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Corporate Strategy and Governance Assignment - M&S

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Added on  2020-10-04

Corporate Strategy and Governance Assignment - M&S

   Added on 2020-10-04

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CORPORATE STRATEGYAND GOVERNANCE
Corporate Strategy and Governance Assignment - M&S_1
8Table of ContentsTOPIC - “An analysis of the lack of awareness of changes in competition and its impact on theprofits of company. A case study of M&S.”....................................................................................3CHAPTER 1....................................................................................................................................31.1 INTRODUCTION.................................................................................................................31.2 BACKGROUND OF M&S...................................................................................................31.3 SIGNIFICANCE OF THE RESEARCH..............................................................................51.4 Aim........................................................................................................................................51.5 RESEARCH OBJECTIVES.................................................................................................51.6 RESEARCH QUESTIONS...................................................................................................51.7 PURPOSE OF THE STUDY................................................................................................5CHAPTER 2: LITERATURE REVIEW.........................................................................................12.1 Competitive market...............................................................................................................12.2 Financial performances.........................................................................................................22.3 To assess the effect of the competitors actions.....................................................................3CHAPTER 3: RESEARCH METHODOLOGY.............................................................................53.1 Primary Research..................................................................................................................63.2 Secondary Research..............................................................................................................7CHAPTER 4: RESEARCH FINDINGS..........................................................................................94.1 Findings on the basis of primary research.............................................................................94.2 Findings on the basis of secondary research.......................................................................19CHAPTER 5..................................................................................................................................205.1 Conclusion...........................................................................................................................205.2 Recommendation and action plan.......................................................................................21REFERENCES..............................................................................................................................24APPENDIX....................................................................................................................................26
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TOPIC - “An analysis of the lack of awareness of changes in competition andits impact on the profits of company. A case study of M&S.”CHAPTER 11.1 INTRODUCTIONIn modern business world, corporate strategy can be defined as actions or directions takenby board of directors of a company which may aid in hitting both desired long and short termtargets. Strategies made by organisations related to governance needs to incorporate bothstrengths and weaknesses of the organisational resources so that to compete in today'schallenging environment (Tricker and Tricker, 2015). Failure in developing a right corporatestrategy may lead an organisation to face a range of issues like decrease in sales, decline inmarket share of the company and so on. Marks and Spencer is one of the famous Britishmultinational retailer headquartered in Westminster, London which is dealing in a range ofsectors like clothing, home and luxury food products has been chosen for conducting the presentreport. Marks and Spencer's corporate strategy had faced a range of problems which impacted onboth sales and profits which impacted negatively on its reputation as well. This is the reasonbehind opting Marks and Spencer for this assignment. Along with this, report will include,literature review, research methodology and data analysis section which will help inunderstanding the concept of lack of awareness of changes in competition and its impact on theprofits of company.1.2 BACKGROUND OF M&SMarks and Spencer was found in the year of 1884 by Michael Marks who was a Polishrefugee, the first store was opened as a market stall in Leeds. Then in the year of 1894, Markswent into partnership with Thomas Spencer, who was a cashier at a wholesale company namedas Dewhirst. It is listed on London Stock Exchange. It is considered as one the best companywhich offers high quality of branded products worldwide. But as competition is rising rapidly ininternational marketplace, therefore, this firm needs to develop effective corporate-goalsstrategy. This would help in running business organisation more effectively. At current time,organisation is having approximately 980 stores in all over the world (Dubuc-Charbonneau andDurand-Bush, 2015). M&S is not only a market leader in clothing sector but is performing itsbusiness in Food and luxury home products. Organisation's corporate strategy which was made
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by the company was related to restructuring the organisational structure, this led Marks andSpencer to go through a range of problems. Just because of this, company's performance levelgot decreased and became a major reason behind fall of sales from 2% to 11%. Due to course ofchange, M&S was required to make alterations not just in its structure but in its production aswell because, clothing, food and home products. All of these industries are rising which raised competition as well in the market and alongwith this, targeted customer's tastes regularly gets changes which was very much required forcompany to first analyse and then adopt new tools and technologies for gathering the reputationwhich was lost because of lacking in different sections like research and developmentdepartment and so on (Srinivasan, Rutz and Pauwels, 2016). For this, Marks and Spencer waspretty much required to adopt new technologies which could help company in making alterationsamong sections where company was lacking. This would also aid in fulfilling requirements ofpublic and develop products and services based on the trends that were faced by the company inmodern market. This section was not covered by Marks and Spencer and the strategy which wasmade by the company was some how lacking. This section started lacking and Illustration 1: Marks & Spencer brand perceptions on the rise as it is rated one of the UK’stop brands, 2018
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With the help of above graph, it is being interpreted that due to lack of awareness ofchanges in competition Marks and Spencer's profit margins is having a really low market sharein United Kingdom and this is rapidly going down as well because of less analysis done ofmarket and so on. 1.3 SIGNIFICANCE OF THE RESEARCHThe basic reason behind adopting the case of M&S is that corporate strategy which wasmade by the company was not at all effective in nature and this took place because it wasdeveloped with lack of awareness related to the rising competition and changes as well at thesame time. This led Marks and Spencer to go through a range of problems in decrease in theirsales, decline among profit margins as well (Pulles and et. al., 2016). This led the wholestrategies of the company to make modifications among its corporate strategy so that maximumbenefits could be carried by them right on time so that competitive advantages can be gatheredby Marks and Spencer.1.4 AimThe aim of this research is “To analyse the lack of awareness of change in competitionand its impact on the probability of M&S”.1.5 RESEARCH OBJECTIVESTo determine the competitive market.To analyse the financial performances.To assess the effect of the competitors actions.1.6 RESEARCH QUESTIONSWhat can be considered as competitive market?Evaluating of financial performances?What is the effect of competitors actions?1.7 PURPOSE OF THE STUDYResearch is basically being conducted to identify or analyse the role of wrong decisionstaken by a business organisation that could lead to face a range of issues like decrease amongsales, decline in profit margins and so on. In the same way, Marks and Spencer made wrongdeterminations, and this was done because of lack of awareness in competition are beingconsidered as some of factors that led them to face major decline among annual profits.
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CHAPTER 2: LITERATURE REVIEW2.1 Competitive marketAs per the thoughts of McCahery, Sautner and Starks (2016), it has been analysed thattheir retail industry of United Kingdom is fastest growing industry as competition in the sameindustry is increasing day by day. It has been evaluated that with the changing time taste andpreferences of people are changing. This creates demand of innovation for retailers as they haveto enhance number of employees of marketing team. It will be helpful I understanding actualrequirements of customers and their expectation from organisation. As a result, with effectivemarketing workforce his industry can grow at its highest speed. It can be said that, it is essentialfor this industry to focus on customers so that they can sustain longer. Along with this, it alsohelps companies belonging to this industry in retaining customers and makes them loyaltowards their products and services (Jiang and Kim, 2015). At the same time, another authorhave said that at one stage increasing competition is beneficial for the whole industry as theiroverall market share as whole is maximising. But, on the another it also minimises theirprofitability ratio of all companies at individual level. Thus, it is required by whole industry toanalyse competition at market place as well as whole industry to check out their sustainabilityproportions and number of threat which might affect them in negative manner and also keepsthem away from being successful successful. According to the viewpoint of Jacoby (2018), It has been analysed that competition inmarket is beneficial for customer as well as companies because they are able to identify numberof emerging opportunities which have been grabbed by competitor company and remaining onecan be grabbed by them. Therefore, it is important for them to analyse whole market effectivelyin order to grab right opportunities. It can be said competitive analysis can be done by usingporters five forces model. This model was given by Michael Porter for evaluating actualcompetition level in the industry. It is done on the basis of five forces that are defined as below: Threat of new entrants: Retail industry is very vast in size because there are number ofcompanies who are planning to enter into same industry. Thereat of new entrant is high for smallcompanies who belongs to this industry. Because, at the same financial level companies caneasily enter. But In context to large companies, it is difficult for new entrants to enter as it is1
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required by them to invest high amount to manage their work. Therefore, it can be said threat ofnew entrant is high. Bargaining power of Buyers: This for retail industry is low because all the companies belong tothis sector have to focus on influencing interest of buyers in order to make them loyal. Asbuyers have no alternate option to buy product from another industry (Ranson and Lissenden,2016) . But, in order to remain competitive it is important for companies to provide best qualityof products and services to the customers in effective manner.Bargaining power of Suppliers: It can be said that bargaining power for supplier is very lowbecause retail industry is very vast in size and supplier have no alternate option to avoid rateswhich have been given by retail industry.Threat of Substitutes: Retail industry is sum up of many products and services. It includes vastrange of products. Thus, it is important for the company's belonging to this industry to introduceunique products to its customers in order to gain competitive advantageRivalry among existing firms in the same industry: Competitive rivalry among retail industryis increasing day by day. Thus, it is important for the retail companies to offer high qualityproducts so that they could remain competitive within the industry. 2.2 Financial performancesAs given by Walls, Berrone and Phan, (2012), retail industry of United Kingdom thatincludes different companies that are dealing in different sectors like clothing, food and homeproducts to consider arrangements of capital as one of the essential term so that to developproducts and services at marketplace. In present context, United Kingdom's retailers have facedas range of problems like range of consumer's price inflation dropped to 2.5% in March (itslowest level in a year) from 2.7% in February. This was primarily because the price of women’sclothing and footwear rose at a slower pace. Meanwhile, average wages climbed 2.8% in March,which is being supported by continued high levels of employment placing pressure on companiesto up their game to both entice and retain staff (De Haan and Vlahu, 2016). The latest quarterlyfigures show the more people than ever are in work, standing at 32.2 million, while the UKunemployment rate of 4.2% is at its lowest level since 1975, with just over 1.4 million peopleseeking work.Due to this, it can easily be said that an organisation's that are doing business atinternational level or in United Kingdom's market. Company had faced a range of problems2
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which was impacted negatively on all over performance level at it also affected market share aswell. With the help of this, it can easily be said that organisation could easily face a range ofproblems which impacted negatively on their profit margins (Cintuglu, Martin and Mohammed,2015). Through this, it can easily be said that, developing a corporate strategy consideringfinance could help the whole industry to reach to an all new level at modern business world. 2.3 To assess the effect of the competitors actionsAccording to the perception of ArAs, (2016), it can be said that competition plays anessential role in the growth of the industry but at the same time reduces profitability ratio of thecompany belonging to same industry. It has been analysed that competitor are making differentstrategy in order to reduce cost of each and every product. Thus, if companies provide highquality products at lower price then they can easily influence maximum number of customers. Itcan be said that it is important for business organisations to adopt certain ways by which theycan gain attention of customers and also influence them to remain loyal with company for longerperiod of time. Along with this, it is essential for them to analyse different actions by whichcompetition in the same industry can be assessed. Some of these action are defined as below:Building self-awareness: A company may assess its competitors actions by analysing itself from historical data and strategies made by its rivals (Kajalo and Lindblom, 2015). Self-awareness is the best way to know the market standing of competitors. This is based on theassumptions by considering various factors such as growth, financial position, market price ofshares, legal compliance level, business position in local market, etc. However, it is useful forthose, who have been operating in a specific market from a very long time. Encouraging Differentiation: Differentiation helps in gaining competitive advantagethrough product or service by providing customer satisfaction. A company shall make uniqueand different products from its rivals in order to meet the specific demands and gain competitiveadvantage (Wilden and Gudergan, 2015). A company can evaluate how variety and uniqueproducts its compertitors are providing. It may be analysed on the basis of brand image,technology used, customer service etc. Conducting market research: It is important business organisation to conduct effectivemarket research for analysing competitors actions which have been taken by them. It can be saidthat an effective market research will help company in making right strategy that could3
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