Unit 32 - Business Strategy: Analysis of Internal and External Environment and Capabilities of Marks and Spencer

This report analyses the internal and external environment and capabilities of Marks and Spencer using various frameworks such as PESTLE analysis, SWOT analysis, Power Interest Grid Framework, Resource Based View, and McKinsey’s 7S. It also evaluates the competitive forces of the retail industry using Porter's Five Force model.

Unit 32 – Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
Applying the appropriate frameworks and analysing the impact and influence of the macro
environment on a given organisation and its strategies..........................................................1
Critically analyse the macro environment to determine and inform strategic management
decisions.................................................................................................................................4
Analysis of the internal environment and the capabilities of organization using relevant
frameworks.............................................................................................................................4
Evaluation of the internal environment to assess the strengths and weaknesses of the internal
capabilities, structure and skill set of organisation. ...............................................................6
Apply Porter’s five forces model and to evaluate the competitive forces of a given market
sector for an organization. .....................................................................................................6
PART B............................................................................................................................................7
Apply a range of theories, concepts & models, interpret & devise strategic planning for a
given organization..................................................................................................................7
Strategic management plan...................................................................................................10
CONCLUSION..............................................................................................................................11
References:.....................................................................................................................................12

INTRODUCTION
For the purpose of proper functioning of business organisation, it is necessary to develop
appropriate strategies. Business strategies refers to the roughly working plans which are
developed by the Human Resource Management of organisation so that they can achieve the
organisational goals and objectives in an effective and efficient manner. Basically, strategy
works for guiding the organisation for making decisions which are also related to the allocation
of resources and hiring employees. It has been found that vision and direction has been created
by the development of strategy. Clear goals of employees help them in moving ahead towards
the direction or mission of organisation. The report is based on Marks and Spencer which a
British multinational company dealing in clothing, home products and food products (Marks and
Spencer, 2021). In 1884, it was founded by Michael Marks and Thomas Spencer and its
headquarter is located in London, England, United Kingdom. This report covers the analysis of
external and internal environment and capabilities. In addition to this, it also includes outcome of
Porter's five forces and concepts which can assist company in strategic decisions.
PART A
Applying the appropriate frameworks and analysing the impact and influence of the macro
environment on a given organisation and its strategies.
There are several internal and external factors which effect the operations of a business
organisation. Macro environment directly impact upon the functions of the business. Hence, it is
necessary to analyse these factors before making any decision. Frameworks which are being used
by Marks and Spencer for the purpose of analysing the macro and micro environmental factors
are given below:
PESTLE Analysis
It is a strategic tool which is used by organisations to analyse the external forces which
are influencing the business operations. PESTLE analysis of Marks and Spencer is given below: Political Factors: These factors are related to the political environment of the state or
country where the organisation is operating. Marks and Spencer is a multinational brand
which is performing business operations globally. Hence, it is necessary for them to
expand the business in the countries where the management get political stability. In
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addition to this, Brexit bring many changes in the rules and regulation of UK country.
For instance, Brexit result in the increase in administration costs of organisation. Economic Factors: It include the several factors which include inflation rate,
employability rate and many more. Due to COVID-19, a lot of people loss their jobs
which result in the decrease in purchasing power of customers (Yamaki 2017). Along
with this, it is found that various small retailers are providing same products at low
prices which affect the brand image of M&S. Social Factors: These factors are related to the demand of customers and spending
habits as well. It has been found that the demand of ready meals are increasing day by
day. They are enhancing profit by providing ready meals to their customers. By
providing products as per the requirement of customers, Marks and Spencer is gaining
profit. Technological Factors: These factors are related to the advancement of technology in
the organisation. Marks and Spencer has introduced self checkout machines at their
store. It is the best example of technology advancement. Along with this, they are
selling their products through various online sites which also involve the technology
advancement. Legal Factors: It is related to the laws and rules made by the government and the
organisation have to follow the same while performing business operations. Change in
the laws after Brixit affect the brand image of Marks and Spencer. Over the years back,
M&S was involved in some legal disputes (PESTLE Analysis, 2021). Recently the
dispute of Marks and Spencer with Frascati landlord affect their brand image.
 Environmental Factors: It include those factors which affect the ecology. Marks and
Spencer is constantly promoting the sustainable retail industry. For instance, they are
focusing on the environmental friendly process of production.
SWOT Analysis
It is also a marketing tool which is used by the organisations for the purpose of analysing
the internal and external capabilities of the business by analysing the strengths and opportunities
of organisation along with the threat and weaknesses. The SWOT analysis of Marks and Spencer
is given as under:
Strength Weakness
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 The online availability of products of
Marks and Spencer is the biggest
strength as they have a huge and
strong infrastructure of e commerce
which attract the customers towards
the organisation (Thomas, P.J.M., and
et. al., 2021). M&S is majorly focusing on
enhancing the experience of customer.
It result in retaining the customers
along with generating the feeling of
loyalty in them.
 M&S is bringing changes in their
products frequently, these changes
effect the loyalty of customers.
 It has been found that the financial
performance of Marks and Spencer is
poor as they are focusing on the
customers satisfaction because they
are providing high quality products to
the customers at average prices by
keeping less profit margins.
Opportunities
 In order to attract the customers, the
firm can reshape the clothing
segment. It will cover all the segments
which result in gaining the market as
well. They have opportunity to start their
operations in those countries where
they are not working yet.
Threats
 Availability of competitors in the
clothing industry affect the sales of
organisation and it is the biggest
threat for Marks and Spencer.
 The manufacturing in the Marks and
Spencer get affected because of
regular or constant change in the
trends of clothing industry.
Stakeholder Analysis
For the purpose of analysing the stakeholders, the organisations divide them in four
categories on the basis of their interest and power. Power interest grid is a framework which is
used by the organisation for classifying the stakeholders on the basis of interest and power.
Expatiation of Power Interest Grid Framework in the context of Marks and Spencer is given
below: High Power, high interest: This category includes those stakeholders who are fully
involved in the business and give best efforts for the purpose of achieving organisational
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goals and objectives. In the context of Marks and Spencer, members of top level
management have high power along with the high interest in the organisation. High power, low interest: It include those stakeholders who have high power but they
do not have much interest in the organisation. Customers of Marks and Spencer are the
stakeholders which come under this category because it is necessary to satisfy the
customer but they do not take interest in knowing about the internal factors of
organisation. Low power, high interest: This category includes the people who take more interest in
knowing about the information regarding the organisation but they do not arise any
major issue (Suoniemi, S., and et. al., 2020). The employees of Marks and Spencer
comes under this category as it is necessary to inform them about all the projects but
they are not allowed to take any decision.
 Low power, low interest: This category involves those stakeholders which are necessary
to monitor but not require to spend time and energy with excessive communication.
Government is the best example of these stakeholders as they take less interest and they
do not have .
Critically analyse the macro environment to determine and inform strategic management
decisions.
It is found that the currently stability in the political factors is in the favour of Marks and
Spencer as they are helping then organisation in continuous performance of their operations in
various countries. Growing economy of Europe implies that the economic factors of organisation
are also in the favour of organisation.
Analysis of the internal environment and the capabilities of organization using relevant
frameworks.
All the organisations have to evaluate the internal environment in order to planning the
effective strategies for the organisation. For the purpose of analysing the internal environmental
factors, the management is required to use the appropriate tools. Marks and Spencer is using
various frameworks in order to analysing the internal capabilities of organisation. In the context
of Marks and Spencer, several concepts are explained below:
Resource Based View
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It refers to the framework which is applied by the managers at work place for the purpose
of making proper utilization of resources which result in effective performance of organisation.
Mainly, it focus on minimization of wastage of resources. In simple words, it can be said that this
theory bring the differences among the organisations on the basis of use of resources (Murawski,
M., and et. al., 2018). Thus, this theory stipulates that analysis of company begins from the
internal environment for M&S.
Mckinsey’s 7S
It is a framework which is used to identify the internal elements of the organisation which
are necessary to be placed at work place. The internal elements of organisation have been
classified in two categories i.e. soft and hard elements. Below mentioned are the 7S of
Mckinsey’s theory: Strategy: It refers to the plan which is build and maintain by organisation for the
purpose of gaining competitive advantage over competitors. In order to gaining
competitive edge in the market, Marks and Spencer is adopting differentiation strategy
for their cloths. Structure: It refers to the way of division of organisation and teams and departments. It
has been found that Marks and Spencer is following flat organisational structure which
include limited levels in the organisation. This structure establishes direct relationship
between front line employees and administrative managers. It leads to the encouraging
the work force in decision making process. System: It define the daily procedures and activities performed by staff members in
order to completing the task assigned to them. Marks and Spencer is focusing on
developing various strategies which help the organisation in expanding their operations
internationally (Landázuri Espinoza and et. al., 2018). The management of organisation
is following quality management system, performance appraisal system in order to
motivating the employees, so that they can complete the task in an effective and
efficient manner. Shared Values: It include the core values of the organisation which reflects its work
culture and ethics. Marks and Spencer is building the values of quality, trust and
innovation at their work place.
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 Style: This element defines the leadership or management style which is adopted by the
organisation. Marks and Spencer is following consultative style of management under
which the leaders consult with their team members before making any decisions. It
encourages the confidence and motivation level in employees. Staff: It refers to the number of employees working in the organisation and their
capabilities which result in efficient productivity (Helmold and et. al., 2019). More than
85000 employees are working in the organisation of Marks and Spencer all over the
world. It has been found that more than 90% of total employees are based in UK.
 Skills: This element is concerned with the skills and capabilities of work force. Marks
and Spencer hired skilled and talented employees so that they can contribute in the
achievement of organisational goals and objectives. The skilled designer of M&S helps
the organisation in staying up to date by following latest trends of industry.
Evaluation of the internal environment to assess the strengths and weaknesses of the internal
capabilities, structure and skill set of organisation.
From the above studies, it is analysed that the the distribution channels which include
online and offline stores helps in creating good brand image of Marks and Spencer. These can
also be consider as the strength of organisation (Echchakoui 2018). Brand image of organisation
help them in creating loyalty in customers.
Apply Porter’s five forces model and to evaluate the competitive forces of a given market sector
for an organization.
Porter's Five Force model is a method which is being used by the organisations for the
purpose of analysing the competition of a business. In order to capitalise upon the opportunities
and formulate effective strategies, Marks and Spencer is applying Michael Porter's framework
which is explained below: Bargaining power of supplier: It has been found that there are many suppliers available
in the market of retail industry (Hallal 2020). Hence, the bargaining power of suppliers
is low as Marks and Spencer can take the supply of resources from any other supplier. It
is analysed that all the suppliers provide resources on negotiable and up rise prices.
Marks and Spencer has alternate option to switch to the different person for the purpose
of getting resources.
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 Threat of new entrants: The entry of new organisation is the huge threat to Marks and
Spencer. It has been found that there are many retailers in this industry which provide
the products of same quality at lower prices (Desai 2019). Marks and Spencer is
requiring to adopt some changes and implement innovative techniques in their products
so that they can make their product differ from others. It will also help the organisation
in managing the brand image in the market. Threat of Substitutes: The threat of substitute to Marks and Spencer is moderate as it is
a well-known organisation and they maintain the loyalty of customers on the basis of
their brand image. But the newly opened organisations perform various activities for the
purpose of attracting the customers towards the organisation. Such activities can affect
the business of Marks and Spencer. Bargaining power of buyers: This threat can be considered as high for Marks and
Spencer as constantly raising in competition in retail industry. It is necessary for
organisation to maintain the productivity and frame the customers towards the
organisation by providing products of good quality at good prices as per the
requirements of customers. It is suggested to Marks and Spencer to follow friendly
pricing strategy which result in the satisfaction of customers.
 Competition and rivalry: This threat of Marks and Spencer is found as high as there are
lots of companies which are concerned with this. It has been analysed that the nature
and the raised competitive are effecting the business operations and itss result can be
seen on the productivity and profitability of organisation.
PART B
Apply a range of theories, concepts & models, interpret & devise strategic planning for a given
organization.
It has been found that there are various strategies and concepts have been developed in an
organisation for the purpose of smooth functioning of organisation (de Jesús Bustamante-Ruíz
and et. al., 2017). In order to managing the work at work place, Marks and Spencer is using
several models and theories which are as follow:
Generic Strategies
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It is an important model which provide general working guidelines in order to managing
the work effectively under which the growth and advancement is being made. This model is
explained below in the context of Marks and Spencer: Cost Leadership: The organisations who are following this strategy, majorly focus on
gaining the market share by attracting cost conscious customers. Becoming the lowest
cost producer is the aim of organisation. Marks and Spencer is adopting this strategy for
the purpose of gaining a higher share of consumers as compare to their competitors as
the organisations under this strategy sell the products for below the market average cost. Differentiation: The objective of differentiation led organisation is to do something
different in order to make their products different or attractive than any other product
which result in the achievement of competitive advantage (Curuksu 2018). Marks and
Spencer can apply this strategy at their work place for the purpose of expanding the
business operations in a new market which also leads to the development of growth and
culture of organisation.
 Cost Focus: It refers to the organisations who are looking to develop a lower cost
advantage. But, the application of this strategy is possible only on a small market
segment. The products produced under this strategy are similar to the products which
are provided by the other organisations. If Marks and Spencer apply this strategy at their
work place, it will result in the decrease in the sales of their products because of
availability of competitors in the market.
It is recommended to the Marks and Spencer to apply differentiation strategy because it
will help the organisation in managing the market sedimentation and expansion of organisation
in various new markets. It also result in the growth and development of organisation and increase
in the market segments.
Bowman's Strategy Clock
This strategy was developed by two economists i.e. Cliff Bowman and David Faulkner
for the purpose of creating awareness regarding the position of the organisation in the market as
compared to their competitors. It can be consider as the marketing model as it helps the
organisations in analysing their position in the market. This model explains the eight positions
which are given below in the context of Marks and Spencer:
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 Low price and low added values: As per this position, the organisation decrease the
prices of their products and services. Many organisations offer the same products on a
very low prices. This also leads to perceiving the customers (Claudya and et. al., 2020). Low Price: Organisations follow this strategy when they do the production of
products in a large quantity and that products are valued in the target market. It leads to
the creation of war at the prices because of availability of competitors. The organisation
decide to sell the products at lower prices by keeping low profit margins. The output of
such organisation is found as high which result in the high profit generation. Hybrid: This strategy is found as the most effective strategy as the organisations add
values to the products and then offer the products on regular basis. Such type of
organisations basically focuses on the product differentiation which create high value in
the mind of customers. Differentiation: The organisations who are following differentiation strategy of
Bowman's Strategy Clock wants to offer best quality product to the customers on the
average prices (Clarke 2019). Such type of organisations not only focus on quality of
product but they also put efforts on building brand image. Focused Differentiation: This strategy is beneficial for the luxury brands who produce
high quality products and sell them at high prices. Such type of organisations earns
huge amount of profit as they focus on promotions, marketing distribution along with
segmentation strategies. Risky High Margins: Under this strategy, the organisations charge high prices for their
products. Adoption of this strategy is too risky for the organisation as it is not useful for
long term because customer always look for the same quality products at lower prices
or the higher quality products at same prices. Monopoly Pricing: The organisations under this strategy becomes the monopoly leader
in the market because they are providing a specific type of product which is not offered
by any other organisation (Barney and et. al., 2018). Making the decision regarding the
prices, is in the hand of organisation itself as there is no any fear of competition.
 Loss of market share: It is the last strategy of Bowman's Strategy Clock under which
the organisation is not expected to provide the products as per the value of customers
and the they do not want to purchase the product as the prices are too high.
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Marks and Spencer is required to adopt the strategy of differentiation so that they can try
to develop they best quality products and provide them at average prices to the customers. This
strategy will help the organisation in creating brand image in the market along with providing the
products of best quality. This strategy leads to the long term development of organisation.
Strategic management plan
It is the plan which helps out to identify and manage all the strategies through which the future
goals and the production can be enhanced and this provides the general method of upliftment
(Alghalibi and et. al., 2018). As in context to M&S it is being mentioned thereunder:
Summary The present strategic plan for Marks & Spencer is to expand the
business in new region so that it can grow and expand the customer
base. The company wants to attract new customers so it is planning to
expand the business in India.
Vision M&S has a vision to expand its business across the world together with
maintenance of quality of its products so that competitive edge can be
taken.
Mission Its mission statement is to maintain the quality of products and make its
offering accessible to all.
Objectives  To increase the customer base by 23% in next 12 months.
 To enhance sales and profitability of company by 31% in next
12 months.
Strategy In order to implement this plan, Marks & Spencer can use market
development strategy so that it can expand the business in new region
and attract new customers with same product range.
Tactics
 Product: M&S deals in the product range of clothing, home
décor and food.
 Price: It will follow the competitive pricing strategy so that it
can compete with the other businesses and make its brand
position in new market.
 Place: The organization will offer its products in store of India
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and use e-commerce for attracting more sales.
 Promotion: It will promote its business in new region through
digital media such as social media, emails, etc.
Evaluation For the purpose of monitoring of the plan, M&S will make use of the
benchmarking tool wherein a standard will be set by company and
actual performance shall be compared with plan and standard.
CONCLUSION
It is concluded from this report that business strategy is the action or outline which helps
in planning the new strategy for business. before the strategy is made, it is essential for
organization to analyse the internal as well as external environment and capabilities so that it can
get prepared to mitigate threats and grab opportunities. The external environment is analysed by
using framework such as PESTLE, SWOT, stakeholder analysis while micro environment is
analysed for Marks & Spencer using models such as resource based view, McKinsey’s 7s, and
many others. The industry analysis is also a part of business strategy which helps in taking the
competitive advantage by using Porter’s five forces. Further it is added that strategic
management plan helps the organization to plan its strategy which result in the growth of
organisation.
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References:
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Online
PESTLE Analysis, 2021 [online] Available Through <https://www.marketingtutor.net/pestle-
analysis-of-marks-and-spencer/#Legal-Factors>
Marks and Spencer, 2021 [online] Available Through <https://www.marksandspencer.in/?
&utm_source=google&utm_medium=search&utm_campaign=10019994644&adgroupi
d=100707296843&utm_content=540071266221&utm_term=marks%20and
%20spencer&gclid=EAIaIQobChMI4pTckdzz8gIVByQrCh0GYQA7EAAYASAAEgJ
xLPD_BwE&gclsrc=aw.ds>
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