Analyzing the Impact of Macro and Internal Environment on Marks & Spencer's Strategies

This report analyzes the impact of macro and internal environment on Marks & Spencer's strategies using frameworks like PESTLE, SWOT, McKinsey 7's Model, and Porter's Five Forces Model. It includes a strategic management plan for the organization with tangible strategic priorities and objectives. The report covers the subject of business strategy and includes course code and college/university if mentioned.

Business Strategy
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Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
P1 Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies..............................................................
M1 Critically analyse the macro environment to determine and inform strategic management
decisions.................................................................................................................................6
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s capability.......................................................................................................10
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation.....................................................................................................10
M3 Devise appropriate strategies to improve competitive edge and market position based on
the outcomes.........................................................................................................................11
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation........................................................................................................11
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives..............................................................................................................................13
D1 Critically evaluate the global business environment, including the opportunities and
challenges faced by organisations .......................................................................................13
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................15
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INTRODUCTION
Strategic planning is the process of creating a desired future for organisation. Strategic
planning involves assessment of where is company standing in current situation, and in which
environment firm operates (Kurpiela and Teuteberg, 2022). Marks & Spencer was founded by
Michael Marks and Thomas Spencer in year 1884. Marks & Spencer have more than 959 stores
across the UK. The firm is dealing in retail industry which delivers products and services related
to food, clothing and home ware appliances etc. In this report, different organisational strategies,
SWOT and PESTLE analysis of Marks & Spencer analysed compared to competitive world.
Moreover, it encompasses Porter's five model, strategic planning and application of different
theories, concepts and models expressed in context of given organisation and creation of
strategic management plan which has tangible strategic priorities and objectives.
MAIN BODY
P1 Applying appropriate frameworks analyse the impact and influence of the macro environment
on a given organisation and its strategies.
Pestle analysis of Marks & Spencer
Pestle analysis of Marks & Spencer analyses the business scenarios. Pestle analysis
evaluates various kinds of external factors such as Political, economic, social, technological,
legal and environmental factors.
 Political Factors- Marks & Spencer have its business in various countries. The two main
factors which can affect company politically are political instability and tax rate. If
government increase tax rates, then it will increase the cost of the product and have
negative implication on total sales of the company.
 Economic factors- Increment in inflation rate will effect a company economically. This
factor includes inflation rate, Interest rate etc. UK has largest economy in the world.
Monetary policies of country are properly managed by government but financial crisis
can lead to low demand for high quality goods due to low income of consumer.
 Social factors- Buyer purchasing standard influenced by changing trend of products. In
global business environment changes took place rapidly. Therefore, company should
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ensure that with changing trends in market company should also modify its products as
per marketing trends and customers demand.
 Technological factors- M&S launched Technology Transformation Programme which
help firm in becoming a digital business deliver which provide customer a different
experience. This programme is designed to acknowledge faster and commercial
technology that will help in the growth of business. The company needs to focus on
simplifying M&S technology supplier base.
 Legal Factors- Legal factors are those which emerge due to changes in legal environment
such as consumer protection act, Food safety act etc. Marks & Spencer should follow The
Consumer Rights Act 2015 in order to save customer from unfair trading and should
follow The Food Safety Act 1990 in supply of good quality product to its customers.
 Environmental Factors- The issues related to climatic conditions included in
environmental factors. Marks & Spencer has built its own Green policy which will have a
positive impact on social surrounding and people on earth.
SWOT analysis of Marks & Spencer
SWOT analysis is taken into consideration so as to analyse and determine the current position of
the company in the concerned business environment (Stacchini, Guizzardi, Mariotti, 2022).
Strength
 Private label: - Marks & Spencer have their own private labels like other premium brands
Louis Vuitton, Vero mode and Versace. These private labels prove helpful in making
customers familiar with the company Marks & Spencer.
 Innovation:-Innovation in Marks & Spencer is also synonymous with creativity and
communication and people across levels are motivated and encouraged to think out of the
box and suggest new innovative ideas whenever they feel necessary. The spirit of
innovation and motivating employees for innovation is the biggest strength of Marks &
Spencer
 Diversity: - Marks & Spencer have 80,000 employees around the world who work in
their showrooms and offices. The company encourages diversity and thus have
employees from all castes, religion and genders. The company also ensures that there is
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no discrimination of any kind on the basis of religion and gender. All these factors shows
that company's employees are culturally sensitive and understand the customer better.
Weaknesses
 Declining sales:- according to report by wood 2019, the sale in some of the stores of
M&S was declining by the end of 2019. Reason behind this was because of the poor
supply chain management and non – availability of products.
 Perception in public :- Perception plays a vital role in market. Regarding M&S general
public have perception that M&s only focuses on older people and ignores cloth offering
to young and teenagers. But this perception was wrong and proves as a weakness for
M&S.
 High cost due to manual process:- One of the major drawbacks of M&S is that the
company concentrates on manual operations. It is costly and consumes a lot of time,
many companies in this competitive world has already adopted latest technology to
mechanize various processes. If M&S adopts the latest tech, then it would the brand to
save time, cost and become efficient
Opportunities
 Global Expansion:- M&S is a multinational brand and the company has opened up it
stores across the world in countries like India, Russia, Brazil, Poland and Indonesia.
 Online Stores:- Since e-commerce company have online stores same as M&S also have
online stores which help companies consumer in buying product online which saves
customers time and transportation cost and increase favour ability of consumers towards
organisation.
 Market Segmentation:- Market segmentation is the process of dividing the customer
market into different groups based on similar traits. If M&S follows the customer
segmentation policy of offering the products based on the needs of customer than it will
create a different level of satisfaction for buyers and company will able to cover large
market share.
Threats
 Trend:- Increasing trend in fashion industry and daily interests change of customer for
clothing will lead to threat for M&S.
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 Competition:- M&S operate in many segments like food, clothing etc. and in global
market there are many competitors dealing in same product line such as Tesco,
Sainsbury, Zara and gap these rivalry firms are competitors of company.
 High Taxes:- Another threat for M&s is high tariff and quotas. As M&S has business
across the world so it needs to pay high taxes for selling and purchasing of products all
over the world.
M1 Critically analyse the macro environment to determine and inform strategic management
decisions.
By analysing macro environment of firm, it can be understood that Marks & Spencer have some
external as well as internal factors which can effect it positively and at same time negatively if
enterprise does not focus on some negative factors (Freundschuh, 2018). Such as environmental
factor plays a crucial role in growth of a company. Company should ensure that their product
does not affect environment and social surroundings. M & S has launched its green policy
(Ofori, 2021). which created to ensure that environment not get affected negatively through
company’s production. By analysing SWOT of company, it can be understood that M & S have
multiple Strength, weaknesses and opportunities as well but it can’t be neglected that at the same
time it has threats (Mallon, 2019). Diversity is the biggest strength of firm as organisation have
its stores across the UK and have employee who belongs to different caste and communities.
P2 Analyse the internal environment and capabilities of a given organisation using assess
strengths and appropriate frameworks.
Mckinsey 7’s Model
Mckinsey 7’s model analysis Marks & Spencer competitive strategy, organisational structure,
goals and objectives of company etc.
 Strategy- Organisation should build a strategy in a way that it maintains a balance
between short run cost saving and quality of product. Customer paying for M&S product
because it is ‘value for money’. Company should avoid cost cutting because it can result
into low quality product.
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Structure- Marks & Spencer organisational structure is flexible employees are free to take
initiative and they can report to top level management and their new ideas and thoughts are
welcomed by superiors. Enterprise should focus on diversifying its supplier on the basis of
geographical areas so that weather issues does not impact Marks & Spencer long term existence
in market.
 Systems- Organisation should focus on development of its system as per the requirement
of modern world (Phillips and Moutinho, 2018). Company is focused on providing “work
from home” to its employees which leads to greater interaction of workers among both
physical and online environments.
 Staff- COVID-19 pandemic has had global impact on staffing policies. To enhance
employees’ involvement in company. Leaders should focus on remote on boarding such
as small group discussions, technical validation etc.
 Skills- Marks & Spencer providing training sessions for development of skills for people
who works from remote locations.
 Style- Requirement of leadership style in physical and remote locations is totally
different. Leaders should ensure that in physical environment manager can stop a
conversation but in remote locations employees working in isolated place. Leaders should
create small group of people as part of large teams.
 Shared value- Marks & Spencer should focus on sustainability areas because investors
are putting more force on environmental, social and government related issues.
VRIO analysis
VRIO term stands for Value, Rare, Inimitability and Organisation. VRIO analysis is the
criteria used for evaluating company’s organisational resources and capabilities.
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Figure 1 VRIO Analysis
Valuable- Valuable resources are those which have a strong value for company.
 Network distribution- The network distribution of Marks & Spencer is found to be
valuable in VRIO analysis because competitors require huge investment in setting up of
distribution network like M & S.
 Financial resources- Financial resources of M & S are very valuable as it helps firm in
investing external opportunities arising in competitive world.
 Product & Services- Marks & Spencer local food products are differentiated from its
competitors because customers are paying for quality of products and services.
 Patents- Patents of Marks & Spencer are very valuable as it provides benefit to the
company in selling its product without rivalry firms interference.
Rare- Rare products are those which possessed by only few companies in market.
 Financial resources- Financial resources of M & S found to be rare because strong
financial resources are only owned by few firms in market.
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 Patents- Patents are a legal authorized document which provide a complete right for
companies’ invention.
 Network distribution- M & S have unique network distribution which make M & S
unique from its competitors and allows it to cover more market share.
Inimitable- Inimitable products refers to those products whose substitute is not available in
market or they cannot be copied.
 Financial resources- Financial resource is one of the inimitable resources because these
resources are very costly and M & S acquired these resources after profit from years.
 Network Distribution- Network distribution is founded inimitable resource because new
entrants in markets have to invest a specific amount to develop network distribution like
Marks & Spencer.
Organized- Organized resources are those which available to a firm among its competitors.
 Network Distribution- Network distribution is founded organized resources in Marks
& Spencer VRIO analysis. Firm use this resource to reach out it buyers thus, network
distribution is a competitive advantage for Marks & Spencer.
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s capability.
After analysing and assessing company Mckinsey's 7s model and VRIO analysis it can be
understood that M & S have different strategies and resources which make M & S different from
its competitors. Network distribution is the organised resource of company through which
organisation gets a special advantage in reaching out to its buyer and able to cover more and
more market share.
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organisation.
Porter's five forces is a framework for analysing an industry's competitive environment.
Porter's Five Forces Model
 Threat of New entrants – Marks & Spencer threat of new entrants is low because Marks
& Spencer has its presence in 1000 locations globally. It has a good brand value. Retail
industry is very mature and it means that existing firm have an eagle's eye on its share so
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they will not lose it. Also if any other new firm try to enter into the market. So, in order
to setting up store chain it requires high investment to achieve that position which Marks
& Spencer have. Also lack of knowledge and experience will also be a barrier to enter in
retail industry.
 Threat of substitutes – Marks & Spencer deals in food and clothing industry. Food &
clothing is the basic need of every human being. Threat of substitutes is high because
there is high availability of substitute food and clothing products. If a customer gets same
satisfaction with other substitute at same cost. So, customer will move to other substitute.
By discussion over above factors it is concluded that threat of substitute is high.
 Bargaining power of Customers – Marks & Spencer have high bargaining power of
customers. Customers are the main factor of market. Its basic consumer nature that
customers are highly price sensitive and retail industry is very competitive in nature there
are lot of rivalry firms exist. Change in preference due to cheap price is not a big deal for
customer. There are many other options available to choose as various rival firms that
offer differentiated and similar products. Options available for customers are expensive
as well as affordable also. In context to above factors it is clear that bargaining power of
customers is high.
 Bargaining Power of Suppliers – Marks & Spencer's bargaining power of suppliers is
low. Suppliers are the integral part of Marks & Spencer as it acquires there input
material. It is known that Marks & Spencer is a multinational firm and has a goodwill in
market. It deals with multiple suppliers not with single and company manufactures items
not buy finished goods, this gives firm an extra benefit to sell products at higher margins
which will not possible in case of buying ready made goods and it is possible for Marks
& Spencer to shift from one supplier to another as it is dealing with multiple suppliers
already. From above factors it is concluded that bargaining power of suppliers is low.
 Competitive rivalry – Competitive rivalry of Marks & Spencer is high. As it is
previously told that competition in retail industry is very high, there are many
competitive firms exist in the market. Customers have wide range of options available to
choose from, and not only in retailer’s customer have variety in product as well. But
brand value is devaluing every day and trying to provide products to everybody this make
in differentiable in near future.
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M3 Devise appropriate strategies to improve competitive edge and market position based on the
outcomes.
Application of Porters five forces model on Marks & Spencer stated that competitive
rivalry of firm is high because there are many competitive firm exists in market and providing
not much differentiated product at a reasonable price. Firm should differentiate its products from
its competitors otherwise long-term survival of firm is not possible in competitive world. Threat
of substitute of is also high of M & S because organisation dealing in food and clothing industry
which is a basic need of every human being and if any other firm offer the same product at low
cost than customer definitely move towards it because customer is always price sensitive in
nature.
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given organisation.
Porters Generic Strategy
Porter's generic strategy divided into 3 major parts (a) Cost leadership (b) differentiation (c)
Focus. Focus have two more sub points Cost focus and differentiation focus.MAIN BODY
(a) Cost leadership: - Cost leadership refers to when a company started manufacturing of low
cost production in industry. Benefits of this strategy varies from industry to industry types
because for making different products different technology and machines requires.
(b) Differentiation: - Differentiation strategy explains that how a firm is stands out differently or
uniquely from other companies. These kinds of firm have more than one attributes and able
to seeks attention of buyers more rapidly as compares to other firms in the market. Such
firms got rewarded with their uniqueness and premium price.
(c) Focus: - A focus strategy is a competitive strategy which more focuses on particularly a
specific market segment.
Cost focus is a strategy where an organization only and only focuses on pricing to attract its
customers and try to lower their prices from rivalry firms in the market.
Differentiation focus is a strategy where an organization looking for a competitive advantage
where company performs out of the bar and primarily focuses on product quality which
automatically make product superior.
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In regards of Marks & Spencer it is analysed that Company follows Cost leadership
strategy because company focuses on providing good quality product at low prices. It is difficult
for other retail industries to follow cost leadership but M & S getting competitive advantage
from it. Marks & Spencer is cutting product cost by providing smaller facilities to its customer
all these factor help M & S to reduce some cost thus, Marks & Spencer follows Cost leadership
strategy.
Bowman Strategy Clock
Bowman’s strategy clock is a tool used for analysing the position of firm in market based
around price and value.
 Low value- This phase involves low quality and no differentiation product. If a firm does
not provide a good quality product and no differentiation from its competitors, then no
buyer will buy such kind of product (Villagrasa, Sánchez, and Donaldson, 2021). M&S
may not execute this strategy because it is dealing in premium price products.
 Low Price- Low price and low value has not much difference. In this strategy product
have a moderate quality at low price to attract customers.
 Hybrid (Moderate price/ Moderate differentiation)- This strategy focuses on providing
moderate quality at reasonable price. This strategy will help M & S in its clothing line
because M & S is providing a moderate quality product at reasonable price as compared
to its competitors.
 Differentiation- Differentiation in product leads to hike in price. One of the most specific
reason for downfall of the company is that it does not provide differentiation in its
product. Product differentiation is also requiring with branding.
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
Objectives.
Strategic Management Plan
Strategic management plan is set of objectives, organisation goals, to ensure that
employees are working towards common organisation goal.
 Situation Summary
Through swot analysis of Marks & Spencer it is analysed that company is required to
change its strategy for long term survival in industry because competitors are very strong. M & S
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should adopt new innovative consumer focused strategy which will help company in giving good
customer satisfaction.
 Objectives
To become world's leading retailer on supporting customer in sustainable living up-to
2025: - M & S wants to become world's leading retailer by focused on sustainable living
through tie ups with charitable trust, and production of healthy food product (Sparks,
2018). This all possible through new production strategy which help M & S in making
sustainable products which provide more choices to customer and help them in decision-
making.
To achieve 10% increment in total sales in upcoming financial year: - M & S objective
is to achieve 10% increment in total sale. For achieving this objective organisation is
focused on providing after sales benefits to its customers in form of guarantee, warrantee,
free replacement etc. and provide premium customer cards to its regular customer all
given factors help firm in attracting customers towards buying from M & S and as a
result of it company achieve its 10% sales growth.
 Mission
To make high quality product: - Through company’s mission strategy it is analysed that
company is focused on providing high quality product to its customers while ensuring complete
value for money. The companies mission clearly states that M & S want to create a global
environment where people get quality product as per their choice easily.
 Vision
To create a Standard against its competitors: - M & S vision is to maintain a standard
against its customers which can be work as a benchmark in industry. Companies leaders want to
take company to new heights where company known for its quality products against its rivalry
firms.
 Strategy
Marks & Spencer product strategy is to provide quality product at reasonable rate by
cutting cost in raw materials and neglection of mediators in supply chain these given factors help
M & S in providing quality product at reasonable price.
 Budget
Sales Budget
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Particulars 2023 2024 2025
Healthy food products
Expected Sales (in units) 20 24 30
Per Unit Price 2521 2826.8 2934.45
Total Sales 50420 67843.2 88033.5
Premium customer cards
Expected Sales (in units) 100 115 135
Per Unit Price 2239.33 2343.45 2482.83
Total Sales 223933 269496.75 333940
Total Sales Received from both the
products 274353 337339.95 397301
Cash From Sales Budget
Healthy food products
Cash Sales 187625.9 421057.2 317840.7
Credit Sales 7500 35179.86 78948.23
Credit Sales 2100 2500 11726.62
Total Cash received from sales 197226 458737 408516
Less: Cash Discount 150 4690.648 10526.43
Total cost 197076 454046 397989
Total Debtors 105776
 Cash Flow
2023 (£) 2024 (£)
CASH INFLOWS
Investments 15000 12000
Loans 5000 3000
Total inflows 20000 13000
CASH OUTFLOWS
Marketing 2785 2568
Material 3684 3495
Wages 5231 4965
Other Expenses 1348 1245
Total outflows 13048 12273
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NET CASH FLOW £6952 £727
 Action & Control
Tracking KPI is a crucial factor for business. M & S wants to a sustainable leader
up to 2025. So, it is following these KPIs.
Carbon footprint: - Carbon footprint is the whole sum amount of greenhouse gases produces due
to people action. M & S can measure its carbon footprint through this KPI and if it affecting
environment more than set standard so, company can control it through this KPI.
Supplier Environmental Sustainability Index- SESI is a indicator which measure suppliers
environmental performance Marks & Spencer can measure its environmental performance
through this KPI and if environmental performance is not as per standards so, it can control it.
D1 Critique and interpret information and data applying environmental and competitive analysis
to produce a set of valid strategic directions, objectives and tactical actions.
After analysis of various theories such as McKinsey's 7s model, VRIO analysis, Porters
generic strategy, bowman strategy clock etc. All these theories states that strategic management
planning is play a crucial role in strategic management planning (Tairova and Niyazov, 2021).
Key Performance Indicators (KPIs) guides the way to Marks & Spencer how to control its key
factors such as Carbon footprint by measuring total sum of greenhouse gases and through
supplier environmental sustainability index company came to know about its environmental
performance.
CONCLUSION
It can be concluded that business strategic plan is a crucial part for a company in fulfilling
its long term and short term goals. In this competitive global business world, it is more necessary
for firm to execute their strategies carefully in market. Business strategic plan is getting ready for
future situations and minimizing business challenges which can firm in near future due to
external or internal factors. This is why business strategies are able to minimize threats and
maximize opportunities.
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Ofori, 2021. Opportunities and Challenges of Green Marketing. Green Marketing in Emerging
Markets, pp.251-276.
Mallon, 2019. Does strategic planning matter?. Academic Medicine, 94(10), pp.1408-1411.
Phillips, Moutinho and2018. Contemporary issues in strategic management (pp. 159-177).
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Stacchini, Guizzardi and Mariotti, 2022. Smoothing down arbitrariness in planning: From SWOT
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IATED.
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