology (artificial intelligence) to enhance time, cost and establishing more effective operations of company. Threats- The biggest threat for Marks and Spencer is high level competition from other brands like Tesco, Sainsbuy, Asda, Debenhams that is why company need to modify its business strategy (cost leadership and differentiation) and modify to build strong position at global level. Mckinsey 7S Model The Mckinsey 7S Model is the effective model that can be used by Marks and Spencer to evaluate company effectiveness in their industry. This model involves structure, strategy, skills, system, shared values, style and staff that help company to maintain sustainability. Structure-The structure represents units or division of business in organised way to deliver accountable information. Marks and Spencer implement team based organisational
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structure that will help company in dividing roles and responsibilitiesas per employees capability. This develop cooperation and enhance company problem solving skills. Strategy-It is the development plan for company sustainability in competitive market. Marks and Spencer adopted cost advantage strategy of cost leadership that will help company in developing low cost products from its competitors and create more profits. System-This is the process of business activities that company deals in operating daily functions and decision making(Karami, 2017). The Marks and Spencer concentrate on managers and its organisational change (policies, procedure) to make sure suitable system is working to achieve organisational goal. Skills-It refers to ability of company employees and examine how they are performing to achieveobjectives.ForenhancingcapabilitiesandcompetencesofMarksandSpencer employees, company execute training programs to improve skills ( time engagement, critical thinking, technical skills) that is required for enhancing company performance. Style-This refers to the management style which is adopted by the top managers to interact with the employees of company. The Marks and Spencer, adopted coaching style of leadership which provide proper direction to the employees and push their maximum potential in completing goal of company. Staff-This will determine requirements of employee and examine how they recruit, rewarded and motivated. Marks and Spencer motivates their employees by providing equal amount ofrewards (financial and non financial) as per work contribution. The company recruit from both internal (promotions and transfer) and external sources (campus recruitment and employment agency). Shared values-It refers norms and standard which guide employee behaviour and develop foundation for company actions(Keeler, 2020). Marks and Spencer shared value of quality service, trust and innovation that improve company image in front of large customer base. P3 Porter's Five force model The Porter Five Force model improves business strategy of company because it has ability to observe five forces that may impact company profitability. This model includes five force components that help is making strategic decision. It will build strong sustainable competitive advantage and recognise profitable opportunity to enhance customer service sector.
Threat of new entrants- The new entrants in retail contributes innovative technology concept and unique business idea that will develop ultimate pressure on the performance of Marks and Spencer. As a results company have to develop low pricing strategy of its products and services. Marks and Spencer also concentrate on cost reduction so that they can deliver more proposition value to their customers(Learn, 2017). The company need to manage its challenges and develop barrier to protect competitive advantage. Threat of substitutes- The profitability of Marks and Spencer gets highly suffered when any new or exclusive products and services introduce in the market that meet actual requirement of customers. In retail segment, Marks and Spencer face heavy threat of substitutes because it competitors like Sainsbury, Asda, Tesco are providing same category of valuable products at very affordable cost. Bargaining power of suppliers-Each retailer company purchase its raw material from several suppliers that is why they are in the dominating position that may impact market profitability ratio of the company. In the segment of customer services, supplier consist strong position of the negotiation that will fluctuate the price of Marks and Spencer. The powerful position of Marks and Spencer supplier impact company profits at lower level. Bargaining power of buyers-The buyers are very demanding of the Marks and Spencer because they are in the strong position. They wants to purchase valuable products and services at affordable price. This will develop pressure on Marks and Spencer because they have to provided affordable products with maintaining quality of the respective products(Legum, 2019). It will impact company profitability in the long run and found some difficulties in maintain sustainability. The smaller and effective consumer base has capacity of high bargaining power as they always in search of Heavey discounts and offers. Rivalry among existing competitors-The Marks and Spencer faces high intense competition among rivalry of its current competitors. So company need to decrease their price level to improve its profitability ratio. The Marks and Spencer executes its business operation in high competition of retail sector. This competition will impact company revenue at high level andinfluencelongtermsustainabilitythathelpsinimprovinginternalenvironmentand capabilities of company.
P4 Range of concepts to develop strategic plan The Porter's generic strategies is known as effective framework that will help Marks and Spencer in recognising its potential market and develop strategic plan to gain competitive benefit.Thismodelincludesstrategiesof cost leadership,differentiation,cost focusand differentiation focus that Marks and Spencer can applied in its products and services to capture market share. Cost leadership-This strategy involve capturing great market share of the industry by becoming more cost conscious to gain mass audience. The Marks and Spencer must become low cost producer as per the norms of retail industry because this will enhance their customer base. By applying this strategy, company can reduce cost and overhead expenses in order to exploit economies of scale (effective production). Reduction in operating cost will help Marks and Spencer to achieve aim of lowest cost producer. This will help them to increase maximum profits and capture high market share of customer as compare to its competitors. Differentiation-Thedifferentiationstrategyconsisttodevelopdifferentrangeof products and services to attract potential customers. By this strategy Marks and Spencer can achievecompetitiveadvantageastheycantargetmassaudiencebydeliveringthem differentiation products and services(Norton, 2019). Company must made some changes in designing, features, durability in order to create differentiation products from its competitors. It charge premium cost of products and services as company have to develop unique and add extra features. Cost focus-In this strategy company recognise particular segment and then provide low cost products to specific segment.The cost focus refers on developing lowest cost advantage in niche market segment. The Marks and Spencer will get narrow scope of profit creation because they need to charge high price of popularproducts that is why this strategy is not effective for company. Differentiationfocus- The differentiationfocusstrategyincludesuniquerange of products to target only niche markets. For this Marks and Spencer need to recognise its niche market where they can provide differentiated products to particular market. Through this strategy company can ensure innovative products at high price and satisfied specific needs of particular segment.
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The customers are very price sensitive, they want affordable products and serviceswith premium quality otherwise they can switch company products. For marks and Spencer Cost leadership is best effective strategy through which they can expand market share and improve its customer base. This strategy enhance ability of company to produce low cost products by cutting overhead expenses. It will help company to provide low price products at best quality as compare to its competitors. The cost leadership is the best strategic plan that will improve respective company performance and they can easily win their competitors. CONCLUSION From the above report, it has been concluded that effective business strategy provides suitabledirectioninanalysingcapabilitiesandenvironmentofcompany.Therespective company develop strategic plan with the helpPorter's generic model. During this model company experienced, cost leadership is the best strategy through which they can capture market share. This strategy helps in providing low cost products by cutting overhead expenses in order to attract price sensitive customers. The Porter Five Force model help respective company in gaining competitive advantage and improve their performance level. The company profits gets affected by new entrants as they introduce innovative products and increase competitionlevel. As a results company need to focus on quality and product differentiation features to decrease level of competition. The internal and external environment of respective company is examine by SWOT andPESTLE model. The company is managing its weakness (technology) and threats (competition) by improvised strengths (recognised brand) and opportunities (market expansion).
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