Business Strategy: Analysis and Application of Strategic Models

This document provides an analysis of business strategy using various strategic models like Porter's Five Forces, Balanced Scorecard, Ansoff Matrix, and Bowman's Strategic Clock. It explores the application of these models to evaluate and interpret strategic directions available to an organization. The case study focuses on Marks and Spencer, a British multinational retailer.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
LO3. Evaluate and apply the outcomes of an analysis using Porter Five Forces model to a given
market sector....................................................................................................................................1
Balance Scorecard.......................................................................................................................1
Porter's Five Force Model...........................................................................................................2
Stakeholder Analysis...................................................................................................................3
Ansoff Matrix..............................................................................................................................5
LO 4. Apply models, theories and concepts to assist with the understanding and interpretation of
strategic directions available to an organisation..............................................................................6
Porter Generic Model..................................................................................................................7
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business strategy is defined as the set of tactics and actions taken up by a company to
attain a competitive edge at market place (Veit and et. al., 2014). The project is based upon
Marks and Spencer is a British multinational retailer which was established during the year 1884
and having its headquarters located within the confines of Westminster, London. It manufactures
and sells excellent quality of textiles, home décor products, general merchandise, footwear, baby
products and food items all across the world. The project consists of strategic models and
frameworks such as Porter Five Forces, Balance Scorecard, Stakeholder Analysis, Ansoff
Matrix, Porter Generic and extended model of Bowman's Strategic clock.
LO3. Evaluate and apply the outcomes of an analysis using Porter Five Forces
model to a given market sector
It is important for an organisation to gain knowledge of the competitive environment in
which it operates (Veit and et. al., 2014). This provides the company with the scope to devise the
strategies in accordance with which the current position of entity in market place can be
significantly enhanced. In this regard, the competitive analysis of Marks and Spencer is given as
follows witn the help of application of certain frameworks and models:-
Balance Scorecard
Balanced scorecard can be referred to as a strategic performance management tool which
is used by business manager with a view to facilitate tracking of implementation of activities by
the employees in their control and monitoring of the outcomes emerging out of such actions.
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Porter's Five Force Model
Porter's five force analysis is basically used to analyse overall industry in detailed manner
that further supports the company in developing future strategies accordingly and enhancing their
sustainability within the industry. In context of Marks and Spencer, its manager has applied this
framework for analysing retail industry effectively. All forces of this framework are specified as
below:
Bargaining power of buyer (High):Influence of this force is relatively low high for
retail industry. This is so because, the respective industry has various companies who are
performing well within the industry and serving its customers in adequate manner. Thus, the
buyers are having lots of options in terms of product and services as well as brands. Thus, if
these buyers found something inappropriate then they can easily move forward to another
company. This clearly depicts higher influence of Bargaining power of buyer for Marks and
Spencer.
Bargaining power of supplier (Low): Suppliers are the one who provides raw materials
and other required products and services to the company which further helps them out in serving
its customers in appropriate manner,. Here. It can be said that Bargaining power of supplier for
Marks and Spencer is relatively low as the company has strong contacts with lots of suppliers
which simply means that if the continuing supplier does not gets agreed on the provided rates
then the company can easily move to another supplier offering same raw materials at lower rates
(Klettner, Clarke and Boersma, 2014). Thus, suppliers do not have any option instead of agreeing
with the specified company belonging to retail industry.
Threat of new entrants (Moderate): Entry barriers within the retail industry is
relatively low. This, it is easier for business especially new entrants to enter into the industry
whereas at the same time it has been seen that the respective industry requires huge capital
investment at the time of establishing their business and compete existing companies which is
not at all possible for all the new entrants. This simply depicts the moderate influence of this
force for Marks and Spencer
important for the
Threat of substitutes (High): Retail industry has lots of competitors which means that
all the companies belonging to this sector focuses on developing something new or alternative
product so that they can easily influence interest of the customers and attract them towards
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themselves so that they can sustain longer within the same industry and attain higher
profitability. With reference to retail sector, influence of this threat is higher there are chances
that competitors can introduce substitutes and affect sales of the company.
Competitive rivalry (High): Competition with the retail sector is very dense which
simply means that every company belonging to this sector focuses on taking best possible
initiative in order to grab attention of maximum number of customers towards them. With
reference to Marks and Spencer, it can be said that the respected company must focus on
offering higher quality products at affordable price range so that they can easily capture attention
of middle class people too. This will help Marks and Spencer in enhancing its sales performance
and maximising profitability within the same industry.
Stakeholder Analysis
Stakeholders are regarded as the most crucial aspect of an entity as they hold the
capability of influencing the decision making of company as well as possess an interest within it.
It is important for an organisation to take into account the interests of a stakeholder so that no
conflict emerges in future course of time (Peng, 2017). In this regard, stakeholder analysis is a
framework which is put to use by companies across the globe to analyse the influence placed by
diverse stakeholders group upon the decisions and functioning of business. Thus, the stakeholder
analysis of Marks and Spencer is presented as follows:-
Stakeholder Influence on Marks and Spencer
Customers Customers are regarded as the most important stakeholder group for a
corporation. The demands and requirements of customers keep on changing
at rapid intervals of time in accordance with the trends and technologies
coming up at market place. Customer put pressure upon Marks and Spencer
to develop products and services that can cater to their needs and demands in
an effective manner.
Suppliers This stakeholder group is crucial for a company as it provides the firm with
required raw materials and other essentials for developing organisational
offerings. It places a significant influence over the functioning and operations
of business as Marks and Spencer will not be able to manufacture products
without raw materials.
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Trade union This stakeholder group exists to protect the interests and rights of workers in
an organisation. This group may place an adverse impact over the business
operations of Marks and Spencer in an instance whereby it finds out that the
rights of employees are violated in any manner.
Local
community
The main intent of this stakeholder group is to make sure that the business
operates in an eco-friendly manner without causing any harm to the
environment. It places large scale impact over the operations and functioning
of Marks and Spencer as the violation of environmental standards by the
entity may result in boycotting of organisational products by the local
community.
Government Government is recognised as being that stakeholder group which stipulates
policies and procedures to be followed by the companies belonging to a
nation. It places positive influence in case the company is operating in a legal
and ethical manner while adverse consequences may be borne by the
organisation in an instance whereby it gets indulged in illegal affairs.
Owner They are the owner of the company and hold the ultimate influence as well as
impact over the operations and decision making of company. Further, losses
if borne by the entity will have to be faced by this stakeholder.
Management Management holds the second highest influence over the operations and
functioning of company after the owner. Thus, Marks and Spencer needs to
make sure that their interests are duly taken care of so as to avoid the
emergence of any probable conflicts.
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(Source: Self Generated)
Ansoff Matrix
This matrix is basically propounded the identification and analysation the scope of
market development, product development with brand competitors and product diversification in
terms of growth of an company.
Product Development:
This is a strategy which seeks to focus on implementing new products to an existing
market. The use of product development strategy by Mark and Spencer can be done to improve
their product quality in terms of house ware, food items and clothing segments. In Food area,
Mark and Spencer can implement the change in packaging of particular food carter as per the
necessity of customers in which they can buy small quantity in bulk (Brewster, 2017). In textiles,
they can introduce new fashion trend according to changing trend into the market as well the
customer demands. Lastly, in relation to home décor, the respective corporation can bring the
new resources which are not presently being sold by it such as Voice enabled microwave,
Toasters etc.
Market Development:
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Illustration 1: Stakeholder Analysis Matrix of Marks and Spencer

This strategy of the Ansoff vector emphasizes upon the introduction of current offerings
product into new markets. By making use of this strategy, Marks and Spencer can expand their
venture in new countries where they currently do not hold presence. This will provide the
organisation with an opportunity of attaining growth within the market. In this regard, the
superior brand value and quality products of Marks and Spencer would be able to gain the
attention of customers in new locations. This will imply an increment in the existent revenues as
well as profits of the corporation.
Market Penetration:
This quadrant of the Ansoff Growth matrix focuses upon introduction of current products
within the existing market. Marks and Spencer sell products of satisfactory quality in domestic
market owing to which it has effective market goodwill. This leads the firm to sustain at one of
the leading places within the retail market. To implement market penetration, Marks and Spencer
can adopt a better pricing strategy such as premium pricing to gain the attention of people who
perceive products in terms of their value in market. This would provide assistance to the
corporation in gaining the attention of new individuals in current market and retain them for a
long period of time by providing them with high quality offerings.
Diversification:
This strategy tends to focus over introduction of new products into new markets. For
Marks and Spencer, this strategy can be implemented by facilitating differentiation in offerings
in terms of durability as well as quality. The entity can incorporate changes in products as per the
market demand (Chang, 2016). However, they may have to face some challenges such as
regulatory policies, economics crisis or large number of competitors in the new marketplace. All
of these can slow down the growth of Mark and Spencer. Thus, there is an element of risk
involved within this strategy that needs to be duly controlled by the corporation so as to ensure
that adversities do not hit the respective retail firm.
On the basis of above discussion, market development is identified to be the best strategy
for Marks and Spencer as it will allow the firm to gain entry into new markets with a view to
inflate the existent market positioning. It will enhance the goodwill of Marks and Spencer across
the globe.
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LO 4. Apply models, theories and concepts to assist with the understanding
and interpretation of strategic directions available to an organisation
It is essential for an organisation to apply certain frameworks, theories and concepts so as
to identify the most suitable strategic direction for the company.
Porter Generic Model
This is a strategic framework which consists of 4 possible strategic directions that are
available to a company out of which one has to be adopted by the organisation. With respect to
this, the application of this model in context of Marks and Spencer is presented as follows:-
Cost leadership: Hereby, the main intent of an organisation is to reduce the overall cost
of operations by adopting effective technologies or systems (Chen and Jermias, 2014). If this
strategy is applied by Marks and Spencer, it would provide assistance to the corporation in
becoming a cost leader within the confines of retail sector.
Differentiation: Hereby, a firm intends to attain an edge over rival firms by creating a
unique or distinct image of itself in market place by developing differentiated offerings. In an
instance whereby this strategy is adopted by Marks and Spencer, it would imply attainment of
competitive edge in global retail sector. This will result in instilling a sense of loyalty and trust
among the customers towards the brand.
Focus: It is of 2 types, cost as well as differentiation. With respect to Cost focus, an
organisation focuses upon the generation of internal efficiency so as to effectively withstand the
external pressure. On the other hand, differentiation focus is a strategy whereby the organisation
emphasizes upon incorporation of distinction within the products so as to create a unique image
of itself amidst the customers.
On the basis of above discussion, it can be said that the most suitable strategy for Marks
and Spencer will be cost leadership as it will allow the firm to reduce its overall cost of
operations and gain a cost advantage within retail market. This implies the increment in profit
margins as well as revenues for the firm, thereby assisting the company in sustaining in market
place for a long period of time in future context.
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Bowman’s Strategic Clock
This is a strategic model which is put to use by companies to ascertain the position at which it is
currently functioning out of the 8 positions or stages that are a part of this framework. In this
regard, the eight positions are acknowledged to be
Position 1. Low price and low added value
Position 2. Low price
Position 3. Hybrid
Position 4. Differentiation
Position 5. Focused Differentiation
Position 6. Risky high margins
Position 7. Monopoly Pricing
Position 8. Loss of market share
As per the above analysis, it can be seen that Marks and Spencer is currently functioning at
Position 4 – Differentiation as this allows the firm to create a distinct image of it in the minds of
customers and thereby inflating the prospect of its growth and development.
CONCLUSION
On the basis of above discussion, it can be said that competitive analysis of an
organisation is important to be conducted so as to gain knowledge of the positioning of company
as against the rivals present in market place. In addition to this, it has been analysed that cost
leadership is an effective strategy which can be adopted by a firm to become cost leader in
market place. Further, it is identified that market development is a strategy through which entry
can be gained in new markets and existent base of customers can be substantially increased.
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REFERENCES
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Jeston, J., 2014. Business process management. Routledge.
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible
business strategy. Journal of Business Ethics. 122(1). pp.145-165.
Peng, M. W., 2017. Cultures, institutions, and strategic choices: Toward an institutional
perspective on business strategy. The Blackwell handbook of cross
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management, pp.52-66.
Scholes, M. S., 2015. Taxes and business strategy. Prentice Hall.
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Veit, D. and et. al., 2014. Business models. Business & Information Systems Engineering. 6(1).
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