Business Strategy and Audit Reporting

This assignment examines the relationship between business strategy and audit reporting quality. It delves into how different business strategies can impact the nature and tone of auditor reports. Students are expected to analyze relevant academic literature, including the GE/McKinsey Matrix and BCG Matrix, to understand the strategic context in which auditing takes place. The assignment emphasizes the importance of considering business strategy when evaluating audit reporting quality.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1.1 Business mission, vision, goals, objectives and core competencies to inform strategic
planning.......................................................................................................................................1
P1.2 Factors to be consider while formulating strategic plan.....................................................2
P1.3 Effectiveness of techniques used while developing strategic business plan.......................3
TASK 2............................................................................................................................................4
P2.1 Strategic position of Marks and Spencer by carrying out an organisational audit.............4
P2.2 Environmental audit for Marks and Spencer......................................................................5
P2.3 Significance of stakeholder analysis while formulating new strategy................................6
P2.4 New strategy for Marks and Spencer..................................................................................6
TASK 3............................................................................................................................................7
P3.1 Appropriateness of alternative strategies relating to market entry, limited growth,
substantive growth and retrenchment for M&S business...........................................................7
P3.2 Justify the selection of a strategy........................................................................................8
TASK 4............................................................................................................................................9
P4.1 Role and responsibilities of personnel, charged with strategy implementation..................9
P4.2 Resources requirements for implementing a new strategy for Marks and Spencer............9
P4.3 Contribution of SMART targets to achieve strategy implementation for M&S...............10
Conclusion ....................................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Marks and Spencer is a major British multinational retail firm which is founded in 1884,
Leeds, United Kingdom and founder is Sir Michael Marks and Thomas Spencer. Headquarter of
the firm is located in City of Westminster, London, UK. M&S supply their products and services
worldwide, Chairman of the firm is Archie Norman and CEO is Steve Rowe. It is a public
limited company in retail sector with revenue of 10,6000.0 million per year. There are across
84,940 employees in different branches worldwide. The business is specialised in selling clothes,
home accessories, luxury food products etc. The company has currently 979 stores across UK.
The introduction will include business mission, vision, goals and objectives and factors which
are considered during strategic plan. Organisational audit will help to understand the strengths
and weaknesses and environmental audit using PESTLE will help firm to improve its strengths
and skills. Alternative strategies relating market entry, growth and retrenchment of M&S, justify
the selection of new strategies. Roles and responsibilities of personnel and resources for new
strategy is also evaluated. Finally, the contribution of SMART targets to achieve business goals,
objectives and strategy implementation will be discussed.
TASK 1
P1.1 Business mission, vision, goals, objectives and core competencies to inform strategic
planning
Mission: The mission of M&S organisation is to meet the settled goals and objectives. The
statement will help organisation to identify the size of market and also helps stakeholders by
informing the execution of strategies followed by the firm. Mission statement describes the
business motto which is assessed that organisation M&S wants to satisfy their customers with
advanced innovations, service quality and product development.
Vision: Vision shows the future of M&S organisation. Visions are long process for future
objectives and goals (Bentley-Goode, Newton and Thompson, 2017). Identification of new
territories, adopting innovation, providing support to employees, evaluating business
requirements are considered in vision statement of M&S. Vision helps M&S to set parameters
for strategies or objectives.
Goals: There are some goals which M&S firm decides before implementing their strategies and
plans. Goals have two types short term and long-term goals. Short term goals help business to
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face daily challenges and activities and long-term goals include objectives to achieve and attain
the mission statement of the firm effectively.
Objectives: Objectives are those elements which helps business to achieve their goals
effectively. Objectives of M&S are as follows:
1. Using advanced and innovative techniques
2. Providing satisfaction for customers
3. Macro business environment for employees to support them
4. Raising the revenue
Core competencies: Core competencies helps business in strategic planning as they act real for
competitive nature and also increase employee’s skills which is beneficial for the customers
effectively. For example, M&S reduce their operational costs and increase profitability to
achieve the competitive advantages (Burlton, 2015). It is observed that there is an interrelation
between strategic planning with vision, mission, objectives, goals and core competencies of the
firm.
P1.2 Factors to be consider while formulating strategic plan
Strategic planning is crucial for the organisation in terms of achieving their desired goals
and targets. There are some factors attached with strategic planning which must be checked
properly by the firm. Factors which are needed to be considered while formulating strategic
plans are as follows:
Managers: There is a set-up in every organisation which includes top level, middle level and
lower level management. Top level management is responsible for preparing strategic plans with
perspectives of business goals and objectives of the firm effectively. Middle level management
divide the responsibilities and targets between lower level management or employees with
individual targets to cope up with strategic plans.
Delegation: The duties and responsibilities are delegated by the middle level management as per
the strategic plans managed by the top-level management. The duties and responsibilities of
work divided into employees according to their skills and experience effectively. Delegation is
depended on available resources which are needed for targets otherwise the imbalance will result
in low productivity.
Targets: Targets are that desired benchmark which is fixed by the top-level management in
order to increase the profitability and productivity effectively. Logical skills and analysis is
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important for fixing the targets due to anticipation of profit and loss for upcoming years
efficiently. Thus, time management is crucial for fixing targets.
Resources: Organisation need resources for accomplishing the strategic plan effectively.
Strategic plan is set by business perspectives of goals and for that resources are required such as
human capital, place, equipment, finance and knowledge etc. resources should be managed
according to the output process and deficiency in resources can cause crisis in the strategic plans
effectively.
P1.3 Effectiveness of techniques used while developing strategic business plan
Strategic plans depend on the organisation situations that with the help of these strategies,
business can manage the position in the market effectively. Effectiveness of techniques used in
strategic planning can be done from following way:
BCG matrix: The BCG matrix determines the business level, relative share of the firms and
business with the help of four dimensions effectively (Chen, Eshleman and Soileau, 2016).
Strategic business plans are set by considering current situation and growth rate of the firm. BCG
matrix helps organisation to determine its growth rate with concerning firms shares. The four
dimensions included in BCG matrix is stars, question mark, cash cows and dog. Question mark
defines the position of business share which is low than the organisational growth rate. Stars
defines the position of business where growth rate and organisation shares increasing. Cash cow
stands for highlighting stagnant growth but a favourable market share of the business. Dog
determines the business slow down rate.
Illustration 1: BCG Matrix
(Source: Locus assignments 2017)
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Illustration 2: GE/ McKinsey Matrix
(Source: Locus assignments 2017)
Mc Kinsey matrix: The matrix considers nine dimensions which is based on high, low and
medium. Strengths and attractiveness of the business is considered with position determination.
In this approach market size, growth rate, competition level of the business included (Dinwoodie,
Quinn, and McGuire, 2014). The major part of this technique is that it determines all the possible
levels of the business while making strategic plan. Management of M&S can undertake strategic
planning with the help of techniques which will give accurate figures of the firm. Application of
the techniques is depended on the competency level of team effectively and efficiently.
TASK 2
P2.1 Strategic position of Marks and Spencer by carrying out an organisational audit
SWOT analysis for M&S which incorporates strengths, weaknesses, opportunities and
threats of the firm effectively.
Strength: Strengths of the firm M&S can be its committed and hardworking employees, updated
techniques and innovative technology, production, quality products and services and recruitment
department effectively. The business is also considered as the fastest growing firm around the
world. M&S has 940 branches and employees with number of 84,940 across the world which is a
great strength for the firm effectively.
Weakness: Weakness of the firm M&S is like poor management, insufficient raw materials or
resources, poor customer support, dearth of suppliers and high prices for products and services
effectively. The weakness can be also its punctuality among workers and also job securities.
These all elements together form the weaknesses of the business.
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Opportunity: The M&S is a worldwide organisation that it has many opportunities such as good
suppliers, international clients and customers, new and innovative techniques, new equipment
and high product quality (Ghemawat, 2016). With the help of new transportation techniques and
facilities, M&S can easily export and import its business activities effectively and efficiently.
Threat: Increasing competition in all areas of the business affect M&S firm as a threat that it is
losing its scope due to the high level of competition. Retail competitors for M&S are Asda,
Sainsbury and Tesco that they are expanding themselves in local and mega markets. In order to
reduce the risk of losing reputation among the customers, M&S should increase its stores which
will help to improve profitability. The business should manage a strategy from which they can
overcome all the obstacles easily and effectively.
P2.2 Environmental audit for Marks and Spencer
Environmental audit for M&S will give an idea from which the firm can operate or work
effectively by using PESTLE analysis:
Political: Political factors allows business to take place in market among the customers. The
business formulates protocols and laws. Effective and good relations with political affairs can
increase the chances of enhancing profits effectively. Political factors include fiscal policies, tax
policies and trade tariffs.
Economic: Economic factors determines the economy performance of M&S organisation which
directly impacts and have long termed effects. Economic factors involve interest rates, economic
growth, foreign exchange rates and inflation rates. These changes affect the demand and supply
process for customers and also changes price for products and services effectively.
Social: Social factors includes cultural trends, population analysis and demographics. The
organisation M&S has many branches across the countries that it will affect the price of products
and services according to the social factors of that country respectively. Demand goes high
during the holiday season as population increase.
Technological: Technological factors affect the business in both favourable and unfavourable
ways. These factors include, technological awareness, automation, research and development etc.
the business should try to adopt the latest and innovative techniques for reducing the
technological errors and for improving its performance and production effectively. This will help
business to raise its profitability as well (Hart, Sharma and Halme, 2016).
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Legal: Legal factors have both internal and external sides. There are some certain laws in a
certain country which affect the business environment with certain policies which organisation
try to maintain themselves. Legal factors include consumer laws, health and safety standards and
labour laws. Business should follow these legislations for effective organisational activities.
Environmental: Environmental factors such as farming, tourism and agriculture determined by
the surrounding environment of the business effectively. Organisation environmental analysis
include climate, weather, global changes and geographical location of the firm.
P2.3 Significance of stakeholder analysis while formulating new strategy
Stakeholders plays a crucial role in the firm. This is an entity which can impact on the
business strategy effectively. This can be internal or external such as employees, unions,
customers and government etc. Significance of stakeholders towards M&S firm, stakeholder
mapping is needed from which the business can determine the power and influence level.
Stakeholder mapping has four dimensions which can be related to M&S firm in following way:
The section highlights high power with low level of interest. Customers of M&S can be
categorised in this dimension where they have opportunity with high power and less interest
level. Customers are the main elements for driving revenue of the business that organisation
should understand their wants and demands while delivering values. Customer satisfaction with
value proposition is the main strategy for M&S firm effectively. The section represents the high
power with low interests. In respect to this, shareholders, investors and financial institutes are
included. They all invest for return a sound return effectively. Thus, M&S should handle them
effectively and also provide them information about the business to coordinate with them which
is helpful for profitable relationships efficiently. However, when the interest level is high and
level of power becomes low, employees of M&S will be included in this category. The workers
have high interest in the firm such as growth opportunities, salary and incentives etc. Providing
relevant information to employees about business activities will help them to remove their
conflicts and issues effectively. The section which shows both power and interests at low level.
Only way to meet their necessities is to evaluate them with managing time. This will include
efforts effectively.
P2.4 New strategy for Marks and Spencer
Strategy is the map for organisation from which they can achieve their desired goals and
strategies. Strategies are aligned with objectives of the firm. New strategy for M&S will be
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market development and penetration. Market penetration is a strategy from which the business
can increase its market share and understand the certain changes in strategies and pricing
effectively (Karami, Sahebalzamani and Sarabi, 2015). Developing markets of business will help
them to create new target segments with existing products and services of the firm. For an
example 25% of people from UK do not use home accessories and clothing but majority of
people connect with internet is around 75%. In respect to this, M&S should try to change its
products price and promotional strategy to attract the customers and create interest on their
minds which will increase the market share and scope of M&S effectively and efficiently.
Developing market is a growth strategy for the firm which is related to the non-buying customers
of M&S in UK. The sales will be increase and firm has chance to get high customers' equity in
the business.
The benchmark or framework of the strategies will be based upon following grounds given
below:
 Importance of home accessories and clothing need to be promoted during promotion for
according to the customer’s needs.
 The innovation and new techniques should be adopted by the firm in respect to, change
tastes and preferences of the customers effectively.
 The process should be integrated while the business delivers values to their customers
efficiently.
TASK 3
P3.1 Appropriateness of alternative strategies relating to market entry, limited growth,
substantive growth and retrenchment for M&S business
Market entry: Market entry defines a complete new market segment for the business. It is based
upon some external factors such as government taxation, level of competition, localisation
factors and current preferences and tastes of the customers etc. The M&S is a global brand and
new market for them requires extensive research for operating successful business operations and
activities.
Substantive growth: Substantive growth helps organisation to maintain its position in
competitive market. It is normally divided into two integrations: horizontal and vertical.
Horizontal integration describes two or more business merged together. Under the vertical
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integration business itself becomes own distributor or supplier. Thus, the growth added from
substantive growth strategy can be easily accomplished for M&S.
Limited growth strategy: This strategy restricts the M&S growth in some business units to give
focus on other business activities and areas. The organisation uses this strategy for focusing
some specific areas of the business to develop them accordingly (Patel and Chrisman, 2014).
Retrenchment: Retrenchment strategy comes active during recession time. It may be considered
that business faces losses and failures sometimes as they need to reduce their products and
services prices to maintain the position in the market effectively. Restrictions in outputs for
reducing business risk factors is associated with retrenchment. This strategy is not suitable for
the M&S firm as they need to concentrate upon customers who are shifting to other bands from
effective techniques such as promotion, pricing, modification of products etc. This will help
business to increase their output level effectively and efficiently.
P3.2 Justify the selection of a strategy
The M&S firm has most crucial human resources, which decide the way to success for
the business and also choose the best employees for competitive world. M&S analysed that there
is a bad demand of training and developing employees’ skills to compete in growing market
effectively. The organisation aim is to provide quality products and services to customers in
order to increase their profitability. For increasing business turnover and customer loyalty or
attraction, substantive growth strategy can be helpful for the firm. Justification behind the
strategy of M&S can be done from following way:
Suitability: The global revenue is increased up to 5.07% which is nearly 10,622.0 million KRW
and the operating profit is also increased around 12.00% which is 690.06 million, which is
important for the strategy. The operating profit and excess growth can be utilised by opening
new research units in UK for attracting non-buying peoples of M&S.
Feasibility: Feasibility is based on the strategy to enhance future scope of getting new and loyal
customers which helps organisation to accomplish the competitive advantage. M&S can cater the
untapped UK market successfully which will help them to grow and increase their profitability.
Acceptability: M&S is a global organisation and have different products for customers such as
home accessories, clothing and luxury food (Slack, 2015). Carry forward and adjustments is
possible in this strategy as M&S can successfully tap the target customers with some additional
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resources. The customers will attract from this as they find something different and will create
interest for M&S products and services.
TASK 4
P4.1 Role and responsibilities of personnel, charged with strategy implementation
A proper team or group of individuals is required in every organisation to work
collaboratively. This will include, board of directors, planning staff, and top management. Their
skills and knowledge help organisation to make effective strategy and plans for business
activities.
Role of Top level management: Top level management is responsible for preparing draft and
strategic plans. Global top-level management discuss the plans and strategies to top management
team for implement them. Budget and financial conditions are also verified by top level
management. The prepared plan will be communicated with middle level management with help
of meetings and discussions (Zamberi Ahmad, 2014).
Role of middle level management: Superiors and team leaders delegate the responsibilities and
duties to the team members. Front line management control the team members on the basis of
responsibilities and targets which is shared by the team leaders and superiors of M&S effectively
and efficiently. Issues and conflicts faced by the team members will be communicated with the
middle level management effectively.
Role of employees: Middle level management acquire all the information from top level
management which should be used in business operations and activities. Employees are
responsible for achieving these targets and goals settled by middle level management. The skills
and knowledge of employees help them to accomplish their individual and business objectives
effectively.
Thus, the roles and responsibilities of personnel is charged and connected with strategy
implementation effectively and efficiently.
P4.2 Resources requirements for implementing a new strategy for Marks and Spencer
Management of the firm allocate the resources to execute planned strategies. It is based
upon product demand in the market and it only enables resources availability for the firm which
objectives are planned by the top-level management. It can be said that business ambience and
resource usage decide the resources requirements effectively. Requirements for strategy
implementation can be analysed in following way:
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Budgetary resources: Budget for the strategies and funding is to be designed according to the
market returns. An estimate should be analysed by the management to allocate the requirements
and also considering expected output or returns effectively. Current working capital also should
be analysed (Spil, Kijl and Salmela, 2016). The strategy should also consider the estimate in the
anticipation of the profits.
Personnel resources: The secondary resource for the organisation is the people resources and it
is also important for the strategy. They help to improve and develop the products and services of
M&S and also should be trained by the firm before doing any work. Since, M&S is a growing
business that it can easily acquire resources for development. Human resource planning helps
them to evaluate the human capital required for the firm.
Physical resources: The physical resources include machineries or any new set up for helping
strategic plans in the firm. This will increase the production level and tap the non-buying
customers of the organisation effectively.
Technology: M&S is a huge firm that technology is the key potential in the firm and for that
innovation and machineries are needed which will help organisation to keep its operating costs
low and increase production outputs effectively.
P4.3 Contribution of SMART targets to achieve strategy implementation for M&S
M&S is the leading business in clothing, home products and luxury foods but to compete
the other brands like Tesco and Waitrose, organisation need to implement new strategies
effectively.
Specific: Specific goals helps organisation to make decisions more clear and effective.
Organisation and involved members' communication can be done easily through specific goals.
Specific areas of strategies are very clear and concerned with increasing business turnover with
the help of target customers for M&S in UK. No additional investment is required for this
strategy.
Measurable: These elements help organisation to measure the accomplishment of goals. This
will help members to evaluate their performance. The measurable areas can be determined after
three months of strategy implementation.
Attainable: Critical area of this strategy is achievement. The strategy will only succeed if the
non-buying customers pay attention towards M&S firm’s products and services. Promotional
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approach is needed for that integration. Customer expectations are needed to be analysed for this
strategy effectively (Torrent-Sellens, 2015).
Relevant: The most relevant thing for this strategy is that the additional investment is not taken
from the investors. The excess growth of the organisation is utilised for investing in this strategy
effectively.
Time bound: Time management helps organisation to decide the starting and ending time for
achieving a goal. Time bound also helps to determine the effectiveness. Quarterly results of the
firm describe the real picture of strategy implementation. Reaching time for any goal can be
evaluated from this time bound strategy.
CONCLUSION
Finally, it can be assessed that business strategy is essential for sustainable growth and
development of the firm. The analysis of this assessment, business of M&S should run easier and
evaluate strategies for the future growth effectively. It can be said that business strategy can turn
the organisation towards success and also develop products and services with the help of experts
and management which are well concerned about market effectively and efficiently.
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REFERENCES
Books and Journals:
Bentley-Goode, K.A., Newton, N.J. and Thompson, A.M., 2017. Business Strategy, Internal
Control Over Financial Reporting, and Audit Reporting Quality. Auditing: A Journal of
Practice and Theory.
Burlton, R.T., 2015. Delivering business strategy through process management. In Handbook on
Business Process Management 2 (pp. 45-78). Springer Berlin Heidelberg.
Chen, Y., Eshleman, J.D. and Soileau, J.S., 2016. Business Strategy and Auditor
Reporting. Auditing: A Journal of Practice & Theory, 36(2), pp.63-86.
Dinwoodie, D.L., Quinn, L. and McGuire, J.B., 2014. Bridging the strategy/performance gap
how leadership strategy drives business results. White paper Center for Creative
Leadership.
Ghemawat, P., 2016. Evolving Ideas about Business Strategy. Business History Review, 90(4),
pp.727-749.
Hart, S., Sharma, S. and Halme, M., 2016. Poverty, Business Strategy, and Sustainable
Development.
Karami, A., Sahebalzamani, S. and Sarabi, B., 2015. The Influence of HR Practices on Business
Strategy and Firm Performance: The Case of Banking Industry in Iran. IUP Journal of
Management Research, 14(1), p.30.
Patel, P.C. and Chrisman, J.J., 2014. Risk abatement as a strategy for R&D investments in family
firms. Strategic Management Journal, 35(4), pp.617-627.
Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.
Spil, T., Kijl, B. and Salmela, H., 2016, April. Digital Strategy Innovation; toward product and
business model innovation to attain e-leadership. In ICMLG2016-4th International
Conference on Management, Leadership and Governance: ICMLG2016 (p. 321).
Academic Conferences and publishing limited.
Torrent-Sellens, J., 2015. Knowledge products and network externalities: implications for the
business strategy. Journal of the Knowledge Economy, 6(1), pp.138-156.
Zamberi Ahmad, S., 2014. Small and medium enterprises’ internationalisation and business
strategy: some evidence from firms located in an emerging market. Journal of Asia
Business Studies, 8(2), pp.168-186.
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