Value Chain Analysis of Marks and Spencer

This report provides an analysis of the competitive environment of Marks and Spencer using Porter's Five Forces model. It also discusses the value chain analysis of the company, including inbound logistics, operations, and outbound logistics. Additionally, it explores two support activities in Porter's value chain and identifies key value-adding activities of Marks and Spencer. The report concludes with recommendations on how the company can deploy information technology and innovative ideas to improve its business processes and enhance its competitive positioning.

Report about Marks
and Spencer

Table of Contents
INTRODUCTION...........................................................................................................................1
Introduction about the company .................................................................................................1
Back ground information............................................................................................................1
Products and services of Mark and Spencer- .............................................................................1
Analysis of Competitive environment of Marks and Spencer using Porter’s 5 Force with
justifications................................................................................................................................2
Discuss Value Chain analysis of Marks and Spencer................................................................4
Discuss two support activities in Porter's value chain of Marks and Spencer:...........................6
Identify key value adding activities with justification of Marks and Spencer............................7
Summarise and reflect on how the business could deploy information technology (IT) and use
innovative ideas to improve its business processes and to enhance its competitive positioning 7
REFERENCES................................................................................................................................9

INTRODUCTION
Introduction about the company
Marks and Spencer Group plc commonly known as M&S. It is a most renowned brand
among British retail sector, which majorly deals in quality clothes, premium edible products and
luxurious home décor articles (Baxter, 2019). It is a UK based multinational corporation and its
headquarters are situated in Westminster, London. It has a high rising position in the London
stock exchange list. As a constant component in the Financial Times Stock Exchange 250 Index
since 2019. The company has been ranked as top 7th super brand by Centre for Brand Analysis in
the year 2018. It is among giant global retailer brands with a counting of more than 959 stores
all over the world.
Back ground information
Marks and Spencer was established as a partnership firm by Michael Marks and Thomas
Spencer in the year 1884. It grew up from a small shop to a public company by the year 1926.
Marks and Spencer opened their first food product outlet in 1931(Carvalho, 2019). Company
started the research and planning regarding the production of garment and apparel products
during the interwar period and established its very first textile unit in 1985. as in respect of the
current scenario marks and Spencer trades in more than 30 nations. The growth of brand on a
worldwide level is appreciable as it majorly focused on the core competencies of market. They
always tries to perform every operation in the most innovative way possible. Significant brand
values of Marks and Spencer are its promises for high quality services and trust for providing the
premium products. Marks and Spencer sources raw material only from their verified farmers and
stockist. Business also involve a great role in establishing international connections as it
contributes in their economy as well (Chalaby, 2019). By doing overseas sourcing of production
materials from various other countries as Malaysia, India, Hong Kong, Bangladesh, Turkey,
Thailand, China, Italy, Sri Lanka and Indonesia. Thus such verifications increase the authenticity
of the production process and enhances the quality of it.
Products and services of Mark and Spencer-
They offers a wide range of products and services in its three respective sectors as they
consists of home products, food and beverage items and the foremost part is it clothing sector .
There are numbers of quality products in this segment some of them are women’s clothing,
1

denims for each and every age and gender group. men’s clothings from inner wear to formal
suits, school articles comprising of all the major products as bags, containers, classic and sporty
footwear, kids wear; shoes for occasions, accessories for men and women, wallets, jewellery,
watches, hosiery, gem art effects, socks, and cosmetics, beauty products, for bathing, body, hair
care, make up, fragrant soaps, perfumes and deodorants, nail care, and skincare products, extras
includes men’s and kids’ toiletries, travelling gears, relent accessories, and occasional gifts. The
company commits to provide the genuine product on time with full value of money. From past
few years the business faced a bit of difficulties in the market in terms of the increased
competition. As the vast segment of customer shifted towards the electronic shopping platforms.
Where other business entities offers the similar good under same quality and decreased price.
Such replicas of the original product influences the price oriented customers.
Analysis of Competitive environment of Marks and Spencer using Porter’s 5 Force with
justifications
There is a high competition for Marks and Spencer in the market place as there are
numerous other retail businesses which affect the working cycle of company. Porter's Five
Forces is a strategic business model which helps in finding and analysing the competition
surroundings around the organisation (Chlopecký, 2019). Analysing the Porter's five strategies
for Marks and Spencer will help in understanding the pros and cons of brand in market. Such
information plays an important role in the corporate planning for upcoming operations and
management of business. A long term profitability can be achieved by taking corrective
measures after application of these five forces.
Threat of new entrants:
Magnitude of new entrant in the market is quite low. The main reason behind this is that
it take s a huge capital investment for the establishment of the new retail company. It is a risky
task to introduce something new or experimenting irrespectively of market culture. As a new
company has to provide something very different product and service to consumers as it is
necessary to differentiate the product for the effective build up of brand.
All major retailers have strong established brand names and so enjoy customer loyalty, which
becomes increasingly important in homogeneous markets. In a case of a foreign entrant in the
local market the consumer taste and preference would be unidentified by the company. Higher
cost will be incurred to perform the research and development for the company in different
2

market. As the new entrant would face a lot of difficulties and it either would result in the pack
up of new venture. Marks and Spencer has more than 100 years of experience in doing business
of retail, nationally and globally (Cordell, 2019). Thus for the new entrant it is quite difficult to
threat such a strong company on the level of skills, marketing and experience.
Threat of substitutes
Substitute firms would decrease the market share for Marks and Spencer. As the new
alternatives are being introduced customers are more active to get shifted towards them. There
are so many retailers who trades in foreign imports by lower price. It influences those segment of
customer who are more concerned about the prices, the replica of any premium product is
common to get and cheaper to buy. Thus the customer sometimes gets attracted towards the cost
and willingly pay for the brand and label. In the food and eatable segment there are less chances
for the substitute products, because no different company can use or copy the recipe of existing
food item. Certainly it is also difficult to maintain the same qualitative standards.
There are other substitutes as Tesco, LIDL, ASDA these giant retail companies plays a
role of coercive competitor as well as a substitute for the product and services of the Marks and
Spencer. These organisation provides the similar quality products globally. The intensive
competition with substitutes can lead the organisation toward de capturing of customer. As the
organisation can deal with this scenario by focusing more on product differentiation and using
the premium quality in the preparation to promotion of the product.
Bargaining Power of Buyers
The strength of buyers to bargain within the market is weak. There are a lot of material
suppliers for the Marks Spencer as it provide the finished goods into the market. Such limited
companies are limited in to market and that's why they engage more and more of supplier in to
selling their unfinished product to company. This creates the less competition of such retail
companies into the market. As the buyer also not get the much option to choose for the
purchasing of product. Marks and Spencer applies the product differentiation strategy by which it
creates the unique standards for its products. By doing so the customer gets more relied on to
choosing the same brand again and again, and feel unable to find the alternatives for the
particular item. Thus it becomes difficult to shift toward any other competitive firm and that
makes the buying power a weak force for the customers.
Bargaining Power of Suppliers
3

The extent of the bargaining of suppliers is low for the organisation. Marks & Spencer is a big
retail chain company, with a global range of trading. Small and medium scale supplier are
willing to take the part into the production and sales of this branded retail giant, to enhance their
name and product's popularity on a large customer base(Devinney, 2019). Moreover, the
organisation is not wholly dependent on suppliers and it prefers majorly to sale its very own
produced goods under that brand name. That involves the major focus of company is onto
collecting the raw material from local and overseas supplier and not the semi finished or loose
products. Another factor for the decrement of buying power of supplier is that , Marks and
Spencer mainly export the raw material from small and developing company. This activity helps
the organisation in many ways as it does not only decreases the cost of product but it also
enhances the quality. Certain premium characteristics of raw material increases the product
authenticity and creates the efficient product differentiation into the market place. At the time of
sourcing of raw material Mark and Spencer have several other options of supplier by that it is
enabled to switch and shift the supplier thus how the bargaining power of supplier power
becomes ineffective.
Competitive rivalry.
The growing culture of departmental shopping increased the market share of retail companies.
Most of them are giant and large scale brands while some of them relies on the small and
medium scale. Marks and Spencer being a developed retail venture faces competition from both
the sides. As small scale retails does not effect the company's turn over that much but they affect
quality and local market share of respective firm. A limited number of large scale competitors
includes Tesco, Morrisons, H&M, LIDL etc. Competitive rivalry among retail firms is a threat
for the company and has a strong force in the market. Marks and Spencer incurs a huge fixed
costs for the operations. This enables it to perform most effectively in terms of doing the
production and other management within industry at a maximum capacity. Investing the equity
finance gives the company more control on determining its cost and pricing. These policies
helps in standing strong into the market and giving the optimum response to this high force
competitive rivalry (Culot, 2019).
Discuss Value Chain analysis of Marks and Spencer
Value chain analysis is a marketing strategy that helps the firm to identify the internal
factors of a firm in order to gain knowledge of the competitive environment. This provides
4

assistance to the company in undertaking measures through which strategic edge can be gained at
market place. Value chain adds value to the customers and thus increase the profitability of a
business. Marks and Spencer is one of the most reputed brands operating within the confines of
UK that deals with selling of clothing, home appliances and food products. The manager of
Marks and Spencer has applied this strategy to build loyal customers and to increase the sale of a
products (Jnr, 2019). In the context of Marks and Spencer, porter's value chain consist of
activities like inbound logistics, operations and outbound logistics. These are presented as
follows:
 Inbound Logistics: Inbound logistics consist of activities such as retrieving, storing and
distributing the raw materials and converting them into finished product. This is first and
foremast activity of a business which deals with various operations. As Mark and Spencer
has extensive goodwill in the market and it has maintain good relation with suppliers
which help in distributing and storing the goods across the globe. The firm uses high
quality products that results in cost savings and make best use of resources to gain large
access in market.
 Operations: It includes activities that involve the process of converting raw material into
semi or finished goods. In the context of Marks and Spencer, the firm is engage in
various operations like assembling, machining and packaging. In this, the product is
ready to launch in the market with special features like attractive packaging, display etc.
The respective firm facilitate smooth flow of activities in order to gain competitive
advantage within the market (Knoll, 2019). The firm provide products of standard quality
at reasonable prices and gain large customer base across the globe. Thus, this increase
productivity and maximize the efficiency of a business which promote economic growth.
 Outbound Logistics: Outbound logistics includes activities such as material handling,
warehousing and delivering goods to the destination. This is one of the important factor
of value chain analysis in a competitive market. One of the advantage of Marks and
Spencer is that it engage in providing delivery of products to the destination at a
minimum time in a optimised cost which increase customer satisfaction. Thus, this
provide growth opportunities to the firm and increase the productivity. The concerned
firm provide quick deliveries of products by strong network of intermediaries operating
across the globe and provide after sale service which provide an ease to a customer.
5

Discuss two support activities in Porter's value chain of Marks and Spencer:
Support activities play an important role in coordinating the activities of a firm. This
assist the firm in facilitating the primary activities which is very crucial for an organization.
Support activity provides the bases of decision making and organising the activities of a firm
(Mbazira, 2019). Support activities such as human resource management, technological
development, etc. is very important for Marks and Spencer in facilitating the . Below the support
activities of value chain analysis of Marks and Spencer are presented as follows:
 Human Resources Management: It consist of various elements like recruitment,
selection, training and development of a workforce to increase the efficiency of an
organisation. Choosing the right person for a right job is very important for a company to
increase the productivity and it is very important to make optimum utilization of
resources to achieve the goals of an organisation. The manager of Marks and Spencer
provides training to employees in order to increase the sale of products and skills and
knowledge of an employees. As the firm is highly dependent on its subordinates so it is
important for a manager to provide training to them as a result the motivation and morale
increases. This provide benefit to a respective firm as it can save cost by hiring of
experts.
 Technological Advancement: Today in a competitive era, technological development is
one of the important factor of any business as it brings efficiency and quality in a
manufacturing sector. There has been constantly improvement in a technology which
contributes in the economic growth of a country. The manager of Marks and Spencer has
promote their business on social media marketing and organisational websites for the
purpose of expansion. This provide easy access to customers which increases the sale of a
products. This provide growth opportunities and increase the profitability of a business.
Today, Marks and Spencer has diversify its operations across the globe in order to gain
competitive advantage within the market. The business environment in which company
carry out its operations is regarded as dynamic and the manager has to adapt itself
changes in the organisation in case of obsolescence of technology. The manager provide
proper guidance to subordinates so that they can work in an effective manner.
6

Identify key value adding activities with justification of Marks and Spencer
Value chain plays a very important role in an organisation as it provides a overall
framework of internal and external factors which provide a bases of decision making. The main
focus is to make best use of resources so as to achieve the organisation goals. Marks and Spencer
is one of the renowned brand in UK which emphasize on selling of various items like clothes,
food and home products (Morgan, 2019). The manager of Marks and Spencer focus on efficient
supply chain which improves the productivity. Also, the firm provides attractive packaging
designs which attract large number of customers. The concerned firm focuses on providing
excellent quality products at a reasonable prices which adds value to its customers. The firm can
gain competitive advantage by providing better experience to the customers and and provide
training to new staff. Also, providing wide options of payment provide flexibility to the
customers while purchasing products covering operating parts of UK.
Summarise and reflect on how the business could deploy information technology (IT) and use
innovative ideas to improve its business processes and to enhance its competitive
positioning
Based on the analysis of Porter's 5 force of Marks and Spencer it can be determined that
the level of competition rivalry in the confines of retail sector is, moderately active. As the newly
established retail firms are loosing through marginal profits, and existing giant retailers are
targeting the different segment of market (Rosca, 2019). Marks and Spencer has a very pro
efficient departmental structure that enables it to engage its people inside the organisation as well
as the consumers from targeted sectors.
Being a constantly growing retail organisation it has multiple strengthens which helps in
efficiently approaching the market in a strategic manner. As there are some weak points of
Marks and Spencer which can be managed effectively by practising certain new factors and
techniques (Prabavathi, 2019). Such as promoting the use of information technology and digital
media. As the organisational people are also a less tech friendly and that results in wasting of a
large operational time while performing most of the activities manually. Engaging the human
resources with the more technological and digital activities will save the time and other resources
in overall organisational process. The positioning of the company among its targetted market
share is currently not placed as up to standards. Due to the significant classification of market the
physical platform sale is become a less effective these days so to enhance the company's market
7

position it can adapt multiple of electronic platform for the sale and marketing of the product.
While targeting market audience demographically, the organisation can use the E-media
platforms, for the promotion, advertising and market surveys (Rivera, 2019). Sale of the products
can also be performed at various E commerce portals, company can increase more customer
interaction with the help of online media.
Another big deployment of information technology can be done inside the organisation
by implementing the techniques of operations and management. Automation in the production
techniques will increase the more quality of process as it will help in achieving the time base
targets efficiently. While certain business soft wares and tools can be used to increase the
systematic management. Furthermore the innovative ideas can be performed in the packaging
and production.
8

REFERENCES
Books and Journals
Baxter, G., 2019. A strategic analysis of Cargolux Airlines International position in the global air
cargo supply chain using Porter’s Five Forces Model. Infrastructures. 4(1). p.6.
Carvalho, J. and Nobre, P.J., 2019. Five-factor model of personality and sexual aggression.
International journal of offender therapy and comparative criminology. 63(5). pp.797-
814.
Chalaby, J.K., 2019. Outsourcing in the UK television industry: A global value chain analysis.
Communication Theory. 29(2). pp.169-190.
Chlopecký, J. and et. al., 2019. External Analysis for the Purpose of Strategic Decision-Making
of Heating Company.
Cordell, A. and Thompson, I., 2019. The Procurement Models Handbook. Routledge.
Culot, G. and et. al., 2019. Integration and scale in the context of Industry 4.0: The evolving
shapes of manufacturing value chains. IEEE Engineering Management Review. 47(1).
pp.45-51.
Devinney, T., 2019. Boeing: mitigating socio-political risks to the supply chain. The Business &
Management Collection.
Jnr, B.A., 2019. Sustainable value chain practice adoption to improve strategic environmentalism
in ICT-based industries. Journal of Global Operations and Strategic Sourcing.
Knoll, H.O. and Jastram, S.M., 2019. A pragmatist perspective on sustainable global value chain
governance–the case of Dr. Bronner’s. Society and Business Review.
Mbazira, A., 2019.Evaluating the Pharmaceutical industry in Uganda using porters' five forces
model (Doctoral dissertation).
Morgan, E.H. And et. al., 2019. Analyzing food value chains for nutrition goals. Journal of
hunger & environmental nutrition. 14(4). pp.447-465.
Prabavathi, V. and Vanathi, R., 2019. Role of Supply Chain Management in Indian Textile
Industry and the key issues faced by the Textile Supply Chain. Journal of
Contemporary Research in Management. 14(2).
Rivera, J.P.R. and Gutierrez, E.L.M., 2019. A framework toward sustainable ecotourism value
chain in the Philippines. Journal of Quality Assurance in Hospitality & Tourism. 20(2).
pp.123-142.
Rosca, E. and Bendul, J.C., 2019. Value chain integration of base of the pyramid consumers: An
empirical study of drivers and performance outcomes. International Business Review.
28(1). pp.162-176.
9