Competitive Environment and Value Chain Analysis of Marks and Spencer

This article analyzes the competitive environment of Marks and Spencer using Porter's Five Forces and examines the inbound and outbound logistics along with operations of the company. It also identifies key value adding activities and analyzes two support activities in the value chain.

Report

Contents
INTRODUCTION.....................................................................................................................................3
MAIN BODY.............................................................................................................................................4
Competitive Environment........................................................................................................................4
Analysis of inbound and outbound logistics along with operations of Marks and Spencer......................6
Analysis any two support activities in the porter ‘s value chain in the Marks and Spencer.....................8
Identify the key value adding activities...................................................................................................9
Summary and Reflection.........................................................................................................................9
CONCLUSION........................................................................................................................................10
REFERENCES........................................................................................................................................11

INTRODUCTION
Marks and Spencer is a British multinational retailer of high-quality clothing, household,
food products. The company is headquartered in London, United Kingdom and is one of the
most widely recognized brands in the world. It was founded by Michael Marks and Thomas
Spencer in the year 1884. Marks and Spencer has nearly 1300 stores around the world, with a
minimum of 910 stores across United Kingdom only. The company manufactures and delivers its
products both to its offline retail stores as well as online to its website (Bryson, 2017). Marks and
Spencer own the chain of men’s clothing stores, Brooks Brothers. Although the company is one
of the oldest retailers, it has still been able to maintain its competitiveness by constantly
innovating its products and coming up with different offers.
In the early 20th century, the company came up with a policy wherein it said that it would
only sell goods that are British. Marks and Spencer came into relationships and long-term
partnerships with different British manufacturers as well as suppliers. The products were sold
under the brand name St. Michael. The company started selling food items like Christmas cakes
and puddings in the year 1958. It was after this, that the company started expanding its business
overseas and in the year 2016 Marks and Spencer expanded its operations across the European
market. Respective company has a vast distribution network across different parts of the world
and also shares positive as well as healthy relations with its suppliers. Due to its international
reach, the company has a large number of applicants who are willing to work for it.
Prior to the year 1939, the company’s primary focus had been on advantages associating
with the reduction of prices and bulk buying. Apart from its research development, the company
set up its own approach of the buying process (Busse, Meinlschmidt and Foerstl, 2017). This was
done by training its employees working in different departments which helped it in attracting a
greater number of customers. The company offers products for people of all age groups for men,
women and kids. The company’s products for men as well as women include shirts, linen, skirt,
cardigans, jeans, dresses, etc. On the other hand, footwear range for women include loafers,
pumps, boots, sandals and heels. Famous brands that sell products for women are Classic,
Indigo, Autograph, Foot Glove and Twiggy.

Marks and Spencer is also known for offering products for home as well as furniture
section which includes furniture for living room, dining room as well as home accessories. The
company is also known for selling food products for lunches and dinners. The main unique
selling proposition of the company’s food products is that they are known for quality, freshness
and innovation. Whereas the clothing items are contemporary, wearable and are a value add for
the customers. This is one of the reasons behind the company having a large base of loyal and
satisfied customers. Lastly, Marks and Spencer also provides a wide range of financial services
that include credit cards, current accounts, mortgages and insurance.
MAIN BODY
Competitive Environment
Porter’s 5 Force Analysis can be defined as a framework that is used in order to analyze
the competitive environment of an organization (Cuganesan, Hart and Steele, 2017). It can help
an organization in identifying and understanding the overall intensity of competition that can
impact its overall performance. This is of the most important tools that an organization can use in
order to gain a competitive advantage against competitors in the market. Also, it can help the
company by providing access to different opportunities of growing overall business operations as
well as profitability. This can further help in making effective decisions. This can contribute to
the organization’s overall performance as well as productivity. Marks and Spencer operates in a
highly dynamic as well as competitive environment. And since the company has operations
globally, it is important for it to analyze the different forces as well as their impact on it. Porter’s
Five Force Analysis for Marks and Spencer is explained below –
Threat of New Entrants – This is a weak force because it requires huge amounts of
investments to set up a chain of stores that are profitable as well as successful. This means that a
new entrant in the market wherein Marks and Spencer operates will need to offer its customers
something innovative and new, which is difficult. All major retailers have brands that are well
established and have loyal customers, which will make it even tough for them to start their
business (Porters 5 Forces Analysis Of Marks And Spencer Marketing Essay, 2020). But there
can be some new entrant that can put pressure on the company and its operations through low
prices, reduced costs etc. Therefore, it is important for the respective company to innovate its

products ad services so that customers get a reason to buy its products. Also, Marks and Spencer
can invest in its research and development to maintain its competitiveness.
Bargaining Power of Suppliers – This is also a weak force because arks and Spencer
has a huge list of potential suppliers that can supply the required material to it. This means that
they have a low power to bargain for the prices (Darnton and Giacoletto, 2018). Also, Marks and
Spence is not dependent upon a particular supplier for its raw material and can get it sourced
from a different one, if there is a need. This is also because the company manufactures and sells
its own products. Almost all companies within the retail sector buy raw material from different
suppliers. Although there are chances that some suppliers may have a dominant position in the
market. This can put pressure on the respective company and therefore, it is important for it to
build a supply chain that is efficient and comprises of multiple suppliers. Respective company
can also experiment and come up with new product designs using unique and different materials.
Bargaining Power of Buyers – Buyers have a high bargaining power which makes this
force a strong force. This is because the overall concentration of buyers in the market who
purchase products from Marks and Spencer (Preece, 2018). Therefore, it can be said that they
rule the market with their tastes and preferences. One of the reasons behind this is that if they are
not satisfied with the products and services of the company, they can easily switch brands and
buy competitors’ products. Also, the demands of buyers keep on changing from time to time and
they ask for products that are of high-quality but priced low. The company can reduce this force
by building a larger base of customers as this will be beneficial in two ways, this will reduce
their overall power to bargain as well as provide an opportunity for the company to expand its
business. Another way of doing this is to introduce new products in the market.
Threat of Substitute Products or Services – This is also a strong force because when a
new product or service will meet the needs of customers in a much more efficient way, there are
chances that the overall profitability of the company will suffer. Therefore, it is important for the
company to not just focus on its products but services as well (Richardson, 2017). This will help
it in retaining existing customers as well as attract a greater number of potential customers. Also,
the company should understand the needs and requirements of its customers in an effective
manner and not just focus on what they buy. Lastly, marks and Spencer can also increase the
overall switching costs for its customers. This will help it in retaining customers for a long

period of time and satisfy their needs as well. Some of the company’s competitors like Tesco
introduced alternatives that were cheap, which posed pressure on Marks and Spencer.
Rivalry among Existing Competitors – This is an extremely strong force because
competition within the retail industry is very high. There are various competitor brands like Zara,
Tesco, Sainsbury’s etc. who pose competition to Marks and Spencer. If the rivalry among
competitors within the industry will be intense, it will lead to an overall drop among the prices of
products (Ustundag and Cevikcan, 2017). This will further lead to a decline in the profitability of
the industry. Therefore, it is important for the company to adopt measures so that it gains a
competitive advantage in the market. This can include differentiating the products or even
collaborating with other competitors in order to increase market size. Also, Marks and Spencer is
most vulnerable to competition because it offers a wide range of products in different sectors.
Therefore, from the above analysis, it can be said that by using Porter’s Five Force
analysis, Marks and Spencer can gain a competitive advantage and stand out against competitors
in the market (Sujan, 2018). This is because it will help the company in identifying the intensity
of the different forces and how can they impact overall performance of the firm. Thus, the
management of the company can understand and address these forces accordingly so as to
maintain the its performance within the industry. It will also assist in making effective and
efficient decisions.
Analysis of inbound and outbound logistics along with operations of Marks and Spencer
The primary activities that are being carried out by M&S are involved directly within
production as well as sales products to their targeted or potential customers. By carrying out the
analysis of primary aspects of value chain activities, overall performance of organization can be
improvised. It is specified beneath:
Inbound logistics: This is essential that strong relationships must be formulated with
suppliers as adequate support is required from them in context of receiving, storing as well as
distribution of products (Dooley, 2017). In case if this is not analyzed by inbound logistics of
M&S then it will hamper the operations of organization and they will face wide range of
challenges with respect to faces associated with product development. Here, firm need to
emphasize on each aspect related with transforming raw materials into finished goods or
services. An instance can be taken to understand this aspect like retrieving raw material from

suppliers, storing it and internal transmission to production department to start working on it but
if this is not maintained then functionalities will be affected.
Operations: The significance of carrying out analysis of operational activities arises
when raw materials are being supplied by suppliers and attained by M&S. Now firm is ready to
carry out their processes associated with transformation of raw material into a complete or
finished product for example machining, packaging, assembling them and testing as per desired
standards. In addition to this, it also involves maintenance as well as equipment repair. This
involves both the aspects services operations and manufacturing. Carrying out analysis of
activities is mandatory for improvisation of productivity, enhancing efficiency and ensures
competitive edge within marketplace.
Outbound Logistics: This comprises of activities that are liable for delivering product to
their end customers by passing them via distinct intermediaries. Some of them are warehousing,
material handling, order processing, transportation and delivery to store or destination. M&S
analyze as well as optimize outbound logistics for exploring competitive edge through which
they can attain their objectives (Purcell and et. al, 2017). When these activities are managed in
timely manner then there will optimize cost as well as delivery of products will eradicate
pessimistic impact on performance and quality of the products. This will further lead to
satisfaction of customers by enhancement of growth opportunities for organization. Therefore, it
is important for M&S to emphasize on their outbound processes when products are being offered
and have quick delivery.
Identification key values adding activities:
All the functionalities that are being carried out have equal importance and add up value
to end product. For an instance if raw material is not of the good quality then no matter how
much efforts are being made by employees something will be left that will hamper the end
product. Raw material has equal importance in end product and value attained by this. The other
instance is being taken suppose adequate raw material is being delivered by suppliers but it is not
handled in an appropriate way by operations department so again the affect will be on end
product (Hassan, Rahman and Sade, 2019). In similar manner it goes with outbound process.
Thus, it is crucial for M&S to have strict procedures while dealing with different situations so

that each aspects or function can be conducted in precise and enhanced manner to have amplified
results on overall growth of firm
Analysis any two support activities in the porter ‘s value chain in the Marks and Spencer
The value chain analysis refers to the business management tools and technique used by
the organization to take the competitive advantage in the market places by adding value to the
inputs resources to provide effective outputs which have effective values in final product and
services. Information technology helps the Marks and Spencer to achieve the desire level of
outcomes in the target market and achieve the goals and objective in the most profitable
manners. (Alcacer and Delgado, 2016).
The value chain analysis has primary activities and secondary activities which helps the
organization to add value to the goods and services they offer in the market place. The support
activities are the important part of coordinating and facilitating the various primary task so that
effective results can be seen in the organization by applying the good information technology in
the management level of the Marks and Spencer. Some of the effective support activities are
stated as below:
Human resource management: In the context of the Marks and Spencer, the
organization uses the technology to manage the requirement of the employee at the work place. It
process include the to know the requirement of the more worker in the organization and have the
effective hiring process where the applicants goes though the recruitment, selection, training and
development programs and provide rewards to the employees for their better work in the team so
that good and effective people are associated with the organization and helps in achieving the
desire level of outcomes in the organization. These processes can be carried out by using the
technology where applicants can apply for the vacant position, and HR manager can use the
online mode to conduct the recruitment and selection process and choose the most qualified
candidates for the organization (Kano, 2018). The effective management helps the employee of
the organization to reduce the competition pressure by having skillful and capable employees for
the company. The organization can also reduce the hiring and training cost by using the
information technology in the effective and efficient manners in their organization and conduct
all the essential activities in the profitable manners.

Technology development: In the work place, the advance technology always add value
to the organization activities. The Marks and Spencer have different department such as
production and operational, distribution and logistics, human resource and marketing section
needs technology to perform their respective part of function in the most effective ways. Some of
the example, are automation software, advance customer support services and product research
require the technology to be used in proper way to complete the task in the productivity manners
(Breyer. and Vainikka, 2015).
Identify the key value adding activities
The Marks and Spencer, uses the value chain analysis to examine the work environment
and focus on taking the competitive advantages in the market places (Woodsworth and Williams
II, 2018). These also hells the organization to identify how the different department and various
activities are interlinked and interconnected with each other. With the use of advance technology
organization can performed in the profitable manners in the organization.
Summary and Reflection
Information Technology can help a business in fostering an innovative as well as learning
environment. This is also important because information technology is increasingly becoming
important for all businesses to have (Chung and et. al., 2017). Marks and Spencer can deploy
Information Technology in many ways so as to ensure an elevation in its overall performance as
well as productivity. IT not only helps in improving the overall quality of business but also
ensures that all needs and requirements of customers are met. Respective company can deploy
information technology in its business by implementing new soft wares that will make the whole
process of understanding in satisfying the needs of customers effectively. This can include
installing the soft wares, running and testing them, and making changes accordingly.
The management of respective company should analyze its business processes and
redesign the same if any kind of error or inefficiency is found (Paul, 2019). Also, when the
management decided to bring in or implement a new change within the workplace, it should be
communicated to the employees effectively. It is important to review the whole process before
implementing so as to maintain the overall efficiency of the business. The employees should also
be provided effective training so that they become familiar with how to operate the software. The
management of Marks and Spencer should analyze its business processes in order to identify

what needs a change. Innovative ideas can then be brought in by conducting regular
brainstorming sessions. This will also be beneficial for the employees and make them feel
involved.
Also, the company should position its products in a differentiated manner in the market
as this will help it in gaining a competitive advantage. Also, since Marks and Spencer operates in
a highly competitive environment, it is important for it to implement latest technology as it will
help in bringing innovation and creativity to its products that will be different from the ones that
are offered by its competitors (Vorraber and et. al., 2018). Therefore, it can be said that
deployment of information technology will help the company in not only improving its business
processes, but also in enhancing its overall competitive positioning in the market. This is because
information technology will foster innovation and hence, result in the business running more
efficiently (Whelan, 2017). This will also contribute to the overall profitability of the company
and help it in standing out against competitors in the market. So, it is recommended that Marks
and Spencer implements effective information technology in its system.
CONCLUSION
From The above report, it can be concluded that Porter’s Five Force analysis as well as
Value Chain model are important frameworks that can be used by organizations in identifying
and understanding the impact of various external forces that can impact their overall business
operations. On the other hand, Value Chain model assists in enhancing as well as increasing the
overall production efficiency within an organization. Lastly, businesses can deploy information
technology in order to improve their business processes as well as competitive positioning in the
market.

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