Strategic Management Approaches of Marks and Spencer Company

This report focuses on the strategic management approaches of Marks and Spencer Company in the retail sector. It compares theory and practice, conducts a Porter's Five Force Model analysis, and discusses the competitive analysis of the company. The report also analyzes the business environment using PESTEL analysis and examines the impact of political, economic, social, technological, environmental, and legal factors on the company's operations.

PROJECT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Compare theory and practice.......................................................................................................3
Porter’s Five Force Model analysis.............................................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategic management is defined as providing strategic direction to the organisation on
the basis of the goals and objectives of the company. This report is based on the case study of
Marks and Spencer Company in respect to its strategic management approaches. Marks and
Spencer Company is a retail sector organisation based in United Kingdom. Company initiated its
business operations in the year 1884. Company offers high quality clothing, food products and
home products. This report will project the strategic management approaches of the Marks and
Spencer Company. Henceforth, report will emphasis on the comparative theory and practices in
respect to the Marks and Spencer Company. Competitive analysis of Marks and Spencer
Company will be conducted in this report. Analysis such as business environment analysis,
competitor analysis and competitive analysis will be conducted in this report.
MAIN BODY
Compare theory and practice
Retail sector is among the most competitive sector part of the business environment. The
sector contains effective demands which further resulted into aggressive level of market
competition all across the globe.
Business environment analysis
Business environment is a collection of all internal and external factors part of the
business environment. All such factors associated with business environment put a huge impact
over the business operations of company. To assess the external business environment PESTEL
Analysis tool is the most convenient tool to utilise.
PESTEL Analysis
PESTEL Analysis is an analytical tool used to assess the impacts of various external
factors put an impact over the business operations of Marks and Spencer Company. PESTEL
Analysis involves factors like political, economical, social, technological, environment and legal
factors. All such factors directly influence the company’s operations in the market.
Political Factor: Political factor is a key business environment factor part of the PESTEL
Analysis tool. All policies and strategies form by government related to the corporate sector is a
part of the political factor of business environment. Government along with United Kingdom all
across the globe are very supportive towards the growth and development of the corporate sector.
Government all across the globe are much aware with the significance of the corporate sector in
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respect to economic growth of the country. Contribution of the corporate sector in gross
domestic product of country drive governments all across the globe to frame supportive polices
and strategies that can result into more favourable business environment. Retail sector is always
a part of strategic policy making of government. As the sector comprises with the product
portfolio belongs to the basic needs of living for peoples. Due to the nature of retail products
governments all across the globe take a special interest in the growth and development of all
retail sector companies. Retail sector also contributes aggressively in the tax reforms with the
support of heavy demand of different retail products over regular basis. The sector does not
differentiate in any economic class background in society which allows the sector to offer its
product portfolio to all economic background and social class people belongs to any culture,
religion and any social factor. In recent times BREXIT becomes part of the United Kingdom that
influenced the business operations of the companies like Marks and Spencer in a negative
manner (Akhter, 2017). BREXIT offered restrictions over the business operations of Marks and
Spencer Company that also resulted into reduced demands of all the retail products offers by
Company. Marks and Spencer Company hold its business operation in more than 1400 locations
at global level which also allows company to review the policies framed by government at all
such locations part of the business of company. Political stability is also a big factor influence
the business of company. Political stability allows government to develop a long term policies
for the business development and growth. In United Kingdom government has a very stable
political position due to support of the people in UK. Stable government in United Kingdom
formed long term policies like sustainable tax structure, less restrictions and other associated
factors. Political stability also allows Marks and Spencer Company to sustain its strategic
decision making for long period of time.
Economical Factor: Economic factor comprises with factors like currency exchange rate, value
of currency in international market, stability of the currency, economic policies of government,
monetary policies and other associated factors. All such factors directly impact over the business
operations of company. Economic factor create a huge impact over the company’s pricing
strategies. Taxation policy of government directly dominates the prices offer by Marks and
Spencer Company in respect to its different product segments. Stability of government and
political party is also a key factor that allows government to sustain its taxation policies for the
long period. Marks and Spencer Company operate its business operation in more than 1400
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location all across the globe that involves economic position of all such countries company hold
its outlets (Holmqvist and Ruiz, 2017). Company needs to assess the economic stability of all
such countries belongs to business regime of company.
Social Factor: Social factor is also a crucial business environment factor part of the business
environment. Social factor involve different social elements like choice of people, religion,
culture, fashion, trend and various other factors that directly impact over the purchase decision
making of the customers. All such factors are dominating tool behind the purchasing decision
making of customers. Marks and Spencer Company deals in clothing which is highly depends
upon the fashion and current trend of the market. Fashion and trend is directly influences the
sales of company related to clothing line (Yang, 2017). Marketing team of the Marks and
Spencer Company form different strategies by involving different social factors like culture,
religious values of peoples, attitude of people and other key social factors in all its marketing and
promotional activity. Company always try to attract the decision making of buyers in retail sector
by channelizing an effective marketing campaign. Marks and Spencer Company offers clothing
range for all peoples irrespective to any gender or age group. Other retail product segments such
as food products do not carry huge influences of the social factors as the products belongs to
regular use of customers.
Technological Factor: Technological factor is another macro environment factor create
influences over the business operation of company. Technology has created major transformation
in the business environment. This factor of business environment enables Marks and Spencer
Company to get aware in respect to all different technological developments. Technological
factor has also resulted into company entered into the online retail segment. This segment of
market has expanded the sales potentials of companies like Marks and Spencer (Zhao, Pan and
Chen, 2018). Technology supported different functional activities of company along with the
sales like customer relationship management, public relation, research, marketing, sales and
other key operations are directly associated with the technologies. Technological factor also play
a huge role in innovation and product development process of company. Marks and Spencer
Company channelizes technology in each functional activity company is engaged with so that
higher level of operation efficiency can be achieved. Company in engaged is selling its products
over internet that has also contributed in the growth of company. In United Kingdom peoples are
very active over internet and different social media applications. As per the recent stats it is
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projected that online retailing in United Kingdom is growing at the rate of approximately 25%
every year. With the support of technology Marks and Spencer Company could gain the
dominance in online retail sector also.
Environment Factor: Environment factor is the recent development of business environment
after the emergence of social awareness towards environment protection and eco friendly
products. People are keener to utilise eco friendly products that can support environment
protection as well. Marks and Spencer Company channelizes its brand promotion in such a way
that company can project the eco friendliness of all its products. Company deals in high quality
clothing, food products and home products which contains the eco friendly nature (Purnama and
Subroto, 2016). Marks and Spencer Company also engaged in different social activities like
plantation, water harvesting, energy saving, green energy and other forms of social activities as a
part of the corporate sector responsibility. Marks and Spencer Company is very active in respect
to its corporate social responsibility campaigns as it allows company to improve its brand image.
Campaigns run under corporate social responsibilities allow company to improve the brand
connectivity with the potential customers of company.
Legal Factor: Legal factor is also an important business environment factor associated with
PESTEL Analysis. Legal factor comprises with all laws and legislation implemented over
corporate sector. Company needs to cope up with all such laws applicable over the company.
Different laws like equality, data protection, minimum wage payment and other legislations are
applicable on Marks and Spencer Company (Chan and et.al., 2016). Company has to meet all
guidelines part of different laws applicable over the company. Legal factor also involve different
regulations issued by government. Company needs to deal with all such government regulations
as a part of the business operation. In case of business expansion company need to take licensing
and other formalities which are guided by the legal factor involve in business environment.
The above mentions factors are associated with business environment. Different factors
of business environment influences operation activities of company along with its growth
potential in the market.
Competitor analysis
Retail sector is among the key competitive market sector part of the business
environment. Product portfolio of the retail sector offers basic products for living like food, cloth
and other basic needs which also makes the sector more demanding and competitive. As the
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sector offers huge demand of different retail products on a constant basis it has further
channelized into aggressive market competition between all retail companies. Growth rate of
retail sector is United Kingdom is approximately 5% every year. It can be projected as an
impressive market growth rate that also attracts stakeholders to invest in the sector.
1(Kresic, Milatovic and Sanfey, 2017)
(Kresic, Milatovic and Sanfey, 2017)
Marks and Spencer Company is one of the top brand associated with the retail sector.
Apart from the strong presence of company with latest retail products of company receive huge
competition from other retail companies like Asda, Wall Mart, Tesco and other retail companies.
Asda Company is considered as the top retail sector organisation all across the globe. Asda
Company carries the market share of approximately 31% in food retail segment (Schaller,
Vatananan-Thesenvitz and Stefania, 2018). The above pie chart projects that the company carry
the low dominance as compare to other competitors especially in food retail sector. The overall
market growth of Marks and Spencer Company is approximately 16% in its sales turnover in the
last financial year. Growth rate indicate that apart from low dominance in food retailing
company has gained effective presence in other retail segments like clothing, online retailing and
other segments.
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2(Trad and Kalpić, 2016)
Marks and Spencer Company also engaged in selling its products over internet. Online
retailing has been proved as the transformation in the entire sector. The above projected chart is
indicating that Marks and Spencer Company carry the huge presence in online retail sector.
Company has been n the top position in the online retail market by considering the growth rate of
more than 9%. Online retail market in United Kingdom is growing at the rate of approximately
25% every year (Ištvanić, Crnjac Milić and Krpić, 2017). Key competitors from the company in
online retail sector can be named as Primax, Next, Agcdia, Asda, Tesco, TK Max, e Bay and
other online retail brands. It is further predicted that online retailing will further improve its
market share in the company and can go up to 33% of overall retail market share in United
Kingdom.
Porter’s Five Force Model analysis
The porter’s five force model is one of the best models in undertaking the competitive
analysis that is present in the market (Bruijl, 2018). The model analyses the different aspects that
are associated with the competition and overall, a single model helps in conducting an exhaustive
competitive analysis of the company where by comparing different factors directly with their
competitor. There are five different factors that this model presents and the for the M&S
company, these can be analysed in following manner:
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Existing Rivalry (High): Marks and Spencer operate in the two critical market segments of
clothing and food. Both of these industries are highly competitive and the existing numbers of
companies in the competition are extensive. This can be understood by the fact that in retail
segment, the major competitors of the company is Asda, Lidl, Tesco etc. which are solely food
and other consumable item retailers and therefore their impact on the market is severe where
they individually have successfully captured and maintained large portions of the consumer
market. Similarly, in the clothing sector as well there are multiple number of competitors of the
company such as Gap, Next, Oasis etc. that are giving tough competition to the already
threatened former fashion retail giant (Zhang, Leng and Zhou, 2020). On the top of all this, there
is also the fact that the online presence of almost every company today and the increase in the
preference of the online shopping as compared to the offline customers has presented another
level of challenge before the company. Collectively it can be said undeniable that the overall
competition that exists for the company in the offline i.e. traditional as well as online market is
harsh and severe. It is necessary for the brand to maintaining their hold and grasp on the current
market share that is still under them in both the industries and then develop strategies to emerge
stronger for the intense competition that exists.
Bargaining Power of Suppliers (Low): The suppliers of the company are another sector that is
critical for the successful operation of the company in the market. The competitive analysis
above collectively showed that the power that the suppliers hold for M&S itself is very limited as
the switching cost for the company to the next supplier is very low and hence the impact of the
suppliers is lower (Moreno-Izquierdo Ramón-Rodríguez and Perles-Ribes, 2016). Since the
company M&S is at the top position in the respective market industries, it is kind of a privilege
for the suppliers to get associated with the company. This gives an additional power to the
company thus reducing the impact that the suppliers have and the overall bargaining power that
they hold for the products in the industry are huge. They can easily turnover to another supplier
who might be able to give them more profitable deals collectively thus reducing the impact that
suppliers have with the company significantly.
Bargaining Power of Buyers (High): Buyers are the ultimately targeted customers for the
company to whom the goods have to be sold. Now since the industries in which the company
M&S is currently operating is very vast with a high number of alternate options that can be
accessed easily is a challenging aspect for the company (Porter and Kramer, 2019). It can be said
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that the overall bargaining power of the buyers in the industry is comparatively much higher
where it is difficult to retain the customers as the switching cost of the customers to any other
competing brand is very low putting them i.e. customers in the advantageous position. Therefore,
it can be said that the impact of this aspect is significantly higher in the industry thus putting the
buyers in a much more superior position for the company currently.
Threat of new entrants (Low): The industry in which the M&S is currently operating i.e. the
food and clothing retail has a very limited number of barriers while entering both of these
industries. Hence it is very easy to enter in this industry and begin operating the different tasks
and establishing the businesses successfully (Arshed and Pancholi, 2016). However, the
challenging aspect for the new entrant would be to incur all the maintenance and other costs and
sill rise in the sphere of competition matching up to the level at which M&S store operates. This
huge position that they hold in the market makes it difficult for the new entrants to enter the
same sphere and operate successfully. Therefore the impact of this factor is comparatively much
lower for the Marks and Spencer currently.
Threat of substitute products (Medium): The threat of the substitute products is comparatively
at a moderate level for the company as the industries in which they are operating currently
involves goods and items that are more of a necessity and hence cannot be substitute with any
other type of good. Additionally, the innovation in this industry is comparatively much lower
where the basic items of food and clothing cannot be innovated into something else however
they can be specialised and regenerated with some unique ideas or creativity (Varelas and
Georgopoulos, 2017). Therefore it can be adequately said that the impact that this factors has
over the operation of the company in the competitive field which is already aggressive out there
is comparatively at a medium level only. Hence it can be concluded that the impact of this factor
in the competitive environment of the M&S company is almost negligent.
Collectively the analysis of the porter’s five force model with the context of the different
asps that are associated with the M&S Company and the competitive environment around it
shows that the current competition is very high for the company. there are certain factors that
affect every decision of the company but there are also certain factors who are affected by every
decision of the company significantly.
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CONCLUSION
This report projected the competitive factors associated with the companies. PESTEL
Analysis projected different factors like political, social, economic factor, technological factor
and other key factors associated with business environment. All such factors influence
company’s growth and sustainability in the associated market sector. Marks and Spencer
Company is receiving huge competition from companies like Asda, Wall Mart, Tesco and other
retail companies. The organisation also receives competition from online retailing brands.
Different forces like power of customer, supplier power, new entrants and other power
influences the business operations of company.
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REFERENCES
Books and Journals
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Bruijl, G.H.T., 2018. The Relevance of Porter's Five Forces in Today's Innovative and Changing
Business Environment. Available at SSRN 3192207.
Chan, T. and et.al., 2016. Western firms' successful and unsuccessful business models in
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TQM Journal.
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in the Western Balkans: evidence from the BEEPS.
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Porter, M.E. and Kramer, M.R., 2019. Creating shared value. In Managing sustainable
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Medium Enterprises. International Review of Management and Marketing. 6(4).
pp.984-992.
Schaller, A. A., Vatananan-Thesenvitz, R. and Stefania, M., 2018, August. Business model
innovation roadmapping: A structured approach to a new business model. In 2018
Portland International Conference on Management of Engineering and Technology
(PICMET) (pp. 1-9). IEEE.
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Trad, A. and Kalpić, D., 2016. The E-Business Transformation Framework for E-Commerce
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Implementation, and Management (pp. 733-753). IGI Global.
Varelas, S. and Georgopoulos, N., 2017. Porter’s competitive forces in the modern globalized
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Zhao, X., Pan, W. and Chen, L., 2018. Disentangling the relationships between business model
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