Business Strategy: Analysis of External and Internal Environment of Marks & Spencer

This report analyses the impact of macro environment on Marks & Spencer, its internal environment and capabilities, competitive forces of the market sector, and strategic planning using appropriate frameworks. The report includes PESTLE analysis, SWOT analysis, VRIO analysis, Porter's Five Forces analysis, and Ansoff Matrix.

BUSINESS
STRATEGY
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Applying appropriate frameworks analyse the impact and influence of the macro environment
on a given organisation and its strategies....................................................................................3
TASK 2............................................................................................................................................6
Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks..................................................................................................................................6
TASK 3............................................................................................................................................8
Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organisation.......................................................................................................................8
TASK 4..........................................................................................................................................10
Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given organization...................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14
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INTRODUCTION
The concept of business strategy is being denoted as a combination of various business
decisions along with related tactics which provides the assistance to company in respect of
achieving their goals. This is defined as a core plan that is being executed by the firm's
management in order to have sustainable competitive advantage (Mao, 2017). The present report
is being developed with relation to Marks & Spencer who is a UK based multinational firm
generally deals clothing’s, home items, groceries, and others. This covers an analysis of external
environment through PEST and stakeholder’s analysis, the internal environment is being
analysed through SWOT and VRIO frameworks. Further, in continuation to this, the competitive
analysis of Marks & Spencer is evaluated through Porter's five forces and Ansoff Matrix. Lastly,
the strategic plan is devised along with an application of Porter's Generic and Bowman's strategic
clock.
TASK 1
Applying appropriate frameworks analyse the impact and influence of the macro environment on
a given organisation and its strategies
Vision
The company Marks and Spencer carries a vision of becoming a international standards
which will be measured or considered by other business firms at global level in order to evaluate
their own performances.
Mission
The company's mission is to develop an inspirational quality that is being accessible to
rest. This would assist the business in enhancing their customer ratio with the assistance of which
the Marks and Spencer would be able to achieve greater profits.
Objectives
Marks and Spencer aims at achieving great leadership in context to its clothing as well as
in eatable segments. This would help company in becoming a famous multinational brand that
can be able to compete with similar firms efficiently.
The term strategy is being defined as some activities that are being considered by the
businesses to have successful attainment of their targets. This involves the development of such
strategies that are able to guide them as well as assists them in having a high competitive
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advantage through their revenues & sales. These business achievements from different
perspective can helps Marks and Spencer in having long term market stability along with a
combination of market leader. The appropriate frameworks that can have proper analysis of the
impact & influence of the macro environment are mentioned below:
Stakeholders Analysis
The analysis of stakeholders is denoted as a process of determining such person who are
associated with the business affairs either in direct or in indirect manner. The stakeholders are
those who contributed to the business developments and have a great impact upon it. The
analysis of stakeholders within Marks and Spencer helps the firm in determining the interest
level of each & their participation level which is the main reason for the impact (Wu, 2019). The
main stakeholders for Marks & Spencer comprises of management team, employees, customers,
suppliers, distributors, government and all those who are somehow connected with the business.
The stakeholder’s analysis in relation to Marks and Spencer is conducted below:
 High power & high interest: Such kind of stakeholders is categorized as the most
essential persons for Marks and Spencer who carries a great power upon the affairs of
business and are highly interested in its actions. These are the management team and
employees of Marks and Spencer.
 High power & low interest: Such kind of stakeholders develops a high influence upon
the daily workings of a business while on the other hand are not much interested in the
process of their activities or projects. This could be government or suppliers of Marks
and Spencer.
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Sta
keholders Analysis

 Low power & low interest: Such type of stakeholders does not seem to be interest in the
activities of an organisation and also does not holds power in business affairs
(Maximova, 2017). These can be customers, distributors, etc. for Marks and Spencer. Low power & high interest: This kind of stakeholder are associated with the business at
their high interest but are not having any sort of power in either influencing the business
or developing any decisions for it. These are like lower level of employee's or supporting
staff of Marks and Spencer
PESTLE Analysis:
PEST framework is categorized as a specific strategic tool that is being adopted by
organisations in order to acknowledge the external or micro business environment & market
appropriately. In relation of Marks and Spencer, the PESTLE analysis is conducted below:
 Political factors: This form of factor is concerned associated with the tax regulations,
tariff rates & stability of ruling government. The UK government is politically stable as
well as imposes very less tax rates for corporate firms which can have favourable impact
upon its performances (Cramer and et. al., 2020).
 Economic factors: Such factor includes the growth rate, interest rate, Gross domestic
product, purchasing power & inflation rate within the economy of UK. The growth rate in
United Kingdom is huge as well as the residents earns adequate disposable income
assistance of which they are able to buy the offerings of Marks & Spencer. There is an
improvement in the inflation rate of UK due to the happening of great recession in year
2018, which has impacted in negative manner upon Marks and Spencer due to which they
experienced low sales.
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PEST
Analysis

 Social factors: This comprises of various social aspects that are concerned with people's
opinion, attitude, belief and perception. The society of UK is open minded where the
individual's prefers to adopt modern & advanced culture as well as products. If Marks
and Spencer would offers modern products with high quality to their consumers, then the
business would experience high sales (Tsvirko, 2020).
 Technological factors: The UK market is seems to be technologically advanced where
the individual's uses internet & digital media to the most in order to perform their daily
activities more smoothly. In relation to Marks and Spencer there is a need to enhance
their technology, machinery & distribution procedure in context with market demand
which will attract more customers as well as retains the current with their offerings.
TASK 2
Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks
Strategic capabilities & their key elements
The business strategic capabilities are stated as a process within which various strategies
are developed & are injected into the organisational actions so to attain higher merits in front of
their competitors. Such strategic capabilities comprises of six major components that are key
goals, strategic purpose, planning of action, analytical tools, values & vision. These elements
help Marks and Spencer in utilising their strategies in effective manner (Tokmurzina, 2018).
Resource based view strategy
The resource based view is denoted as a management framework that is being
implemented by the organisations in order to identify such strategically resources which could be
used by the business in respect to attain higher sustainability as well as competitive advantage. In
relation to this concept, there are two major forms of resources such as intangible & tangible
resource. The tangible resources are categorized as physical resources like buildings, machinery,
capital, land, equipment’s and many others. On the other hand the intangible resources are not
having any sort of physical existence but they could be managed by Marks and Spencer like their
trademarks, intellectual property, brand reputation etc.
SWOT Analysis
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The internal analysis of Marks and Spencer is being done through the application of
SWOT which is below:
Strengths Weaknesses
 The high brand recognition of Marks
and Spencer acts as its strengths
through their product & services.
 The business has vast product line such
as outfits for women, children & men,
home products, food outlets etc. with
the offering of such in huge ratio the
customers are having wider option in
order to select the desired product
(XUEWANG and YAN, 2017).
 The UK population as well as of the
outer region feels Marks and Spencer as
an out-dated store for young as well as
adult generation with respect to their
clothing segment.
 Marks and Spencer uses the out-dated
methods in order to manufacture their
items due to that the offerings are
priced high comparatively to the
competitors firm.
Opportunities Threats
 The company could flourish their
existence in African as well as in Asian
nations because of the presence of high
potential consumers.
 Marks and Spencer could invest more
in their marketing actions with an aim
of attracting more and more customers
towards the company’s offerings.
 The dynamic change within the
political environment because of
globalisation could behave as a
hindrance in the organisational
effectiveness.
 The rival firms like H&M, Zara or
others are providing strong competition
to Marks and Spencer that could be a
huge threat for them.
VRIO Analysis
The notion for VRIO analysis is stated as value, rarity, imitable as well as the
organisation. This is known as strategically tool which is applied by businesses to determine
their available resources along with internal capabilities. This would assist Marks and Spencer in
attaining higher competitive advantage in against of rival firms. In relation to Marks and
Spencer, the VRIO analysis is conducted below:
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 Valuable: It is essential for the manager at Marks and Spencer to utilise their valuable
resources in appropriate manner so that the strong competition can be provided to the
rival firms within the industry. If Marks and Spencer holds certain valuable resources,
then they could generate high profits out of it. For example, the valuable resource for
Marks and Spencer comprises of their staff members, distribution & supply chain
management (Acuner, Cin and Onaygil, 2021).
 Rareness: This element provides advantages to a business in determining if the offerings
that are manufactured by them is rare or not. Rare items offered by Marks and Spencer
would assist them in attaining consumer loyalty due to that the sales & revenues can be
experienced with an increment in a favourable manner. Rare offerings of business are
involved within their manufacturing & production machines. Marks and Spencer believes
in serving unique as well as innovative items to their buyers due to that they are able to
maintain their standards.
 Imitable: Marks and Spencer is needed to serve such items that could not be copied by
the rival firms. If items offered by Marks and Spencer would be easily copied then
competitors can sell them at fever prices due to that the customer's will not tend to buy
the offerings of Marks and Spencer. The raw material for manufacturing the food item or
clothes acts as imitable resources for the business.
 Organisation: This is the most crucial element for the organisations like Marks and
Spencer in order to maintain their present resources effectively if resources as well as
materials of the firm are not used in proper way, then it would result in the enhancement
of cost. This would minimise the revenue margin of Marks and Spencer due to that
competing with rivals would became a tough task. Various resources such as are staff
members, investors, suppliers & the company's stakeholders are a matter of concern with
this element for Marks and Spencer (Ribeiro and Soares, 2021).
TASK 3
Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector for
an organisation
 Threat of New Entrants: In case of retail industry it is not easy to have an entry because
this demands for a huge investment and capital. Marks and Spencer being an old global
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business company has a large investment so it is tough for new companies to be in
competition with Marks and Spencer. Hence, the company is having very less or no threat
from the new firms.
 Threat of Substitute Products: The Company Marks and Spencer are needed to make a
regular innovation within its offerings in order to maintain brand image strong & to
maintain distinctive so to fulfil the customer demands. It is extremely easy within the
industry to copy the business of clothing so the customers can find their substitutes very
frequently (Nam and Yi, 2020).
 Bargaining Power of Buyers: In retail industry there is a very low cost to customers in
respect of switching to other brand as there is a great availability of alternate items in the
market. Marks and Spencer needs to develop its loyalty & offer its customers value as
well as conveniences so that the customers can be retained for a long term.
 Bargaining Power of Suppliers: Initially Marks and Spencer is having suppliers from
British, but the pressure of competition from the rival firms forced Marks and Spencer to
outsource & reduce its expenses reducing the power of suppliers. The switching costs for
Marks and Spencer suppliers, particularly since the company depends on outsourced
suppliers found low (Lopes, Oliveira and Silveira, 2020).
 Competitive Rivalry: The company Marks and Spencer is having tough competition
within industry as there are numerous similar firms available in the market. So it is hard
for Marks and Spencer to maintain its brand image and offer unique products.
Ansoff Matrix
 Market Penetration: these talks about selling of old product within existing market with
an aim of making the present sales high. In case of Marks and Spencer, the company can
penetrate its market through having low development cost or offering its items in
European and UK market (Mon, 2020).
 Product Development: Under this a company offers new product within its current
market with an aim of attracting customers. Marks and Spencer can have this through
making an advancement in technology which will have new look to the product and
would attract large customers.
 Market Development: This is concerned with having an existing product launch in new
market which is done by firms when they attain a point of satiety in their existing market.
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Marks and Spencer can do this through entering into the new market where it can explore
new customers.
 Diversification: This leads to the initiation of new product in new market. Marks and
Spencer can attain this through increasing the food products range or via changing the
stores outlook (Alyamani, 2020).
TASK 4
Applying a range of theories, concepts and models, interpret and devise strategic planning for a
given organization
Porter’s Generic Strategies
The Porter Generic Strategies comprises of three different components which identifies
the profitability of the firm below and above the average of industry. This comprises of Cost
leadership, Differentiation and focus. The Porter’s generic strategy in relation to Marks and
Spencer is mentioned below:
 Cost Leadership: The concept of cost leadership mentions about the ways to become a
leader within the industry through offering products at low cost. Marks and Spencer can
sell its clothing and food items at low cost in against of their rival firms so that can
attract more and become a market leader.
 Differentiation: This mentions about having uniqueness within the industry with a
combination of various dimensions that can be valued by the customers. Marks and
Spencer through this can have its unique position in UK as well as in international
market and can have differentiation in its clothing segment (Ali and Anwar, 2021).
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 Focus: This involves both cost as well as differentiation that pay its emphasis upon the
particular market segment to offer products with high value and qualities. In case of
Marks and Spencer the company can have cost advantage with a focus upon targeting
customers. The company acquires this strategy in context of having a low cost products
but serving them at high values.
Bowman’s Strategic Clock
The strategy comprises of eight different components that are placed next to each and
highlights the ways of success in competitive market. This includes low price and low values
added, Low price, hybrid, differentiation, focused differentiation, risky higher margins,
monopoly pricing and the last is loss of market share. In relation to Marks and Spencer the
strategy is explained below:
Low Price & Low Value Added: This component is related to the quantity selling. The goods
or services are lowest in value as well as setting its price to the low. The combination for Marks
and Spencer creates it the lowest competitive area within the market (Kalokola, 2019).
Low Price: This element is related about having the lowest cost choice for customers in the
market. This strategy could have low margins for Marks and Spencer, so the procedure of
efficiency as well as cost reduction is the key for its success.
Hybrid: The Hybrid is placed between low price & differentiation. It is around assuring the price
is competitive, initially with a lower perceived rate from customers. The growth of Marks and
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Spencer from hybrid strategy comes down to the combination between cost & differentiation,
aiming to enhance the company’s margin.
Differentiation: The Differentiation element is one in which a company focuses on
differentiating their items or services from rival firm’s through mixing high value. This
differentiation in Marks and Spencer has a vast spectrum from efficient offerings diversity by its
unique characterises within a main product (Echchakoui, 2018).
Focused differentiation: This is related to offering high value with a high price. When this is
successfully done by Marks and Spencer, this can offer high profits but on the other hand could
be tough to maintain.
Risky High Margins: The main aim of this element is to go in with a higher price ratio by not
having any perceived value in it. Marks and Spencer when having a sound brand in this and
needs to pull off then the buyers would pay high because of brand recognition.
Monopoly Pricing: In case of monopoly markets a single business regulates the goods &
pricing, so the rest factors like value, price points or rivalries play fewer of a factor. In case of
retail clothing business there is tough to maintain the monopoly because of the presence of
numerous firms within the industry for Marks and Spencer.
Loss of Market Share: This is commonly the negative position to be in & suggests that the
business is present in the market or is not. It might be that Marks and Spence could have selected
this strategy as form of a launch to newer markets, or it might be forced on them because of
having their price.
CONCLUSION
From the above report, it can be concluded that in case of external environment analysis a
company can have stakeholder’s analysis as well as PESTLE analysis that scan the
organisational climate from outside the boundaries. In case of internal or micro analysis there is a
SWOT and VRIO which is highly essential in order to know the internal capabilities of a
business. Within the industry there is a presence of huge firms which competes each other
keeping eye on which is extremely essential because this carries on the advantage and leadership
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in the industry. A competitive analysis can be done through Porter’s five force as well as Ansoff
Matrix. In order to derive a strategic planning there are numerous theories such as Porter’s
Generic strategic and the Bowman Strategic Clock which can be considered for a sound
planning.
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REFERENCES
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